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2012-07-31 Correspondence
r r -04 CITY OF IOWA CITY 2f(1) �-=`H`094 E MORAN DUM Date: July 23`d, 2012 To: City Clerk From: Darian Nagle -Gamm, Traffic Engineering Planner. Re: Item for the July 31St, 2012 City Council meeting; Change of parking meter terms from 2 hours to 30 minutes for spaces numbered L1 28N and L1 30N on the east side of the 100 block of North Linn Street. As directed by Title 9, Chapter 1, Section 3B of the City Code, this is to advise the City Council of the following action. Action: Pursuant to Section 9 -1 -3A (17), Change of parking meter terms from 2 hours to 30 minutes for spaces numbered L1 28N and L1 30N on the east side of the 100 block of North Linn Street. i Comment: This action is being taken to provide additional short term metered parking on the 100 block of North Linn Street. This action was originally requested through the Transportation Services department by the T.Spoons coffee shop located at 301 East Market Street. cc: Chris O'Brien; Transportation Services U r -,. CITY OF IOWA CITY 2f(2) MEMORANDUM Date: July 24th, 2012 To: City Clerk From: Darian Nagle -Gamm, Traffic Engineering Planner Re: Item for July 31St, 2012 City Council meeting; Installation of ZIPCAR PARKING ONLY signs on the west side of the 300 block of North Clinton Street. As directed by Title 9, Chapter 1, Section 3B of the City Code, this is to advise the City Council of the following action. Action: Pursuant to Section 9 -1 -3A (10); Install ZIPCAR PARKING ONLY signs on the west side of the 300 block of North Clinton Street. Comment: This action is being taken at the request of the Transportation Services department to allocate on- street parking spaces for Zipcars near the southeast corner of Burge Residence Hall. i`• -1 �e CITY OF IOWA CITY - MEMORANDUM- Date: July 24th, 2012 To: City Clerk From: Darian Nagle -Gamm, Traffic Engineering Planner Re: Item for July 31St, 2012 City Council meeting; Removal of existing NO PARKING 2 AM — 6 AM prohibition on South Linn Street meters 1-204S, 1-206S, and on Iowa Avenue meters 1104E, and 1106E. As directed by Title 9, Chapter 1, Section 3B of the City Code, this is to advise the City Council of the following action. Action: Pursuant to Section 9 -1 -3A (10); Remove existing NO PARKING 2 AM — 6 AM prohibition on South Linn Street meters 1-204S, 1-206S, and on Iowa Avenue meters 1104E, and 1106E. Comment: This action is being taken at the request of the Transportation Services department to provide 24 hour parking for Zipcars. rya 2f(4) Marian Karr From: cjk <cjkohrt@gmail.com> Sent: Saturday, July 07, 2012 11:17 AM To: Council Subject: iowa city chicken ordinance Dear Council Members, I encourage you to take up the task of passing an ordinance to allow chicken - keeping in Iowa City. There has been a petition submitted, signifying strong community interest. Rational objections to such an ordinance have been properly addressed, and we see that surrounding communities that have passed such an ordinance without problems. I again encourage you to fullfill your civic role and address this issue that has been brought before you by citizens of our fair city. Sincerely, Casey J Kohrt 435 Rundell St. Iowa City, IA Marian Karr From: V Donohoe <dvdonohoe @gmail.com> Sent: Tuesday, July 10, 2012 8:37 AM To: Council Subject: chickens To all Iowa City City Council members: We strongly oppose allowing chickens to be raised in the Iowa City city limits. We do not want chickens raised in our neighbors yards and we are assuming there are at least 20,000 more people that don't either since only a 1000 signed the petition wanting chickens. They belong on the farm. Talking to friends that are farmers and raise chickens they tell me they are smelly and dirty. That is why they don't have chicken coops close to their homes - so why would we want them close to our homes in town? We have a very nice community and we don't believe that adding chickens would keep it that way. Please vote AGAINST allowing chickens to be raised in the Iowa City city limits. Val and Dick Donohoe 1130 Penkridge Dr. Iowa City, IA 52246 11 i- "), r";ox ;0 ;,otj)a Cittl, 9owa )22, Uj last AQ Gansiz & liqoo Wyk, Yt. id, not ptq3peti., o,-, ttr-e but IT Is lie !towel bo 4 A town. 9 do me� My ave. auait'abW yf. 0 ban, lvov,,-7-1 o&, t,'--czj oott),,I bcaut,�,sq yowa C, I. gavoq 1. 40la - 102 2f(5) Marian Karr 2f(6) From: cliff pirnat <cpirnat @mchsi.com> Sent: Thursday, July 12, 2012 6:40 PM To: Council Subject: rocky shore I am against the Taft Steed Way Levee. Just because the city has government money, let it go to someone who needs the most. a concern of the council ought to be Rocky Shore Drive and the encroachment of the river towards the Drive. Brought this up once before, and suggest the council go and take a look for them selves. cliff pirnat 07 -31 -12 Marian Karr From: patrick.jepson @mchsi.com Sent: Friday, July 13, 2012 10:01 AM To: Council Subject: Will Iowa City follow Stockton California to bankruptcy? Mayor Hayek & Council members, I have attached an article that supports my belief that Iowa City's fiscal policy is not sustainable. As a seasoned human resource professional and over 30 years of compensation and employee benefits experience, and as a taxpayer, I am appalled by the excessive salaries and benefits paid to Iowa City employees. I direct you to the Iowa City Public library salaries, with six library coordinators earning more than $90,000 in salary each. For a quick comparison, take a look at the salaries for the Cedar Rapids public library, in a community twice the size of Iowa City, you will find their library salary expense is nearly 50% of the Iowa City salary library expense. I strongly encourage you to take corrective action now, or future Iowa City generations are surely to suffer the same fate as Stockton California. http• / /thechairmansbiog gallup com/ 2012 /07 /why - stocktons- bankruptcy- should- alarm.html Patrick Jepson, SPHR 17 Forest Hill Place NE Iowa City, Iowa 52240 ♦< "mss.,. r July 9, 2012 The Honorable Matt Hayek, Mayor City of Iowa City 410 E. Washington Street Iowa City, IA 52240 Dear Mayor Hayek: Pursuant to the provisions of the ICC Termination Act of 1995, 49 USC Part 14501(A), you are hereby notified that effective August 15, 2012, Greyhound Lines, Inc. will discontinue service to your location by discontinuance of an entire route or discontinuance of your location as a stop. Please let us know if we can be of assistance in this regard or if we can answer any questions. Please contact the undersigned in writing. Sincerely, P//< non/ M.K. Parnell P//< 4 RAJ Schedule Planning Greyhound Lines, Inc. PO BOX 660362 1 DALLAS, TEXAS 75266 1 TEL 214.849.8000 2f(8) l � ,...: CITY OF IOWA CITY MEMORANDUM Date: July 25, 2012 To: Tom Markus, City Manager From: Chris O'Brien, Director of Transportation ServicesDOA15-- Re: Burlington Trailways to provide discontinued Greyhound Service Introduction: On July 13, 2012 the City of Iowa City received notice of Greyhound Lines, Inc. discontinuance of service to Iowa City effective August 15, 2012. History /background: The memo from Greyhound, dated July 9, 2012, stated that effective August 15, 2012, Greyhound Lines Inc. will discontinue service to Iowa City. This will also result in the termination of the current lease with Greyhound Lines Inc. for space at the Court Street Transportation Center. Prior to receipt of the notice, Greyhound shared a stop location with Burlington Trailways at the Court Street Transportation Center. Each entity provided independent service to various destinations and utilized the leased space for ticket sales and a customer waiting area. Discussion of Solution: Representatives from Burlington Trailways have indicated that they will be servicing the destinations that have been discontinued by Greyhound. In addition, we are currently in negotiations with Burlington Trailways for the lease space at the Court Street Transportation Center. Financial Impact: The change in tenant may lead to a change in the income received in rent from the space currently leased by Greyhound Lines, Inc. Recommendation: Transportation Services staff, with guidance from City Legal staff will continue to work out the details of a lease with Burlington Trailways. Upon completion, the lease will be brought before City Council for approval. Marian Karr 2f(9) From: Andrea Rauer <arauer @mchsi.com> Sent: Wednesday, July 18, 2012 11:07 AM To: Council Subject: Sycamore Mall management concerns This correspondence will become a public record. Today I went to Cindy K's Fitness center as I have the past 4 years. Cindy Duwa has been part of the Sycamore Mall business community for 8 years. She notified all of her customers that she was notified by the Mall management lawyers on Tuesday that she would have to be out of her business by this Saturday. Four days? Even renters who don't pay apartment rents get at least 30 days. Cindy's lease is up on November 1st. Could they not have instituted this at lease renewal time? A little history on this management issue. Cindy admits she was late 7 days on this month's rent. This was her attempt to get the Mall's attention to ongoing problems. She said she has been trying to get the Mall management to address several issues without any satisfaction. The past year we have noticed a sewer -type smell that I guess emanates from the restaurants at this location if the restaurants don't properly use their vent fans. The Mall has had several notifications of this and didn't take it too seriously. Also, this past month there was moisture on the wall adjoining another business. This also had a distinct moldy odor. The Mall did not take immediate action on this either. Is there mold in the wallboard? It is now on the to -do list for the maintenance to fix. Several times this past winter the parking lot was treacherous with ice /snow mix. Sycamore Mall has been in the news lately with the closing of Von Maur. What is the management doing for their existing customers to ensure continuity and full occupancy? I surely don't want to see my Iowa City tax money going to a place that so poorly treats their existing businesses. I thought the goal was to infuse some new businesses in the southeastern part of Iowa City. This isn't a good indication of a successful business plan. Questions remain for me: Was this quick decision even legal? (Ask their Cora lviIle-based lawyer.) Would this happen to a male business owner with an all male clientele? Should The Four Seasons women's clothing store be concerned with their lease? Thank you for your attention to this situation in the interest of many customers of both Cindy K's and the Sycamore Mall in general. Andrea Rauer 319 - 337 -2551 ** 100 pages archived in meeting folder but not available at this time; Pages will be available on City Council website when folder is finalized Marian Karr From: tony barino <barrinotony @g mail. com> 2f(10) Sent: Wednesday, July 18, 2012 2:10 AM To: Council Subject: Fwd: TRILLIONAIRE COMMUNICATIONS - - - -- TARGETED FOR FRAUD - -- FRAUDULENT NATURE -- VENALITY -- PRAETORIAN ELEMENT REVISED PAGES 6- 9= = -MEET ALL SPECIFIC ELEMENT OF FRUAD -- "FRUAD FORENSICS Attachments: ** delierate ignoranc fraud.pdf; judicial improppiety - -craft persuasuion.pdf; power courrupts.pdf; fiduucallaw. pdf ---- - - - - -- Forwarded message ---- - - - - -- From: tony barino <barrinotonU&gmail.com> Date: Wed, Jul 18, 2012 at 3:03 AM Subject: TRILLIONAIRE COMMUNICATIONS - - - -- TARGETED FOR FRAUD - -- FRAUDULENT NATURE -- VENALITY -- PRAETORIAN ELEMENT REVISED PAGES 6- 9= = -MEET ALL SPECIFIC ELEMENT OF FRUAD - -- "FRUAD FORENSICS To: newsalerts&bMMews9.com AN INTERDISCIPLINARY VIEW OF FIDUCIARY LAW "AS IF." ACCOUNTABILITY AND COUNTERFACTUAL TRUST JOSHUA GETZLER' Tamar Frankel's writings on fiduciary law form a continuum with her studies of ethics and trust in business.I Her work carries even greater weight in light of the travails of Wall Street and the sense that the current financial crisis was triggered by a fatal interaction of moral failure and incompetent service. These are precisely the human frailties that fiduciary law strives to correct. Frankel interprets the classical inheritance of fiduciary law to mean that a person entrusted with the assets or affairs of another cannot treat those assets or business as their own. A fiduciary must advance and protect the interests entrusted, and hold all benefits on behalf of the entrustor save for any openly negotiated payment that the terms of the entrusting agreement may provide. A fiduciary serves not as an insurer of the beneficiary interest, but as an honest guardian and prudent manager.2 My argument in this paper, offered as an affectionate tribute to a dear friend and inspiring scholar, is that the law sustains trust in fiduciaries not primarily by ordering redress of losses caused by a falling below fiduciary standards, but rather by requiring that the fiduciary be induced to act as if those standards were met. Wherever possible, the fiduciary is estopped from acting in reliance on the breach, and instead is asked to cure the breach by positive performance of duty. As a fiduciary, you do not keep the illegal profit and proffer compensation for any ensuing loss; rather, you hold the profit for the beneficiary as you always should have done, with loss measures calculated to level any shortfall. This "as if' trusting, enforced by law, solves the conundrum that complete trust properly requires no enforcement, but is self- ' Reader in Legal History, University of Oxford; Fellow in Law, St Hugh's College, Oxford; Conjoint Professor of Law, University of New South Wales; joshua.getzler@ law.ox.ac.uk. I TAMAR FRANKEL, FIDUCIARY LAW 1 -78 (2011) [hereinafter FRANKEL, FIDUCIARY LAW]; TAMAR FRANKEL, FIDUCIARY LAW: ANALYSIS, DEFINITIONS, RELATIONSHIPS, DUTIES, REMEDIES OVER HISTORY AND CULTURES 1 (2008); TAMAR FRANKEL, TRUST AND HONESTY: AMERICA'S BUSINESS CULTURE AT A CROSSROAD 3 -6 (2006) [hereinafter FRANKEL, TRUST AND HONESTY]; Tamar Frankel, Fiduciary Duties as Default Rules, 74 OR. L. REV. 1209, 1209 -11 (1995) [hereinafter Frankel, Default Rules.]; Tamar Frankel, Fiduciary Law, 71 CALIF. L. REV. 795, 797 (1983) [hereinafter Frankel, Fiduciary Law]. z See Frankel, Fiduciary Law, supra note 1, at 800 -01. 973 974 BOSTONUNIVERSITYLAWRE VIE W [Vol. 91: 973 enforcing, or better, self - fulfilling; as Frankel wisely observes, the notion of "trust but verify" is a tantalizing moral contradiction.3 Knowing that one can be required to act "as if' one can be trusted turns out to be a powerful yet subtle constraint on destructive conduct in relationships. We see where the opposite type of behaviors can lead, when business actors no longer feel any constraint whatsoever in pursuing self - serving conduct. Recklessness and profit- gouging ultimately led to the 2008 nadir of the capital markets represented by Lehmann Brothers and AIG, with Bernie Madoff standing as the ne plus ultra of how recklessness leads into the most deceitful betrayal of trust.4 Charles Ponzi, whose defalcation of a large pool of investors after the First World War has been intensively studied by Frankel, provides a minor- league Boston precursor of these notorious Wall Street titans.5 Frankel's work on case - studies such as Ponzi reveals that fraud is the pathological flipside, the weak underbelly, of trust — that to repose great reliance in another person gives an increased scope to the trusted person to defect from and exploit that trust. This insight helps explain the stringent profit- stripping remedies applied to the errant fiduciary — their purpose is not simply to deter and punish breach, but also to induce the particular fiduciary to act as if trust had been maintained. Breaches of trust are reversed, not priced, else the market for fraud be flooded with sellers. Fiduciary law provides the foundation for Frankel's great body of work on securitization and investment management.6 Using the lens of fiduciary doctrine has helped her identify the promise and the shortfalls of modern finance. In a justly celebrated and slightly cheeky review of Frankel's treatise on investment, the corporate scholar Robert Clark suggested that implicit in her work was the discovery of a "fourth stage of capitalism," whereby fiduciaries take over the savings as well as the investment, control, and ownership functions of entrustors.7 Arguably Clark missed a trick or was just a little too early to see what was really happening: we are by now up to a fifth 3 FRANKEL, TRUST AND HONESTY, supra note 1, at 105 -106. For a similar argument focusing on the counterfactual belief of the entrustor rather than the entrusted party, see Richard Holton, Fiduciary Relations and the Nature of Trust, 91 B.U. L. REV. 991 (2011). 4 See Diana B. Henriques, Madoff Scheme Kept Rippling Outward, Crossing Borders, N.Y. TIMES, Dec. 20, 2008, at Al. 5 See, e.g., FRANKEL, TRUST AND HONESTY, supra note 1, at 61 -62; see also Henriques, supra note 4. 6 See generally TAMAR FRANKEL & CLIFFORD E. KIRSCH, INVESTMENT MANAGEMENT REGULATION (3d ed. 2005); TAMAR FRANKEL, SECURITIZATION: STRUCTURED FINANCING, FINANCIAL ASSETS POOLS, AND ASSET - BACKED SECURITIES (Ann Taylor Schwing ed., 2d ed. 2005); TAMAR FRANKEL & ANN TAYLOR SCHWING, THE REGULATION OF MONEY MANAGERS: MUTUAL FUNDS AND ADVISORS (2d ed. 2001). 7 Robert Charles Clark, The Four Stages of Capitalism: Reflections on Investment Management Treatises, 94 HARv. L. REV. 561, 565 -66 (1981). 2011] ACCOUNTABILITYAND COUNTERFACTUAL TRUST 975 stage whereby fiduciaries are empowered by courts and legislatures to write for themselves the terms of their entrustment powers, in effect becoming co- beneficiaries of the funds they manage and potentially reaping huge profits whilst shifting the risks of mismanagement and downturn to the client beneficiaries.$ Perhaps we do not have to devise neat progressive (or regressive) stages of capitalism in order to appreciate the historical regularities by which fiduciary capitalism comes to decay into predatory capitalism. Here Frankel's contribution has proved essential. She argues that modem financial practice represents a falling away from classical fiduciary law, and she makes a call for repentance and return. She identifies a major problem in the submergence of fiduciary law into contract.9 But fiduciary law forms its own discrete category, rooted in history and human nature, and properly separate from contract, tort, and the other departments of private law. Fiduciary law is obligational law based on voluntary undertakings, but it has many likenesses to property law, with mandatory terms forming pre -set categories of right and duty, excluding unauthorised interference with assets and reaching to bind third parties. The mandatory nature of fiduciary standards suggests that this branch of law has strong public dimensions. It is a special hallmark of fiduciary law that the fiduciary cannot vary the protections of the beneficiary without full disclosure and informed consent, and moreover that the burden of proof lies on the fiduciary to justify any departures from the rules that enforce loyalty — the prohibitions on self - interest and conflicted duties. Furthermore, the distinct equitable remedies aim to uphold duty. Injunctions, declarations, specific performance, accounting for lost or foregone assets, and analogous equitable compensation for loss put pressure on the fiduciary to eschew efficient breach and instead to serve the entrustor with loyalty — without searching for unauthorised personal gain, without weighing the cost - benefit of compliance, and without the distraction of rival interests. Such unrelenting pressure changes the incentives of the trustee or fiduciary so that the entrustor can vest the fiduciary with discretions without having to closely monitor operational decisions. Fiduciary law may be default law subject to voluntaristic renegotiation, but its special modes of formation and enforcement point to its distinctive functions in upholding trust, and it therefore cannot be collapsed into the more familiar obligational categories of contract and tort.10 Fiduciary law is not just a body of default terms allowing easier structuring of correlative legal obligations; it has significant externalities in guaranteeing the health of a For some figures on the scale of wealth extracted from investment management by finance professionals today, see Joshua Getzler, Fiduciary Investment in the Shadow of Financial Crisis: Was Lord Eldon Right ?, 3 J. EQUITY 219, 221 -23 (2009). 9 Frankel, Default Rules, supra note 1, at 1210. 10 For further analysis, see Tamar Frankel, The New Financial Assets: Separating Ownership from Control, 33 SEATTLE U. L. REv. 931 (2010). 976 BOSTON UNIVERSITYLA WREVIEW [Vol. 91: 973 the financial system, maintaining trust in professional and intimate relationships, and even guaranteeing honest service in government. I hope Tamar Frankel will recognize the encapsulation of her views above, which she sets out afresh in her new summa of fiduciary law." There she invokes arguments drawn from law, psychology, anthropology, religion, and general history to support her vision of a fiduciary economy. I wish to elaborate Frankel's insights in a slightly different idiom. History shows us many perspectives on complex legal and social phenomena, and not always those that we expect to fmd. In what follows I purpose to build on Frankel's vision and bring reasons drawn from the doctrinal legal history of early England to further demonstrate why she is right. To start at the public law end of the argument, Frankel has suggested that trust and fiduciary ideas inform constitutionalism, with Locke and the Federalist Papers as stand -outs in use of the language of trusteeship in public office.12 Moreover, she suggests that public law morality can be used to reawaken concepts of loyal service in the private sphere. Just as government officials are entrusted with public power solely for the benefit of the people, so are fiduciaries entrusted with private power solely for the benefit of entrustors.13 That fiduciary notions underpin Western constitutionalism via Locke is just one example of how the fiduciary concept can face in many directions. Scholars have recently observed that within the boundaries of private law, the strong fiduciary duties generated by custodial trust law have been engrafted and exported into many other areas of law, notably in the law of corporations, partnerships, and agency, but also professional, familial, and public contexts.14 This is a good insight, but the "export" metaphor may be framed rather differently. Trusts law — the entrusting of assets and powers by transfer from the beneficiary to the trustee — is not the core. Rather, accountability is the key concept, and historically, account duties spring from English feudal law and society where no neat split could be made between public and private, nor really between property and obligation. To hold land of another was a tight personal bond of fealty between tenant and lord as much as a horizontal relationship between possessor and purchaser or trespasser; and it is in the context of an idealized feudalism that duties of account emerged in agency, bailment, trust, and contract, mirroring the high duties to guard and protect that were woven into tenurial relationships.' 5 A judge generalized the 11 FRANKEL, FIDUCIARY LAW, supra note 1, at Riii. 12 See, e.g., JOHN LOCKE, TWO TREATISES OF GOVERNMENT §§ 149, 156 at 385, 389 (Peter Laslett ed., Cambridge Univ. Press 1988) (1690); see also FRANKEL, FIDUCIARY LAW, supra note 1, at 279 -84. 13 FRANKEL, FIDUCIARY LAW, supra note 1, at 285 -87. 14 See, e.g., Peter Birks, The Content of Fiduciary Obligation, 34 ISR. L. REV. 3, 4 (2000). 11 For overviews of the early common -law account, see J.H. BAKER, AN INTRODUCTION 2011] ACCOUNTABILITYAND COUNTERFACTUAL TRUST 977 point in 1494: "In every case where one has a thing in his keeping, he is chargeable in an action of account if he has it not to his own use. "16 From the Seventeenth Century, account came to be associated with the sophisticated procedures of the equity courts, with the common law turning to use assumpsit to enforce like contractual relationships through trespassory damages. What, then, is this accountability? To account to another is to narrate what happened to the assets or affairs entrusted to you: to give an account of what you did with your trust. On the other side of the relationship, to take an audit is to hear what is told of the assets. Account (as David Seipp rightly says in his essay17) begins in the common law in a parallel legal reform to the action of novel disseisin. This was the royal writ for supervision and enforcement of the feudal relationships of protected possession between lord and tenant, adapting the Roman possessory interdicts into a feudal context. Novel disseisin and its sister writs are commonly seen as the origin of the English common law as a new system of jurisprudence, independent of the ius commune and distinct from French or Germanic custom. The parallel actions of nuisance and account dealt with different mischiefs: nuisance addressed interference in enjoyment of land short of dispossession, and account aimed to correct the problem of substandard stewardship of land by bailiffs entrusted with the business of farming. A bailiff who had control of a farm was expected to run the business for his lord honestly and actively, and would be surcharged for failing to raise crops or collect rents. This required him to make good the missing account entries from his own pocket, or else have wrongful account entries falsified — that is, wrongful disbursements would be cancelled and restoration of the missing assets would be required. The assets of the farm were thereby maintained at their correct level. 18 From "farm" — Latin fundus — meaning the collection of moveable and immoveable assets making up an TO ENGLISH LEGAL HISTORY, 362 -65 (4th ed. 2002); BAKER & MILSOM, SOURCES OF ENGLISH LEGAL HISTORY: PRIVATE LAW TO 1750, at 326 -37 (2d ed. 2010); PAUL BRAND, KINGS, BARONS AND JUSTICES: THE MAKING AND ENFORCEMENT OF LEGISLATION IN THIRTEENTH - CENTURY ENGLAND 62 -69, 348 -61 (2003); S.F.C. MILSOM, HISTORICAL FOUNDATIONS OF THE COMMON LAW, 75 -82, 23543 (1969); THEODORE F.T. PLUCKNETT, THE MEDIEVAL BAILIFF (1954); Steven B. Elliott & Charles Mitchell, Remedies for Dishonest Assistance, 67 MOD. L. REV. 16 (2004), building on Steven B. Elliott, Compensation Claims Against Trustees, ch. 2 (2002) (unpublished Oxford DPhil thesis) (on file in Bodleian Law Library, Oxford); S. J. Stoljar, The Transformations of Account, 80 L.Q. REV. 203 (1964). For a description of the operation of modern equitable accounting, see Robert Chambers, Liability, in BREACH OF TRUST 1, 2 (Peter Birks & Arianna Pretto eds., 2002); Charles Mitchell & Stephen Watterson, Remedies for Knowing Receipt, in CONSTRUCTIVE AND RESULTING TRUSTS 115, 120 -31 (Charles Mitchell ed., 2009). 16 Y.B. 10 Hen. 7, fol. 6a -7a, Mich., pl. 12 (1494) (Eng.). 17 See David J. Seipp, Trust and Fiduciary Duty in the Early Common Law, 91 B.U. L. REV. 1011, 1034 -35 (2011). 18 See WARREN ORTMAN AULT, PRIVATE JURISDICTION IN ENGLAND 97 -125, 142 -44 (1923). 978 BOSTON UNIVERSITYLA WREVIEW [Vol. 91: 973 agricultural unit, we take the word "fund." Fund has come to mean a bracket of value into which assets move in and out.19 What is distinctive about the account remedy is that it generally serves as an enforcement of the primary obligation to manage the fund effectively, involving an order to perform as if the powers of control had been exercised properly all along. Making good wrongful disbursements is not tortious compensation for loss, even though it has compensatory effect; it is rather a substitutive money performance. An accounting order restoring profits that ought to have been earned, or that were earned but kept back instead of being brought into the fund, is in form neither contractual compensation for breached performance nor an action for disgorgement of unjust enrichment, even though it has those effects. An order to produce missing profit is again a substitutive money performance — as if the collection of rents and profits had been done effectively and honestly in the first place. Thus, the accounting process does not remedy simply breach; it reverses or jumps over breach by making a specific performance order, measured as a substitutive money debt to reconstitute the trust funds or restore the fiduciary relationship to the state it ought to have been in. Sometimes the courts do use the language of correcting a breach through account for "wilful default" (a substitutive money order to reconstitute the fund following a failure to get in assets in breach of a duty to so do) or equitable "compensation" (paying over money directly to the victim of a breach of a fiduciary relationship who suffers loss).20 But these can be seen as variants of the core case of common accounting, or narrating the state of the trust relationship and assets, and ensuring a due performance of the primary duties 21 Account to maintain the performance of duties, rather than trespassory damages for harm to rights, is the pre - eminent common law remedy in this context. It presumes the honesty and competence of the agent and asks the agent to act as if all duties had been duly performed. The remedy expresses the right — it is not a reaction to the right being breached. It is a nineteenth - century notion, 19 For further discussion, see Joshua Getzler, Plural Ownership, Funds, and the Aggregation of Wills, 10 THEORETICAL INQUIRIES IN LAw 241, 243 (2009). 20 See infra note 21. 21 Chambers, supra note 15, at 7 -12, argues for separation of the categories of common account and account for wilful default, both of which restore the trust, and equitable compensation, which provides a secondary remedy, arguing also that each turns on a breach of trust or duty. Damages rather than account are ordered to be paid where, for example, the trust has ended or the fiduciary relationship does not entail any custodial account capable of restoration. Others have argued that no breach is required for common account. See Mitchell & Watterson, supra note 15, at 120 -27. I have argued that the impulse for each of these remedies is basically the same whether put in primary, secondary, strict, or fault liability terms. Joshua Getzler, Am I My Beneficiary's Keeper? Fusion and Loss -Based Fiduciary Remedies, in EQUITY IN COMMERCIAL LAw 239, 251 (Simone Degeling & James Edelman eds., 2005); Joshua Getzler, Equitable Compensation and the Regulation of Fiduciary Relationships, in 1 RESTITUTION AND EQUITY: RESULTING TRUSTS AND EQUITABLE COMPENSATION 235, 236 -37 (Peter Birks & Francis Rose eds., 2000). 2011] ACCOUNTABILITYAND COUNTERFACTUAL TRUST 979 popularised by John Austin, that a breached primary obligation always gives rise in a discrete stage of legal analysis to a secondary remedial obligation, whether crafted ex ante by the parties (pre- estimated damages, deposits, and so on), or imposed by the courts. In earlier law the substantive right, the remedy, and the writ of action to assert the right and seek the remedy, were not so easily divided, and this is not, pace Henry Maine, because substantive rights were an epiphenomenon of the forms of action in an unevolved system.22 It is simply a different method of legal thinking. We can see account ideas expressed in contract cases down to the mid- Nineteenth Century. Thus, the great common -law judge Baron Parke stated in 1848: "The rule of the common law is, that where a party sustains a loss by reason of a breach of contract, he is, so far as money can do it, to be placed in the same situation, with respect to damages, as if the contract had been performed. "23 But the notion of damages for loss caused by breach soon after displaced this concept of substitutive performance. The concept of accounting, or keeping up due performances in a continuous relationship of stewardship over property or powers, is found in other parts of the old common law. On the contract side, the writ of account was a popular alternative to writs of covenant and debt down to 1600, used particularly for enforcing continuous contractual relationships.24 On the estate law side, the Magna Carta of 1215 and the Statute of Marlborough of 1267 codified the practice whereby lords who took guardianship of a minor heir's socage lands (the standard non - military tenure) would have to account for all estate profits made where the minor had reached the age of fourteen, and avoid wasting or appropriating the value of the land.25 In another stream of law, the church courts enforced accounting of executors charged with the management and disposition of the chattels of deceased estates; as Richard Helmholz has shown, this was a potent source of fiduciary accounting ideas for early chancery enforcement of uses.26 I would argue that by the time the Court of Chancery 22 Cf. SIR HENRY SUMNER MAINE, ON EARLY LAW AND CUSTOM 389 (London, John Murray 1890). 23 Robinson v. Hannan, (1848) 154 Eng. Rep. 363, 365 (emphasis added). For an argument that modern law should reproduce the substitutive performance idea for contracts, and has been doing so in the past decade and a half in many cases, see James Edelman, Money Awards of the Cost of Performance, 4 J. EQUITY 122 (2010), available at http: / /ssm.com/abstract--1697669. 24 BAKER, AN INTRODUCTION TO ENGLISH LEGAL HISTORY, supra note 15, at 362 -78. 21 BRAND, supra note 15, at 348 -61; Antonio Buti, The Early History of the Law of Guardianship of Children: From Rome to the Tenures Abolition Act 1660, 7 U. W. SYDNEY L. REV. 91, 97 -100 (2003). 26 1 R.H. HELMHOLZ, THE OXFORD HISTORY OF THE LAWS OF ENGLAND: THE CANON LAW AND ECCLESIASTICAL JURISDICTION FROM 597 To THE 1640s, at 421 -23 (2004); R. H. Helmholz, The Early Enforcement of Uses, 79 CoLUM. L. REV. 1503, 1504 (1979); Richard Helmholz, Trusts in the English Ecclesiastical Courts 1300 -1640, in ITINERA FIDUCIAE: TRUST AND TREUHAND IN HISTORICAL PERSPECTIVE 153, 157 -60 (Richard Helmholz & 980 BOSTON UNIVERSITYLAWREVIEW [Vol. 91: 973 was regularly enforcing uses of land from the Fifteenth Century, it could draw on a body of fiduciary accounting ideas to add to its own distinct theory of holding of land subject to duties of equitable conscience. The "holding to the use of idea then spread into other parts of property and contract, with equitable in personam orders of specific performance and rescission helping to enforce trust and contract claims and binding successor third parties to respect beneficial interests. Why is the medieval history important? My answer is that it shows how the accounting duties of fiduciaries come first, as emanations of royal enforcement of the feudal economy of entrustment of powers. This idea is then applied to estates, giving rise to the trust, and then to continuous contractual relationships such as agencies, which further build up the power and defmition of fiduciary doctrine. Chancery takes over the enforcement of such duties, but does not invent them; fiduciary law is not intrinsically "equitable. "27 Putting it another way, the trust is a particular instantiation of fiduciary law; fiduciary law is not an offshoot of trusts law. All of this fiduciary law works according to the idea that equity typically enforces a primary performance interest, as if the fiduciary were honest and capable, through the positive accounting remedies, notably disgorgement and surcharge remedies, and specific performance. This body of law also strikes down actions that are beyond power, by avoidance, rescission, and the falsification of account remedy. The compensatory, deterrent, and prophylactic effects of equitable orders are side products of the primary performance mechanism. A fiduciary must compensate for losses flowing from breach on a but -for causal basis, without reductions for contributory fault or remoteness, and a fiduciary cannot profit from any conduct in breach of loyalty and single- minded promotion of the beneficiary's interests. These remedies are applied not as sanctions but rather because one is prevented from carrying out one's breach. This explains the persistence of but -for causal measures of liability; for example, you cannot speculate about contributory causes of loss if you are simply required to perform your duty to correct the loss, and you cannot claim as of right a proportionate share of profits created by your own efforts where breach of fiduciary duty was a material source of the profit.28 And, at least classically, if not in North American law, one cannot be attached with penal damages to remedy an egregious breach of fiduciary Reinhard Zimmermann eds., 1998). 27 See, e.g., 2 HENRY BALLOW, A TREATISE OF EQUITY 178 -90 (John Fonblanque ed., 1794). 28 Regal (Hastings) Ltd. v. Gulliver, [1967] 2 A.C. 134 (H.L.) (appeal taken from Eng.); Phipps v. Boardman, [1967] 2 A.C. 46 (H.L.) (appeal taken from Eng.). But cf. Murad v. Al- Saraj, [2005] EWCA (Civ) 959, [85] (Eng.); Warman Int'1 Ltd. v Dwyer (1995) 182 CLR 544, 561 (Austl.) ( "In the case of a business it may well be inappropriate and inequitable to compel the errant fiduciary to account for the whole of the profit of his conduct of the business or his exploitation of the principal's goodwill over an indefinite period of time. In such a case, it may be appropriate to allow the fiduciary a proportion of the profits, depending upon the particular circumstances. "). 20111 ACCOUNTABILITYAND COUNTERFACTUAL TRUST 981 duty (though such damages may apply concurrently to address dishonest, as opposed to presumptive, fraud).29 We began with the Lockean idea of public trust, of duties of selfless and loyal service informing the vertical contract between government officials and the people. Frankel reminds us in her treatise just how radical in its time was the Lockean model of the fiduciary government official who served the public.30 Public offices were once owned and even inherited as capital investments bought in anticipation of fee income, and bequeathed as valuable income streams to heirs. Frankel argues that fiduciary law in the early modem period transformed the concept of an office by cutting away the self - interest, leaving a powerful obligation of service to the public.31 Two ideas complete this story. First, the concept of holding an office stripped of self - interest could plausibly be the very definition of what it means to be a fiduciary. It is quite easy for civilian lawyers (more accurately, lawyers working in cross -bred civil/common law jurisdictions such as Quebec, Scotland, and South Africa) to see fiduciary duties as an office enwrapping the officeholder with duties, a superimposed personal role recognized by law. We take these ideas from the classical concept of officium, the sense of duty belonging to a person with recognized responsibilities.32 So for a fiduciary, holding such an office accents and shapes all the relevant duties, positive and negative, that are owed by the fiduciary to a beneficiary. The conception of a fiduciary office arises especially in the context of executorship,33 and it is increasingly used by modem civilian analysts to find a place between property and contract that does not require the evocation of artificial legal personality to explain the asset - partitioning magic of the trust.34 So fiduciary office becomes a useful 29 See Vyse v. Foster, (1872) 8 Ch.App. 309, 333 (James L.J.) (Eng.); see also Harris v Digital Pulse Pty. Ltd. [2003] 56 NSWLR 298, 407 (Heydon, JA) (Austl.). 30 FRANKEL, FIDUCIARY LAW, supra note 1, at 279 -84. 31 Id. 32 The locus classicas is of course MARCUS TULLIUS CICERO, DE OFFICIIs 6 (Arthur L. Humphreys 1902) (44 B.C.E.), which for centuries provided a foundation in Europe for the education of persons preparing for a legal career, not least John Scott and later Lord Eldon, who wrote a lengthy paraphrase of De Officiis as a young student in the 1760s. See A Catalogue of Lord Chancellor Eldon's Law Books, GEORGETOWN LAW LIBRARY, http: / /www.1l.georgetown.edu /special /eldon/eldontitles.cfm. 33 See A.M. HONORS, SOUTH AFRICAN LAW OF TRUSTS 74 (1966); Michele Graziadei, The Development of Fiducia in Italian and French Law from the 14th Century to the End of the Ancien R6gime, in ITINERA FIDUCIAE: TRUST AND TREUHAND IN HISTORICAL PERSPECTIVE, supra note 26, at 327, 333 -35; Tony Honor6, Trust, in SOUTHERN CROSS: CIVIL LAW AND COMMON LAW IN SOUTH AFRICA 849, 859 (Reinhard Zimmermann & Daniel Visser eds., 1996); Maurizio Lupoi, Trust and Confidence, 125 L.Q. REV. 253, 278 (2009); Tony Honor6, On Fitting Trusts into Civil Law Jurisdictions 7 (Oxford Univ. Legal Research Paper Series, Paper No. 27/2008, 2008), available at http: / /ssm.com/abstract-- 1270179. 31 See generally George L. Gretton, Trusts Without Equity, 49 INT'L & COMP. L.Q. 599 982 BOSTON UNIVERSI-TYLAWREVIEW [Vol. 91: 973 concept not only for export of loyalty duties into government roles, but also for explaining fiduciary duties in their core territory of private law. The second idea about the role of office - holding is that fiduciary law historically attained a deeper self - consciousness when legal officials in the early modern state perceived irreconcilable tensions between self - interest and specifically judicial propriety. In an interesting dialectic, the judiciary intensified fiduciary law for private actors when the judicial apparatus of the state saw the need to cleanse itself of self - interest. The guardians of the legal system had to learn to guard against themselves, and thereby set an example to the rest of the populace. The discovery of fiduciary morality did not come easily, and there were some spectacular fallings -down. It is well -known that Lord Chancellors who presided over the trusts and estates system, as practicing politicians wielding a relatively free discretion over Chancery decrees, were regularly impeached for corruption or misfeasance. In part this was common - law resentment of Chancery interference in the legal process, but there could be fire beneath the smoke. Francis Bacon was forced out of the Chancellorship in 1621, partly for accepting bribes that exceeded even the Elizabethan and Stuart courts' lax norms. His defense was that, while he took gifts from parties in disputes over estates, he did not let the gifts cloud or influence his judgments.35 I do not think he was trying to be ironic; rather, he saw the gifts as an acceptable emolument of office. Bacon died of a chill five years later, after stuffing a chicken with snow in a pragmatic experiment in food preservation by refrigeration, and perhaps we can thank his prosecutors for releasing his energies for science and philosophy in his later years.36 A century after Lord Chancellor Bacon's fall, another chancellor, Lord Macclesfield, was impeached for corruption, and fiduciary law again was at the heart of the conviction. The story is little known and well worth recounting.37 By the early 1700s, the Court of Chancery was acting as an investment conduit, a kind of semi - official fidelity fund and pension broker, channelling trust estates and fortunes into the informally approved funds of the new Bank of England and the other "monied" companies such as the East India Company. Unfortunately, in the years running up to 1720, the South Sea Company was a special investors' favorite, and Macclesfield allowed himself and the Masters of Chancery to lift suitors' funds from the court and invest them in the South Sea Bubble on their own personal account. Macclesfield's defense was that he could justly keep the profits since he would personally be (2000); Lionel D. Smith, Trust and Patrimony, 38 REvuE GENERALE DE DROIT 379 (2008). 31 Markku Peltonen, Bacon, Francis, Viscount St Alban (1561 - 1626), in OXFORD DICTIONARY OF NATIONAL BIOGRAPHY (Oxford Univ. Press 2004), available at http://www.oxforddnb.com/view/article/990. 36 Id. 37 Here I draw on my essay, Joshua Getzler, Rumford Market and the Genesis of Fiduciary Obligations, in MAPPING THE LAW: ESSAYS IN MEMORY OF PETER BIRKS, 577 -98 (Andrew Burrows & Alan Rodger eds., 2006). 20111 ACCOUNTABILITYAND COUNTERFACTUAL TRUST 983 liable for any losses on the writ of account; in effect the argument was that he who has the risk pockets the gains, an argument that had been run for executors in past case law.38 All the capital taken from Chancery funds was lost when the Bubble burst in 1720, and Macclesfield's risk -based argument for investor protection proved useless in the face of the systemic insolvency that resulted; the errant fiduciaries were in no position to personally account for the losses. Enter Peter King, a Whig parliamentarian and lawyer who had risen through the Court of Common Pleas and was thus removed from the lax culture of the Chancery. As a member of Parliament, King had long criticized tory and Crown officials for their corruption and incompetence in service to the public. He particularly opposed the sale and pecuniary exploitation of public offices. The tory court of Queen Anne opposed his promotion as a Crown law officer, but George I appointed him Chief Justice of the Court of Common Pleas in 1714. He tried the Jacobite rebels with mercy and humanity, and took his place in the line of gifted lawyers from Holt to Mansfield with his creative decisions in commercial law. It was Chief Justice King who presided over Macclesfield's impeachment in the Lords, and he was appointed to succeed the disgraced judge as Lord Chancellor in 1725, with a brief to restore the reputation and effectiveness of the Court of Chancery. Lord Chancellor King refused to follow the practice of selling the Chancery masterships as capital investments, but added £12,000 to his £6,000 public pension in substitution for that questionable income stream. He required that litigants' monies be paid into a separate fund of the Bank of England, appointed an accountant to control all payments and securities brought into court, and took measures to indemnify any suitor whose money was lost by an official's bankruptcy or insolvency. King may have instigated moves by Parliament in the 1730s to have all legal proceedings conducted in English and to control the exorbitant expenses and delays of litigation in equity and the common law.39 It is Lord Chancellor King who crystallized the idea that a fiduciary assumes an office that permits no profit or conflict of interest. From the time of his appointment to the chancellorship in 1725, and indeed for nearly a century to follow, the business classes of England were still reeling from the disintegration of confidence in the capital markets following the South Sea Bubble of 1720.40 The peculations of the Chancery masters were only one 38 See, e.g., Linch v. Cappy, (1680) 22 Eng. Rep. 834, 834; 2 Chan. Cas. 35, 35; Grosvenor v. Cartwright, (1679) 22 Eng. Rep. 827, 827; 2 Chan. Cas. 21, 21; cf. Ratcliff v. Graves, (1683) 22 Eng. Rep. 890, 890 -91; 2 Chan. Cas. 151, 152 (Lord Keeper North). These cases are discussed in THOMAS LEWIN, PRACTICAL TREATISE ON THE LAW OF TRUSTS AND TRUSTEES 326 -27 (London, A. Maxwell 1837). 39 See Getzler, supra note 37, at 581 -85. 40 The impact of the Bubble on the law is examined in RON HARRIS, INDUSTRIALIZING ENGLISH LAW: ENTREPRENEURSHIP AND BUSINESS ORGANIZATION, 1720 -1844, at 60 -81 (2000). Certainly the events of 1720 reached into the minds of trusts lawyers. Lord Chancellor Hardwicke wryly commented, "But it is well known, that during the golden dream, people were so infatuated as to look upon imaginary wealth as equally valuable with 984 BOSTON LTNIVERSITYLAW REVIEW [Vol. 91: 973 small element in those losses, but just in this instance the losses in the 1720 crash produced a defalcation of some £100,871 of suitors' payments into court, a staggering sum for that period — £ 160 million (equivalent to approximately $260 million USD) in today's money calculated on an average income index 41 This was failure enough to cause an abrupt change of course in the practices of the Chancery Court. King's attacks on the sinecurism, speculation, and corruption of the officials of Chancery came with a new prophylactic policy announced at the start of his chancellorship, which involved a run of stringently moralistic decisions disciplining trustees, guardians, co- owners, mortgagees, and so on.42 The culmination was the celebrated decision of Keech v. Sandford, which held that where a trustee takes a profit from office, it is to be surrendered on account or constructive trust, without proof of fraud, and without any defense that the profit was not at the expense of any opportunity to the beneficiary or had caused the beneficiary no loss.43 This "no further inquiry" principle has been attacked as too stringent a clamp on the activity of trustees and fiduciaries, which could inhibit their serving the best interests of entrustors.44 What is less well -known about Keech is that the pleadings alleged that the trustee had stolen trust funds and bribed the counterparty to deny estate benefits to the beneficiary and offer them instead to the fiduciary.45 Lord King stated: "I do not say there is a fraud in this case "46 because the facts of fiduciary profit - taking so easily raised a presumption of propriety; he did not have to spell out the fraud in the case before him because everyone in court knew what was being alleged. Although the case deserves its celebrity, it is to this day not fully understood. We can fmd plentiful evidence that scandals in the public sphere often led to tightening of fiduciary regulation across the board. Another important conduit so much money." Jackson v. Jackson, (1737) 26 Eng. Rep. 324,325; 1 Atk. 512,514 (Lord Hardwicke L.C.) (Eng.). He refused to compensate beneficiaries' losses in the Bubble where trustees acted as investment agents. Id. at 324; 1 Atk. at 512. 41 1 WILLIAM HOLDSWORTH, A HISTORY OF ENGLISH LAW 439 -42 (A.L. Goodhart & H.G. Hanbury eds., 7th ed. 1982). 41 See, e.g., Macarte v. Gibson, (1725) 25 Eng. Rep. 217, 217; Sel. Cas. T. King 50, 50- 51; Comb's Case, (1725) 25 Eng. Rep. 214, 214; Sel. Cas. T. King 46, 46; Wood's Case, (1725) 25 Eng. Rep. 214, 214; Sel. Cas. T. King 46,46; Pugh v. Ryal, (1725) 25 Eng. Rep. 211, 211; Sel. Cas. T. King 41, 41; Eden v. Foster (Case of Birmingham School), (1725) 25 Eng. Rep. 208, 210; Sel. Cas. T. King 36,39; Western v. Cartwright, (1725) 25 Eng. Rep. 207, 208; Sel. Cas. T. King 34, 36; Whitackre v. Whitackre, (1725) 25 Eng. Rep. 195, 195; Sel. Cas. T. King. 13, 13. 43 Keech v. Sandford, (1726) 25 Eng. Rep. 223, 223; Sel. Cas. T. King 61, 62. 44 John H. Langbein, Questioning the Trust Law Duty of Loyalty: Sole Interest or Best Interest ?, 114 YALE L.J. 929, 952 (2005). 4s Bill and Answer, Keech v. Sandford, Public Records Office Series C.11 2007/25, June 1724, reprinted in Dennis R. Paling, The Pleadings in Keech v. Sandford, 36 CoNv. & PROP. LAw (n.s.) 159, 162 -74 (1972). 41 Keech, 25 Eng. Rep. at 223; Sel. Case. T. King at 62. 2011] ACCOUNTABILITYAND COUNTERFACTUAL TRUST 985 was the charitable trust and the chartered corporation, where funds and entities were constituted for public ends such as infrastructural development, municipal and colonial government, and welfare functions. Major defalcations occurred in cases such as Charitable Corp. v. Sutton, 47 a savings- and -loan style scam of 1742 where over £300,000 was embezzled (nearly half a billion pounds, or $800 million USD, in today's money terms), or York Buildings Co. v. Mackenzie '48 a 1795 case involving delinquency in the running of a court- ordered auction of a large insolvent estate which led to a vast undervaluing of the assets. These scandalous cases were important staging posts in the crystallization of modem fiduciary doctrine. One further case of the following century may be instructive. One Justice Albert Cardozo, a judge of the Supreme Court of New York, was disgraced and driven from office in 1868 when it emerged that he had been suborned by business interests during the battles over the Erie Railway.49 It may be no accident that he had a lawyer son who much later penned one of the most powerful and demanding formulations of fiduciary doctrine in common -law history.5o It has been said that fiduciary law has been caught between the strategies of disempowering the fiduciary by setting limits to capacity, and of applying ex post requirements that the fiduciary should use his or her wide powers to seek the beneficiary's best interests, or at least refrain from conflicted behavior that undercuts best interests.51 Robert Sitkoff has elegantly restated this thesis using a law- and - economics idiom.52 But perhaps this model too needs some historical tweaking. English law classically spoke of disabilities and limits to power, and by the time of Lord Mansfield had already invented a plethora of tests for the proper exercise of powers that preserved the validity of such actions at law, but that rendered transactions subject to avoidance in equity at the suit of the beneficiary. Third parties could find their acquired rights under impeached transactions vulnerable, but could establish priority and render the beneficiary right defeasible by suitable defenses, notably innocent acquisition for value. The remedy that is especially associated with enforcement of 47 (1742) 26 Eng. Rep. 642, 642; 2 Atk. 400,400 (Lord Hardwicke L.C.). 48 [1795] 3 Eng. Rep. 432, 446; 8 Brown 42, 65 (Scot.); see also Whichcote v. Lawrence, (1798) 34 Eng. Rep. 856, 856; 1 Ves. Jun. Supp. 422, 422 (Loughborough L.C.). 49 See Geoffrey P. Miller, A Glimpse of Society via a Case and Cardozo: Meinhard v. Salmon, in THE ICONIC CASES IN CORPORATE LAW 12, 23 (Jonathan R. Macey ed., 2008) (citing RICHARD A. POSNER, CARDOZO: A STUDY IN REPUTATION 2 (1990)). Richard Posner has valuable insights into Benjamin Cardozo's fiduciary concepts in POSNER, supra, at 105. " See Meinhard v. Salmon, 164 N.E. 545 (N.Y. 1928). 51 For a detailed defense of this approach, see MATTHEW CONAGLEN, FIDUCIARY LOYALTY: PROTECTING THE DUE PERFORMANCE OF NON - FIDUCIARY DUTIES 1 -6 (2010). 52 Robert H. Sitkof, , The Economic Structure of Fiduciary Law, 91 B.U. L. REV. 1039 (2011). 986 BOSTON UNI VERSITY LA W RE VIE W [Vol. 91: 973 fiduciary obligation, profit - stripping, can be seen alternatively as rescission of wrongful transactions, treating the transactions as if they had not occurred (with injunction as a future- oriented variant) or else as ratification, or post - facto authorization, of wrongful actions and adoption as if they were acts done for the trust. The beneficiary thus polices the fiduciary through constant measurement of the manner in which power is exercised — not just the limits or outer scope of that power, as in classical corporate ultra vires. We can see how the control of powers of charitable and municipal corporations in Lord Mansfield's time leaked from Chancery to the King's Bench and so laid the foundations for judicial review of public powers.53 This indicates another historical cross -over that buttresses Frankel's argument about the importance of public office in forcing fiduciary notions into their modern form. One of the hottest topics in modern fiduciary law is how consent may be inferred from formal or informal agreement or from business context so as to displace or read down the scope and intensity or even the very existence of fiduciary loyalty duties. If we see such duties as based on office or status relationships, bringing stringent regulation of associated powers through the accounting technique of primary enforcement, then the fiduciary standard of full subjective understanding of the terms of engagement will apply to any downgrading of fiduciary expectations. Lord Eldon, in the classic 1802 case of Ex parte Lacey, explained how fiduciary law worked when dealing with a trustee who bid to buy for himself the trust property he was selling at an open auction, and his judgment explains with great clarity and power both the primary enforcement technique and the centrality of informed consent: The rule I take to be this; not, that a trustee cannot buy from his Cestuy que trust, but, that he shall not buy from himself.... A trustee, who is entrusted to sell and manage for others, undertakes in the same moment, in which he becomes a trustee, not to manage for the benefit and advantage of himself. It does not preclude a new contract with those, who have entrusted him. It does not preclude him from bargaining, that he will no longer act as a trustee. The Cestuys que trust may by a new contract dismiss him from that character: but even then that transaction, by which they dismiss him, must according to the rules of this Court be watched with infinite and the most guarded jealousy; and for this reason; 53 In R v. Windham, (1776) 98 Eng. Rep. 1139, 1140 (K.B.); 1 Cowp. 377, 378 -79, Lord Chief Justice Mansfield investigated the interplay between the common -law prerogative writs and fiduciary and equitable remedies that could be levied against officers of a corporation with public functions (in this case, Wadham College, Oxford). See also Charitable Corp. v. Sutton, (1742) 26 Eng. Rep. 642; 2 Atk. 400 (Lord Hardwicke L.C.); 9 Mod. 349; Julius v. Lord Bishop of Oxford, [1880] 5 L.R.E. & I. App. 214 (H.L.) 228 (appeal taken from Eng.) (denying a writ of mandamus where a bishop had to exercise his discretion); Darley v. Regina, [1845 -46] 8 Eng. Rep. 1513 (P.C.) 1521 -22 (appeal taken from Ir.). 2011] ACCOUNTABILITYAND COUNTERFACTUAL TRUST 987 that the Law supposes him to have acquired all the knowledge a trustee may acquire; which may be very useful to him; but the communication of which to the Cestuy que trust the Court can never be sure he has made, when entering into the new contract, by which he is discharged. I disavow ... that the trustee must make advantage. I say, whether he makes advantage, or not, if the connection does not satisfactorily appear to have been dissolved, it is in the choice of the Cestuy que trusts, whether they will take back the property, or not; if the trustee has made no advantage. It is founded upon this; that though you may see in a particular case, that he has not made advantage, it is utterly impossible to examine upon satisfactory evidence in the power of the Court, by which I mean, in the power of the parties, in ninety-nine cases out of an hundred, whether he has made advantage, or not. Suppose, a trustee buys any estate; and by the knowledge acquired in that character discovers a valuable coal -mine under it; and locking that up in his own breast enters into a contract with the Cestuy que trust: if he chooses to deny it, how can the Court try that against that denial? The probability is, that a trustee, who has once conceived such a purpose, will never disclose it; and the Cestuy que trust will be effectually defrauded.54 More recently, the problem of fiduciaries preying upon entrustors was rehearsed in relation to the Crown as a governmental fiduciary in the 1977 case of Tito v. Waddell (No. 2).55 The United Kingdom Crown government had made undertakings in the early Twentieth Century to the natives of an island to restore the island to habitability after strip- mining it for phosphates and to share the mining royalties.56 The Crown was the direct sovereign with strong prerogative powers over the government of the island territory. Over a long stretch of time, the Crown negotiated for further land acquisition and a shaving back of the royalties due, which were now paid into a collective fund controlled by the Crown. When the time came to perform the promised duty of restoring the island, the Crown preferred to pay damages for efficient breach, which was much cheaper than the promised restoration. The natives sued the Crown as fiduciary, inter alia, for breach of the fair dealing and self - dealing rules. Vice - Chancellor Megarry refused relief on the basis that the Crown was immunized by a sovereign immunity from fiduciary duty, a decision controversial to this day. For our purposes, the case is fascinating for its revival of the older techniques of avoidance and rescission to enforce fiduciary duty. Vice - Chancellor Megarry listed the remedies under two heads: " Ex parte Lacey, (1802) 31 Eng. Rep. 1228 -29; 6 Ves. Jun. 626 -27; see also York Bldg. Co. v. Mackenzie, [1795] 3 Eng. Rep. 432, 449; 8 Brown 42, 69 (Scot.). 55 [1977] Ch. 106 (Eng.). 56 Id. at 125 -46. 988 BOSTON UNIVERSITYLAWRE VIE W [Vol. 91: 973 (1) The self - dealing rule: if a trustee purchases trust property from himself, any beneficiary may have the sale set aside ex debito justitiae, however fair the transaction. (2) The fair - dealing rule: if a trustee purchases his beneficiary's beneficial interest, the beneficiary may have the sale set aside unless the trustee can establish the propriety of the transaction, showing that he had taken no advantage of his position and that the beneficiary was fully informed and received full value.... [ T]hese rules, or either of them, apply not only to trusts but also to other cases where there is a fiduciary relationship, springing perhaps from agency, or partnership or membership of a committee of inspection in bankruptcy ....57 The stronger first case rests on the ultra vires conduct of a trustee taking a legal title to himself purged of the inconsistent beneficial interest. The weaker second case involves equitable rescission of a positive dealing in the beneficial interest, which is inimical to the fiduciary relationship. Again, it is ultra vires to so meddle with the beneficial interest, and the trustee is made to act as if the wrongful sale is never made. Whatever the equities of the actual case, it demonstrates that the old rescissionary remedies are not archaic rules but rather provide the core of modern equitable remedies for abuse of fiduciary office 58 Tamar Frankel has described how different federal and state courts have grappled with these very same problems of finding a language to explain the identification, the content, and the remedying of fiduciary duties in modern American law. She is right to argue that the characterization of fiduciary standards and procedures is not just a policy choice, but an architectural choice about how our law fits together. In this paper, I have tried to suggest the importance of knowing how the common law and Chancery courts historically evolved the structure of fiduciary rights and remedies, and I suggested how the historical material continues to shape what courts do. These long centuries of evolved doctrine amount to "unknown knowns," a body of law dimly recollected but largely forgotten. It is well worth recovering. But we can also put the case using the language of modern law and economics. Fiduciary law might be the sole living example of the "penalty default rule" construct identified by Ian Ayres and Robert Gertner in a controversial paper two decades ago.59 They postulated a rule that perhaps the majority of market 57 Id. at 225. 58 Cf. CONAGLEx, supra note 51, at 125 -39 (relying on cases extending back to the 1700s to explain the development of the fair - dealing rule); Matthew Conaglen, A Re- Appraisal of the Fiduciary Self - Dealing and Fair - Dealing Rules, 65 CAMBRIDGE L.J. 366, 368 (2006) (arguing that both the self - dealing rule and the fair - dealing rule represent applications of the fiduciary conflict principle). 11 Ian Ayres & Robert Gertner, Filling Gaps in Incomplete Contracts: An Economic 2011] ACCOUNTABILITYAND COUNTERFACTUAL TRUST 989 actors would not have chosen because it sets duties too high or too low. The default rule is therefore perceived to be a "penalty," an unacceptable equilibrium to be contracted away from. The search for a new equilibrium encourages release of information and revelation of preferences by self -aware and rational actors, who will renegotiate terms and tailor the level of protection to their special needs. In fiduciary law, the default rule can set high protections against conflict of interests and duties, perhaps too high for most sophisticated actors to be comfortable; the parties are thus free to adapt these rules where this brings them countervailing advantages. The law can then leave in place a highly protective default position for less sophisticated actors who cannot easily bargain or do not know which equilibrium to bargain for. Moral hazard and temptation to abuse fiduciary power by redrawing relationships in favor of the fiduciary is reduced when the law applies stringent disclosure rules to ensure that any departures from the default rule are well - understood and consent is well - informed. The costs of forcing many or most parties to bargain around the over - stringent fiduciary default position is therefore justified because the payoff to individuals and society of honest and faithful service is very high.60 The parties face a tradeoff between moral hazard in trusting the other side and freedom to act in transacting with the other side and third parties. Fiduciary disclosure and consent rules ensure that the balance of risk and protection is set to the level the parties actually accept, with full information and eyes wide open; absent such consent, the default position should be very demanding of the fiduciary. In other words, a fiduciary standard is applied to attempts to vary the fiduciary standard, a kind of double entrenchment that still permits ready enough variation if the parties truly wish it. There may be a good case for setting efficient rather than penalty default rules in normal contracting, where the majority of parties do not win much value from having to release information and dicker over the precise setting of contractual standards. Objective consent there suffices to shift the goalposts 61 But in long -term discretionary fiduciary relationships, where value is easily destroyed or appropriated by opportunistic agents, it is important that the law help the parties set workable incentives. This means that parties should be encouraged in the first instance to bond to give up self - interest and divided loyalties as a condition of service, with consensual variation of reduced protection being permitted but relatively much harder to attain than in shorter term contracts. The courts should not allow informed consent to turn into a merely formal process, and as we have seen, there are plenty of historical precedents as well as abstract arguments to help them hold Theory of Default Rules, 99 YALE L.J. 87, 91 (1989). 60 CoNAGLEN, supra note 51, at 214 -21 (quoting Michael Whincop, Of Fault and Default: Contractarianism as a Theory ofAnglo- Australian Corporate Law, 21 MELB. U. L. REv. 187,207 (1997)). 61 See Eric A. Posner, There Are No Penalty Default Rules in Contract Law, 33 FLA. ST. U. L. REv. 563, 587 (2006). 990 BOSTON UNIVERSITYLAWREVIEW [Vol. 91: 973 the line. Understanding that history, as Tamar Frankel demonstrates in her great span of work on fiduciary duties, is an essential prelude to getting the law right. W �� /8 RECOGNIZING "DELIBERATE IGNORANCE" AS A FORM OF KNOWLEDGE IN CUSTOMS FRAUD CASES Michael D. Panzera U.S. Department of Justice Washington, DC The 14th Judicial Conference of the United States Court of International Trade November 6, 2006 New York, New York RECOGNIZING "DELIBERATE IGNORANCE" AS A FORM OF KNOWLEDGE IN CUSTOMS FRAUD CASES by Michael D. Panzera' Trial Attorney Commercial Litigation Branch Civil Division Department of Justice Washington, DC 'The views expressed in this paper are those of the author and not necessarily those of the United States or any of its agencies. I. Introduction On April 5, 2006, the Court of International Trade issued a final judgment against an importer of tracksuits from China, Thomas Man Chung Tao, awarding the United States $1,844,284.78, as well as interest in the amount of $1,791,115.37, to compensate for losses in revenue stemming from Mr. Tao's illegal importation of merchandise by means of falsified entry documents prepared by Mr. Tao's broker. See United States v. Pan Pacific Textile Group, Inc., Slip. op. 06 -18 (CIT Jan. 31, 2006) (accepting the Government's calculation and fixing defendants' liability for unpaid duties, plus interest as provided by law). This judgment established the amounts owing to the Government based upon a previous decision, United States v. Pan Pacific Textile Group, Inc., 395 F. Supp. 2d 1244, 1254 -55 (CIT 2005) ( "Pan Pacific "), in which the Court held that, among other things, the agency principle of imputation may be applied in actions brought pursuant to 19 U.S.C. § 1592 to establish an importer's liability for actions of a customs broker making entries on behalf of the importer. The Court reasoned that the purpose underlying imputation is "to protect innocent third parties or ... to prevent principals from benefiting at the expense of innocent third parties." Id. (citing Bankers Life Ins. Co. ofNeb. v. Scurlock Oil Co., 447 F.2d 997, 1005 (5th Cir. 1971)). The Court further noted that "the United States Court of Appeals for the Federal Circuit has previously indicated that, rather than force the government (as third party) to bear the loss resulting from unpaid duties, it is preferable to extend liability for unpaid duties to an innocent party who is nonetheless `traditionally liable' for such payment. Id. (citing United States v. Blum, 858 F.2d 1566, 1570 (Fed. Cir. 1988) (footnote omitted). The Court concluded that "extending liability to defendants in this case achieves the public policy goals underlying both 2 traditional agency principles and the Blum court's reasoning." Id. The Court also explained that the applicability of agency imputation principles is particularly appropriate in the context of Customs penalty cases: Id. [T]he Court's holding in this case serves an additional public policy interest by creating proper incentives for importers in the future. If the Court were to allow defendants to immunize themselves from liability for customs violations by hiring a customs broker and transferring importer of record status, the Court would effectively create an incentive for bad behavior. Allowing such protection for importers would discourage care on their part in selecting their agents, and would thus provide more opportunity for dishonest middlemen such as [Tao's broker] Juang. Moreover, if importers could lower their costs through unlawful customs transactions without incurring any liability, they would be encouraged to seek brokers willing to commit fraud on their behalf (this case demonstrates that it is possible for both parties to benefit from such an arrangement). In the Court's view, the likely effect of denying liability in this case would be an increase in fraudulent customs transactions. Therefore, the Court concludes that extending liability to defendants for duties unpaid as a result of Juang's fraud is not only well supported by law, but also sound public policy. See TIE Communications. Inc. v. United States, 1994 WL 176918, 18 CIT 358, 366 (1994) (weighing public policy concerns to arrive at disposition in customs case). As explained in greater detail below, the Government had also argued that the incontrovertible evidence demonstrated that Mr. Tao was apprised of highly suspicious irregularities in the manner in which his broker, Mr. Juang, entered the goods upon his behalf, the amounts he was paying, and the documentation that he was receiving. The Government further argued that, nevertheless, Mr. Tao chose not to inquire into the details or the mechanics of how Mr. Juang was in fact entering the goods, and that such admittedly deliberate ignorance is tantamount to knowledge as a matter of law. However, because the Court held that Mr. Juang's fraudulent acts, statements and omissions could be imputed to Mr. Tao as principal, the Court in 3 Pan Pacific did not reach the issue of whether Mr. Tao's admittedly deliberate ignorance regarding material facts surrounding the entry of his merchandise by his broker on his behalf would constitute "knowledge" of fraud as a matter of law. Id. at 1249 n.11. This article summarizes the theory of deliberate ignorance as applied in the context of criminal and civil fraud cases and recommends its application to Customs fraud cases pursuant to section 1592, either through judicial recognition in a future case or amendment to the relevant regulation promulgated by the United States Customs and Border Protection ( "Customs ") II. Relevant Statutory Scheme A. Section 1592 To establish a violation of 19 U.S.C. § 1592, the Government must demonstrate that: (1) " "no person "; (2) "by fraud, gross negligence, or negligence "; (3) "may enter, introduce, or attempt to enter or introduce any merchandise into the commerce of the United States" (4) "by means of any document or electronically transmitted data or information, written or oral statement, or act which is material and false" or "any omission which is material." 19 U.S.C. § 1592(a)(1). Pursuant to the regulation, a violation of 19 U.S.C. § 1592 is fraudulent when "a material false statement, omission, or act in connection with the transaction was committed (or omitted) knowingly, i.e., was done voluntarily and intentionally, as established by clear and convincing evidence." 19 C.F.R. pt. 171 app. B(C)(3) (emphasis added). Thus, the regulation does not specifically require that the Government establish "actual knowledge" for purposes of penalty actions alleging fraud. B. Standard Of Review For claims alleging fraud, "the United States shall have the burden of proof to establish 4 the alleged violation by clear and convincing evidence." 19 U.S.C. § 1592(e)(2). "Although not susceptible to precise definition, `clear and convincing' evidence has been described as evidence which produces in the mind of the trier of fact 'an abiding conviction that the truth of [the] factual contentions are "highly probable. "' Buildex Inc. v. Kason Industries, Inc., 849 F.2d 1461, 1463 (Fed. Cir. 1988) (quoting Colorado v. New Mexico, 467 U.S. 310, 316 (1984)). The Government may establish deliberate ignorance by offering circumstantial evidence. "The record need not contain direct evidence ... that the defendant deliberately avoided knowledge of wrongdoing; all that is necessary is evidence from which the jury could infer deliberate avoidance of knowledge." United States v. Whittington, 26 F.3d 456, 463 (4th Cir. 1994). In determining whether the evidence supports the charge, the evidence and all reasonable inferences that may be drawn from it are viewed in the light most favorable to the government. See United States v. Sharpe, 193 F.3d 852, 871 (5th Cir. 1999). "It is not required that the evidence supporting such an instruction be introduced by the government rather than by the defense." United States v. Bautista, 252 F.3d 141, 147 (2d Cir.2001). III. The Application Of "Deliberate Ignorance" Theory To Establish Fraudulent Knowledge A. The Theory Of "Deliberate Ignorance" Is Widely Accepted In Cases Involving Fraud In Other Contexts 1. Judicial Acceptance Of "Deliberate Ignorance" Theory Of Knowledge The concept of deliberate ignorance (also referred to as "willful blindness" or "conscious avoidance ") generally provides that "if [a defendant] has his suspicions aroused but then deliberately omits to make further enquiries, because he wishes to remain in ignorance, he is deemed to have knowledge." See, e.g., United States v. Prather, 205 F.3d 1265, 1270 (11th Cir. 2000) (quoting United States v. Rivera, 944 F.2d 1563, 1570 (11th Cir. 1991)). Many circuit courts of appeal have generally recognized and applied the theory that, under certain circumstances, the knowledge element of a fraud statute may be proved by demonstrating deliberate ignorance. See, e.g., United States v. Epstein, 426 F.3d 431, 440 -41 (1st Cir. 2005) (money laundering and mail fraud under 18 U.S.C. § 1341, in connection with scheme to defraud timeshare owners.); United States v. Wasserson, 418 F.3d 225, 237 -39 (3d Cir. 2005) (improper disposal of hazardous waste, 42 U.S.C. § 6928(d)); United States v. Zedner, 401 F.3d 36, 50 -51 (2d Cir. 2005) (bank fraud, 18 U.S.C. § 1344); United States v. Freeman, 434 F.3d 369, 377 -78 (5th Cir. 2005) (wire fraud under 18 U.S.C. § 1343, travel fraud under 18 U.S.C. § 2314, and money laundering under 18 U.S.C. § 1957, in connection with defendant's operation of Ponzi scheme that involved telling investors that he would invest their funds in high yield programs or "private placement secured trading programs" involving overseas trades of financial instruments); United States v. Patient Transfer Service, Inc., 413 F.3d 734 (8th Cir. 2005) (false or fraudulent claims involving Medicare, in violation of 18 U.S.C. §§ 2 and 287, and false statements involving Medicaid, in violation of 42 U.S.C. § 1320a -7b.); United States v. Arias, 431 F.3d 1327, 1335 (11th Cir. 2005) (conspiracy to defraud Medicare, 18 U.S.C. § 371); United States v. Collins, 372 F.3d 629, 634 (4th Cir. 2004) (money laundering, 18 U.S.C. § 1956); United States v. Carney, 387 F.3d 436, 448 -49 (6th Cir. 2004) (aiding and abetting the felonious utterance of knowingly false statements by customers in the defendants' firearms transfer records, 18 U.S.C. § 924, and felonious creation or maintenance of willful omissions and /or falsehoods in their firearms transaction records regarding the name, age, and place of residence of firearms purchasers, 18 U.S.C. § 922(b)(5)); United States v. Jaffe, 387 F.3d 677, 681 (7th Cir. 2004) (real estate attorney convicted for wire fraud under 18 U.S.C. § 1343 for financing purchase of a Chicago property with a fraudulently obtained mortgage loan of more than $60,000 for a property worth just $25,000); United States v. King, 351 F.3d 859, 866 (8th Cir. 2003) (conspiracy to violate the Foreign Corrupt Practices Act, 15 U.S.C. § 78dd -1(a), in connection with scheme to bribe Costa Rican officials to obtain valuable land concessions to aid land development project); United States v. Bieganowski, 313 F.3d 264 (5th Cir. 2002) (scheme to defraud medical - insurance companies in violation of, 18 U.S.C. § 1341 and 18 U.S.C. § 1956); United States v. Draves, 103 F.3d 1328 (7th Cir. 1997) (conviction for knowingly using or attempting to use a fraudulently obtained credit card in violation of 15 U.S.C. § 1644(a) and 18 U.S.C. § 2.); United States v. Bussey, 942 F.2d 1241, 1246 (8th Cir. 1991) (conviction for filing false tax returns in violation of 26 U.S.C. § 7206(1); failing to file tax return in violation of 26 U.S.C. § 7203; and filing false statement with Department of Housing and Urban Development in violation of 18 U.S.C. § 1001). 2. Codification Of Deliberate Ignorance Theory Under The False Claims The definition of "knowledge" in fraud statutes may specifically include deliberate ignorance. The False Claims Act ( "FCA "), 31 U.S.C. § 3729(a), applies to false statements that are made knowingly. To establish fraud under the FCA, the Government must establish that: (1) a person presented a claim for payment or approval or to decrease an obligation owed to the Government; (2) at that time, the claim was false or fraudulent; and (3) the person acted knowingly. United States ex rel. A + Homecare, Inc. v. Medshares Mgmt. Group, Inc., 400 F.3d 428, 451 (6th Cir. 2005); see also 31 U.S.C. § 3729(a) (providing for liability under the FCA where a defendant, among other things, "(1) knowingly presents, or causes to be presented, to an officer or employee of the United States Government or a member of the Armed Forces of the United States a false or fraudulent claim for payment or approval; (2) knowingly makes, uses, or causes to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by the Government; ... or (7) knowingly makes, uses, or causes to be made or used, a false record or statement to conceal, avoid, or decrease an obligation to pay or transmit money or property to the Government "). Pursuant to the 1986 amendments to the FCA, a "specific intent to defraud" would no longer be required to satisfy the scienter element. United States ex rel. Taylor v. Gabelli, 345 F. Supp. 2d 313 (S.D.N.Y 2004). "[I]n amending the Act in 1986, Congress explained that ... its purpose in lowering the threshold was to impose upon individuals and contractors receiving public funds `some duty to make a limited inquiry so as to be reasonably certain they are entitled to the money they seek,' and to 'preclude 'ostrich' type situations where an individual has 'buried his head in the sand' and failed to make any inquiry that would have revealed the false claim. "' Id. (quoting S.Rep. No. 99 -345 at 20 -21, reprinted in 1986 U.S.C.C.A.N. 5266, 5285)); see also U.S. v. Hercules. Inc., 929 F. Supp. 1418 (D. Utah 1996) (recognizing that 1986 amendments broadened liability under FCA). "The drafters were especially concerned about "corporate officers who insulate themselves from knowledge of false claims submitted by lower -level subordinates' and as such, drafted the new mens rea requirements to make it more difficult for these officers to avoid liability." Pamela H. Bucy, CIVIL PROSECUTION OF HEALTH CARE FRAUD, 30 Wake Forest L. Rev. 693 (1995) (citing S. Rep. No. 345, 99th Cong., 2d Sess. 7 (1986), reprinted in 1986 U.S.C.C.A.N. 5266, 5272). 8 Consequently, under the current version of the FCA, "knowingly" is defined as "actual knowledge of the information, or with deliberate ignorance or reckless disregard of the truth or falsity of the information." Medshares, 400 F.3d at 451. Specifically, the Government need only establish one of the following: "(1) [the defendant] has actual knowledge of the information; (2) [the defendant] acts in deliberate ignorance of the truth or falsity of the information; or (3) [the defendant] acts in reckless disregard of the truth or falsity of the information ...." 31 U.S.C. § 3729(b). Thus, for purposes of the FCA, "what constitutes the offense is not intent to deceive but knowing presentation of a claim that is either `fraudulent' or simply `false. "' United States ex rel. Hagood v. Sonoma County Water Agency, 929 F.2d 1416, 1421 (9th Cir.1991); see also Lamb Eng'g & Const. Co. v. United States, 58 Fed. Cl. 106 (2003) (holding government contractor liable under FCA where contractor acted knowingly, or in deliberate ignorance with reckless disregard of falsehoods, when it certified contrary to fact that all subcontractors had been paid). B. Criteria Used In Determining The Applicability Of "Deliberate Ignorance" Theory Courts have considered several criteria in determining whether the deliberate ignorance theory may be applied to establish knowledge for purposes of fraud. Courts have held that there is a proper factual basis for a "deliberate ignorance" jury instruction where the evidence supports inferences that: "(1) the defendant was subjectively aware of a high probability of the existence of illegal conduct; and (2) the defendant purposely contrived to avoid learning of the illegal conduct." United States v. Scott, 159 F.3d 916, 922 (5th Cir. 1998). Courts also consider whether the defendant derived a benefit from the fraudulent scheme. 0 1. The Government Must Typically Establish That The Defendant Was, At A Minimum, On Notice Of Facts Underlying Alleged Fraud Several courts have found that fraud is proved where a principal is "on notice" of facts surrounding false statements. See, e.g., Stone v. Lawyers Title Ins. Corgi, 554 S.W. 2d 183, 188 (Tex. 1977) (even though president of company had no actual knowledge of an easement, existence of memorandum disclosing easement put president of title agency "on notice;" misstatement was knowing and fraudulent). The deliberate ignorance instructions has been held appropriate where an employer contends that he the responsibility for the fraud rested solely with his employees and that he knew nothing of their wrong doing. For example, in United States v. Walker, 191 F.3d 326, 337 (2nd Cir. 1999), the Court of Appeals for the Second Circuit held that the instruction was proper where the employer- defendant, charged with making false statements to Immigration and Naturalization Service (INS), had "supervised his employees and occasionally reviewed their completed applications," he was "confronted ... about a false story on [an] application," and he "instructed [an employee] to sign blank forms that later contained a false account of persecution." The Court concluded that "[t]his and other evidence easily supported the inference that even if Walker did not have direct knowledge of the crimes occurring in his office, he deliberately remained ignorant of them." Id. Similarly, the court in Roadmaster Indus., Inc. v. Columbia Manufacturing Co., 892 F. Supp. 1162, 1176 -78 (D. Mass. 1995), granted summary judgment despite defendant's offer to present evidence concerning subjective intent. The court reasoned that defendant had "knowledge" of false statement even though he lacked actual knowledge that a remediation of the property at issue would be needed. Id. The court reasoned that the defendant was "on notice" that remediation might be needed in light of old monitoring results and the fact that 10 defendant had knowledge of a pending inspection. Id. Other courts have held that a plaintiff must present specific evidence that the defendant actually suspected possible criminal activity. See, e.g., United States v. Heredia, 429 F.3d 820, 824 (9th Cir.2005) ( "[T]he instruction is `rarely appropriate,' and should be given only when the government presents `specific evidence' that the defendant `(1) actually suspected that he or she might be involved in criminal activity, (2) deliberately avoided taking steps to confirm or deny those suspicions, and (3) did so in order to provide himself or herself with a defense in the event of prosecution. "') (quoting United States v. Baron, 94 F.3d 1312, 1318 n.3 (9th Cir. 1996)). Similarly, the Court of Appeals for the Second Circuit has limited the use of the instruction to circumstances where the defendant was aware of a "high probability" of the fraudulent acts and "consciously avoided confirming that fact." United States v. Ferrarini, 219 F.3d 145, 154 (2d Cir. 2000) (quoting United States v. Rodriguez, 983 F.2d 455, 458 (2d Cir. 1993)). The defendant's sophistication, experience, and education are relevant to determining whether the defendant was, or should have been, on notice of illegal activity. For example, the court in Campbell, 977 F.2d at 857, applied the deliberate ignorance in a money laundering case where the defendant was a licensed realtor who had conveyed to the sellers of real property a buyer's proposal to pay a substantial amount of cash under the table and lower the contract price accordingly. The amount of money and the nature of payment should have been a red flag to an experienced realtor of a possible illegality in the transaction. Id. The defendant's proximity to the fraudulent actions are also relevant to determining whether a deliberate ignorance jury instruction is warranted. For example, the Court of Appeals for the Fifth Circuit in Freeman, 434 F.3d at 378, sustained a conviction for conspiracy, wire 11 fraud, travel fraud, and money laundering in connection with a Ponzi scheme. The appellate court held that trial court's deliberate indifference instruction was proper because, among other things, there was ample evidence that the defendant was subjectively aware of a high probability of the existence of illegal conduct, given his involvement in typing and witnessing bogus agreements with investor - victims. Id. See also Draves, 103 F.3d at 1333 -34 (relying upon evidence of defendants close proximity to wrongdoing, close relationship with primary perpetrator, and a strange pattern of activity). 2. The Government Must Typically Establish That The Defendant Took Affirmative Steps To Avoid Learning The Truth Or Failed To Conduct An Investigation Notwithstanding Suspicious Circumstances To warrant application of the "deliberate ignorance" theory, the evidence must indicate that the defendant took affirmative steps to avoid learning the truth. "A deliberate ignorance instruction is appropriate only when there is evidence in the record showing the defendant purposely contrived to avoid learning the truth." United States v. Stone, 9 F.3d 934, 937 (11th Cir.1993) (emphasis added); see also United States v. Espinoza, 244 F.3d 1234, 1242 (10th Cir.2001) (allowing "deliberate ignorance" instruction "`only when the prosecution presents evidence that the Defendant purposely contrived to avoid learning all the facts in order to have a defense in the event of a subsequent prosecution' ") (quoting United States v. Hanzlicek, 187 F.3d 1228, 1233 (10th Cir.1999)). However, the signs of fraud may be so glaring that courts have held that it is sufficient that a defendant failed to conduct an adequate investigation. See, e.g., United States v. Faulkner, 17 F.3d 745, 766 (5th Cir.1994) ( "We have held that in some cases the likelihood of criminal wrongdoing is so high, and the circumstance surrounding a defendant's activities and cohorts are 12 so suspicious, that a failure to conduct further inquiry or inspection can justify the inclusion of the deliberate ignorance instruction. ") (citations omitted). See also United States v. Stouffer, 986 F.2d 916, 925 (5th Cir. 1993) (holding that the deliberate indifference instruction was appropriate where corporate officer used investment company funds for personal purposes, "blindly accept[ing]" co- defendant's representation that the company's charter authorized the expenditures); United States v. Del Ag_uila- Reyes, 722 F.2d 155, 157 (5th Cir. 1983) ( "From these suspicious facts, it was reasonable for the jury to infer that [the defendant] should have known that his trip to Miami was prompted for some additional, probably illegal, reason. "). The failure to conduct an adequate investigation is particularly relevant where a principal claims ignorance of an agent's fraudulent actions. In United States v. Leahy, 445 F.3d 634, 652 (3d Cir. 2006), a president of an auction company and his employee, a manager, were accused of selling repossessed vehicles at prices greater than amounts reported to the banks. The court allowed a deliberate ignorance instruction where the president had claimed ignorance of the employee's double billing scheme. Id. See also United States v. Gray, 105 F.3d 956, 967 (5th Cir. 1997) (holding that the deliberate indifference instruction was warranted because defendant had first -hand information that loan applicants received no money, but failed to make an adequate inquiry as to any possible wrongdoing). Accordingly, a deliberate ignorance instruction is warranted if. (1) the defendant denies knowledge of a specific fact required for conviction, and (2) there is evidence that the defendant was aware of a high probability of the disputed fact and deliberately avoided confirming that fact, for example, where his involvement may have been so overwhelmingly suspicious that his failure to question the suspicious circumstances establishes his purposeful contrivance to avoid 13 guilty knowledge. United States v. Svoboda, 347 F.3d 471, 480 (2d Cir. 2003) (quoting United States v. Lara - Velasquez, 919 F.2d 946, 952 (5th Cir. 1990) (internal quotations and citations omitted) (emphasis in original)), cert. denied, 541 U.S. 1044 (2004). 3. Courts Also Consider Whether The Defendant Derived Any Benefit From The Fraudulent Acts To establish the applicability of deliberate ignorance theory, the Government may introduce evidence that the defendant had benefitted from the fraudulent acts. See LowM vv. SEC, 340 F.3d 501, 506 (8th Cir. 2003) (holding that defendant's spending investor funds on personal expenses establishes the requisite state of mind for committing securities fraud); SEC v. Infinity Group Co., 212 F.3d 180, 192 (3d Cir. 2000) (same). For example, the Court of Appeals for the Seventh Circuit applied the theory of deliberate ignorance in finding a bankruptcy attorney liable for securities fraud, in part because he benefitted from the illegal transactions. SEC v. Jakubowski, 150 F.3d 675, 678 (7th Cir. 1998). In Jakubowski, the Securities and Exchange Commission ( "SEC ") claimed that a bankruptcy attorney had made false statements of material fact in connection with the sale of securities in violation of Rule l Ob -5, which has a scienter requirement of "knowledge." Specifically, the SEC alleged that the defendant had participated in violation of a regulation that: (1) prevents an individual from transferring ownership of conversion rights and (2) prevents the sale of any securities in excess of the maximum amount provided. Id. Mr. Jakubowski claimed that, while he may have been "careless," he was unaware of the regulations precluding such sales. Id. at 681. Mr. Jakubowski contended that he failed to read thoroughly the purchase forms, which stated that the stocks could not be resold. Id. Mr. Jakubowski also asserted that he performed a quick search on Lexis and was unable to find any cases prohibiting his actions. Id. 14 The court rejected Mr. Jakubowski's defense upon the grounds that: (1) he had failed to conduct an adequate investigation regarding or to inquire into the legality of the transactions; (2) he had been sufficiently aware that something was wrong with these transactions; and (3) he had derived a financial benefit from the transactions. Id. at 682. The court held that Mr. Jakubowksi was at the very least "deliberately ignorant" and that deliberate ignorance is a form of knowledge. Id. Accordingly, the court affirmed the lower court's decision to grant the SEC's motion for summary judgment. Id. C. The Courts Have Cautioned Against Use Of The Deliberate Ignorance Instruction In Certain Circumstances Many courts have expressed that "[c]aution is necessary in giving a willful blindness instruction." United States v. Cassiere, 4 F.3d 1006, 1023 (1st Cir. 1993); see also United States v. Mancuso, 42 F.3d 836, 846 (4th Cir. 1994) (indicating a "war[iness] of giving a willful blindness instruction "); United States v. Inv. Enters., Inc., 10 F.3d 263, 269 (5th Cir. 1993) (cautioning that instruction be given only "sparingly "). Other courts have cautioned that such an instruction is "rarely appropriate" or is only proper in "rare circumstances." Heredia, 429 F.3d at 824; United States v. de Francisco - Lopez, 939 F.2d 1405, 1409 (10th Cir.1991); United States v. Ruhe, 191 F.3d 376, 385 (4th Cir. 1999); United States v. Mendoza - Medina, 346 F.3d 121, 132 (5th Cir.2003); United States v. Concha, 233 F.3d 1249, 1252 (10th Cir. 2000); Prather, 205 F.3d at 1270; United States v. Sanchez - Robles, 927 F.2d 1070, 1073 (9th Cir. 1991). Several circumstances are of particular concern: (1) where the defendant has not asserted a lack of knowledge; (2) where the Government alleges deliberate ignorance as well as actual knowledge; (3) where the instructions do not clearly distinguish deliberate ignorance from recklessness or negligence; and (4) where the statute requires that the plaintiff establish knowledge as to specific 15 facts. 1. Courts Typically Require That The Defendant Have Asserted A Lack Of Fraudulent Knowledge Before Allowing Application Of "Deliberate Ignorance" Theory A willful blindness jury instruction is appropriate when the defendant asserts a lack of guilty knowledge, but the evidence supports an inference of deliberate ignorance. A plaintiff may rely upon "deliberate ignorance" theory where a defendant asserts that he was unaware of the allegedly fraudulent acts, statements or omissions despite the appearance that he possessed such knowledge. United States v. Hildebrand, 152 F.3d 756, 764 (8th Cir. 1998)). For example, the Court of Appeals for the Second Circuit recently held that a "conscious avoidance" charge was proper where, because the defendant "did not dispute that he took certain actions but denied having knowledge of their criminal nature, the defendant has put in issue whether the circumstances would have alerted him of the high probability that his actions were criminal and what steps he took to learn of the extent of that danger." United States v. Chu, Slip op., 2006 WL 1526922 (2nd Cir. 2006) (conspiracy to commit bank fraud, mail fraud, wire fraud, and money laundering, 18 U.S.C. §§ 371, 1341, 1343, 1344, 1956(h)). See also Rube, 191 F.3d at 384 ( "A willful blindness instruction is proper when the defendant asserts a lack of guilty knowledge but the evidence supports an inference of `deliberate ignorance' on defendant's part. "); Sdoulam, 398 F.3d at 993. Other courts have required that the defendant have asserted a lack of specific aspect of knowledge that is necessary to conviction. See Walker, 191 F.3d at 337 (holding that a deliberate ignorance jury instruction was warranted where a "defendant claims to lack some specific aspect of knowledge necessary to conviction" where the "evidence may be construed as 16 deliberate ignorance ") (emphasis added). 2. Some Courts Have Cautioned Against Allowing A "Deliberate Ignorance" Instruction When The Government Also Alleges Actual Knowledge Some courts have held have cautioned against the use of the "deliberate ignorance" instruction where the Government claims that the defendant had actual knowledge of the circumstances forming the basis of fraud. For example, the Court of Appeals for the Seventh Circuit has cautioned district courts "against instructing juries on deliberate ignorance when the evidence only points to either actual knowledge or no knowledge on the part of the defendant." United States v. Ndiave, 434 F.3d 1270 (1 Ith Cir. 2006) (quoting Stone, 9 F.3d at 937). However, a court's decision to give an instruction regarding deliberate ignorance is subject to "harmless- error" review. Id. Thus, because juries are presumed to follow the judge's instructions, the error is harmless as a matter of law where (1) "the jury was clearly instructed that a precondition to its application of the deliberate ignorance instruction was proof beyond a reasonable doubt that [the defendant] deliberately kept himself ignorant," and (2) the evidence was sufficient to support a conviction based on actual knowledge, but not necessarily overwhelming. Id. at 937 -39. See also United States v. Wells, 262 F.3d 455, 466 (5th Cir. 2001) ( "[E]rror in giving the deliberate ignorance instruction is ••• harmless where there is substantial evidence of actual knowledge. "); United States v. Whittington, 26 F.3d 456, 464 (4th Cir. 1994). However, other courts have rejected the proposition that a "deliberate ignorance" jury instruction is not necessarily improper merely because the Government has also claimed that the defendant actually knew of the fraudulent acts, statements or omissions. See, e.g., United States v. Saucedo- Munoz, 307 F.3d 344, 349 (5th Cir. 2002) (noting that relevant cases do not 17 "suggest[ ] that a deliberate ignorance instruction is improper where evidence may be construed as showing either actual knowledge or contrivance to avoid learning the truth. Instead, [the] precedent suggests that a deliberate ignorance instruction may be given alongside evidence of actual knowledge. "). In Patient Transfer Service, 413 F.3d at 742, the court held that, to establish that the defendant knowingly violated Medicare and Medicaid regulations by a double billing scheme, the Government could prove that the defendant either actually knew that the billing practice was improper or that the defendant deliberately avoided investigating whether it was improper. The court considered that "[t]he evidence indicates [that the defendant] had at least some knowledge of Medicare and Medicaid regulations," and that "[i]t could be inferred from the evidence that Wise had actual knowledge of what activity was reimbursable and how the claim forms should have been submitted or that he avoided learning more about proper billing." Id. (emphasis added). Thus, the Government should be able to plead "deliberate ignorance" in the alternative to actual knowledge provided that the evidence may support either inference and that the jury instructions are clear in this regard. 3. Some Courts Have Cautioned Against Allowing A "Deliberate Ignorance" Instruction When There May Be Possible Confusion With Recklessness Or Negligence One of the dangers in applying the "deliberate ignorance" theory to fraud cases requiring a "knowing violation" is that the line between intentional violations and reckless or negligent violations may be blurred. Courts have held that a defendant acts with extreme recklessness if he "encountered `red flags,' or `suspicious events creating reasons for doubt' that should have alerted him to the improper conduct." Howard v. SEC, 376 F.3d 1136, 1143 (D.C. Cir. 2004) (quoting Graham v. SEC, 222 F.3d 994, 1006 (D.C. Cir. 2000)). However, the concept of "red 18 flags" that put a defendant upon notice of fraudulent activity has been used in the context of applying the "deliberate ignorance" theory to fraud cases. Epstein, 426 F.3d at 440 (applying the theory where "record evidence reveals `flags' of suspicion that, uninvestigated, suggest willful blindness ") (quoting United States v. Coviello, 225 F.3d 54, 70 (1st Cir.2000)). See also United States v. Craig, 178 F.3d 891, 898 (7th Cir. 1999) (affirming conviction based on willful blindness because defendant "saw and experienced enough suspicious activities to raise several red flags," which "supports an inference that she consciously chose not to pursue the truth "). This concern has engendered much criticism by commentators. See Charlow, R., WILFUL IGNORANCE AND CRIMINAL CULPABILITY, 70 Tex. L. Rev. 1351, 1382 -90 (1992) (expressing concern that "most definitions of wilful ignorance delineate a mens rea that is the equivalent neither of knowledge nor recklessness "); Robbins, I.P., THE OSTRICH INSTRUCTION: DELIBERATE IGNORANCE AS A CRIMINAL MENS REA, 81 J. Crim. L. & Criminology 191, 220 -27 (1990) (contending that the Model Penal Code "has merely renamed recklessness with respect to existing facts in order to reach the deliberately ignorant defendant "). This concern is heightened when courts recognize "reckless disregard" to satisfy the knowledge element in the context of securities fraud. See, e.g., In re Kidder Peabody Sec. Litig., 10 F. Supp. 2d 398, 415 (S.D.N.Y. 1998) ( "[R]eckless disregard of the truth satisfies the scienter requirements of [the anti -fraud provisions] when the defendant deliberately failed to acquire the information that would have indicated to her that her statements were false or misleading. "). Courts are also "cognizant of the risk ... that a deliberate ignorance instruction might lead the jury to employ a negligence standard and convict a defendant on the impermissible ground that he should have known an illegal act was taking place." King, 351 F.3d at 866 19 (citing United States v. Barnhart, 979 F.2d 647 651 (8th Cir. 1992)). Accordingly, courts of cautioned that, in evaluating the propriety of a deliberate ignorance instruction, "` [t]he evidence must establish that the defendant had subjective knowledge of the criminal behavior," and, thus, "[s]uch knowledge may not be evaluated under an objective, reasonable person test. "' United States v. Lee, 54 F.3d 1534, 1538 -39 (10th Cir. 1995) (emphasis added). Nevertheless, jury instructions may be carefully constructed to avoid any confusion in this regard. Pursuant to typical jury instructions regarding "deliberate ignorance," the word "knowingly" or the phrase "the defendant knew" signifies "that the defendant realized what she was doing and was aware of the nature of her conduct and did not act through ignorance, mistake or accident." Typical jury instructions read as follows: When the word "knowingly" or the phrase "the defendant knew" is used in these instructions, it means that the defendant realized what she was doing and was aware of the nature of her conduct and did not act through ignorance, mistake or accident. The government may prove that the defendant acted "knowingly" by proving, beyond a reasonable doubt, that this defendant deliberately closed her eyes to what would otherwise have been obvious to her. No one can avoid responsibility for a crime by deliberately ignoring what is obvious. A finding beyond a reasonable doubt of an intent of defendant to avoid knowledge or enlightenment would permit the jury to find knowledge. Stated another way, a person's knowledge of a particular fact may be shown from a deliberate or intentional ignorance or deliberate or intentional blindness to the existence of that fact. It is, of course, entirely up to you as to whether you find any deliberate ignorance or deliberate closing of the eyes and any inferences to be drawn from any such evidence. You ma, not conclude that defendant had knowledge, however, from proof of a mistake, negligence, carelessness, or a belief in an inaccurate proposition. See United States v. Alston - Graves, 435 F.3d 331 (D.C. Cir. 2006) (emphasis added). Thus, jury 20 instructions should include cautionary language to avoid conflation with negligence. 4. Some Courts Have Cautioned That Deliberate Ignorance May Serve Only As A Mechanism For Inference, Rather Than A Substitute For Knowledge Other commentators have expressed skepticism regarding deliberate ignorance theory because of the conceptual distinction with actual knowledge. "[I]t is hard to see how ignorance, from whatever cause, can be knowledge. A particular explanation of why a defendant remains ignorant might justify treating him as though he had knowledge, but it cannot, through some mysterious alchemy, convert ignorance into knowledge." Douglas N. Husak & Craig A. Callender, WILFUL IGNORANCE, KNOWLEDGE, AND THE "EQUAL CULPABILITY" THESIS: A STUDY OF THE DEEPER SIGNIFICANCE OF THE PRINCIPLE OF LEGALITY, 1994 Wis. L. Rev. 29, 52. The Court of Appeals for the Eighth Circuit in Mattingly v. United States, 924 F.2d 785, 791 (8th Cir. 1991), considered whether a the trial court, in a proceeding to assess a civil penalty for aiding and abetting an understatement of tax liability, erred in giving a deliberate ignorance instruction. The Court held that the trial court erred because "actual knowledge, as opposed to the less stringent willful blindness, is required" where the statute at issue requires that the actor perform certain specified acts and know certain specified facts. Specifically, the Court found that "the statute requires that appellant assist in the creation of a tax document, know the use of the tax document, and know such document will understate another's tax liability." Id. at 791 (contrasting United States v. Massa, 740 F.2d 629 (8th Cir.1984), a brokerage fraud case requiring proof of specific intent, in which the court held that a willful blindness instruction was appropriate). The court contrasted the "knows" requirement of 26 U.S.C. § 6701 to the "willful" 21 requirement in other civil tax preparer penalty provisions, and reasoned that "[s]ections 6694(b) and 7206(2) require willful understatement or willful assistance, respectively, before imposing liability." Id. The Court explained that "[t]he fact Congress chose to use `knows' as opposed to a lesser form of mental state commonly used in other provisions leads us to believe a distinction was intended." The Court further noted that "[t]he legislative history indicates Congress intended that the actor be directly involved in aiding or abetting an understatement before liability is imposed." Id. (citing S. Rep. at 276, reprinted 1982 U.S.C.C.A.N. at 1022). The Court concluded that "the direct involvement requirement, in combination with Congress' choice of language, suggests an actual knowledge jury instruction is most appropriate." Id.2 Notwithstanding the Court's holding that the trial court erred in giving the deliberate ignorance instruction where the statute required knowledge of specific facts, the Court specifically recognized that "the willful blindness instruction still plays a role when knowledge is required, but as a mechanism for inference, not as a substitute for knowledge." Id. at 791. Therefore, jury instructions should be clear that deliberate ignorance is a means of drawing inferences. IV. The Theory Of "Deliberate Ignorance" Should Apply To Customs Fraud Cases The facts underlying Pan Pacific present a classic case of an importer's attempt to shield himself from liability for Customs fraud by deliberately seeking to avoid learning about the fraudulent scheme conducted upon his behalf and to his benefit. z Nevertheless, the Court held that the trial court's error was harmless where: (1) the trial court had also instructed the jury that the Government must prove a tax preparer knew he was aiding and abetting the understatement; (2) the instruction did not authorize substitution of willful blindness for the element of knowledge; and (3) there was evidence of actual knowledge on the part of the alleged aider and abettor. Id. at 792. 22 1. The Policies Underlying "Deliberate Ignorance" Apply Equally To Customs Fraud Cases Key aspects of many Customs fraud cases fall in line with the policies underlying cases involving other types of fraud where the deliberate ignorance instruction was allowed. There are several rationales supporting the application of the deliberate ignorance theory that apply with equal force in the context of Customs fraud. For example, the deliberate ignorance theory is often justified on the premise that a defendant who deliberately remains ignorant is just as culpable as a defendant who is fully informed. See, e.g., Jewell, 532 F.2d at 700. As in Walker, 191 F.3d at 337, and Leahy, 445 F.3d at 652, Customs cases often involve individuals who claim not to be aware of the specific mechanics of how goods are entered fraudulently by agents acting on their behalf. The arrangements for entering goods fraudulently often involve highly suspicious circumstances, such as the unusually low fees charged by a broker that may be well below the duty rates that would have been charged otherwise in many instances. Deliberate ignorance theory recognizes that individuals should not be able to shield themselves from liability merely because they had the foresight not to conduct a reasonable inquiry about the suspicious actions taken on their behalf. Similarly, courts have reasoned that conscious avoidance of material facts does not necessarily negate an ability to perform fraudulent acts. See, e.g., United States v. Adeniii, 31 F.3d 58, 62 (2d Cir. 1994). Customs cases may involve defendants who, as in Jaffe, 387 F.3d at 681 and Jakubowski, 150 F.3d 678, have a high degree of understanding with respect to their legal obligations. Just as evidence of personal benefit supported use of the deliberate ignorance instruction in Lowry, 340 F.3d at 506 and other cases, the benefits from the fraudulent acts by a broker often redound to the importer. 23 Courts have reasoned that the concept of "knowledge" necessarily encompasses more than positive knowledge. United States v. Graham, 739 F.2d 351, 353 (8th Cir. 1984) ( "one `knows' facts of which he is less than absolutely certain. To act `knowingly,' therefore, is not necessarily to act only with positive knowledge, but also to act with an awareness of the high probability of the existence of the fact in question. "). Similarly, the theory recognizes that person's knowledge or a state of mind can rarely be proven directly, and that plaintiffs typically must rely upon circumstantial evidence to establish mens rea. The Customs penalty statute does not require that a defendant have knowledge of certain facts that are specified by statute, unlike in Mattingly, 924 F.2d at 791 -92, and many Customs cases rely upon circumstantial evidence to prove the requisite level of scienter. In the absence of any legislative intent that "knowingly" was intended to be limited to actual knowledge, the statute allows for knowledge to be established by means of an inference that can be drawn from circumstantial evidence of deliberate ignorance. 2. The Facts In Pan Pacific Demonstrate The Applicability Of The Deliberate Ignorance Theory Defendant Thomas Man Chung Tao was the sole owner and president of Pan Pacific Textile Group, Inc. ( "Pan Pacific "), and Aviat Sportif, Inc. ( "Aviat "). Mr. Tao and his companies were almost exclusively engaged in the importation and distribution of men's and women's track suits manufactured in the People's Republic of China. At issue in the case were 68 entries of track suits entered into the United States at the Ports of Los Angeles and Long Beach, California, between September 21, 1995 and January 20, 1997. Mr. Juang was the owner, president, and chairman of defendant Prime International Agency ( "Prime ") and Budget Transport, Inc. ( "Budget "), (collectively "Prime/Budget"). Mr. Juang provided freight 24 forwarding services and cleared shipments through customs on behalf of Mr. Tao, even though Mr. Juang did not have a valid broker's license. Mr. Tao's business arrangement with Mr. Juang for the importation of track suits occurred in two main phases. Initially, without Mr. Tao's knowledge Mr. Juang filed with Customs falsified invoices and other falsified entry documents that falsely described the goods, understated their value, and, thus, arrived at a lesser amount of duty owed. The documents falsely described the track suits as non - restricted (that is, not subject to quota), low -duty, and inexpensive "plastic sacks and bags" or "wooden patio tables." Compare HTSUS 3923.21.0090 (1996) (setting 3% tariff for plastic bags) and HTSUS 9401.79.0025 (1996) (setting 2.4% tariff for outdoor household furniture sets with metal frames) with HTSUS 6211.33.30 (1996) (setting 16.8% tariff for sets of men and boys' tracksuits of man -made fibers). Mr. Juang paid Customs the lower amount of duty and pocketed the difference between what was charged to Mr. Tao and what was paid to Customs. Id. Mr. Juang attached to his invoices to Mr. Tao entry documents that he had created which accurately described the goods, the value, and the applicable duty rate, but were never in fact filed with Customs. Approximately one year and a half later, however, Mr. Juang proposed a change in the business relationship. Mr. Juang offered Mr. Tao a "flat fee" that was necessarily lower than the actual amount of duties that Mr. Tao would have had to pay to Customs. Mr. Juang also told Mr. Tao that he no longer needed to purchase quota visas. For the duration of Mr. Tao's business relationship with Juang, Chinese textiles were subject to quotas and required quota visas for entry into the United States. See, e.g., Agreement Between the United States and China Concerning Trade in Textile and Apparel Products, U.S.- China, June 8, 1995, Temp. State Dep't 25 No. 95-148,1995 WL 539718. Mr. Tao accepted Mr. Juang's proposal. Messrs. Juang and Tao negotiated the flat fee, which varied depending on the size of the container. Mr. Tao knew that he would be benefitting from it by paying an amount lower than the duties he had been paying previously. Mr. Tao agreed that he would no longer be identified as the "importer of record," and he stopped keeping copies of his entry records. Mr. Tao told his supplier in China, Singmay, to continue submitting invoices properly identifying the merchandise as track suits, but that it no longer needed purchase the quota visas. Mr. Juang began submitting to Mr. Tao invoices that did not indicate the amount actually paid for customs duties, and stopped providing Mr. Tao with copies of entry documents. Mr. Tao instructed his employees to pay the invoices from Mr. Juang automatically. On or about November 26, 1996, Customs Special Agents began investigating Mr. Juang's involvement in an operation of suspected smuggling of Chinese medicine into the United States. On February 26, 1997, a Federal search warrant was issued to conduct a search of the premises of Mr. Juang's companies, Prime/Budget. Upon analyzing the seized records, investigators discovered that, from late 1993 to early 1997, Prime/Budget entered track suits for numerous importers, including Mr. Tao and his companies, Pan Pacific and Aviat. Based upon the evidence seized, investigators searched the premises of Pan Pacific and Aviat, Mr. Tao's companies in City of Industry, California, in early 1997. On June 19, 1997, Customs conducted another search of Pan Pacific's premises, and recovered documents establishing that payments by Pan Pacific to Prime/Budget's shell companies, Ever Power and /or Billion Sales, were generally less than one -third of the duties that 26 would have been owed based upon the value represented on the actual commercial invoices. The search also revealed that quota visa charges had not been paid for entries of track suits. Before the Court of International Trade, the Government argued, among other things, that the application of "deliberate ignorance" theory was warranted based upon the Mr. Tao's admissions as well as uncontroverted facts surrounding his business arrangment with Mr. Juang. Mr. Tao specifically chose not to ascertain basic facts to ensure that the goods were entered properly. Mr. Tao was aware of Customs fling requirements. Mr. Tao testified that he did not know how Mr. Juang was able to enter the goods for a lower duty, but that he deliberately did not inquire as to the nature of Mr. Juang's activities. Lastly, Mr. Tao derived a personal benefit from his agent's activities where he paid amounts substantially below the amount he would have had to pay had the goods been entered properly. As in Stone, 554 S.W. 2d at 188, Walker, 191 F.3d at 337, and Roadmaster, 892 F. Supp. at 1176 -78, Mr. Tao was also aware of highly suspicious facts that put him "on notice" of false statements being made upon his behalf. Mr. Tao admitted that he knew that the "flat fee" that Mr. Juang was charging him for complete package of entry services represented an amount that was necessarily less than the duties that he would have had to pay otherwise. Mr. Tao admitted that he knew that the amounts that he actually paid under this scheme were below the amount of duties he would have to pay based upon the value of the merchandise indicated on the commercial invoices. As in Jakubowski, 150 F.3d 675, 678, this arrangement resulted in a benefit to Mr. Tao. As in Faulkner, 17 F.3d at 766; Stouffer, 986 F.2d at 925; and Del A uila- Reyes, 722 F.2d at 157, Mr. Tao failed to conduct a reasonable inquiry notwithstanding the highly 27 suspicious activities of his broker. Mr. Tao never asked Mr. Juang how it was possible to pay an amount below the duties that would be owing. Mr. Tao assumed Mr. Juang was basing the duties upon the cost of production, but never verified with Mr. Juang that such was the case. Mr. Tao knew of irregularities in the way Mr. Juang billed him for his "import services," but nonetheless accepted the way Mr. Juang implemented the "flat fee" agreement without question. Mr. Tao stated that once the "flat fee" arrangement went into effect, he stopped paying attention to the information in the invoices sent by Mr. Juang. Mr. Tao did not request supporting documentation, and instructed his employees to pay the invoices from Mr. Juang "automatically." Mr. Tao's employee brought to his attention the fact that the charges on Mr. Juang's invoices varied for no apparent reason, but Mr. Tao instructed her to pay the charge without receiving any explanation from Mr. Juang, even though the previous broker's charges had always been consistent. Mr. Tao's intimate involvement with the facts surrounding the entry documents supports application of the deliberate ignorance instruction. Draves, 103 F.3d at 1333 -34. Mr. Tao was an experienced importer who was familiar with his legal obligations, as in Jaffe, 387 F.3d at 681. Mr. Tao knew that a quota visa was necessary for each shipment, yet took no steps to ensure that one was in fact being purchased during the "flat fee" period. Mr. Tao agreed that Mr. Juang would "handle" the visa, and instructed Singmay not to purchase the visa, but never inquired of Mr. Juang how he obtained a visa or asked to see proof that one was in fact being purchased. Mr. Tao instructed his employee not to ask questions with respect to Mr. Juang's "handling" of the quota visa. Mr. Tao's admission that he had instructed Singmay to continue submitting invoices properly identifying the merchandise as track suits indicates that he 28 was aware that Mr. Juang's "flat fee" scheme was, at best, not the normal course of business. Therefore, the factual circumstances underlying the Pan Pacific case demonstrate that Customs fraud cases can bear all the hallmarks of "deliberate ignorance" as applied in other fraud cases. V. Conclusion In recognition of the applicability of these principles, Customs regulations should be amended to specify that the Government may satisfy the "knowledge" requirement for purposes of establishing fraudulent intent under 19 U.S.C. § 1592 by establishing that: (1) the defendant was subjectively aware of a high probability of the existence of illegal conduct; and (2) the defendant purposely contrived to avoid learning of the illegal conduct. Scott, 159 F.3d at 922. Such an amendment would clarify the applicability of deliberate ignorance theory and provide practical guidance for the standards for making the determination. In the meantime, the Courts are well within their discretion to apply the "deliberate ignorance" theory as applied in other fraud contexts to Customs penalty actions in which the Government claims that the defendant acted with fraudulent intent. 29 Power Corrupts: Honest Services Fraud and Fiduciary Duties Charion L. Vaughn* I. INTRODUCTION In 2010, the U.S. Supreme Court decided Skilling v. United States and immensely affected white - collar crime cases. Throughout the circuits, mail fraud indictments were stopped in their tracks,2 and a few defendants were released from prison.3 Traditionally, prosecutors employed the honest ser- vices fraud statute, 18 U.S.C. § 1346, to reach a broad range of criminal acts not otherwise addressed by the mail and wire fraud statutes.4 In Skilling, § 1346 was limited in its application to cases involving bribery and kickback schemes.5 The U.S. Supreme Court noted that this class of cases always had involved a breach of fiduciary duties.6 The Court, however, failed to clarify the source of such a duty. Consequently, a circuit split remains on the issue of whether the actor must have breached a duty found in state or federal law or if there needs to be a separate source of duty at all.7 This Note examines the expansion of the mail fraud statute's scope and the impact of Skilling on this body of cases. Part II describes the history of the mail fraud statute and the recent U.S. Supreme Court case trilogy that af- fected it. Part II also chronicles the growth of laws governing fiduciary rela- tionships in the corporate context. Part III proposes that the process of deter- mining whether a fiduciary duty exists must be different in public and private contexts, and it proposes an amendment to § 1346. * B.A. 2008, Rockhurst University; J.D. 2011, Washburn University School of Law. 1. 130 S. Ct. 2896 (2010). 2. See United States v. Riley, 621 F.3d 312, 339 (3d Cir. 2010) (reversing defendant's honest services conspiracy fraud conviction); United States v. Leslie, No. 09- 115- JJB -DLD, 2010 U.S. Dist. LEXIS 81800, at *4 (M.D. La. Aug. 11, 2010) (dismissing defendant's honest services fraud indictment). 3. See Geddings v. United States, No. 5:06 -CR- 136 -D, 2010 U.S. Dist. LEXIS 64229, at *2 (E.D.N.C. June 29, 2010) (releasing defendant convicted of honest services fraud from prison). 4. See Anne S. Dudley & Daniel F. Schubert, Mail and Wire Fraud, 38 AM. CRIM. L. REv. 1025, 1026 -27 (200 1) (discussing the various crimes that the fraud statutes were used to address). 5. Skilling, 130 S. Ct. at 2931. 6. Id. at 2930 -31. 7. See United States v. Murphy, 323 F.3d 102, 116 (3d Cir. 2003) (looking to state law to define fidu- ciary duties); United States v. Bryan, 58 F.3d 933, 940 (4th Cir. 1995), overruled in part by United States v. O'Hagan, 521 U.S. 642 (1997) (stating that state law did not determine whether the mail fraud statute cov- ered defendant's conduct). 713 714 Washburn Law Journal [Vol. 50 IL BACKGROUND The mail and wire fraud statutes and fiduciary laws both have extensive histories. This Note will outline both, beginning with the mail fraud statute's evolution as it was stretched to its fullest limits by circuit courts and Congress and eventually limited by the U.S. Supreme Court twice. Mail fraud and wire fraud are prohibited by 18 U.S.C. §§ 1341 and 1343, respectively.8 To prove a violation of the mail fraud statute, the government must show: (1) a scheme to defraud, (2) that the defendant had the intent to defraud, and (3) that the United States mail or a private interstate commercial carrier was employed to further the scheme.9 The wire fraud statute also re- quires intent and a scheme to defraud, but it adds a requirement that the de- fendant used interstate wire communication to further the scheme. 10 Initially enacted for very narrow purploses, these fraud statutes now encompass a broad range of criminal conduct.] Congress did not define "scheme to defraud;" rather, courts have given the phrase meaning. 12 A. History of §§ 1341 and 1346 Congress passed the first version of § 1341 in 1872.13 At that time, the statute required that the punishment for a crime be adjusted proportionally to the degree in which the defendant used the mail to commit the act. 14 The clear objective of the statute was to protect "the post office from use in the execution of frauds." 15 As a circuit split developed over what type of crimes the statute was intended to cover, 16 Congress amended it several times during the next twenty years. 17 There was no longer a requirement that the defen- dant intended to abuse the postal system, only that the mail was used to 8. 18 U.S.C. §§ 1341, 1343 (2006). 9. § 1341; Dudley & Schubert, supra note 4, at 1029. 10. Dudley & Schubert, supra note 4, at 1029. 11. See id. at 1026. 12. See United States v. Lemire, 720 F.2d 1327, 1335 (D.C. Cit. 1983) (noting that the expression has been given meaning from 111 years of cases). 13. Act of June 8, 1872, ch. 335, § 301, 17 Stat. 283, 323. 14. George E.B. Holding, Dennis M. Duffy & John Stuart Bruce, Federal Prosecution of State and Local Officials Using Honest Services Mail Fraud: Where's the Line ?, 32 CAMPBELL L. REv. 191, 194-95 (2010). The original statute read: That if any person having devised or intending to devise any scheme or artifice to defraud, or be effected by either opening or attempting to open correspondence or communication with any other person ... by means of the post - office establishment of the United States, or by inciting such other person to open communication with the person so devising or intending, shall in and for executing such scheme or artifice (or attempting so to do), place any letter or packet in any post - office of the United States, or take or receive any therefrom, such person, so misusing the postal - office estab- lishment, shall be guilty of [a crime,] ... [the court] shall proportion the punishment especially to the degree in which the abuse of the post - office establishment enters as an instrument into such fraudulent scheme and device. Id. (quoting Act of June 8, 1872, ch. 335, § 301, 17 Stat. 283, 323). 15. United States v. Bohonus, 628 F.2d 1167, 1170 (9th Cir. 1980). 16. See Holding, supra note 14, at 196. While some courts found that the statute was intended to pun- ish common schemes of fraud, others held that the statute was aimed at any crime that involved use of the mail, even if a specific federal statute had not been violated. Id. 17. Id. at 197 -98. The statute was amended in 1889 and 1909. Id. 2011 ] Honest Services Fraud and Fiduciary Duties 715 further the relevant scheme. 18 The U.S. Supreme Court considerably broad- ened the statute's application when it held that Congress could prohibit any mailing that furthered a scheme "contrary to public policy," regardless of whether Congress had the ability to prohibit the scheme itself 19 In 1952, Congress enacted § 1343, addressing wire fraud.20 It covers crimes of fraud that involve "the transmission of writings, signs, signals, pic- tures or sounds by means of wire, radio or television .... "21 As the mail and wire fraud statutes are similar, courts apply the same analysis to both. 22 B. The Intangible Rights Doctrine and McNally v. United States Eventually, federal prosecutors used the fraud statutes to fight govern- ment corruption. 23 Circuit courts applied the fraud statutes to cover cases in which people were defrauded of rights that were nonmonetary and intangi- ble.24 According to this line of cases, the right being defrauded was the right to honest services. 25 Cases applying mail and wire fraud liability to intangible rights fell into three main categories: those involving (1) defendants who defrauded victims of "nonmonetary, intangible interests," (2) public officials who defrauded the public of "honest governmental services," and (3) defendants in the private sector "with clear fiduciary duties to their employers or unions" who de- frauded the same. 26 The types of conduct varied and included bribery, kick- backs, failures to disclose, and conflicts of interest. 27 In 1987, the U.S. Supreme Court brought the line of intangible rights cases to a screeching halt by holding that intangible rights were outside of the statute's scope. 28 In McNally v. United States,29 the Court reversed a deci- sion of the U.S. Circuit Court of Appeals for the Sixth Circuit, United States v. Gray. 30 In Gray, the defendants had engaged in a scheme involving certain 18. See id. at 199. 19. Badders v. United States, 240 U.S. 391, 393 -94 (1916). 20. 18 U.S.C. § 1343 (2006); Michael K. Avery, Note, Whose Rights? Why States Should Set the Pa- rameters for Federal Honest Services Mail and Wire Fraud Prosecutions, 49 B.C. L. REv. 1431, 1435 (2008). 21. § 1343. 22. Avery, supra note 20, at 1436. 23. United States v. Lopez - Lukis, 102 F.3d 1164, 1168 (11th Cir. 1997). This use of fraud statutes began around 1940. Id. 24. See id. at 1169 -70 (applying mail fraud statute where defendant used influence as county commis- sioner to influence votes to favor her boyfriend's company). 25. See Holding, supra note 14, at 205. 26. United States v. deVegter, 198 F.3d 1324, 1327 (11th Cir. 1999) (citing Lopez- Lukis, 102 F.3d at 1168); United States v. Ballard, 663 F.2d 534, 536-39 (5th Cir. 1981) (applying mail fraud statute to defen- dants who conducted a scheme to buy and sell oil at the maximum price during a shortage); United States v. Condolon, 600 F.2d 7, 9 (4th Cir. 1979) (holding that victims were defrauded of expectations when defendant used phony talent agency to seduce women)). 27. See United States v. Weyhrauch, 548 F.3d 1237, 1239 (9th Cir. 2008), vacated, 130 S. Ct. 2971 (2010); United States v. Bush, 522 F.2d 641, 643 (7th Cir. 1975) (public official failed to disclose material information). 28. McNally v. United States, 483 U.S. 350, 356 (1987). 29. 483 U.S. 350. 30. 790 F.2d 1290 (6th Cir. 1986), rev'd, McNally, 483 U.S. 350. 716 Washburn Law Journal [Vol. 50 political leaders and a private insurance company. 31 The defendants were convicted of conspiring to devise a scheme to defraud and aiding and abetting in mail fraud. 32 The Sixth Circuit acknowledged that other circuits had prem- ised mail fraud charges on the theory that public officials are trustees for the public that they serve. 33 Consequently, they owe fiduciary duties that a trus- tee would owe. 34 The court focused on this relationship because it found that honest services fraud could exist only "when at least one of the schemers ha[d] a fiduciary relationship with the defrauded person or entity." 35 Further, the court noted that the intangible rights theory did not cover private fiduciar- ies dealing with exclusively private matters. 36 The U.S. Supreme Court noted that the sparse history of the statute only revealed a goal of protecting people from schemes that deprived them of their money or property. 37 Accordingly, McNally limited the fraud statutes' appli- cation to these schemes. 38 McNally had a significant effect on pending and recent cases. 39 The Court commented that if Congress wished the statute to have a more expansive reach, it needed to use clear language to that effect. 40 The following year, Congress responded by adding § 1346, which ex- tended the fraud statutes' application to any "scheme or artifice to deprive an- other of the intangible right of honest services." 41 Courts recognized that Congress intended to overrule McNally by passing § 1346.42 Consequentll3 the intangible rights decisions that McNally overruled were again good law. 31. Id. at 1292 -93. As chairman of the Kentucky Democratic Party, Howard Hunt had control over choosing the insurance agencies from which the state would purchase its workmen's compensation insurance policies. Id. One insurance company agreed that, in return for Hunt securing a contract between the com- pany and the state, it would split commissions in excess of $50,000 with Hunt. Id. Hunt, in turn, had the insurance company funnel money to a company that he controlled, along with the other two defendants, James Gray and Charles McNally. Id. Gray was a public official, and McNally was a private actor. Id. at 1292. Over a four -year period, the insurance company transferred $851,000 in excess commissions. Id. at 1293. Hunt pled guilty to intangible rights mail fraud. Id. at 1292 n.1. McNally and Gray appealed. McNally, 483 U.S. at 352. 32. Gray, 790 F.2d at 1292. 33. Id. at 1294. 34. Id. 35. Id. at 1295 (quoting United States v. Alexander, 741 F.2d 962, 964 (7th Cir. 1984) (internal quota- tion marks omitted)). 36. Id. This was not to say that all participants in a scheme needed to be public officials; to the con- trary, for an honest services charge to be valid, only one member of the scheme was required to be a public official. Id. 37. McNally v. United States, 483 U.S. 350,356 (1987). 38. Id. 39. See Ellen S. Podgor, Intangible Rights Dejd Vu, 63 VAND. L. REv. 63, 66 (2010) (discussing how defendants charged with intangible rights crimes moved for dismissal, used writs of habeas corpus, and filed writs of error after leaming of McNally's holding). 40. McNally, 483 U.S. at 360. 41. 18 U.S.C. § 1346 (2006). " `Congress passed § 1346 to overrule McNally and reinstate prior law.' " United States v. deVegter, 198 F.3d 1324, 1328 (11th Cir. 1999) (quoting United States v. Lopez - Lukis, 102 F.3d 1164, 1168-69 (11th Cir. 1997)). There is no common law definition of "honest services" nor does the statute define it. Ellie Neiberger, Honest Services Fraud: Federal Prosecution of Public Cor- ruption at the State and Local Levels, 84 FLA. B.J. 82, 83 (2010). 42. See United States v. Frost, 125 F.3d 346, 364 (6th Cir. 1997) ( "Every court to address the effect of § 1346 has held that it has overruled the holding in McNally. "). 43. See United States v. Turner, 465 F.3d 667, 672 (6th Cir. 2006) (discussing whether § 1346 revived its former intangible rights cases). 2011 ] Honest Services Fraud and Fiduciary Duties 717 After all, Congress had employed the term "honest services," which was not found at common law but in the intangible rights cases. 44 Without the mate- rial limit, the statutes were able to "cover not only the full range of consumer frauds, stock frauds, land frauds, bank frauds, insurance frauds, and commod- ity frauds, but [also] ... such areas as blackmail, counterfeiting, election fraud, and bribery." 45 The honest services statute requires that one person deprived another of the right to honest services. As such, the defendant must have owed such ser- vices to a person in the first place. Courts have limited § 1346 to situations involving relationships between fiduciaries and their beneficiaries. 46 Federal courts split over how this limitation applied to public and private actors. C. Public v. Private Sector Honest services fraud cases have covered both public and private rela- tionships.47 The most common case involved a public official who had abused his position. 48 Courts found that "when a political official use[d] his office for personal gain, he deprive[d] his constituents of their right to have him perform his official duties in their best interest." 49 There are two ways by which an individual case may fall within the public sector of honest ser- vices fraud. In the first, a public official defrauds the public of its right to the official's honest services.5 In the second, a private actor is treated as a pub- lic fiduciary because of a special governmental relationship that allows him to make governmental decisions and causes others to rely on him. 51 The latter category was discussed in a case from the U.S. Court of Appeals for the Sec- ond Circuit, United States v. Margiotta.52 Joseph Margiotta was the chairman of two Republican Party committees in New York. 53 Margiotta contracted with certain insurance agencies to work for the town of Hempstead, New York. 54 In return, the agencies paid 44. Id. ( "It is a well - established rule of construction that `[w]here Congress uses terms that have accu- mulated settled meaning under ... the common law, a court must infer, unless the statute otherwise dictates, that Congress means to incorporate the established meaning of these terms.' " (quoting Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 318,322 (1992))). 45. See Dudley & Schubert, supra note 4, at 1026 -27 (quoting Jed S. Rakoff, The Federal Mail Fraud Statute (Part I), DUQ. L. REv. 771 (1980) (internal quotation marks omitted)). 46. See Turner, 465 F.3d at 675 (noting that pre- McNally case law required that the defendant owed a fiduciary duty to the victim). 47. See United States v. Sorich, 523 F.3d 702, 707 (7th Cir. 2008) (discussing two categories into which honest services fraud cases generally fall: the relationship between employers and their employees, and those between public officials and the citizenry). The court noted that the latter case was the more com- mon. Id. 48. See id. 49. United States v. Lopez - Lukis, 102 F.3d 1164, 1169 (11th Cir. 1997). See also United States v. Frost, 125 F.3d 346, 365 (6th Cir. 1997) ( "The classic application of the intangible right to honest services doctrine has been to a corrupt public servant who has deprived the public of his honest services. "). 50. See United States v. deVegter, 198 F.3d 1324, 1327 (11th Cir. 1999). 51. See United States v. Margiotta, 688 F.2d 108, 122 (2d Cir. 1982). 52. 688 F.2d 108 (2d Cir. 1982). 53. Id. at 112. 54. Id. at 113. 718 Washburn Law Journal [Vol. 50 Margiotta and others fifty percent of their commissions. 55 Margiotta was charged with mail fraud and extortion. 56 Margiotta argued that the mail fraud statute did not apply to him as a non - office holder; rather, the statute only ap- plied to public officials. 57 The Second Circuit responded that such a rigid prerequisite was unnecessary; "It require[d] little imaginative leap to conclude that individuals who in reality or effect [were] the government owe[d] a fidu- ciary duty to the citizenry." 8 The court then discussed two different tests that it could employ to determine whether Margiotta's conduct affected gov- ernment decisions. 9 In the first test, the court asked whether others relied upon the individual because of a special relationship with the government. 60 The second was a de facto control test, under which the individual could be held a fiduciary if he actually made governmental decisions. 61 The Sixth Cir- cuit has also adopted both tests. 62 The prevalent cases involved public officials, and only in recent years has the statute been used to address purely private conduct.63 The Sixth Cir- cuit has held that a fiduciary's misconduct that does not involve the "misuse of public office or public trust" cannot support an honest services charge. 64 Therefore, at least one member of the scheme needed to be a public fiduci- ay. 65 Most circuits, however, limited honest services to instances in which the defendant had breached a fiduciary duty. 66 D. Circuit Split on Source of Duty Early on, circuit courts occasionally held that the duty required under § 1346 was incredibly broad. 67 The U.S. Court of Appeals for the Fifth Cir- cuit held that the duty was governed by moral standards such as honesty and fair play. 68 There is a split among the circuits as to what source defines 55. Id. 56. Id. at 112. 57. Id. at 120. 58. Id. at 124. 59. Id. at 122. 60. Id. 61. Id. 62. See United States v. Turner, 465 F.3d 667,675 (6th Cir. 2006). 63. See Lisa L. Casey, Twenty -Eight Words: Enforcing Corporate Fiduciary Duties Through Criminal Prosecution of Honest Services Fraud, 35 DEL. J. CORP. L. 1, 38-39 (2010). 64. United States v. Gray, 790 F.2d 1290, 1295 (6th Cir. 1986), rev'd, McNally v. United States, 483 U.S. 350 (1987). See also United States v. Urciuoli, 513 F.3d 290, 295 -96 (1st Cir. 2008) (holding that de- fendant could only be charged for the conduct that affected his official actions). 65. Gray, 790 F.2d at 1295. 66. See Skilling v. United States, 130 S. Ct. 2896, 2930 -31 (2010); United States v. Sorich, 523 F.3d 702, 707 (7th Cir. 2008) (stating that "in most honest services cases, the defendant violates a fiduciary duty "). 67. See Blachly v. United States, 380 F.2d 665, 671 (5th Cir. 1967). Blachly was involved in an elabo- rate scheme selling water softeners. Id. at 668. Blachly and his partner would go to potential customer's homes and sell them the machine, offering referral sales commissions if the customers told friends about the deal. Id. at 668-69. The sale involved paperwork that, unbeknownst to the customers, was actually a real estate mortgage on their home. Id. at 669. The form was blank, and Blachly would fill in the details later. Id. Blachly was convicted of eighteen counts of mail fraud. Id. at 668. 68. Id. at 671. Further, the Fifth Circuit held that all that was necessary for the mail fraud charge is that the scheme was "reasonably calculated to deceive persons of ordinary prudence and comprehension." Id. 2011] Honest Services Fraud and Fiduciary Duties 719 fiduciary duties in honest services fraud cases. 69 This division arises mostly in the context of the private sector. 70 It is generally accepted that cases in- volving public officials fall under the honest services doctrine of § 1346.71 The application, however, varies when the defendant owes no duty to the pub- lic but has defrauded a company. 72 There are two main categories of these cases: first, those holding that the duty is governed by an inherent, uniform, federal standard, and second, those following the state law limiting principle, which requires that the fiduciary duty be recognized at state law. 73 1. Uniform Federal Standard The U.S. Courts of Appeals for the First, Fourth, Seventh, and Ninth Circuits rely on a uniform federal standard in determining whether a fiduciary duty has been breached. 74 These courts hold that several sources can create fiduciary duties, including the mere fact that a defendant was a public offi- cial.75 Still, breach of a fiduciary duty alone is not enough; rather, there also must be a "recognizable scheme formed with intent to defraud." 76 The Sev- enth Circuit has held that state law need not be violated because "other sources can create a fiduciary obligation." 77 Just what those other sources are remains unclear, providing little guidance as to what conduct could be cov- ered by the mail fraud statute. These circuits apply the statute to both public officials and private employees. 78 While acknowledging that, in certain in- stances, state law can shed light upon what duties are owed by a public offi- cial, these courts are hesitant to create a requirement that an independent state law be violated. 79 2. State Law Limiting Principle The U.S. Courts of Appeals for the Third and Fifth Circuits require violation of an independent state law before an honest services charge will 69. See United States v. Murphy, 323 F.3d 102, 116 (3d Cir. 2003) (following state law limiting princi- ple). But see United States v. Bryan, 58 F.3d 933, 940 (4th Cir. 1995), overruled in part by United States v. O'Hagan, 521 U.S. 642 (1997) (holding that state law did not determine whether mail fraud statute covered defendant's conduct). 70. See generally United States v. Lemire, 720 F.2d 1327 (D.C. Cir. 1983); United States v. Von Barta, 635 F.2d 999 (2d Cir. 1980). 71. See United States v. deVegter, 198 F.3d 1324, 1327 -28 (11th Cir. 1999) ( "[T]he paradigm case of honest services fraud is the bribery of a public official .... .. ). 72. See id. at 1328 (discussing the difference between the duties owed by public officials to the society that they serve and the varying duties owed by those in the private sector to their employers). 73. See United States v. Weyhrauch, 548 F.3d 1237, 1245 (9th Cir. 2008) (rejecting the state law limit- ing principle). But see Murphy, 323 F.3d at 116 (adopting the state law limiting principle). 74. Weyhrauch, 548 F.3d at 1245; United States v. Sorich, 523 F.3d 702, 712 (7th Cir. 2008); United States v. Urciuoli, 513 F.3d 290, 298 (1st Cir. 2008); Bryan, 58 F.3d at 940. 75. Sorich, 523 F.3d at 712. 76. United States v. Bohonus, 628 F.2d 1167, 1172 (9th Cir. 1980). 77. Sorich, 523 F.3d at 712. 78. See Bohonus, 628 F.2d at 1169 (noting that defendant was manager for private insurance com- pany) 79. See Urciuoh, 513 F.3d at 298; Bryan, 58 F.3d at 940. 720 Washburn Law Journal [Vol. 50 lie. 80 Not any state law will do, however. If the law itself does not create a fiduciary duty for the defendant, then violation of it cannot be used as a predi- cate offense for the honest services fraud. 81 In United States v. Murphy, 82 the Third Circuit demonstrated that this requirement is for both private actors and public officials. 83 Reaffirming Murphy, the Third Circuit later clarified that its precedent does not require that the defendant have violated a criminal law; rather, the government must prove that the defendant violated "a state - created fiduciary duty." 84 The Fifth Circuit addressed the issue of a duty's source in United States v. Brumley. 85 The Brumley court refused to infer that Congress intended for federal courts and prosecutors to define the proper services that state employ- ees owe to their employers. 86 If § 1346 did not require violation of a state law, then Congress had effectively "impose[d] upon states a federal vision of appropriate services ... [constituting] an ethical regime for state employ - ees. "87 The court held that the defendant must have breached a duty concern- ing the services he owed to his employer under state law. 88 This was not to say that there had to be an actual law establishing the breach as a crime. As long as the fiduciary relationship was legally cognizable under state law, the honest services charge had a basis. 89 Although it did not explicitly state that it followed the state law limiting principle, the U.S. Court of Appeals for the Eighth Circuit has employed simi- lar reasoning. In United States v. Rabbitt, 90 the defendant was a state legisla- tor who had been convicted of eleven counts of mail fraud. 91 The Eighth 80. See United States v. Murphy, 323 F.3d 102, 116 (3d Cir. 2003) (requiring "a state law limiting principle for honest services fraud "); United States v. Brumley, 116 F.3d 728, 734 (5th Cir. 1997) (holding that honest "services must be owed under state law and that the government must prove in a federal prosecu- tion that they were in fact not delivered "). 81. See Murphy, 323 F.3d at 104 (holding that violation of the state's bribery act was insufficient be- cause criminal statutes do not create a fiduciary relationship between individuals and the public). 82. 323 F.3d 102 (3d Cir. 2003). 83. See id. at 104 (noting that defendant was a county chairman for the Republican Party); Brumley, 116 F.3d at 730-31 (noting that defendant was regional associate director for the Texas Workers' Compensa- tion Commission). 84. United States v. Gordon, 183 Fed. Appx. 202, 211 (3d Cir. 2006). A criminal law violation still could be sufficient to charge a defendant with honest services fraud. Id. The court was merely establishing that the minimum for an honest services charge was violation of a duty under state law, whether found in a law that specifically addresses the conduct or just a recognized fiduciary duty. Id. 85. 116 F.3d 728. In Brumley, the defendant was regional associate director of the Texas Workers' Compensation Commission. Id. at 730 -31. His job was to identify attorneys and insurance carriers who failed to follow certain regulations. Id. at 731. His honest services charge rested upon an apparent deal be- tween Brumley and practicing attorneys who would pay him money in return for favorable dealings with the Commission. Id. 86. Id. at 734. 87. Id. 88. Id. 89. See United States v. McGeehan, 584 F.3d 560, 568 (3d Cir. 2009). In McGeehan, the Fifth Circuit recognized a fiduciary relationship that arose under its case law and affirmed an honest services charge. Id. at 571. In the same case, the court refused to recognize such a relationship where its case law did not hold that the situation created a fiduciary relationship. Id. at 572. 90. 583 F.2d 1014 (8th Cir. 1978). 91. Id. at 1018. Rep. Richard Rabbitt was a member of the Missouri House of Representatives. Id. In addition to the mail fraud counts, Rep. Rabbitt was convicted of three counts of extortion and one count of attempted extortion. Id. 2011 ] Honest Services Fraud and Fiduciary Duties 721 Circuit determined that the defendant acted unethically and that his actions possibly could constitute a charge under state statutes governing the behavior of public officials. 92 The court set aside the convictions, however, because the Government failed to show any standard of conduct that applied specifi- cally to the defendant's actions. 93 The court did not require that an actual law have been violated, but mere unethical conduct was not enough. 94 The rationale behind the state law limiting approach is found in princi- ples of federalism. 95 Conduct that is innocent under state law should not be criminalized by federal statutes. 96 Courts using this approach wish to limit the statute's reach. 97 If state law does not govern employees' behavior, then the mail fraud statute has the potential to reach an incredibly broad range of illegal acts. 98 If properly limited, however, then the statute can "serve federal interests without supplanting rights of core state governance." 99 There is a slight difference in the treatment of private and public offi- cials. These circuits assume that public officials owe a duty to provide honest services to the public that they serve. 100 The only remaining issue is exami- nation of the relevant local and state law to determine whether those duties have been breached. 101 No such assumption exists for private actors. For private employees, a law must establish a fiduciary relationship. loz Man of the predicate offenses for mail fraud charges are criminal in na- ture. 03 This fact often creates difficulty for the government's case because criminal statutes usually do not create a fiduciary relationship. 104 If courts frid that private actors owe "a duty to the public not to break the law[,]" then the mail fraud statute would cover all forms of criminal activity. 105 92. Id. at 1025. Specifically, the court found that the evidence showed Rep. Rabbitt violated ethical rules governing attorneys, a candidate disclosure statute, "and possibly a Missouri law rendering `partiality' or abuse in public office unlawful." Id. 93. See id. at 1026. 94. See id. at 1025. 95. See United States v. Brumley, 116 F.3d 728, 734 (5th Cir. 1997) ( "Such a taking of power would sorely tax separation of powers and erode our federalist structure. "). 96. See id. at 734, 735. 97. See United States v. Dowling, 739 F.2d 1445, 1450 (9th Cir. 1984), rev'd on other grounds, 473 U.S. 207 (1985) ( "To hold otherwise that illegal conduct alone may constitute the basis of the fraud element of a mail fraud conviction would have the potential of bringing almost any illegal act within the province of the mail fraud statute. "). 98. Id. 99. Brumley, 116 F.3d at 734. 100. See United States v. Murphy, 323 F.3d 102, 115 (3d Cir. 2003) ( "[P]ublic officials have a duty to provide honest services to the public. We then look[] to state law to ascertain what standards of fiduciary care the public officials [are] required to meet in order to determine whether the officials defrauded the citi- zens of their right to honest services. "). 101. See id 102. See id. at 117 (holding that the government was required to prove a fiduciary relationship created by law). 103. See Podgor, supra note 39, at 64 (noting that many honest services cases involved criminal activity covered by other statutes). 104. See Murphy, 323 F.3d at 117 ( "[The Government] cannot point to an established `right' of honest services that Murphy owed to the County or its citizens beyond a criminal statute, which we do not believe can create a fiduciary relationship. "). 105. Id. 722 Washburn Law Journal [Vol. 50 E. Circuit Split on Additional Requirements In an attempt to limit § 1346's reach, many circuits have required that the government show more than a breach of fiduciary duty. These "breach plus" circuits vary in their approaches, which include material breach, detri- ment, active fraud, and private gain. Under the first of these approaches, ma- terial breach, the court requires a material breach by the defendant. 106 A ma- terial breach of duty arises "from the reasonable foreseeability of potential harm to the employer by the employee." 107 Moreover, the defendant must have acted with fraudulent intent. 08 The U.S. Courts of Appeals for the Sec- ond, Eighth, and Tenth Circuits employ this method. 109 In the second approach, detriment, courts require that defendants have breached fiduciary duties that caused detriment to their employers. The Fifth Circuit follows this approach in private sector cases. 110 Noting that not every breach of fiduciary duty is criminal, the Fifth Circuit employs this standard to limit the statute's application. 111 The Fifth Circuit does not specify what kind of harm qualifies as detriment to the employer; 112 however, private gain is not enough. If the employer was not somehow harmed, the scheme falls outside of the scope of § 1346.113 A third approach requires that the defendant have committed an "active" fraud. In other words, that he used his position of trust to benefit himself at the expense of the victim whose trust he breached. In United States v. Lemire,114 the U.S. Court of Appeals for the D.C. Circuit recognized that the right of honest services has different meanings in the public context than it does when applied in the private sector. 115 The rules governing private con- duct are meant to protect the economic interests involved. 116 As such, the D.C. Circuit requires that a private employee acted with the knowledge or contemplation that his actions "pose[d] an independent business risk to the employer." 117 The U.S. Court of Appeals for the Eleventh Circuit adopted Lemire's reasoning and created a requirement in private sector cases of economic harm 106. See United States v. Cochran, 109 F.3d 660, 667 (10th Cir. 1997); United States v. Jain, 93 F.3d 436, 442 (8th Cir. 1996). De minimis bribes do not satisfy this standard. United States v. Rybicki, 354 F.3d 124, 146 (2d Cir. 2003) (en banc). 107. Dudley & Schubert, supra note 4, at 1038. 108. See Cochran, 109 F.3d at 667; Jain, 93 F.3d at 442. 109. See Rybicki, 354 F.3d at 146; Cochran, 109 F.3d at 667; Jain, 93 F.3d at 442. 110. See United States v. Ballard, 663 F.2d 534, 540 (5th Cir. 1981). 111. See id. "All fiduciary breaches, it seems, could be found to involve the loss of an intangible -an employee's faithful and honest services. But, as the Seventh Circuit has stated, `not every breach of fiduciary duty works a criminal fraud.' " Id. (quoting United States v. George, 477 F.2d 508, 512 (7th Cir. 1973)). 112. See United States v. Brown, 459 F.3d 509, 519 (5th Cir. 2006). 113. See id. at 522 (holding that defendants were not guilty of honest services fraud if they were in pur- suit of a corporate goal, benefitting their company). 114. 720 F.2d 1327 (D.C. Cir. 1983). 115. See id. at 1336. 116. See id. 117. Id. at 1337. 20111 Honest Services Fraud and Fiduciary Duties 723 to the employer. 118 Inherently, the relationship between public officials and the public requires these officials to work for the public's best interest. 119 In contrast, "private sector interactions do not involve duties of, or rights to, the `honest services' of either party." 120 Whereas the private sector uses stan- dards of conduct as a means to an end, the honest services of public officials are the end itself. 121 Consequently, the Eleventh Circuit requires the state to show that the breach of loyalty inherently harmed the relationship's pur- pose. 122 As the purpose of private sector relationships is economic in nature, the breach must have involved a "reasonably foreseeable economic harm. ,123 The difference between this approach and the detriment method is that the lat- ter requires that harm occurred, whereas the active fraud approach only re- quires that harm was foreseeable. The Sixth Circuit also requires a showing that in addition to breaching a fiduciary duty, 124 the "employee foresaw or reasonably should have foreseen that his employer might suffer an economic harm as a result of the breach." 125 Proof of mere breach is insufficient. 126 In rejecting the materiality standard followed by other circuits, the Sixth Circuit explained that its requirement is superior because it "focuses on the intent of the employee, and explicitly ac- knowledges the implicit assumption of the `materiality' standard ...." 127 The rationale behind the circuit's rule is partly that the mail fraud statute should be limited in the scope of its application. 128 Through its holding, the Sixth Circuit avoids an "over - criminalization of private relationships." 129 The final approach requires only private gain. Circuits following the fi- duciary duty and private gain approach do not consider whether the employer or public was harmed or the defendant should have foreseen harm. l 0 As demonstrated by the Seventh Circuit, the only additional requirement to breach is that the defendant must have breached a fiduciary duty with the in- tent to reap private gairi.131 118. See United States v. deVegter, 198 F.3d 1324, 1328, 1330 (11th Cir. 1999) (discussing Lemire and adopting its rationale concerning the difference between public officials and private sector interactions). "When official action is corrupted by secret bribes or kickbacks, the essence of the political contract is vio- lated." Id. at 1328 (quoting United States v. Jain, 93 F.3d 436, 442 (8th Cir. 1996) (quotation marks omit- ted)). 119. See id at 1328. 120. Id. 121. See id. 122. Id at 1328 -29. 123. Id. at 1330. 124. See United States v. Turner, 465 F.3d 667, 675 (6th Cir. 2006) (noting the circuit's requirement that a defendant have owed a fiduciary duty to the victim). 125. United States v. Frost, 125 F.3d 346, 368 (6th Cir. 1997). 126. Id at 368 -69. 127. Id.. The assumption the court references here is that an employer would alter its business conduct if it possessed the relevant information. Id. at 369. 128. Id. at 368 ( "[T]he literal terms suggest that dishonesty by an employee, standing alone, is a crime. Courts, however, have refused to interpret the doctrine so broadly. "). 129. Id. 130. See United States v. Sorich, 523 F.3d 702, 708 (7th Cir. 2008). 131. Id. 724 Washburn Law Journal [Vol. 50 F. Void for Vagueness Doctrine In the midst of the circuit confusion over the honest services statute, many defendants argued that the statute was unconstitutionally vague. 132 To comply with the Due Process Clause of the U.S. Constitution, criminal stat- utes must define clearly the conduct that they proscribe. 133 Statutes fail to meet this standard when they do not "provide a person of ordinary intelli- gence fair notice of what is prohibited, or [are] so standardless that they au- thorize or encourage seriously discriminatory enforcement." 134 There are several methods that a court may employ to cure a statute's de- fects rather than voiding it. 135 These include: (1) narrowing the statute's con- struction, (2) looking to the legislative history, (3) using specialized defini- tions, (4) using common understanding of the language, (5) using the context of the prohibited conduct, and (6) relying on the meaning law enforcement agencies have created. 136 The primary method is narrowing the statute's con- struction; however, this remedy is limited. If a court limits a statute in a way that is not clear from the statutory text, then it has not fixed the vagueness problem. 137 In Skilling, the U.S. Supreme Court was faced with either void- ing or curing § 1346. G. U.S. Supreme Court Case Trilogy: Skilling, Black, and Weyhrauch In June 2010, the U.S. Supreme Court decided three honest services fraud cases. 138 The Court granted certiorari "to determine what conduct Con- gress rendered criminal by proscribing, in § 1346, fraudulent deprivation of the `intangible right of honest services.' "1 9 The main case of the trilogy, Skilling v. United States, had profound effects on honest services cases. An example of the fallout from Skilling occurred in United States v. Lake. 141 In the 1990s, Wall Street investment bankers David Wittig and Douglas Lake became top executives of Kansas' largest public utility, Westar Energy, Inc. 141 In 2003, both men were charged with more than forty counts of wire fraud, money - laundering, circumventing internal financial controls, and conspiracy to commit the same, for questionable multi - million dollar 132. See United States v. Rybicki, 287 F.3d 257, 263 (2d Cir. 2002); United States v. Czubinski, 106 F.3d 1069, 1073 (1st Cit. 1997); United States v. Waymer, 55 F.3d 564, 568 (11th Cit. 1995). 133. Skilling v. United States, 130 S. Ct. 2896, 2935 (2010) (Scalia, J., concurring); see also U.S. CONS1. amend. V. 134. Skilling, 130 S. Ct. at 2935 (quoting United States v. Williams, 553 U.S. 285, 304 (2008)). 135. See Andrew E. Goldsmith, The Void-for- Vagueness Doctrine in the Supreme Court Revisited, 30 Am. J. CRIM. L. 279,294-303 (2003). 136. Id. 137. Id. at 295. 138. Skilling, 130 S. Ct. 2896; Black v. United States, 130 S. Ct. 2963 (2010); Weyhrauch v. United States, 130 S. Ct. 2971 (2010). 139. Black, 130 S. Ct. at 2968. 140. 472 F.3d 1247 (10th Cir. 2007). 141. Id. at 1251. Wittig eventually became president, Chief Executive Officer, and chairman of the board, while Lake was executive vice president and chief strategic officer. Id 2011 ] Honest Services Fraud and Fiduciary Duties 725 transactions. 142 The resulting legal battle spanned seven years. 143 One month before the fmal trial, the government moved to dismiss all charges, and the U.S. District Court for the District of Kansas granted the motion. 144 The government and court had relied on one case decided by the U.S. Supreme Court in June 2010, Skilling v. United States. 145 1. Skilling v. United States Skilling is the first case in the U.S. Supreme Court's trilogy. Jeffrey Skilling was a head executive at Enron Corporation for eleven years. After After serving as chief executive officer for six months, Skilling resigned. 147 Sev- eral months after Skilling's resignation, the corporation's stock plum- meted. 148 An investigation followed and revealed "an elaborate conspiracy to prop up Enron's short-run stock prices by overstating the company's financial well-being." 149 Skilling was indicted for defrauding the investing public of the intangible right of his honest services. 150 He was convicted of nineteen counts including the honest services charge. 151 Skilling appealed, arguing, among other things, that he did not receive a fair trial and that he was improperly convicted of the honest services conspiracy. 152 The Fifth Circuit affirmed. 153 The U.S. Supreme Court granted certiorari 154 and affirmed the Fifth Circuit concerning the fair trial 142. Id. at 1253 -54. In 1997, Westar acquired a home - security company. Id. at 1251. Less than two years later, the security company's share price plummeted. Id. As a result, Westar's share price fell too. Id. In what seemed to be an attempt at saving the shareholder value, Westar tried to split its utility business from its unregulated businesses and merge with another utility company. Id. This attempt failed because the Kan- sas Corporation Commission would not allow it. Id. These actions were the basis of the central charges against Lake and Wittig, as the government claimed that the plan was never to save the company; rather, it was to use the split- merger transaction to trigger provisions in Lake and Wittig's employment contracts that would pay them large sums. Id. The amounts were estimated to be anywhere from $37 million to $65 mil- lion for Wittig, and $18 million to $35 million for Lake. Id. 143. United States v. Lake, No. 03- 40142 -02 -JAR, 2011 U.S. Dist. LEXIS 1365, at *3 (D. Kan. Jan. 11, 2011). Lake and Wittig were indicted in 2003. Id. The case was not disposed of until August 2010. Id. The first trial in the case ended in a hung jury. Id. A second trial resulted in a guilty verdict on almost all of the counts; however, in 2007, the U.S. Court of Appeals for the Tenth Circuit reversed twenty -four of the counts with prejudice to retrial. Id. The Tenth Circuit remanded the remaining counts, and a third trial was set; however, Lake and Wittig moved for dismissal on the grounds of double jeopardy. Id. When the U.S. Dis- trict Court for the District of Kansas denied the motion, Lake and Witting took an interlocutory appeal. Id. 144. Id. at *2. Having failed twice before, federal prosecutors were set to try Lake and Wittig for a third time in September 2010. Id. at *3. 145. See id. at *3. 146. Skilling v. United States, 130 S. Ct. 2896, 2907 (2010). Skilling started as head of one of Enron's subsidiaries. Id Eventually, he became president and chief operating officer. Id. 147. Id. 148. Id. 149. Id. 150. Id. at 2907 -08. Skilling was indicted in 2004. Id. at 2907. The first count charged Skilling with conspiracy to commit securities and wire fraud. Id. at 2908. More than twenty -five counts charged him with securities fraud, wire fraud, making false representations to Enron's auditors, and insider trading. Id. 151. Id. at 2911. Skilling was found not guilty of nine insider - trading counts. Id. His sentence was 292 months in prison, 3 years of supervised release, and $45 million in restitution. Id. 152. Id. Skilling also argued that the jury was prejudiced against him because of the location of his trial and extensive case publicity. Id. at 2908. 153. Id. at 2912. 154. Id. 726 Washburn Law Journal [Vol. 50 argument. 155 Concerning the honest services charge, Skilling argued that § 1346 is unconstitutionally vague. 156 Skilling alleged that § 1346 failed to sufficiently define what behavior it barred and gave prosecutors, policemen, and juries free reign to "pursue their personal predilections." 157 In response, the Court acknowledged that the vagueness argument had support; 158 however, it chose to construe the statute rather than voiding it en- tirely.159 The Court did this by focusing on the body of honest services case law that existed before its ruling in McNally. 160 The Court noted that the his- tory of cases involving mail fraud involved defendants who owed a fiduciary duty. 161 Acknowledging that Congress revived these cases when it enacted § 1346, the Court found that at their core, the cases involved "fraudulent schemes to deprive another of honest services through bribes or kickbacks supplied by a third party who had not been deceived." 12 In narrowing § 1346's application, the Court focused on the article "the" that precedes the phrase "intangible right of honest services." 163 Borrowing the Second Circuit's analysis in United States v. Rybicki,164 the Court agreed that the word "the" im�lied that the right of honest services had a specific meaning to Congress. l 5 Consequently, when Congress enacted § 1346, it meant to address the schemes that had been covered in the circuit case law preceding McNally. 166 Congress had not intended to protect "all intangible rights of honest services[,] whatever they might be thought to be." 167 Al- though there had been confusion among the circuits in the pre- McNally cases, those cases involving bribery and kickbacks were sufficiently clear. 168 The Court considered its holding to have preserved Congress' original inten- tions.169 Confined to bribes and kickbacks, the Court concluded that § 1346 presented no vagueness problem. 170 It also determined that Skilling's 155. Id. at 2925. 156. See id. To meet due process requirements, a criminal statute must satisfy a two - pronged test. First, it must define the offense "with sufficient definiteness that ordinary people can understand what conduct is prohibited." Kolender v. Lawson, 461 U.S. 352, 357 (1983). Second, it must do so "in a manner that does not encourage arbitrary and discriminatory enforcement " Id. 157. Skilling, 130 S. Ct. at 2928 (quoting Kolender, 461 U.S. at 358). 158. Id. at 2929. The Court referenced the lack of unity among the pre - McNally cases as supporting a vagueness challenge. Id. 159. The Supreme Court, 2009 Term: Leading Cases: 111. Federal Statutes and Regulations: C. Honest Services Fraud, 124 HARV. L. REV. 360, 363 (2010). As a rule of statutory construction, the Court prefers limiting a statute to destroying it. Skilling, 130 S. Ct. at 2929. "The elementary rule is that every reasonable construction must be resorted to in order to save a statute from unconstitutionality." Hooper v. California, 155 U.S. 648, 657 (1895). 160. Skilling, 130 S. Ct. at 2928. 161. Id. at 2905. 162. Id. at 2928. 163. Id. at 2929. 164. 354 F.3d 124 (2d Cir. 2003) (en banc). 165. Skilling, 130 S. Ct. at 2929. 166. Id. 167. Id. (quoting Rybicki, 354 F.3d at 137 -38). 168. See The Supreme Court, 2009 Term, supra note 159, at 362 -63. The Court noted that McNally itself involved a kickback scheme. Skilling, 130 S. Ct. at 2930 -31. 169. See id. at 2931. 170. Id. at 2928. 2011 ] Honest Services Fraud and Fiduciary Duties 727 conspiracy conviction was flawed. 171 The government argued that the Court also should have recognized un- disclosed self - dealing, either by a public official or private employee, as fal- ling into the core of pre- McNally cases. 172 In support of its argument, the government noted that McNally itself had involved a nondisclosure of a fman- cial conflict of interest. 173 The Court disagreed, fmding that McNally was more of a kickback case that happened to involve a nondisclosure issue. 174 The Court further noted that, unlike cases involving bribery and kickbacks, cases that dealt with nondisclosure issues failed to reach a consensus on which schemes were covered by the statute. 175 In fact, the Court noted there was a circuit split on the matter. 176 Furthermore, honest services fraud is a predicate offense for other white collar crimes. 177 As such, the Court found a limited application to be very appropriate. 178 The Court found that its con- struction of honest services fraud finally established a uniform national stan- dard, clearly defined honest services, and only reached conduct that was seri- ously culpable. 179 The Court echoed its holding in McNally: "If Congress desires to go further, we reiterate, it must speak more clearly than it has." 180 Justice Alito concurred in part and in the judgment but wrote separately to address Skilling's argument that the jury was biased. 181 Justice Sotomayor concurred in part and dissented in part, disagreeing with the majority's resolu- tion of the biased jury issue. 182 Justice Scalia concurred in part and in the judgment because he found § 1346 to be unconstitutionally vague. 183 Justice Scalia noted that in limiting § 1346 to bribery and kickback schemes, the Court had exceeded its judicial authority and defined a new federal crime. In reaching his conclusion, he focused on the fact that § 1346 is standardless and encourages discriminatory enforcement. 185 Justice Scalia noted the 171. Id. at 2934. The Court did not decide whether the rest of Skilling's convictions also were flawed as a result of the honest services conviction. Id. That issue is for the Fifth Circuit to decide on remand. Id. 172. Id. at 2932; Harvey A. Silverglate & Monica R. Shah, The Degradation of the "Void for Vague- ness" Doctrine: Reversing Convictions While Saving the Unfathomable "Honest Services Fraud" Statute, 2009 -10 CATO SUP. CT. REV. 201, 214 (describing the self - dealing cases as part of the "amorphous outer boundaries of the statute "). 173. Skilling, 130 S. Ct. at 2932. 174. See id. 175. Id. 176. Id. 177. Id. 178. Id. 179. Id. at 2933. 180. Id. (quoting McNally v. United States, 483 U.S. 350, 360 (1987) (internal quotations omitted)). 181. Id. at 2941 -42 (Alito, J., concurring). 182. Id. at 2942 (Sotomayor, J., concurring and dissenting). Justices Stevens and Breyer joined in So- tomayor's opinion. Id. 183. Id. at 2935 (Scalia, J., concurring). Justice Scalia joined in parts I and II of the majority opinion, agreeing that Skilling's argument about the prejudiced jury should fail, and that the lower court decision was error. Id. Justice Thomas joined in Justice Scalia's concurring opinion. Id Justice Kennedy joined in as well, except he did not concur to part III, in which Justice Scalia argued that Skilling's conviction should have been dismissed because § 1346 fails to define what conduct it criminalizes. Id. at 2935, 2940. 184. Id. at 2935. 185. Id. 728 Washburn Law Journal [Vol. 50 principle that "a criminal statute must clearly define the conduct it pro- scribes." 186 Statutes that are unconstitutionally vague cannot be saved "by judicial construction that writes in specific criteria that [the] text does not con- tain. "187 Even if one accepted that Congress intended to at least reach bribery and kickbacks, that does not mean that bribery and kickbacks were all that § 1346 was intended to cover. 188 Justice Scalia agreed with the majority that Congress had adopted honest services to revive the pre - McNally case law; however, he found problems with relying on the majority's case law as binding because it did not supply a clear standard of guilt. 189 Furthermore, those pre- McNally cases were not at all limited to bribery and kickback schemes. 190 In rejecting the intangible rights theory, McNally referred to citizens' rights to have State affairs con- ducted honestly and to truthful and unbiased government. 191 McNally de- scribed prior case law as it related to public officials and their fiduciary rela- tionship to the public. 192 Justice Scalia emphasized the circuit split on the question of the source and scope of fiduciary duties and the honest services fraud statutes. 193 The cases included both public officials and private employees. 194 Justice Scalia noted confusion among the circuits concerning not only whether a duty was owed but also the contours of the duty and its proper source. 195 Did honest services even include private actors? 146 Did it depend on whether the private actor's conduct had an effect on the public? 197 These questions, Scalia noted, had no uniform answer. 198 The majority dismissed this concern in a footnote, stat4 that these issues were not really disputed in bribery and kickback cases. 99 Yet Justice Scalia believed that even if the statute was limited to bribery and kickbacks, the vagueness issue remained. 200 Yes, the particular acts that the statute covers were now defined; however, the major issue spit- ting the circuits remained unsolved. 201 The question of what "fiduciary capacity" is required remains for bribery and kickback cases. 202 186. Id. 187. Id. 188. Id. at 2939. 189. Id. at 2936. McNally itself did not even provide a clear definition of the fraud theory it was over- ruling. Id. Justice Scalia observed that McNally "described prior case law as holding that `a public official owes a fiduciary duty to the public, and misuse of his office for private gain is a fraud.' " Id. 190. Id. 191. Id. 192. See id. 193. Id. at 2936 -37. 194. Id. at 2936. 195. Id. 196. See id. at 2937. 197. See id. 198. See id. at 2936 -38. 199. Id. at 2930 -31 n.41 (majority opinion). In dismissing the issue, the Court focused on cases involv- ing public officials. Id. 200. Id. at 2938 (Scalia, J., concurring). 201. Id. 202. Id. 2011 ] Honest Services Fraud and Fiduciary Duties 729 2. Black v. United States The second case of the trilogy is Black v. United States. 203 Black did not involve any new holdings on the honest services fraud issue; rather, it demonstrated Skilling's effect. Conrad Black was an executive of a publicly held newspaper com- pany.204 He was charged with stealing millions of dollars from the company under the guise of paying himself noncompetition fees. 205 Black was charged with honest services fraud and a more traditional fraud of money or prop - erty.206 As these were the Government's alternative theories, the Govern- ment requested special interrogatories, which would be used to determine the theory upon which the jury actually based its decision. 207 Defense counsel argued against such interrogatories, preferring a general verdict. 208 The de- fense won on this matter. 209 Defense counsel objected to the jury instructions given at trial, which in- structed that a defendant was guilty of honest services fraud if he used his po- sition for private gain and knowingly and intentionally breached a duty of loyalty. 210 The objection was overruled. 211 Ultimately, the jury found Black guilty 212 Black appealed, again arguing that the jury instructions were inva- lid.2 3 The Seventh Circuit affirmed, concluding that it did not find any prob- lem with the honest services instructions, and even if the instructions were wrong, Black could not prevail. 214 The court noted that it was defense coun- sel's choice to challenge the special interrogatories. 215 Had they not done so, it was possible that the jury would have specified the money or property fraud as the basis of its decision, rendering the honest services charge issue moot. 216 The court would not allow defendants to capitalize upon obscurity that they caused. 217 The U.S. Supreme Court first held that its Skilling decision rendered the 203. 130 S. Ct. 2963 (2010). 204. Id. at 2966. The other defendants, John Boultbee, Mark Kipnis, and Peter Atkinson, were also ex- ecutives. Id. Their company, Hollinger International, Inc., owned newspapers in the United States and abroad. Id. at 2966-67. 205. Id. at 2967. 206. See id. at 2966. 207. Id. 208. Id Ina general verdict, the jury does not clarify which of the alternate theories it used to make its decision. See id. The move was strategic, as a general verdict maybe set aside "where the verdict is sup- portable on one ground, but not on another, and it is impossible to tell which ground the jury selected." Yates v. United States, 354 U.S. 298, 312 (1957), overruled on other grounds by Burks v. United States, 437 U.S. 1 (1978). 209. Black, 130 S. Ct. at 2966. 210. Id. at 2967. 211. Id. 212. Id. at 2967 -68. 213. Id. at 2968. 214. Id. 215. United States v. Black, 530 F.3d 596, 603 (7th Cir. 2008), rev'd, 130 S. Ct. 2963 (2010). 216. Id. 217. See id 730 Washburn Law Journal [Vol. 50 jury instructions incorrect. 218 The Court then addressed whether the defen- dants had forfeited their objection to the instructions. 219 The Court focused on the complete lack of any provision in the rules governing criminal proce- dure that provided for submitting special questions to the jury. 220 In contrast, the rules did speak on objecting to instructions. 221 All that defense counsel was required to do was object to the instructions. 222 Having done so, the ob- jection was preserved on appeal. 223 As the objection was valid and Skilling had done away with this type of case, the Court vacated the Court of Appeals' holding and remanded the case. 224 Justice Scalia and Justice Kennedy wrote separately to concur in the judgment. 225 Both agreed that the error was not based upon the fact that § 1346 criminalized only bribery and kickback schemes; 226 rather, the error was "instructing the jury on honest[] services fraud at all." 227 Citing Justice Scalia'2s28opinion in Skilling, they noted that the statute was unconstitutionally vague. 3. Weyhrauch v. United States The last case in the trilogy is Weyhrauch v. United States. 229 Rep. Bruce Weyhrauch was an attorney and a member of the Alaska House of Rep - resentatives. 230 Rep. Weyhrauch was indicted for honest services fraud for allegedly agreeing to vote favorably for legislation that would help an oil company that he wanted to work for. 231 The Ninth Circuit held that an inher- ent standard governed the honest services fraud statute. 232 As such, the gov- ernment was not required to prove any violation of an independent state law to charge a defendant with mail fraud. 233 The court also held that two "core categories" were prohibited by the honest services statute: "taking a bribe or otherwise being paid for a decision while purporting to be exercising inde- pendent discretion" and "nondisclosure of material information. "23 The Eleventh Circuit expressly rejected the state law limiting principle, explaining 218. Black, 130 S. Ct. at 2968. 219. Id. 220. Id. "The sole call for special findings in the Criminal Rules concerns nonjury trials." Id. 221. Id. at 2969. 222. Id. 223. Id. at 2970. The Court also noted that the Seventh Circuit Court of Appeals had given the prosecu- tor inappropriate authority to sanction defense counsel simply by asking for a special verdict. Id. 224. Id. 225. Id. 226. Id. (Scalia, J., concurring in part and concurring in the judgment); 2970 -71 (Kennedy, J., concur- ring in part and concurring in the judgment). 227. Id. at 2970 (Scalia, J., concurring in part and concurring in the judgment). 228. Id. at 2970 -71 (Kennedy, J., concurring in part and concurring in the judgment). 229. 130 S. Ct. 2971 (2010). 230. United States v. Weyhrauch, 548 F.3d 1237, 1239 (9th Cir. 2008), rev'd, 130 S. Ct. 2971 (2010). 231. Id. 232. See id. at 1245. 233. See id. 234. Id. at 1247. 2011 ] Honest Services Fraud and Fiduciary Duties 731 that to adopt it would mean public officials' duties of honesty would vary by state. 235 In its decision, the U.S. Supreme Court had the opportunity to resolve the circuit split on the issue of a duty's source for honest services fraud prose - cution.236 When the Court granted review of the case, hopes were high that it would do just that.237 Unfortunately, the Court did not do so. Instead, it va- cated the Ninth Circuit's decision in one sentence, to be reconsidered "in light" of the Skilling case. 238 Corporate directors and officers might have breathed a sigh of relief when the Court did not affirm Weyhrauch. This is because a uniform federal standard is incredibly vague and would enable prosecutors to create fiduciary duties without any reference to what duties the officers and directors actually held under state law. 239 Unfortunately, the Court did not reject the uniform standard either, and that possibility remains. H. Corporate Background of Fiduciary Duties In certain legal relationships, one party entrusts so much power to the other party that the law imposes a high level of responsibility and accountabil- ity on the entrusted party to protect the interest involved. 2 0 These relation- ships are fiduciary in nature, meaning that they entail a special level of trust. 241 Fiduciary relationships and responsibilities are governed largely by state law. 242 1. Officers and Directors Fiduciary relationships have a long history in the corporate context, 235. Id. at 1246. 236. See Holding, supra note 14, at 212 (noting the circuit split and stating that the U.S. Supreme Court would resolve it in its 2009 -10 term); Podgor, supra note 39, at 63 (commenting that the legal world anx- iously awaited the Court's holdings in the case trilogy). 237. See id. 238. Weyhrauch v. United States, 130 S. Ct. 2971, 2971 (2010). 239. See Casey, supra note 63, at 80. 240. See Edwin W. Hecker, Jr., Fiduciary Duties in Business Entities, 54 U. KAN. L. REv. 975, 976 (2006) ( "A fiduciary relationship is one in which a person transacts business or manages money or property, not primarily for the person's own benefit, but for the benefit of another. "). Examples of fiduciary relation- ships include corporate directors and officers, partners in general partnerships, and partners in limited liability partnerships. Id. at 977 -81. 241. See id. at 976 ( "It involves discretionary authority on the part of the fiduciary and dependency and reliance on the part of the beneficiary. "); Celia R. Taylor, The Inadequacy of Fiduciary Duty Doctrine: Why Corporate Managers Have Little to Fear and What Might Be Done About It, 85 OR. L. REv. 993, 1007 -08 (2006) ( "When an individual agrees to act in a managerial role and thereby `accepts a trust of this sort, that person is obliged to execute it with fidelity and reasonable diligence.' ") (quoting Charitable Corp. v. Sutton, (1742) 26 Eng. Rep. 642, 645 (Ch.)). 242. See J. Robert Brown, Jr., The Irrelevance of State Corporate Law in the Governance of Public Companies, 38 U. RICH. L. REv. 317, 321 -22 (2004) ( "[T]he standard of behavior for officers and directors is traditionally determined by the law of the state of incorporation. "); Wendi J. Powell, Comment, Corporate Governance and Fiduciary Duty: The 'Mickey Mouse Rule" or Legal Consistency, Protection of Share- holder Expectations, and Balanced Director Autonomy, 14 GEO. MASON L. REv. 799, 801 (2007) ( "[S]tate common law still plays a central role in corporate law. "). 732 Washburn Law Journal [Vol. 50 having grown from the courts of equity. 243 Duties arising from these rela- tionships are "vital in controlling corporate management." 244 They create minimum standards that regulate the behavior of officers, directors, and those in c2o46 parable positions. 245 These duties protect corporations' sharehold- ers. Fiduciary duties fall into two broad categories: the duty of loyalty and the duty of care. 247 The duty of loyalty requires those in high positions to "act solely in the best interest of the corporation." 248 Originally, the duty re- quired directors to act only for their beneficiaries' benefit; 49 however, it now allows self - interested transactions as long as they are "approved by a majority of disinterested directors," are fair, and there is no evidence of fraud. 250 The duty of care requires directors to "discharge their duties in the honest belief that the action taken was in the best interests of the company. ,251 This duty protected directors, thereby advancing corporate development. 252 When problems occur as a result of director decision, courts examine "the harm 243. See Taylor, supra note 241, at 1006. "Drawing on these [equitable] roots, a fiduciary relationship, as the idea is used today, implies that forces beyond positive law are at play and that justice and social values must be considered when determining appropriate behavior." Id. at 1007. Also, at the beginning of corporate development in America, corporations were seen "as a glorified form of partnership." Id. at 1008. Those with powerful positions in a corporation were given duties comparable to those held by a partner. Id. 244. Id. at 1006. At the beginning of corporations' history, the participants did not always know one another. Id. at 1010. The fiduciary obligations helped create trust. Id. "Shareholders would entrust their savings to strangers because they trusted those individuals to act in their best interest." Id. 245. Id. at 1006. Rather than "sanctioning specific behavior per se, [fiduciary duties] demand[] that fiduciaries comport with standards of behavior that society deems to be required by the fiduciary position." Id. at 1007. 246. See Hecker, supra note 240, at 977. The shareholders are the primary beneficiaries of fiduciary duties. Id. This is because shareholders do not act as representatives of a corporation but as owners. Id. This is according to the "shareholder primacy norm," which holds that "ultimate control over the corporation should rest with the shareholder class[.] [T]he managers of the corporation should be charged with the obli- gation to manage the corporation in the interests of its shareholders ...... Daniele Marchesani, A New Ap- proach to Fiduciary Duties and Employees: Wrongful Discharge in Violation of Public Policy, 75 U. ON. L. REv. 1453, 1461 (2007) (quoting Henry Hansmann & Reimer Kraaman, The End of History for Corporate Law, 89 GEO. L.J. 439, 440-41 (2001)). Employees are considered "other corporate constituencies," whose interests are protected through other means, such as contracts. Id. 247. See Andrew D. Appleby & Matthew D. Montaigne, Three's Company: Stone v. Ritter and the Im- proper Characterization of Good Faith in the Fiduciary Duty "Triad," 62 Attic. L. REv. 431, 440 (2009) (dis- cussing care and loyalty as "primary fiduciary duties under Delaware law "); Taylor, supra note 241, at 1007 ( "[I]t is generally accepted that corporate officers and directors are subject to duties of care and loyalty. "). 248. Appleby & Montaigne, supra note 247, at 432. The duty of loyalty was created to protect share- holders from the risk of directors acting in their own self - interest. Taylor, supra note 241, at 1009. As origi- nally established, it "imposed a blanket prohibition on self - interested transactions." Id. The duty of loyalty typically involves a conflict of interest. Brown, supra note 242, at 342. The duty is breached if one acts in his or her own self - interest. Appleby & Montaigne, supra note 247, at 432. 249. See Taylor, supra note 241, at 1009. This was known as the "exclusive benefit rule." Id. The rule forbade the fiduciary from acting for his own benefit, even if there would be no cost to the beneficiary. Id. "[A]ny transaction between a corporate officer or director and his or her corporation was automatically void- able." Id. 250. Id. at 1013. 251. Brown, supra note 242, at 339. This duty does not apply when the decision involves a conflict of interest. Id. It "requires that when making decisions, the directors use the amount of care that a person of ordinary prudence would use under similar circumstances." Appleby & Montaigne, supra note 247, at 432. 252. See Taylor, supra note 241, at 1010. As corporations became increasingly prevalent and important to society, the duty of loyalty developed to protect directors who had to make "risky, but necessary, business decisions." Id. at 1011. It also encouraged individuals to contribute their talents to corporations without fear of being penalized for mistakes. See id. 2011 ] Honest Services Fraud and Fiduciary Duties 733 caused by the directors' actions and their reasons for these actions" to determine whether they were negligent. 253 Directors also must act in good faith. 254 Potential liability from breaches of the duty of care since has de- clined.255 In response to case law that shareholders felt rendered the duty of care burdensome, Delaware, the leading state for incorporation, allowed cor- porations to amend their articles of incorporation to eliminate monetary liabil- ity for directors who commit breaches of the duty. 256 A majority of states have followed suit, enacting these charter option statutes. 257 Monetary liabil- ity, however, still may follow from breaches of the duty of loyalty, among other blameworthy acts. 258 Overall, though, enforcing fiduciary duties through civil lawsuits can be challenging. 259 2. Employees In the context of the employer - employee relationship, fiduciary duties are more nuanced. Like the duties of a director, they arose out of the law of agency. 260 In particular, employee fiduciary duties grew from the English law that governed master and servant. 261 Under common law, employees 253. Id. at 1012. The modern application of this is found in the "business judgment rule." Id. at 1019. Under this rule, there is a presumption that directors make their decisions " `on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the company.' " Id. (quoting Aronson v. Lewis, 473 A.2d 805, 812 (Del. 1984)). The presumption is rebuttable. Id. at 1019 -20. 254. See Janet E. Kerr, Developments in Corporate Governance: The Duty of Good Faith and Its Impact on Director Conduct, 13 GEO. MASON L. REv. 1037, 1040 (2006). "[T]he duty of good faith has long been important in fiduciary duty analysis .... [It] applies to the directors' decision - making process and ... is part of the directors' oversight responsibility." Id. (quoting Norman Veasey, Counseling Directors in the New Corporate Culture, 59 BUS. LAW. 1447,1454-56 (2004) (internal quotation marks omitted)). A failure to act in good faith may be shown, for instance, where the fiduciary intentionally acts With a purpose other than that of advancing the best interests of the corporation, where the fiduci- ary acts with the intent to violate applicable positive law, or where the fiduciary intentionally fails to act in the face of a known duty to act, demonstrating a conscious disregard for his duties. Hecker, supra note 240, at 999. Good faith is often considered to be a subsidiary to either the duty of care, duty of loyalty, or of both. See Appleby & Montaigne, supra note 247, at 431 (arguing that Delaware courts need to recognize good faith as "a necessary subsidiary element of both the duty of loyalty and the duty of care "); Hecker, supra note 240, at 994 ( "There is no doubt that good faith has always been an element of the duty of care ... Good faith is also a baseline condition of the duty of loyalty. "); Kerr, at 1049 -51 (discussing the various interpretations of the duty of good faith's standing). 255. See Marc I. Steinberg, The Evisceration of the Duty of Care, 42 Sw L.J. 919,920-21 (1988). 256. Id. at 920. 257. Steven A. Ramirez, The Chaos of Smith, 45 WAsHBuRN L.J. 343,352 (2006) ( "[T]he vast majority of states have provisions that in varying degrees diminish, or completely eliminate, liability for breach of the directors' duty of care. "). See also James J. Hanks, Jr., Evaluating Recent State Legislation on Director and Officer Liability Limitation and Indemnification, 43 BUS. LAW. 1207, 1208-09 (1988) (discussing legislation in more than forty states that has reduced directors' personal liability for monetary damages and approxi- mately thirty states that have adopted the charter option statutes). 258. Steinberg, supra note 255, at 920. Monetary liability still lies for breaches of the duty of loyalty, declaring unlawful distributions, accepting improper personal benefits, and acting in bad faith. Id. 259. Casey, supra note 63, at 17 -25 (discussing various obstacles to using lawsuits to enforce fiduciary duties). 260. See RESTATEMENT (THIRD) OF AGENCY § 1.01 cmt. c (2006). 261. Benjamin Aaron & Matthew Finkin, The Law of Employee Loyalty in the United States, 20 Cow. LAB. L. & POL'Y J. 321, 321 (1999). In the late nineteenth century, the servant's obligations were defined this way: On the part of the servant, there is an implied obligation to enter the master's service and serve 734 Washburn Law Journal [Vol. 50 owe a duty of loyalty to their employers. 262 This duty, however, is not al- ways the same as the fiduciary duty described above; rather, it is often more general and dependent upon an employee's responsibilities. 263 For example, an employee may search for a job, "and even prepare to compete against his employer," all while still employed. 264 The rationale behind an employee's duty of loyalty is different than that of directors, 265 as is the remedy given. 266 Employees and directors pose different threats. "Whereas other fiduciaries pose a threat of surreptitious theft, employees pose a threat of super- effective competition." 267 Although employees owe this duty of loyalty to their em- ployers, employers do not owe this duty to employees. 268 States use different methods to determine whether an employee has breached the duty. 269 Although the general rule is that employees owe a duty of loyalty to their him diligently and faithfully, to obey all his reasonable commands, treat him respectfully, conduct himself morally in his master's family, and to perform the duties incident to his employment hon- estly, with ordinary care, and due regard to his master's interest and business. Id. 262. See Terry A. O'Neill, Employees' Duty of Loyalty and the Corporate Constituency Debate, 25 CoNN. L. REV 681, 685 (1993) ( "All employees owe a fiduciary duty of loyalty to their employer.... .. ). Such a duty arises under the common law of agency, which "encompasses the employment relation, even as to employees whom an employer has not designated to contract on its behalf or otherwise to interact with parties external to the employer's organization." AGENCY § 1.01 cmt. c. The duty requires employees to act only for their employer's benefit, regarding those matters related to the employment. O'Neill, supra, at 694. Unless a contract provides otherwise, this duty only lasts during the employment period. Id. at 694 -95. 263. See Rash v. J.V. Intermediate, Ltd., 498 F.3d 1201, 1211 (10th Cir. 2007) ( "[T]he bonds created by a fiduciary relationship are stronger and the obligations are correspondingly more rigorous than those as- cribed to the duty of loyalty. "). 264. O'Neill, supra note 262, at 694. "Until his employment has terminated, however, he may not en- gage in actual competition against his employer." Id. at 695. This prohibition includes soliciting the em- ployer's customers and hiring fellow employees. Id. The rationale for this rule is that employers trust their current employees and do not expect them to be competitors. Id. at 704. Once an employee leaves, however, the employer no longer should have this expectation and recognize the employee as a possible competitor. Id. Certain conduct, such as revealing trade secrets, is prohibited even after the employment relationship is terminated. Id. at 695. Generally, employees are not required to inform employers of their future employ- ment plans. Id. at 704. In certain situations, however, the employee has to reveal his employment plans to his employer. Id. Whether the employee must disclose this depends upon how much the employee's plan for future employment harms his current employer. Id. 265. See id. at 705. Employees pose a threat to former employers in two ways: knowledge of the em- ployers' methods and secrets, and special relationships with the employers' customers and other employees. Id. 266. See id. at 704. Whereas directors are held personally liable, the remedy for an employee's breach of loyalty "is often an injunction prohibiting him from competing against his former employer for a sufficient time to allow the latter to regroup." Id. at 705. 267. Id. at 706. The difference between the duties owed is explained further by the rationale for the rules. Id. at 705. Fiduciary duties owed by directors rein in the directors' "broad discretion to deploy and dispose of their beneficiaries' property." Id. Also, directors are freer than are employees, as they are not usually closely monitored. Id. In contrast, employees are "subject to the employer's control as to how, when, and under what conditions to perform their services." Id. at 706. 268. Id. at 685 ( "No reciprocal duty of loyalty, however, runs from the employer to its employees. "). The English law of master and servant provided responsibilities for the master as well; however, the Ameri- can model of employment is at -will. See Aaron & Finkin, supra note 261, at 321. This means that "either party is free to terminate the relationship at anytime and for any reason." Id. Unless an employment con- tract exists and states otherwise, an employer is free to terminate an employee at -will and no duty of loyalty would be violated. Id. at 322. 269. See Leslie Larkin Cooney, Employee Fiduciary Duties: One Size Does Not Fit All, 79 Muss. L.J. 853, 861-66 (2010) (comparing various states' approaches to determining fiduciary duties). In cases involv- ing possible breach, courts often employ a balancing test that takes into account (1) the employer's interests, (2) the interests of society, and (3) the employee's right to make a living. O'Neill, supra note 262, at 698. In this process, courts focus on how a decision affects market competition. Id. 20111 Honest Services Fraud and Fiduciary Duties 735 employers, not all states hold the relationship between employer and employee to be presumptively fiduciary. 270 Rather, many courts have devel- oped unique tests for determining whether a fiduciary relationship exists. One such test is found in Wisconsin, which requires that an employee be a "key employee." 271 This is a fact - intensive determination. 272 For a majority of courts, determining whether a fiduciary relationship exists depends on the facts of the case. When examining the facts, courts fo- cus on what job responsibilities an employee held rather than simply looking at the job title. 273 Generally, lower -level employees either owe no fiduciary duty or owe a lesser one than would a higher -level employee. 274 Whatever the method of determining whether a fiduciary duty exists, one factor remains constant: the importance of an employee's position plays a large part in de- termining fiduciary duties. 275 III. ANALYSIS Even after Skilling, courts must decide whether defendants charged with honest services fraud owed a fiduciary duty to their alleged victims. The process for determining whether a fiduciary duty is owed in honest services fraud cases must be different for cases involving private employees than it is for those involving public officials. This is because public officials, by virtue of the positions that they hold, have to represent the public's best interest. 276 Such is not the case for private employees. 277 A. Evaluating the Skilling Decision In its attempt to save § 1346, the Skilling Court seemed to be grasping for straws. 278 The majority claimed to be borrowing analysis from the 270. See Atlanta Mkt. Ctr. Mgmt. Co. v. McLane, 503 S.E.2d 278, 281 (Ga. 1998) ( "The employee - employer relationship is not one from which the law will necessarily imply fiduciary obligations .... "). 271. Burbank Grease Servs. v. Sokolowski, 717 N.W.2d 781, 796 (Wis. 2005). In Burbank, the defen- dant was a manager who held confidential information related to his employer. Id. at 797. 272. Id. at 796. 273. See Rash v. J.V. Intermediate, Ltd., 498 F.3d 1201, 1208 -09 (10th Cir. 2007) (finding that in light of the employee's specific duties, a fiduciary relationship existed despite the defendant being a lower -level employee), Cameco, Inc. v. Gedicke, 724 A.2d 783, 788 -89 (N.J. 1999) (noting that the scope of the fiduci- ary duty of loyalty varies with the nature of the employer - employee relationship). 274. See Physician Specialists in Anesthesia, P.C. v. Wildmon, 521 S.E.2d 358, 360 (Ga. Ct. App. 1999) (focusing on the employee's lack of power to deal on the employer's behalf); Cameco, Inc., 724 A.2d at 789 (noting that the employee was a low -level employee who was not under any contractual obligation to avoid competing with his employer); see generally Cooney, supra note 269. 275. See ATC Distribution Grp. v. Whatever It Takes Transmissions & Parts, Inc., 402 F.3d 700, 715 (6th Cir. 2004) ( "unlike `mere' employees, officers of a company may be presumed to have a fiduciary rela- tionship to the company on that basis alone "); Beverly Hills Concepts, Inc. v. Schatz, 717 A.2d 724, 730 (Conn. 1998) (holding that a junior associate, mostly responsible for researching and drafting documents, could not be held to the level of trust required by a fiduciary duty); TalentBurst, Inc. v. Collabera, Inc., 567 F. Supp. 2d 261, 265 -66 (D. Mass. 2008) (noting that in Massachusetts, an employee must occupy a position of trust and confidence to trigger a fiduciary duty, qualities that positions such as "officers, directors, execu- tives, and partners," clearly had). 276. See United States v. Murphy, 323 F.3d 102, 115 (3d Cir. 2003). 277. See Atlanta Mkt. Ctr. Mgmt. Co. v. McLane, 503 S.E.2d 278, 281 (Ga. 1998). 278. See, e.g., Samuel W. Buell, The Court's Fraud Dud, 6 DUKE J. CONST. LAW & PUB. POL'Y 31, 32 736 Washburn Law Journal [Vol. 50 Second Circuit opinion, United States v. Rybicki, in holding that the core of honest services fraud cases fall into two categories, either bribery or kick- backs. 279 Yet Rybicki discussed a third category of cases: those involving self-dealing. 280 In fact, Rybicki described these central categories in the same sentence. 2 1 Considering RZybicki's language, and the many cases that in- volved failures to disclose, 282 it is clear that the core of the pre- McNally cases involved more than bribery and kickback schemes. Moreover, Rybicki was discussing only cases that fell within the private sector: "The private- sector honest services cases fall into two general groins, cases involving bribes or kickbacks, and cases involving self-dealing." 28P Yet, the Skilling majority completely failed to distinguish between cases involving public officials and those involving private employees, focusing only on the former. B. Vagueness That § 1346 is vague is an understatement. "Honest services" was a term without any clear definition. 284 Whether the statute should be limited to public or private actors was unknown. 285 Courts were unsure if a fiduciary breach was enough, or if something more was required. 286 Historically, the courts have looked for ways to save a statute rather than void it. 287 But these saving methods always have had their limits. 288 The preferred method is to narrow the statute's construction. As As Jus- tice Scalia noted, however, the Court may not add criteria that the statute itself does not clearly contain. 290 This is exactly what the U.S. Supreme Court has done. If Congress really intended for the honest services statute to be limited to bribery and kickback schemes, it would not have used the vague "honest services" term. Rather, it would have enacted a statute that explicitly ad- dressed bribery and kickbacks. None of the other methods of curing a void statute would have sufficed in the case of § 1346. The legislative history could not be used because it was simply unclear. 291 Yes, § 1346 was intended to revive the pre- McNally case (2010) (describing the opinion as "sketchy "); Silverglate & Shah, supra note 172, at 213 (referring to the decision as "inventive," having no textual authority). 279. See Skilling v. United States, 130 S. Ct. 2896, 2929 (2010). 280. United States v. Rybicki, 354 F.3d 124,139 (2d Cir. 2003) (en banc). 281. Id. 282. See, e.g., McNally v. United States, 483 U.S. 350 (1987); United States v. Weyhrauch, 548 F.3d 1237 (9th Cir. 2008); United States v. Waymer, 55 F.3d 564 (11th Cir. 1995); United States v. Bush, 522 F.2d 641, 643 (7th Cir. 1975) (discussing public official who failed to disclose material information). 283. Rybicki, 354 F.3d at 139. 284. See Silverglate & Shah, supra note 172, at 213 (noting that Congress gave no definition of "honest services "). 285. See supra Part II.D. 286. See supra Part II.D. 287. See Goldsmith, supra note 135, at 294 -303. 288. See id. 289. See id. 290. See Skilling v. United States, 130 S. Ct. 2896, 2935 (2010) (Scalia, J., concurring). 291. See McNally v. United States, 483 U.S. 350, 356 (1987) (describing the legislative history as 20111 Honest Services Fraud and Fiduciary Duties 737 law; however, as the circuit split demonstrates, that case law was never clear. 292 There were no specialized definitions to save the statute, as "honest services" is a term without any particular meaning. 293 For that same reason, the Court could not rely on any clear meaning of the language. Neither the context of the prohibited conduct nor the meanin given the statute by prose- cutors could have cured the statute's vagueness.2 4 Prosecutors used the stat- ute to cover any colorable conduct. 295 There was no limited context to speak of because the statute was stretched to unimaginable limits. 296 The honest services statute lacked standards and encouraged arbitrary enforcement. 297 The public was on no more notice as to what conduct was prohibited than were the circuit courts that struggled over just what the statute meant. 298 The Court gave § 1346 a meaning that Congress obviously did not intend. The Skilling majority effectively created a whole new statute aimed at bribery and kickbacks. Unless Congress responds by making § 1346 clear, courts are left with Skilling's limitation. Also, as the Court did not address the issue of the fiduciary duty's proper source, the lower courts are left with a circuit split. C. Why the Fiduciary Duty Issue Still Matters At first glance, it may appear that the focus on fiduciary relationship is now unnecessary; after all, the U.S. Supreme Court has limited the scope of § 1346 to bribery and kickback schemes. One need not be a fiduciary to par- ticipate in either a bribery or a kickback scheme. Yet the question over which the circuits split was never whether one needed to be a fiduciary to commit particular bad acts. The pertinent question was whether one needed to be a fiduciary for the honest services statute to cover those acts. 299 If so, where did the duty come from? The Skilling majority recognized that the honest ser- vices cases involved breaches of fiduciary duties. 300 Moreover, the Court re- peatedly emphasized the importance of referring back to the "core" pre - McNall cases. 301 These core cases were tied to the breach of fiduciary duties. 02 Therefore, the source of fiduciary duties remains at issue. Limiting § 1346 did not resolve the circuit split. Unless Congress responds as it did "sparse "). 292. See supra Part H.D. 293. See Silverglate & Shah, supra note 172, at 213 (noting that Congress never defined the term). 294. See Dudley & Schubert, supra note 4, at 1026 -27 (detailing how prosecutors used the statute to address a wide variety of conduct). 295. See id. 296. See Silverglate & Shah, supra note 172, at 213 (defining the statute as "patently vague "). 297. See id. (discussing how federal prosecutors were afforded wide discretion by § 1346). 298. See id. at 204 (noting that the statute "left citizens without adequate guidance as to what was and was not a federal crime "). 299. See supra Part II.D. 300. Skilling v. United States, 130 S. Ct. 2896, 2930 (2010) ( "[T]he vast majority of cases involved offenders who, in violation of a fiduciary duty, participated in bribery or kickback schemes. "). 301. Id. at 2928. 302. Id. at 2930. 738 Washburn Law Journal [Vol. 50 twenty years ago to the U.S. Supreme Court's invitation to clarify the honest services statute, its reach in the private context remains unclear. D. Circuit Split The uniform federal standard is inadequate because it is vague. As Jus- tice Scalia noted in his Skilling concurrence, the indeterminacy caused by the question of a duty's source "does not disappear if one assumes that the pre - McNally cases developed a federal, common -law fiduciary duty [because] the duty remained hopelessly undefined." 303 Vagueness is undesirable in any area of the law but even more so when an individual's acts may be found criminal. A major purpose behind the Skilling decision was to limit the mail and wire fraud statutes' reach. 304 The uniform federal standard approach clashes with this goal because it allows federal prosecutors and courts to cre- ate crimes as they go, having no set source of the duty being breached. The state law limiting principle was problematic when applied in the public official context. Despite the fiduciary relationship between these offi- cials and the public, this principle allowed officials to escape culpability for conduct merely because there was not a specific law that addressed it. 305 This problem disappears, however, now that § 1346 is limited in scope to bribery and kickback schemes. As all public officials owe a fiduciary duty to the public, and § 1346 specifically makes bribes and kickbacks illegal, the limiting principle is satisfied. When applied to the private sector, the state law limiting principle has rationale that should be applied by all courts faced with honest services fraud. Private individuals are only fiduciaries if the relevant state law gives them that status. 306 As such, the state law limiting principle ensures that only indi- viduals who were on notice as to their fiduciary status will be criminally cul- pable for breaching that status under § 1346. E. Public Official Analysis As the Eleventh Circuit recognizes the honest services of public offi- cials is the purpose of their employment.107 Public officials are paid to serve the best interests of the citizens they represent. 308 The public entrusts power to these officials, and the law should impose a high standard of accountability for the actions that officials take with the public trust. As such, courts should presume that a fiduciary relationship exists between officials and the pub - lic.309 Here, whether an independent state law has been violated is irrelevant. 303. Id. at 2937 (Scalia, J., concurring). 304. See id. at 2928 (majority opinion). 305. See United States v. Murphy, 323 F.3d 102, 116 (3d Cir. 2003). 306. See United States v. Brumley, 116 F.3d 728, 734 (5th Cir. 1997). 307. See United States v. deVegter, 198 F.3d 1324, 1328 (11th Cir. 1999). 308. See id. 309. See United States v. Sorich, 523 F.3d 702, 712 (7th Cir. 2008); Murphy, 323 F.3d 102 at 115. 2011 ] Honest Services Fraud and Fiduciary Duties 739 A public official who participates in a bribery or kickback scheme has clearly violated his fiduciary duties, as such actions are neither taken solely in the public's best interest, nor has the official acted in good faith. 310 The statute, however, covers more than just public officials, 311 F. Private Sector Analysis Honest services fraud cases involving private employees fall into two main categories: those involving harm to the public and those involving harm only to the employer. 312 Cases in which a private employee's actions have harmed the public should not automatically be treated the same as those in- volving a public official simply because the harm is widespread. As courts have noted, every defendant who violates a criminal statute does not, in turn, breach a fiduciary duty owed to the public. 313 The rationale supporting the presumption for the regular public official is lacking here because private re- lationships do not carry an inherent duty to act in the public's best interest. 314 The fact that a private actor's negative conduct could have a widespread ef- fect does not transform the nature of his employment into one that carries fi- duciary obligations to the public. Instead, in considering cases in which pri- vate breaches have caused public harm, courts should employ the Margiotta test. 315 First, the court asks whether others rely on the individual because of a special relationship in the government. 316 If not, the court also asks whether the defendant actually made governmental decisions. 317 If the answer to ei- ther question is affirmative, then that defendant should be treated as a public official. This means that such a defendant would be considered to owe the public a fiduciary duty. For the other category of private employees, those cases involving harm only to the employer, courts should consult state law to determine whether a fiduciary duty ever existed, and if so, whether it was breached. State law de- termines what duties employees owe to their employers. 318 If the relevant state law does not create duties, individuals cannot be held liable for breach- ing them. G. Differences in Civil and Criminal Liability The trend in civil law concerning fiduciary duties has been to make it difficult to hold directors and officers civilly liable for actions that violate 310. See Appleby & Montaigne, supra note 247, at 440 (discussing fiduciary duties of loyalty and care). 311. See Murphy, 323 F.3d at 104. 312. See id. 313. See Murphy, 323 F.3d at 117; United States v. Lemire, 720 F.2d 1327, 1335 (D.C. Cir. 1983) (not- ing that not every fiduciary breach equates to criminal fraud). 314. See Atlanta Mkt. Ctr. Mgmt. Co. v. McLane, 503 S.E.2d 278,281 (Ga. 1998). 315. See United States v. Margiotta, 688 F.2d 108, 122 (2d Cir. 1982). 316. See id. 317. See id. 318. See Brown, supra note 242, at 321 -22. 740 Washburn Law Journal [Vol. 50 their fiduciary responsibilities. 319 Admittedly, if courts limit private sector honest services fraud cases to fiduciary breaches recognized by state law, shareholders and others with corporate influence could lobby to change those state laws, reducing duties to a minimum. 320 But a resort to such action sim- ply would not make sense. Surely, shareholders do not encourage their em- ployees to accept bribes and participate in kickback schemes. Additionally, the purpose of this proposal is not to suggest that fiduciary breaches should not be penalized; rather, its purpose is to further the U.S. Supreme Court's stated goal in Skilling: to limit § 1346 according to pre- McNally case law. 321 The majority of these cases required that a fiduciary duty have been breached for a private- sector honest services charge to lie. 322 There may be a need for reform in civil law to limit the powers held by shareholders so that directors are forced to face the consequences of their un- faithful actions. 323 That is not, however, the direction that civil law has taken. 324 If Congress wants to punish fiduciary breaches in the corporate context, it must enact legislation that is specifically aimed at doing so. The honest services statute is not that legislation. When conduct does not even reach a level of civil liability under law that directly governs a corporate fidu- ciary's actions, that conduct should not be found criminally culpable under a vague criminal statute. 325 H. Proposed Statute As it stands, § 1346 is far from perfect; however, it is the statute that courts are left with. If Congress decides to keep § 1346 with Skilling's brib- ery and kickback limitations, Congress should amend the statute to provide for private sector actors. The amendment should state that "in the case of pri- vate employees, the actor must have breached a fiduciary duty owed to the party deprived of honest services. Whether a fiduciary duty existed is to be determined by the law of the state of incorporation of the actor's place of em- ployment." This proposed amendment to § 1346 would resolve the circuit split. The statute's reach would be clear and explicit. Private conduct still could be regulated by § 1346, but such regulation would be properly limited by the fiduciary duty an actor accepted by virtue of his employment. Private actors would be subject only to penalty for breaches under state law. As the law of the state of incorporation already governs the conduct of the actors, they 319. See Casey, supra note 63, at 8 -9. 320. See generally Steinberg, supra note 255. 321. See Skilling v. United States, 130 S. Ct. 2896, 2928 (2010). 322. See id. at 2930 -31. 323. C( Casey, supra note 63, at 37. 324. See id. at 8-9. 325. See id. at 37 (discussing corporate fiduciaries confronted with criminal liability for actions that do not render them civilly liable). 2011 ] Honest Services Fraud and Fiduciary Duties 741 would be on notice that they were subject to § 1346. IV. CONCLUSION Public officials and private actors must be treated differently in § 1346 cases. Such treatment respects the differing responsibilities held by an actor in each context. It requires the public official to honor the fiduciary relation- ship that he consented to when accepting his position. It does not impose fi- duciary obligations on parties who never agreed to them. State laws reach conduct that falls under the mail fraud statute. As As such, this proposal would not allow culpable defendants to avoid penalty. On the contrary, the fiduciary limitation will further the goal that the U.S. Su- preme Court demonstrated in Skilling: narrowing the application of honest services fraud. It also will ensure that defendants are not held to the high standards of an agent, having enjoyed none of the benefits of that position. This proposal does not aim at achieving uniformity. At first glance, it may seem appealing to have a uniform test to apply in § 1346 cases for de- termining (1) whether a fiduciary duty exists and (2) if so, whether the duty was breached. Such a standard, however, would mean that defendants in many states would have no notice that their actions were subject to federal criminal law. Consider the differences described above in the discussion of fiduciary duty in the corporate context and how it arises. 327 If there were a uniform standard for determining whether a fiduciary duty exists, then defen- dants would be subjected to criminal sanctions for activity that is innocent under the laws of their own state. 328 Perhaps this is why the U.S. Supreme Court passed on the opportunity to create a standard test in Weyhrauch. In 1987, the U.S. Supreme Court limited the scope of the mail fraud stat- ute. 329 The Court then invited Congress, should it disagree, to refine the stat- ute and clarify just what conduct was to be covered. 3 0 Congress accepted this invitation, and since then the statute has been used for all manner of con- duct. 331 Now, the U.S. Supreme Court yet again has narrowed the statute's application. 332 For a second time, the Court has invited Congress, should it disagree, to make the statute clear. 333 Perhaps Congress will again accept the Court's invitation. Until that happens, bribery and kickbacks are the extent of § 1346, and Congress and federal courts must ensure that only fiduciary rela- tionships recognized by state law are subject to this statute's application. 326. See United States v. Murphy, 323 F.3d 102, 104 (3d Cir. 2003) (holding that defendant's conduct was covered by New Jersey bribery laws); Podgor, supra note 39, at 64 (noting that extending the mail fraud statute is "unnecessary because the criminal activity is already covered by other statutes "). 327. See supra Part II.H.2. 328. See supra Part II.H.2. 329. See McNally v. United States, 483 U.S. 350, 360 (1987). 330. Id. 331. See supra Part II.B.1. 332. See Skilling v. United States, 130 S. Ct. 2896, 2928 (2010). 333. See id. at 2933. 742 Washburn Law Journal [Vol. 50 JUDICIAL ETHICS, THE APPEARANCE OF IMPROPRIETY, AND THE PROPOSED NEW ABA JUDICIAL CODE Ronald D. Rotunda* I am delighted to present the 2005 -2006 Howard Lichtenstein Lecture in Ethics, named after Howard Lichtenstein, a prominent senior partner in Proskauer Rose (formerly Proskauer Rose Goetz and Mendelsohn). He worked hard as a lawyer but also found time to become a community leader, who strongly supported the teaching of, and increased scholarship in, legal ethics. I am also honored because Hofstra is host to two of the giants in Legal Ethics. Roy Simon is the Howard Lichtenstein Distinguished Professor of Legal Ethics, as well as the director of Hofstra's Institute for the Study of Legal Ethics. Roy, of course, succeeds the other giant, Professor Monroe H. Freedman as the Lichtenstein Professor, who had held the position since its establishment in 1989.2 If we had to pick the one person who first created modern legal ethics as a serious academic specialty, it would be Monroe. Although he has never hesitated to criticize the American Bar Association when it has confused legal ethics with trade barriers or with corporate fraud,4 it speaks well of the ABA that it awarded him its highest award for professionalism, in recognition of a "lifetime osf original and influential scholarship in the field of lawyers' ethics. " Monroe and Roy have made Hofstra the Mecca for Legal Ethics. All of us who labor in this area will make many pilgrimages to this place. And, like true pilgrims, we do it because we want to do it, not because we must. a George Mason University Foundation Professor of Law, George Mason University School of Law. 1. It is a small world: Many years ago, I interviewed with Proskauer Rose, but, at the time, the lure of Washington, D.C. was too strong. 2. See generally Ralph J. Temple, Monroe Freedman and Legal Ethics: A Prophet in His Own Time, 13 J. LEGAL. PROF. 233 (1988). This article lists many of Professor Freedman's major publications through 1988. If Monroe had stopped there, he would be one of the most productive faculty members of any law faculty, but, in the nearly two decades since that time, he has not stopped, or even slowed down. His prolific scholarly contributions continue. 3. Id. at 234. 4. E.g., Monroe H. Freedman, The "Corporate Watch Dogs" that Can't Bark: How the New ABA Ethical Rules Protect Corporate Fraud, 8 UDC/DCSL L. REv. 225 (2004). 5. ABA Michael Franck Award Citation 1998: Monroe H. Freedman, http: / /www. Hofstra.edu/pdf/law—mfreeman—franck_award.pdf 1337 1338 HOFSTRA LAW REVIEW [Vol. 34:1337 I. INTRODUCTION In any presentation on legal ethics, it is common for the speaker to argue that we need more ethics. As the Duchess of Windsor (and others) once said, one can never be too thin or too rich. So also, many people think that one can never be "too ethical." But neither saying is correct. Paris Hilton is proof than one can be too rich, and any anorexic is proof that one can be too thin. One can also be too ethical. We sometimes think, loosely, that ethics is good and that therefore more is better than less. But more is not better than less, if the "more" exacts higher costs, measured in terms of vague rules that impose unnecessary and excessive burdens. Overly -vague ethics rules impose costs on the judicial system and the litigants,6 which we should consider when determining whether to impose ill- defined and indefinite ethics prohibitions on judges. Unnecessarily imprecise ethics rules allow and tempt critics, with minimum effort, to levy a plausible and serious charge that the judge has violated the ethics rules.' Overuse not only invites abuse with frivolous charges that have the patina of legitimacy, but also may eventually demean the seriousness of a charge of being unethical.$ Compare, for example, the position of the B'nai B'rith, which rightly objects to those who use the term "Holocaust" lightly .9 A sniper who kills a dozen people horrifies us, but it is wrong to call that evil deed the "Holocaust," because there is nothing like the Holocaust except the Holocaust. Some people are strong believers in vegetarianism, but meat eaters are not like the Nazis, and it is wrong for PETA (People for the Ethical Treatment of Animals) to use Holocaust imagery in their advertising campaigns, and compare the treatment of farm animals to the victims of the Nazi concentration camps.10 We demean the term "Holocaust" when we use it flippantly.I l 6. See Simonson v. General Motors Corp., 425 F. Supp. 574, 578 (E.D. Pa. 1976) (noting that there is an obligation not to recuse without valid reasons because of the burden that recusals place on colleagues). See also Blizard v. Frechette, 601 F.2d 1217, 1221 (1st Cir. 1979) (arguing that a judge has an obligation not to recuse himself when no probative evidence reasonably gives rise to doubt as to his impartiality, and in this sense, the court said, there is a "duty to sit" unless there is a duty to disqualify). 7. See Letter from Ronald C. Minkoff and Ronald E. Mallen, Assoc. of Prof 1 Responsibility Lawyers ( "APRL "), to ABA Commission on the Model Code of Judicial Conduct (June 30, 2004), at 6, available at http : / /www.abanet.org /judicialethics /resources /comm_rules_minkoff 063004.pdf, [hereinafter APRL Letter]. 8. See id. 9. See Press Release, B'nai B'rith Int'l, B'nai B'rith Condems Evangelist's Statement on Stem Cell Research as "Outrageous and Irresponsible" (Aug. 9, 2005), http://bnaibrith.org/pubs/Pr/050810—condemnStem.cfm. 10. See Anti- Defamation League, Holocaust Imagery and Animal Rights (Aug. 2, 2005), 20061 THE APPEARANCE OF IMPROPRIETY 1339 I think that charging someone with an ethics violation is also serious business. We will eventually demean the term and its importance when we routinely throw around the charge. Oliver Wendell Holmes once said that an allegation that a law violates equal protection "is the usual last resort of constitutional arguments," because anyone can make it. 12 All laws make distinctions and so the lawyer can always allege that the distinction violated equal protection. The Court responded to the problem by defining equal protection with care, and creating types of equal protection. Lawyers can still make the argument of an equal protection violation but they will typically lose, unless they show that the classification requires higher scrutiny than mere rational basis. What is true of equal protection is not true of judicial ethics. Today, any lawyer or member of the media can flippantly accuse a judge of violating the "the appearance of impropriety" in either his or her private or official capacity because the title of Canon 2 of the ABA Model Code of Judicial Conduct boldly tells us that the judge must avoid such appearances. 13 Courts and commentators routinely treat this title of Canon 2, forbidding the "appearance of impropriety" as a rule, violation of which subjects the judge to discipline and disqualification. However, this rule does not appear in Canon 3, which is the rule regulating judicial qualification. On that issue, the ABA Model Judicial Code tells us that a judge must disqualify herself where her "impartiality might reasonably be questioned. "14 Then, it lists various specific instances requiring disqualification. These specific instances are fairly clear and reasonably defined. The broader, catch -all rule— "impartiality might reasonably be questioned " —is much more vague, but it is crystal clear compared to "appearances of impropriety." Unlike the Court's treatment of equal protection, the ABA has not defined the "appearance of impropriety" with any precision. In this Article, I will focus on "appearance of impropriety" because it is even more vague than "impartiality might reasonably be questioned." The test, "impartiality might reasonably be questioned," vague as it is, does not forbid "appearances" of impartiality. Moreover, it specifically requires that any allegation of bias must be "reasonable." 15 Finally, the http: / /adi.org/ anti_ semitismlholocaust_imagery.asp. PETA eventually apologized for its exhibit. Id. 11. See, e.g., B'nai B'rith Int'l, supra note 9. 12. Buck v. Bell, 274 U.S. 200,208 (1927). See also Skinner v. Oklahoma ex rel. Williamson, 316 U.S. 535, 539 -40 (1942). 13. MODEL CODE OF JUDICIAL CONDUCT Canon 2 (1990). 14. MODEL CODE OF JUDICIAL CONDUCT Canon 3E(1) (1990). 15. However, the use of "might" invites a broad interpretation of "reasonably." See the discussion in MONROE H. FREEDMAN & ABBE SMITH, UNDERSTANDING LAWYERS' ETHICS 1340 HOFSTRA LAW REVIEW [Vol. 34:1337 Code actually attempts to define "impartiality" in the terminology section. Something is "impartial" when there is an "absence of bias or prejudice in favor of, or against, particular parties or classes of parties, as well as maintaining an open mind in considering issues that may come before the judge. "16 That definition, compared to "appearances of impropriety," exhibits surgical precision. I do not mean to suggest that we should embrace with gay abandon the language of "impartiality might reasonably be questioned." That phrase can be an excuse for careless and sloppy draftsmanship. We expect lawyers and judges to be good draftsmen, particularly when they are drafting in an area where they are unusually knowledgeable —the law governing judging. An example of poor drafting is found in the official Comment to Canon 3E(l). It tells us "if a judge were in the process of negotiating for employment with a law firm, the judge would be disqualified from any matters in which that law firm appeared, unless the disqualification was waived by the parties after disclosure by the judge. "" One wonders why the drafters did not simply add that example (the only one it gives) in the list of specific instances where the judge must disqualify herself.1' If there are no exceptions to the prohibition (and the phrasing of the example suggests none), then it really is a specific prohibition (like the other ones listed in this Canon), and should be listed there. It certainly is easier for a judge to know what the rule is by looking at specific prohibitions rather than a Comment, which the ABA warns us does not create additional rules. 19 We simply do not know why the ABA chose to place the restriction on seeking private law firm employment in the Comment rather than in the rule. Still, for all its problems, the test of "impartiality might reasonably be questioned" is not as troublesome as is the even more formless, "appearance of impropriety." And, because the duty of the judge to avoid an appearance of impropriety is a separate rule ,20 its invocation is not limited to charges requiring disqualification. Instead, it adds a new arrow to the quiver of anyone attacking a judge, for if there is an "appearance of impropriety' —if the judge has done something that is wrong, or appears wrong —that is yet an additional reason to disqualify a §§ 9.05 -9.07, 239 -45 (3d ed. 2004). Professors Freedman and Smith present a forceful argument in favor of the "appearance of impropriety rule." On that issue, we disagree. 16. MODEL CODE OF JUDICIAL CONDUCT Terminology (2004). 17. MODEL CODE OF JUDICIAL CONDUCT Canon 3E(1) emt. (1990). 18. See Leslie W. Abramson, Appearance of Impropriety: Deciding When a Judge's Impartiality "Might Reasonably Be Questioned", 14 GEO. J. LEGAL ETHICS 55, 60 -61 (2000). 19. See MODEL CODE OF JUDICIAL CONDUCT pmbl. (1990). 20. MODEL CODE OF JUDICIAL CONDUCT Canon 2 (1990). 20061 THE APPEARANCE OF IMPROPRIETY 1341 judge, because she is hearing a case in violation of Canon 2. Hurling the charge of "appearance of impropriety" (if I may mix metaphors) is like using a blunderbuss. Nowadays, we might describe a blunderbuss as a weapon of terror. It was not a very precise weapon, and marksmen never used it. Instead, it was good for crowd control, when the goal was to shoot multiple balls simultaneously in the hope of hitting something. The ABA has chosen to arm any lawyer or any pundit with the equivalent of a blunderbuss to attack a judge by giving its imprimatur to a charge of violating the "appearances of impropriety." The attack on the judge's ethics seldom results in discipline or disqualification, but it does serve to besmirch and tarnish a judge's reputation. I do not blame lawyers who use the appearances rule when it helps their clients. We train lawyers to do exactly that. Judges and lawyers created the prohibition on avoiding the appearances of impropriety and we should expect lawyers to use it if it may benefit their clients. It is useless to urge lawyers not to use the charge because they, like countries, are loath to engage in unilateral disarmament. If some lawyers can use the charge when it might benefit their clients, then other lawyers will use it in order not to suffer a competitive disadvantage. Nor can I hold responsible laypeople who —after piling supposition on top of innuendo and allegation— charge that the judge who ruled against them must have been biased because of what she did or did not do, and if the judge did not commit an impropriety, at least, there was the "appearance" of one. The typical dictionary defines "impropriety," as "improper" or "unsuitable. "21 The thesaurus treats "impropriety" as a synonym for "rudeness," "unseemliness," "bad taste," "faux pas," "gaffe," or "inelegance. "22 Laypeople read the rule and think that it means what it says, judges must not only avoid "impropriety " —a much more open -ended term than "wrongful conduct" or "partiality" —but also they must avoid something that is not improper at all, but "appears" to be improper. Instead, I lay the responsibility for the problem directly with those people who created and lobbied for Canon 2. They share equal billing with those members of the ABA Joint Commission to Evaluate the Model Code of Judicial Conduct23 who are now drafting a revised 21. See, e.g., WEBSTER'S NEW INTERNATIONAL DICTIONARY OF THE ENGLISH LANGUAGE 1252 (2d ed. 1959). 22. See, for example, "impropriety" in the built -in thesaurus in Microsoft Word; or Impropriety, Thesaurus.com, http: / /thesaurus. reference .com /search ?q = impropriety. 23. See ABA, About the Commission, http: / /www.abanet .org/judicialethics /about.html (last visited June 17, 2006). 1342 HOFSTRA LAW REVIEW [Vol. 34:1337 Judicial Code that will make the "appearances" rule even broader and more expansive. The proposed ABA Judicial Code will move the "appearances" language from the title of Canon 2 (where the ABA has argued the language is hortatory and aspirational)24 to a new black letter prohibitory rule, Rule 1.02: "A judge shall avoid impropriety and the appearance of impropriety. "21 I am sure that the drafters meant well (we all do). But they were wrong. They were wrong when they added the prohibition in the 1990 Judicial Code and they are wrong to retain and strengthen it in the proposed new ABA Judicial Code. They believed that a rule prohibiting the "appearances of impropriety" will make the world think better of judges, but that belief is inconsistent with the evidence. The world will not think less well of judges if anyone can launch a plausible claim that any judge engaged in an act or omission that was not improper but might appear to be improper. Accompanying the advancement of civilization has been the rule of law. As we have become more civilized, there has been a shift from judgments made on an ad hoc basis by the King or his representatives to relatively uniform rules enacted by a law- making body. The vague and indefinite term, "appearance of impropriety," is a step backward in that journey. Instead of rules, we have the conclusory prohibition of a vague term that invites ad hoc and ex post facto judgments. That is the reason why one federal court held that the "appearance of impropriety" standard in the New York Code 26 governing judges is unconstitutional and void for vagueness, a decision that the Second Circuit reversed on procedural grounds.27 Other courts have expressed similar concerns about the vagueness of it all: Propriety however, is often in the eye of the beholder. A given individual will find conduct to be within or beyond the bounds of propriety to the extent the conduct comports with that individual's own 24. ABA, ANNOTATED MODEL CODE OF JUDICIAL CONDUCt 4 (2004) ( "Two of the Canons are aspirational (Canons 1 and 2) .... "). See discussion infra note 178 and accompanying text. 25. ABA JOINT COMM'N TO EVALUATE THE MODEL CODE OF JUDICIAL CONDUCT, FINAL DRAFT REPORT, Canon 1, Dec. 14, 2005, available at http : / /www.abanet.org/judicialethics /Canon I Final. pdf [hereinafter FINAL DRAFT REPORT, Canon 1]. 26. N.Y. COMP. CODES R. & REGs. tit. 22, § 100.2 (2004) provides: "A judge shall avoid impropriety and the appearance of impropriety in all of the judge's activities." 27. See Spargo v. New York State Comm'n on Judicial Conduct, 244 F. Supp. 2d 72, 91 (N.D.N.Y. 2003), rev'd on other grounds, 351 F.3d 65 (2d Cir. 2003), cert. denied, 541 U.S. 1085 (2004) (federal abstention). The trial court added that the Judicial Commission's enforcement of § 100.2A "must be arbitrary and subjective, for lack of any specific, objective standards to apply." Id. 2006] THE APPEARANCE OF IMPROPRIETY 1343 highly subjective views of propriety.... [D]isciplinary rules expressed in terms of "propriety" risk mercurial existence rising and falling with the temper of the moment. Such rules place ipse dixit powers, antithetical to rule of law, in the hands of disciplinary boards and courts applying such rules. 28 I offer a simple solution to the problem the ABA should not adopt its proposed Rule 1.02, which provides: "A judge shall avoid impropriety and the appearance of impropriety. "29 Similarly, the ABA should repeal the associated commentary. I am not arguing that the rules governing judges should be made weaker. Instead, I am arguing that they should be made more specific.30 The late Justice Goldberg was correct when he called the "appearances" rule "unbelievably ambiguous. 01 We can do better. The ABA should replace the vague "appearances" rule with specific restrictions. It can codify what the case law decides32 and replace the indefinite "appearances" with less nebulous rules that tell us what constitutes the "appearance" of impropriety when it is not an "impropriety." 28. In re Larsen, 616 A.2d 529, 580 -81 (Pa. 1992) (per curiam). 29. FINAL DRAFT REPORT, Canon 1, supra note 25, at R. 1.02. 30. See, e.g., Editorial, Weakening the Rules forJudges, N.Y. TIMES, May 22, 2004, at At 6. The proposed change was apparently driven largely by an overblown concern about the "vagueness" of the appearance -of- impropriety standard. Judges interpret similar terms every day, and there now exists a substantial body of case law and ethics opinions construing the type of behavior that gives rise to an appearance of impropriety. The proper way to address any undue murkiness, in any event, is for the commission to provide further guidance, not to dilute expectations. Id. (emphasis added). See also the statement of Mark I. Harrison, Chairman, ABA Joint Commission to Evaluate the Model Code of Judicial Conduct, responding: "One change proposed in our partial draft of revisions to the American Bar Association Model Code of Judicial Conduct is to strengthen —not weaken —the standard requiring judges to avoid even the appearance of impropriety, by moving a prohibition to a more prominent place in the rule." Mark I. Harrison, Letter to the Editor, N.Y. TIMES, May 29, 2004, at At 4. Note that the Editorial invited the ABA to codify what "appearances" actually means. The ABA Commission declined that invitation. 31. Nonjudicial Activities of Supreme Court Justices and Other Federal Judges: Hearings on S. 1097 and S. 2109 Before the Subcomm. on Separation of Powers of the Senate Comm. on the Judiciary, 91st Cong. (1969) (testimony of Justice Arthur Goldberg), quoted in Cynthia Gray, Avoiding the Appearance of Impropriety: With Great Power Comes Great Responsibility, 28 U. ARK. LITTLE ROCK L. REv. 63, 93 n.187 (2005). 32. The proposals of the Association of Professional Responsibility Lawyers offers well - drafted language that codifies what "appearances" should really mean. See APLR Letter, supra note 7, at 6 -13. Commentators have already tried to make sense of the case law. The ABA can also build on their analyses. See generally Leslie W. Abramson, Canon 2 of the Code of Judicial Conduct, 79 MARQUETTE L. REv. 949 (1996). 1344 HOFSTRA LAW REVIEW [Vol. 34:1337 II. "APPEARANCE OF IMPROPRIETY" UNDER THE ABA's MODEL CODE FOR LAWYERS If a rule prohibiting the "appearance of impropriety" is a good one, we would expect that the ABA would apply it to lawyers as well. Surely no one would recommend that lawyers engage in the appearance of impropriety. If someone gave a young lawyer fatherly advice, it would include the injunction to avoid the appearance of impropriety. Yet, it is one thing to believe in the concept and another to create an enforceable rule. The "appearances of impropriety," as an ethical prohibition, is a useful weapon to attack lawyers. Would the ABA give this weapon to laypeople to attack lawyers? To attack us? The answer is no. We lawyers write the rules and we are safe, for we will not be governed under a standard that threatens to take away our license if we engage in the "appearance of impropriety," because we do not know what it means. But what is not good enough for the goose is good enough for the gander. The ABA briefly flirted with the "appearances of impropriety" standard for lawyers but never adopted it as an enforceable rule. The ABA first adopted ethics rules for lawyers in 1908, when it approved thirty-two "Canons of Professional Ethics" at its thirty-first annual meeting at Seattle, Washington.33 Eventually, amendments and additions led to ABA approval of fifteen additional Canons.34 Some principles or Canons were quite specific —for example, "[w]hen a member of the firm, on becoming a judge, is precluded from practicing law, his name should not be continued in the firm name. ,35 Others were quite vague and sound more like Law -Day speeches —for example, "above all a lawyer will find his highest honor in a deserved reputation for fidelity to private trust and to public duty, as an honest man and as a patriotic and loyal citizen. "36 But none of these principles required the lawyer to avoid the "appearance of impropriety. 07 33. The ABA used these Canons, as amended, until the adoption of the Model Code in 1970. See THOMAS D. MORGAN & RONALD D. ROTUNDA, MODEL RULES OF PROFESSIONAL CONDUCT AND OTHER SELECTED STANDARDS ON PROFESSIONAL RESPONSIBILITY 688 n.* (2006) [hereinafter MORGAN & ROTUNDA (2006)]. 34. CANONS OF PROF'L ETHICS (1908), reprinted in MORGAN & ROTUNDA (2006), supra note 33, at 697 -700 (Canons 33 -47). 35. Id. at 697 (Canon 33, "Partnership- Names "). 36. Id. (Canon 32, "The Lawyer's Duty in Its Last Analysis "). 37. The "appearance of impropriety" standard "did not receive overt expression until the promulgation of the Code in 1970," but we can find case law that said that there was an "appearance of evil" concept that was "implicit in several of the old Canons of Professional Ethics ...... Woods v. Covington County Bank, 537 F.2d 804, 813 (5th Cir. 1976) (quotations omitted). Older ABA 20061 THE APPEARANCE OF IMPROPRIETY 1345 That phrase does not appear until the ABA Model Code of Professional Responsibility of 1970. 8 Canon 9's title reads: "A Lawyer Should Avoid Even the Appearance of Professional Impropriety. "39 The ABA never intended the Canons (which are merely the titles to rules) to be enforceable rules of discipline. They are more like chapter headings. The "Preliminary Statement" to the Model Code made that point explicitly: The Canons are statements of axiomatic norms, expressing in general terms the standards of professional conduct expected of lawyers in their relationships with the public, with the legal system, and with the legal profession. They embody the general concepts from which the Ethical Considerations and the Disciplinary Rules are derived 40 In other words, the "appearance of impropriety" was itself never a rule —it is a reason why we have some rules that are as strict as they are. 4 1 There is nothing wrong with using "appearances" as the rationale to create a rule that may seem stricter than it otherwise would have to be. The problem with "appearances" as a "rule" is that it is not a test, for it offers no reasonably clear guidelines. In contrast, a clear rule is neither fuzzy nor an invitation to ex post facto analysis, even if the motivation for the strict rule derives from a concern about appearances. For example, in the context of the law governing the ethics of lawyers, it is because of appearances that we usually impute to all lawyers in a firm the conflicts that any one of them might have under Rules 1.7 and 1.9.42 The "appearances of impropriety" is a reason for the ethics opinions also referred to "an appearance of evil." Id. 38. The ABA House of Delegates adopted the Model Code of Professional Responsibility on August 12, 1969. It was scheduled to take effect in 1970. Later, motivated by antitrust concerns, the ABA changed the name to "Model Code," and no longer listed an "effective date." The House amended the Model Code in February 1970, February 1974, February 1975, August 1976, August 1977, August 1978, February 1979, February 1980, and August 1980. For a copy of the latest version of the ABA Model Code, see MORGAN & ROTUNDA (2006), supra note 33, at 269 -366. The ABA replaced the Model Code with the Model Rules in 1983. 39. MODEL CODE OF PROF'L RESPONSIBILrrY Canon 9 (1981), reprinted in MORGAN & ROTUNDA (2006), supra note 33, at 343 (emphasis added). 40. MODEL CODE OF PROF'L RESPONSIBILrTY Prelim. Stmt. (1981), reprinted in MORGAN & ROTUNDA (2006), supra note 33, at 270 (emphasis added). 41. See, e.g., Roy Simon, Chinese Wall Fends Off Disqualification in First Department, N.Y. PROF'L REsP. REP. (NYPRR, Roy D. Simon ed., New York, NY) Sept. 1998, at 6 -7, reprinted in Roy Simon, Conflicts of Interest and Legal Malpractice, in 1 LEGAL MALPRACTICE: TECHNIQUES TO AVOID LLABILrrY 17, 45 (PLI Litigation & Administrative Practice Series, Course Handbook Series No. H -608, 1999) (illustrating the basis of the New York rule that disqualifies a firm from opposing "a former client in a substantially related matter" in order to "avoid the appearance of impropriety "). 42. But Rule 1.10(a) does not impute Rule 1.8. MODEL RULES OF PROF'L CONDUCT R. 1.10(a) (2004). 1346 HOFSTRA LAW REVIEW [Vol. 34:1337 imputation, but "appearances" is not a rule itself. Likewise, when we turn to judicial ethics, it is because of appearances and the need for a bright line that the federal judicial code requires a judge to disqualify herself in any case involving Ford Motor Company if she owns even one share of Ford stock.43 Similarly, it is the general rule that a judge should disqualify herself if a close relative is on the brief. The mere fact that the relative is a member of the firm is not enough to require disqualification 44 However, because of appearances, most of the U.S. Supreme Court Justices announced they would abide by a different rule: they would disqualify themselves not only when the relative was actually "acting as a lawyer in the proceeding," but also when the relative, though no longer directly involved in the matter, had been "lead counsel" at an earlier stage of the case. 45 I have no problem with this stricter rule for the Supreme Court. My objections to the "appearances" test relate to vagueness, unpredictability, and unfairness. These objections do not apply when one decides to draw a bright line, although one can certainly argue that the line should be drawn differently.46 In other words, a concern of appearances may be a good rationale for a bright line rule, but a concern for appearances offers too little guidance to be a rule itself47 When the ABA drafted the Model Code of Professional Responsibility, it intended that the "appearance" standard for lawyers would simply embody a general foundation that the drafters of the 43. See U.S.C. § 455(b)(4) (2000) (requiring a judge to disqualify herself if she has a "financial interest" in the subject matter); id. § 255(d)(4) (defining "financial interest" as "ownership of a legal or equitable interest, however small "); see also Fed. Comm. on Codes of Conduct, Advisory Op. 20 (revised 1998), available at http: / /www.uscourts.gov /guide /vol2 /20.htmi (construing the facially similar text of Canon 3 of the Code of Conduct for United States judges to require similar disqualification by judges). 44. See MODEL CODE OF JUDICIAL CONDUCT Canon 3E(1)(d)(ii) (1990) (suggesting that disqualification is appropriate if the lawyer- relative "is acting as a lawyer in the proceeding "). The associated Commentary makes clear, "[tlhe fact that a lawyer in a proceeding is affiliated with a law firm with which a relative of the judge is affiliated does not of itself disqualify the judge." Id. The federal rule is the same. 28 U.S.C. § 455(b)(5)(ii) (2000). See also JEFFREY M. SHAMAN ET AL., JUDICIAL CONDUCT AND ETHICS 120 (1990) (explaining that disqualification is only required if the relative- attorney is actually representing the party in a case before the judge). 45. Supreme Court Justices Adopt Recusal Policy, JUD. CONDUCT REP., Fall 1993, at 6. The seven participating Justices were William H. Rehnquist, John Paul Stevens, Sandra Day O'Connor, Antonin Scalia, Anthony M. Kennedy, Clarence Thomas, and Ruth Bader Ginsburg. Id. 46. See discussion in Steven Lubet, Disqualification of Supreme Court Justices: The Certiorari Conundrum, 80 MINN. L. REv. 657, 660 -61, 676 (1996). 47. See generally Robert C. Hacker & Ronald D. Rotunda, Officers, Directors, and Their Professional Advisers: Rights, Duties, and Liabilities, 3 CORP. L. REv. 82 (1980); Ronald D. Rotunda, Sister Act: Conflicts of Interest ivith Sister Corporations, I J. INST. STUDY LEGAL ETHICS 215 (1996). 20061 THE APPEARANCE OF IMPROPRIETY 1347 Model Code would use when they created specific Disciplinary Rules ( "DRs "). Only the DRs are written in the style of a statute, and the Model Code makes clear that it only intends DRs to be enforceable .48 The "appearance of impropriety" does not appear in any DR, although it does appear as the title to DR 9 -101 ( "Avoiding Even the Appearance of Impropriety ") 49 The actual DR 9 -101 merely imposes a few very specific limits on lawyers accepting private employment in matters where they had acted as a judge or public employee. It also prohibits lawyers from stating or implying that they can influence any government official on corrupt grounds.so The phrase "appearance of impropriety" also appears in a few Ethical Considerations ( "ECs ").51 The drafters of the Model Code equally made explicit that the ECs are not enforceable. They are only "aspirational in character and represent the objectives toward which every member of the profession should strive. "sz The Model Code of Professional Responsibility combined two goals that are not inconsistent but also not congruent. The part that is written in statutory form tells lawyers what they must not do; the part written like grandfatherly advice tells lawyers things that they should keep in mind, like avoiding the appearance of impropriety. Nonetheless, the use of the "appearances" language in the title to Canon 9 and the references in a few of the ECs create a beguiling test, and it should have been expected that lawyers would seek to use that language to attack their opponents, particularly in disqualification cases. There is a long body of case law, ethics opinions, and commentators cautioning against this open -ended charge.53 For example, an ABA Ethics Opinion warned, if the "appearance of impropriety" language were a disciplinary rule, "it is likely that the determination of whether particular conduct violated the rule would have degenerated ... into a 48. See MODEL CODE OF PROF'L RESPONSIBILITY DR 1- 102(A)(1) (1981), reprinted in MORGAN & ROTUNDA (2006), supra note 33, at 274 (advising that a lawyer may not "[v]iolate a Disciplinary Rule "); MODEL CODE OF PROF'L RESPONSIBILITY Prelim. Stmt. (1981), reprinted in MORGAN & ROTUNDA (2006), supra note 33, at 271 (`The Disciplinary Rules, unlike the Ethical Considerations, are mandatory in character. The Disciplinary Rules state the minimum level of conduct below which no lawyer can fall without being subject to disciplinary action. "). 49. MODEL CODE OF PROF'L RESPONSIBILITY DR 9 -101 (1981), reprinted in MORGAN & ROTUNDA (2006), supra note 33, at 345. 50. Id. 51. See, e.g., MODEL CODE OF PROF'L RESPONSIBILITY EC 5 -6, 9-3, 9 -5, 9 -6 (1981), reprinted in MORGAN & ROTUNDA (2006), supra note 33, at 308, 344. 52. MODEL CODE OF PROF'L RESPONSIBILITY Prelim. Stmt. (1981), reprinted in MORGAN & ROTUNDA (2006), supra, note 33, at 270 (emphasis added). 53. See Ronald D. Rotunda, Alleged Conflicts of Interest Because of the "Appearance of Impropriety", 33 HOFSTRA L. REv. 1141 (2005). 1348 HOFSTRA LAW REVIEW [Vol. 34:1337 determination on an instinctive, ad hoc or even ad hominem basis. "54 Commentators, such as Professor Geoffrey C. Hazard, Jr., the reporter for the original ABA Model Rules, referred to the old "appearance of impropriety" standard as "garbage."" The Second Circuit,56 reflecting the case law,57 generally advised, over a quarter of a century ago: "When dealing with ethical principles ... we cannot paint with broad strokes. The lines are fine and must be so marked.... [T]he conclusion in a particular case can be reached only after painstaking 58 analysis of the facts and the precise application of precedent " When the ABA reevaluated the old Model Code and drafted its new Model Rules in 1983, it not only eliminated the "appearance" standard, but also harshly criticized its use as too subjective and undefined: [The appearance of impropriety] has a two fold problem. First, the appearance of impropriety can be taken to include any new client - lawyer relationship that might make a former client feel anxious. If that meaning were adopted, disqualification would become little more than a question of subjective judgment by the former client. Second, since "impropriety" is undefined, the term "appearance of impropriety" 54. ABA Comm. on Ethics and Prof 1 Responsibility, Formal Op. 342 n.17 (1975), discussed in RONALD D. ROTUNDA, PROFESSIONAL RESPONSIBILITY 33 (7th ed. 2004). This Formal Opinion said: "It is obvious, however, that the `appearance of professional impropriety' is not a standard, test or element embodied in DR 9- 101(B)." Formal Op. 342, supra (emphasis added). 55. Pros and Cons of Restatement Are Debated at D.C. Conference, 13 ABA/BNA LAWS. MAN. ON PROF. CONDUCT 29, 31 -32 (Feb. 19, 1997). 56. See Fund of Funds, Ltd. v. Arthur Andersen & Co., 567 F.2d 225 (2d Cir. 1977). 57. See, e.g., Bd. of Educ. v. Nyquist, 590 F.2d 1241, 1247 (2d Cir. 1979) ( "[A]ppearance of impropriety is simply too slender a reed on which to rest a disqualification order except in the rarest cases. "); Fred Weber, Inc. v. Shell Oil Co., 566 F.2d 602, 609 (8th Cir. 1977) (refusing to disqualify under "appearance of impropriety" standard that existed in the legal ethics rules at the time because the "appearance of impropriety" is an "eye of the beholder" standard that gives no way to determine what "a member of the public, or of the bar" would consider improper); Woods v. Covington County Bank, 537 F.2d 804, 813 (5th Cir. 1976) ( "It does not follow ... that attorney's conduct must be governed by [appearance of impropriety] standards which can be imputed only to the most cynical members of the public. "); Sherrod v. Berry, 589 F. Supp. 433, 437 -38 (N.D. Ill. 1984) (no disqualification based on mere appearance of impropriety); In re Powell, 533 N.E.2d 831, 836 (III. 1998), cert. denied, 491 U.S. 907 (1989) (holding that the canon on avoiding even the appearance of impropriety is not an independent basis to impose discipline on a lawyer); State v. Davis, 840 A.2d 279, 287 (N.J. Super. Ct. App. Div. 2004) ( "The appearance of impropriety provisions in the RPCs seek to reduce the risk of improper conflicts. Because of their vagueness and ambiguity, those provisions, however, are not appropriate as ethics standards.... ") (quoting the report of the N.J. Court Commission on the Rules of Professional Conduct). 58. Fund of Funds, Ltd., 567 F.2d at 227 (quoting United States v. Standard Oil Co., 136 F. Supp. 345, 367 (S.D.N.Y. 1955), and citing Silver Chrysler Plymouth, Inc. v. Chrysler Motors Corp., 518 F.2d 751, 753 (2d Cir. 1975)). 20061 THE APPEARANCE OF IMPROPRIETY 1349 is question- begging. It therefore has to be recognized that the problem of disqualification cannot be properly resolved either by simple analogy to a lawyer practicing alone or by the very general concept of appearance of impropriety. 59 When the ABA reevaluated its Model Rules and adopted many changes in 2002 and 2003, it never returned to the old "appearances" language.60 The Third Restatement of the Law Governing Lawyers agreed with the ABA decision to remove "appearance of impropriety" in its entirety. This vague charge, the drafters concluded, does not give "fair warning" to a lawyer. 1 It invited a disciplinary panel or court to engage in "subjective and idiosyncratic considerations" and it was correct for the ABA to eliminate that formless and amorphous standard.62 Commentators and courts have sought to justify why lawyers dropped the appearances language from the lawyers' ethics codes but chose to retain it in the judicial codes.63 The rationales are apt to be 59. MODEL RULES OF PROF'L CONDUCT R. 1.9 cmt. 5 (2001), reprinted in MORGAN & ROTUNDA (2006), supra note 33, at 200; see also, e.g., Golias v. King, No. 09 -95 -157 CV, 1995 WL 517222, at *5 (Tex. Ct. App. Aug. 31, 1995) ( "Appearance of impropriety was eliminated from the new Disciplinary Rules of Professional Conduct because of vagueness. "). There was one instance where the drafters of the 2002 Model Rules thought of "appearances," but it never made it into the final version. A draft version would have "permit[ted] screening without client consent in the case of lawyers moving between firms, to avoid disqualification of an entire firm where a lateral hire previously worked on a matter." Margaret Colgate Love, The Revised ABA Model Rules of Professional Conduct: Summary of the Work of Ethics 2000, 15 GEO. J. LEGAL ETHICS 441, 456 (2002). The ABA Commission had decided that, if the Rules would permit screening in such cases, there still was a difference between litigation and transactional practice, but the members then concluded that this difference should only be "a factor that courts may consider in disqualification motions, where there is a concern about the appearance of impropriety." Id. at 456 n.28. The ABA House of Delegates simply deleted the entire section. Id at 456. 60. The 2002 revisions to the ABA Model Rules eliminated this language as no longer necessary. See M. Peter Moser, Chinese Walls: A Means of Avoiding Law Firm Disqualification When a Personally Disqualified Lawyer Joins the Firm, 3 GEO. J. LEGAL ETHICS 399, 406 n.12 (1990) ( "This concept (the `Appearance of Professional Impropriety') is expressly rejected in the Model Rules. "). However, one can find cases that refer to the "appearances of impropriety" in disqualifying a lawyer, even in a jurisdiction that has adopted the Model Rules, which explicitly reject the appearances test. Old habits die hard. See, e.g., State ex rel. Cosenza v. Hill, 607 S.E.2d 811, 817 -18 (W. Va. 2004). 61. RESTATEMENT (THIRD) OF THE LAW GOVERNING LAWYERS § 5 cmt. c (1998) (citation omitted). 62. Id. 63. See, e.g., Commonwealth v. Goodman, 311 A.2d 652, 654 (Pa. 1973) ( "[T]he appearance of bias or prejudice can be as damaging to public confidence in the administration of justice as would be the actual presence of either of these elements. "); In re Dean, 717 A.2d 176, 184 (Conn. 1998) ( "Avoiding the appearance of impropriety is as important to developing public confidence in the judiciary as avoiding impropriety itself. "). 1350 HOFSTRA LAW REVIEW [Vol. 34:1337 vague, such as: people expect more from judges and appearances are important,64 or judges are the "symbol of government under the rule of law, "65 or judges have different roles than lawyers.bb All those arguments tend to be conclusory, and, even if accepted at face value, only justify different rules for judges than for lawyers. They do not explain why those different rules must be vague. The rationales used to justify the appearances rule do not follow the rigors of Euclidian geometry. III. THE ABA JUDICIAL CODES AND THE "APPEARANCES OF IMPROPRIETY" Initially, the ABA did not impose any rule that threatened judges with discipline, removal, or disqualification because of the "appearances of impropriety." Instead, the ABA moved from fatherly advice to aspirations to stronger cautions to the present proposal that the ABA Commission is now advocating. This progression did not have the inevitable pull of gravity. Instead, it just happened, as if we lawyers and judges are anxious to convince the public that we are more ethical than the prior generation. Let us start with 1924, when the ABA House of Delegates promulgated the first Judicial Code of ethics, called the Canons of Judicial Ethics. 7 An important catalyst to the 1924 Canons of Judicial 64. Andrew L. Kaufman, Judicial Ethics: The Less -often Asked Questions, 64 WASH. L. REV. 851, 854 (1989) (arguing that the "appearance of impropriety" rule is the "basic rule of the Code of Conduct, the one to which all other rules are mere commentary ... "). 65. David A. Harris, The Appearance of Justice: Court TV, Conventional Television, and Public Understanding of the Criminal Justice System, 35 ARIZ. L. REv. 785, 792 (1993) (quoting MODEL CODE OF JUDICIAL CONDUCT pmbl. (1990)). One appreciates how malleable the concept of "appearances" is when the same author who embraces the "appearances" rule for judges argues for the benefits of Court TV. Id. at 826 -27. The 1972 ABA Judicial Code, which first adopted the explicit "appearances" rule, also prohibited televised trials. CODE OF JUDICIAL CONDUCT Canon 3A(7) (1972). 66. See Gray, supra note 31, at 66 ( "The appearance of impropriety standard is `peculiar to the judiciary' because judges have a peculiar position in the American system; they are required to make decisions that sometimes many members of the public will challenge and at all times at least one party will dispute. ") (footnote omitted). See also Roberta K. Flowers, What You See Is What You Get: Applying the Appearance of Impropriety Standard to Prosecutors, 63 MO. L. REV. 699, 724 (1998) (arguing that "[a] judge's independence can be tainted not only by his activities on the bench, but also by his conduct outside the courtroom "). That is true enough, and it justifies why some rules apply to the judge even when she is not acting in a judicial capacity. But it does not explain why we have an "appearances" rule. 67. The ABA considered resolutions for judicial canons in 1909 and 1917, but did not approve a Commission to draft rules until 1922. See ABA, About the Commission, Background Paper, ABA Joint Commission to Evaluate the Model Code of Judicial Conduct, http: / /www.abanet.org/judicialethics /about/backround.html (last visited June 17, 2006) [hereinafter Background Paper]. Chief Justice Taft was chairman of the ABA Commission that drafted the 1924 Judicial Canons. Id. To see the product of this Commission, see CANONS OF JUDICIAL ETHICS 20061 THE APPEARANCE OF IMPROPRIETY 1351 Ethics was the revelation, in the early 1920s, that Kenesaw Mountain Landis, a federal judge, was supplementing his federal salary of $7500 by engaging in private employment with a substantially more generous yearly salary of $42,500 as a Major League Baseball commissioner .68 The ABA adopted a resolution censuring the judge 69 Many states viewed the 1924 Judicial Canons as essentially advisory, with their "curious mixture of generalized, hortatory admonitions and specific rules or standards of proscribed conduct. "70 This Judicial Code, like the original Canons of Professional Ethics, was more sermonizing than statutory.71 The title of Canon 4 of the 1924 Canons of Judicial Ethics was "Avoidance of Impropriety. "72 This Canon provided, in part, that "[a] judge's official conduct should be free from impropriety and the appearance of impropriety .... "73 This Canon also advised that the judge, in his everyday life should be "beyond reproach. ,74 Such vague language was advice, not a statutory command, but it was the precursor of things to come. Nearly a half century later, the ABA House of Delegates replaced these Canons with the 1972 Code of Judicial Conduct.75 Many states (1924), reprinted in LISA L. MILORD, THE DEvELOPMENT OF THE ABA JUDICIAL CODE 131 -43 (1992). 68. See Background Paper, supra note 67; Walter P. Armstrong, Jr., The Code of Judicial Conduct, 26 Sw. L.J. 708, 709 n.9 (1972); CHARLES W. WOLFRAM, MODERN LEGAL ETHICS 965 n.72 (West Pub. Co. Practitioner's ed. 1986). 69. See Armstrong, supra note 68, at 709. 70. John F. Sutton, Jr., A Comparison of the Code of Professional Responsibility with the Code of Judicial Conduct, 1972 UTAH L. REv. 355, 355 -56; see also Robert B. McKay, Judges, the Code of Judicial Conduct, and Nonjudicial Activities, 1972 UTAH L. REv. 391 (1972). 71. The Preamble of the 1924 Code indicated that the Code was a "guide and reminder for judges ... indicating what the people have a right to expect from them" CANONS OF JUDICIAL ETHICS, supra note 67, at 132. 72. Id. 73. Id. 74. Id. at 133. Courts sometimes quoted this language in the course of judicial discipline. In one case, the Supreme Court of Ohio said of the judge: Respondent admitted that he, while still married to, but separated from, his first wife, took his "girlfriend" (now his second wife) with him, at his expense, on the trip to Majorca and on the two trips to Mexico, but he testified that they did not occupy the same room on any of the trips. Such conduct is not behavior beyond reproach within the meaning of Canon 4. Cincinnati Bar Ass'n v. Heitzler, 291 N.E.2d 477, 482 (Ohio 1972). The case involved a disciplinary proceeding against an attorney who was also a judge. The Ohio Supreme Court affirmed the findings of the Board of Commissioners on Grievances and Discipline, which had ruled that the respondent had violated various Canons of Judicial Ethics. Id. at 488. The court indefinitely suspended the respondent from the practice of law. Id. 75. This Judicial Code was a reaction, at least in part, to the events "that led to Justice Fortas's resignation from the Supreme Court and the financial and other disclosures that came about 1352 HOFSTRA LAW REVIEW [Vol. 34:1337 widely adopted the 1972 Code (subject, of course, to various nonuniform amendments). The drafters wrote the 1972 Code in more conventional statutory form, and its preface (which many jurisdictions did not adopt) intended that it be enforceable.76 Nonetheless, the 1972 Judicial Code used the term "should" instead of the more statutory "shall." Thus, the title to Canon 2 said: "A Judge Should Avoid Impropriety and the Appearance of Impropriety in All His Activities. "" The Reporter's Notes advised that "[t]he black -letter statement of Canon 2 is very broad in its terms and perhaps the nearest to being hortatory of any provision in the Code. "78 The road to mandatory rules rather than aspirational guidelines continued with the 1990 version of the ABA Code of Judicial Conduct. A "significant minority of commentators" warned the ABA Committee drafting the new Code that the "appearances" language in the 1972 Judicial Code was simply too vague .79 But the drafting Committee responded by changing "should" to "shall" and expanding its reach to include the judge's activities even when she is off the bench and not acting in her capacity as a judge .80 Thus, the title of Canon 2 of the 1990 Code provides: "A Judge Shall Avoid Impropriety and the Appearance of Impropriety in All of the Judge's Activities .,,81 However, the requirement was still the title to Canon 2 rather than one of the rules under Canon 2. This language certainly looks like a prohibition, and the accompanying commentary does not suggest that the requirement is merely aspirational. Nonetheless, the legislative history advised that the purpose of this expanded rule is "to caution judges to avoid certain prospective conduct even if the conduct only appears suspect, and to proscribe any act that is harmful even if it not specifically prohibited in when the U.S. Senate rejected President Nixon's nomination of Federal Circuit Judge Haynsworth, and then Circuit Judge Carswell." RONALD D. ROTUNDA & JOHN S. DZIENKOWSKI, LEGAL ETHICS: THE LAWYER'S DESKBOOK ON PROFESSIONAL RESPONSIBILITY 2005 -2006 § 10.0 -2 (2005). 76. The Preface to the 1972 Judicial Code said: "The canons and text establish mandatory standards unless otherwise indicated." CODE OF JUDICIAL CONDUCT Preface (1972), quoted in CTR. FOR PROF'L RESPONSIBILITY & JUDICIAL Div., ABA, ANNOTATED MODEL CODE OF JUDICIAL CONDUCT 4 (2004) [hereinafter ABA, ANNOTATED MODEL CODE]; E. WAYNE THODE, REPORTER'S NOTES TO CODE OF JUDICIAL CONDUCT 5 (1973). Many jurisdictions did not reprint the preface when they adopted the 1972 Code. 77. THODE, supra note 76, at 8 (emphasis added). 78. Id. at 49. 79. MILORD, supra note 67, at 13. 80. In addition, the 1990 Code adopted various changes in the details and organization. 81. MODEL CODE OF JUDICIAL CONDUCT Canon 2 (1990) (emphasis added). The 1990 Judicial Code made clear that "an appearance of impropriety" exists "even in the absence of an actual impropriety ...... MILORD, supra note 67, at 13. 20061 THE APPEARANCE OF IMPROPRIETY 1353 the Code. "82 Perhaps because of this reference to "caution[ing]" the judge, or for some other reason, the ABA's Annotated Model Code of Judicial Conduct simply announces: "Two of the Canons are aspirational (Canons I and 2) .... "83 The ABA does not explain its significant assertion that these two Canons are supposed to be merely aspirational, not mandatory, and so we should not read it as an official gloss on the language. I think that many courts would find this statement astonishing, for they use this "appearances" language to discipline judges, not simply to "caution" them. As a typical case, Joachim v. Chambers, 84 stated: Canon 2 in the 1990 Model Code has been amended to use "shall" instead of "should ". This provision is now mandatory, inasmuch as the preamble to the Model Code provides: "When the text uses `shall' or `shall not,' it is intended to impose binding obligations the violation of which can result in disciplinary action. When `should' or `should not' is used, the text is intended as hortatory and as a statement of what is or is not appropriate conduct but not as a binding rule under which a judge may be disciplined." 85 The ABA's Annotated Model Code of Judicial Conduct actually cites Joachim twice, once on the very same page that it declares Canon 2 to be merely aspirational, and elsewhere, but both times it is for another proposition. 86 In addition to the "appearances" command of Canon 2, there are also a few official Comments that refer to "appearance of impropriety," or similar language. 87 This Commentary does not create new rules, but does offer explanations .88 Case law concurs .89 Hence, a review of the 82. MILORD, supra note 67, at 13 (emphasis added). 83. ABA, ANNOTATED MODEL CODE, supra note 76, at 4 (emphasis added). The full sentence says: "Two of the Canons are aspirational (Canons I and 2), and the other three address specific types of judicial conduct: conduct when carrying out adjudicative and administrative duties (Canon 3), conduct in various extrajudicial activities (Canon 4), and conduct in campaigning for judicial office (Canon 5)." Id. 84. 815 S.W.2d 234 (Tex. 1991). 85. Id. at 239 n.9 (emphasis added and citation omitted). 86. The Annotated Model Code cites Joachim for the proposition that a retired judge who continues to serve as ajudicial officer by assignment may not testify as an expert witness in a legal malpractice case, ABA, ANNOTATED MODEL CODE, supra note 76, at 75, and for the proposition that the 1990 Code, unlike the 1972 Code, uses "shall" to express a mandatory obligation. Id. at 4. The rationale for the declaration of the Annotated Model Code that Canon 2 is merely aspirational remains a mystery. 87. See infra note 90. 88. See MODEL CODE OF JUDICIAL CONDUCT pmbl. ¶ 2 (1990), reprinted in MORGAN & ROTUNDA (2006), supra note 33, at 604; see also ABA, ANNOTATED MODEL CODE, supra note 76, at 4. 89. People for Ethical Treatment of Animals v. Bobby Berosini, Ltd., 894 P.2d 337, 340 n.5 1354 HOFSTAA LAW REVIEW [Vol. 34:1337 Comments may offer insight to what the "appearances" requirement actually means. Unfortunately, in this case, when one reads all these Comments, it is fair to say that they do not explain the definition of "appearance of impropriety," although they are sometimes redundant 90 (Nev. 1995) (`The Canons and the Sections are authoritative. The Commentary provides guidance to the purpose and meaning of the Canons and Rules by explanation and example; it is not a statement of additional rules. "). 90. For example, the Commentary on Canon 2A states: Ajudge must avoid all impropriety and appearance of impropriety.... The prohibition against behaving with impropriety or the appearance of impropriety applies to both the professional and personal conduct of a judge.... The test for appearance of impropriety is whether the conduct would create in reasonable minds a perception that the judge's ability to carry out judicial responsibilities with integrity, impartiality and competence is impaired. MODEL CODE OF JUDICIAL CONDUCT Canon 2A cmt. (1990). The Commentary to Canon 2C reads as follows: [A] judge's membership in an organization that engages in any discriminatory membership practices prohibited by the law of the jurisdiction also violates Canon 2 and Section 2A and gives the appearance of impropriety.... Moreover, public manifestation by a judge of the judge's knowing approval of invidious discrimination on any basis gives the appearance of impropriety under Canon 2 and diminishes public confidence in the integrity and impartiality of the judiciary, in violation of Section 2A. MODEL CODE OF JUDICIAL CONDUCT Canon 2C cmt. (1990) (emphasis added). Note that this Comment merely prohibits that which other law already prohibits (`prohibited by the law of the jurisdiction "). The Commentary to Canon 3B(5) states: A judge who manifests bias on any basis in a proceeding impairs the fairness of the proceeding and brings the judiciary into disrepute. Facial expression and body language, in addition to oral communication, can give to parties or lawyers in the proceeding, jurors, the media and others an appearance ofjudicial bias. MODEL CODE OF JUDICIAL CONDUCT Canon 3B(5) cmt. (1990) (emphasis added). This Comment is actually clear. It does not define "appearance," but rather it imposes a new restriction and provides useful advice by telling the judge not to manifest prejudice towards a party orally or by other means, such as facial and body language. The Commentary on Canon 4D(1) is redundant; it simply tells us that violating the rules governing financial and business dealings also raises an appearance of impropriety: Participation by a judge in financial and business dealings is subject to the general prohibitions in Section 4A against activities that tend to reflect adversely on impartiality, demean the judicial office, or interfere with the proper performance of judicial duties. Such participation is also subject to the general prohibition in Canon 2 against activities involving impropriety or the appearance of impropriety and the prohibition in Section 2B against the misuse of the prestige of judicial office. MODEL CODE OF JUDICIAL CONDUCT Canon 413(1) cmt. (1990) (emphasis added). The Commentary preceding Canon 4H only tells us that the appearance of impropriety furnishes the reason for the reporting requirements in Canon 6 of the 1972 Judicial Code and Canon 4H of the 1990 Judicial Code: "Canon 6, new in the 1972 Code, reflected concerns about conflicts of interest and appearances of impropriety arising from compensation for off -the -bench activities." MODEL CODE OF JUDICIAL CONDUCT Canon 4H introductory cmt. (1990). Canon 4H(1) tells us that the compensation and reimbursement of extra - judicial activities that the Judicial Code allows should not be excessive, and the source of the funds should not give "the appearance of influencing the judge's performance of judicial duties or otherwise give the appearance of impropriety." MODEL CODE OF JUDICIAL CONDUCT Canon 4H(1) (1990). This rule 2006] THE APPEARANCE OF IMPROPRIETY 1355 IV. THE PROPOSED NEW ABA JUDICIAL CODE AND THE "APPEARANCES OF IMPROPRIETY" Since 2003, the American Bar Association has been in the process of revising its judicial ethics rules. Recall that the ABA's Model Code of Professional Responsibility never intended that the "appearance of impropriety" would be used as a rule to impose discipline, and its newer Model Rules of Professional Conduct use that phrase only to criticize it 91 Not so with the proposed judicial revisions. Last year, after a great deal of deliberation and public criticism,92 the ABA Joint Commission to Evaluate the Model Code of Judicial Conduct decided to retain its prohibition against an "appearance of impropriety," 93 and to expand it by using it not only as the title to Canon 1, but also as a special, separate rule under that Canon, Rule 1.0294 A great deal of commentary and controversy has accompanied this issue. Many of the opponents were —as any legal realist might guess — lawyers who represent judges and judicial candidates in judicial discipline proceedings. The opponents did not persuade the Commission, which continues the "appearance of impropriety" standard: The Commission heard presentations and received numerous written communications on the question, identified by the Commission itself as an important one at the beginning of the project, of whether the "appearance of impropriety" concept contained in the present Code should be retained. A majority of commentators on the subject, citing to judicial discipline cases decided over a three - decade period, urged that the concept be retained.... The Commission was persuaded [so that] the Preliminary Draft places the admonishment that judges avoid not only impropriety but also its appearance in two places: in the text of Canon 1 and in Rule [1.02]. The explicating Comment language relating to impropriety and its appearance are substantially as they does not raise the same questions that Canon 2 creates because it is not open- ended. Litigants before the judge should not be funding the judge's speaking opportunities. When an individual or an entity does pay for the judge's time (for example, when he or she gives a lecture), the pay should be reasonable, and should not "exceed what a person who is not a judge would receive for the same activity." MODEL CODE OF JUDICIAL CONDUCT Canon 4H(1)(a) (1990). 91. See supra Part II. 92. See, e.g., Weakening the Rules for Judges, supra note 30, at At 6; Harrison, supra note 30, at A14 (responding). 93. The title of Canon 1 reads, "A judge shall ... avoid impropriety and the appearance of impropriety in all of the judge's activities" FINAL DRAFT REPORT Canon 1, supra note 25 (emphasis added). 94. Rule 1.02 is entitled "Impropriety and Its Appearance." Id. R. 1.02. 95. See, e.g., APLR Letter, supra note 7, at 6 -13. 1356 HOFSTR4 LAW REVIEW [Vol. 34:1337 appear in the present Code 96 The Final Draft of the Commission Report provides, in the title of Canon 1, that "[a] judge ... shall avoid impropriety and the appearance of impropriety in all of the judge's activities.07 Later, Rule 1.02, which is titled "Impropriety and Its Appearance," provides that "[a] judge shall avoid impropriety and the appearance of impropriety. "98 The new proposed Rules attempts to define "impropriety" in its "Terminology" section. It tells us that "impropriety" is "conduct that compromises the ability of a judge to carry out judicial responsibilities with independence, integrity, and impartiality, or otherwise demeans the judicial office. See Canon I and Rule 1.02. "99 Do you find that clear? If it is clear enough, then why bother to draft the rest of the Judicial Code? All those other provisions exist only to prohibit any conduct that "compromises the ability of a judge to carry out judicial responsibilities with independence, integrity, and impartiality, or otherwise demeans the judicial office. "100 A Comment to Rule 1 tries to elaborate on this definition in two different sentences. I will quote the language exactly because I want you to know that I am not making this up. This is the first sentence: The test for impropriety is whether the conduct compromises the ability of the judge to carry out judicial responsibilities with independence, integrity, impartiality, and competence.lol The first sentence merely repeats the language in the Terminology section. Repetition adds nothing to our understanding of the concept. That sentence serves neither to define the term nor to explain its rationale. The second sentence states: Examples of actual improprieties under this Rule include violations of law, court rules, or other specific provisions of this Code. 102 The first part of this sentence tells that that it is improper to violate 96. ABA JOINT COMM'N TO EVALUATE THE MODEL CODE OF JUDICIAL CONDUCT, PRELIMINARY DRAFT, INTRODUCTORY REPORT, June 30, 2005, at 4, available at http://www.abanet.org/judicialethics/IntroductoryReport.pdf 97. FINAL DRAFT REPORT, Canon 1, supra note 25. 98. Id. R. 1.02. 99. ABA JOINT COMM'N TO EVALUATE THE MODEL CODE OF JUDICIAL CONDUCT, FINAL DRAFT REPORT, Terminology, Dec. 14, 2005, at 3, available at http://www.abanet.org/judicialethicstTerminologyFinal.pdf 100. Id. 101. FINAL DRAFT REPORT, Canon 1, supra note 25, R. 1.02 curt. 2. 102. Id. 20061 THE APPEARANCE OF IMPROPRIETY 1357 the ethics rules— something that we had already suspected. In that sense, it is not too helpful for two reasons. First, it is too broad because it tells us that an impropriety is a violation of any law, court rules, or other specific provisions of the Judicial Code. That rule is clear but it is much too broad. The violation of court rules (other than violations of the Judicial Code) or the violation of a law should have some functional relationship to the business of judging. For example, lawyers are subject to discipline for committing crimes "that reflect[] adversely on the lawyer's honesty, trustworthiness or fitness as a lawyer in other respects. "'os Lawyers are also disciplinable if they engage in any conduct that involves "dishonesty, fraud, deceit or misrepresentation. "104 If a lawyer engages in this conduct, even if the lawyer is not acting as a lawyer at the time, the conduct has a functional relationship to the practice of law. In contrast, the proposed Judicial Code would subject a judge to discipline or removal or some other remedy if he breaks a law, no matter how unrelated it is to the practice of law.'OS It is unclear why a violation of any law, no matter how minor (not putting enough money in the parking meter, crossing the fog line on a highway, driving 56 m.p.h. in an 55 m.p.h. zone) really merits judicial discipline. Granted, this part of the proposed rule is clear, but its rationale is not. One would think that the violation should have some functional relationship to what judges do. Violating the Judicial Code has a functional relationship to the business of judging; violating a parking ordinance does not. There is a second reason why this sentence is unhelpful: It is also too vague. If this sentence of the Comment had said that an impropriety is a violation of a law, court rules, or other specific provisions of the Judicial Code, then that would have been quite clear, although too broad. But the Comment advises that those violations of law (even minor law for which there is no criminal penalty) are merely examples of what is an impropriety. 106 The language does not use the boilerplate, "include[d] but not limited to," but the Comments are written in a less formal tone than the black letter rules, so one should not make too much of this fact, because "include" often means a partial list.107 The Comment, in the end, gives us no real test to determine what constitutes an "impropriety." 103. MODEL RULES OF PROF'L CONDUCT R. 8.4(b) (2003). 104. MODEL RULES OF PROF'L CONDUCT R. 8.4(c) (2003). 105. See FINAL DRAFT REPORT, Canon 1, supra note 25, R. 1.02 cmt. 2. 106. Id. 107. See BLACK'S LAw DICTIONARY 777 -78 (8th ed. 2004) (defining "include" as: "To contain as a part of something. The participle including typically indicates a partial list <the plaintiff asserted five tort claims, including slander and libel >. But some drafters use phrases such as including without limitation and including but not limited to—which mean the same thing. "). 1358 HOFSTRA LAW REVIEW [Vol. 34:1337 The failure of this Comment to give us a real test has consequences far beyond the ABA. The ABA draft of the Judicial Code, like its predecessors, becomes real law (in the same way that rules of procedure or rules of evidence are real law) when a court adopts it.108 This "model" code thus has significant consequences, particularly because whatever the ABA recommends comes with a presumption of authority, and state and federal courts are likely to adopt it. Even when a court has not adopted the ABA model codes it often cites them (as well as the ABA ethics opinions) as evidence of the law.109 Compare this proposed ABA Comment to a litmus test. In a litmus test, we dip the paper (created from lichens and absorbed into filter paper) in the solution, and we know if the solution is acidic or basic when the paper turns red (acid solutions) or blue (alkaline solutions). A test that tells us that the solution is sometimes acidic if the paper turns red, or that it is sometimes basic if the paper turns blue would not be much of a test at all. The test for "impropriety" found in the latest draft of the ABA proposed Judicial Code is as useful as litmus paper that sometimes turns blue even if the solution is acidic. The proposed revision of the ABA Judicial Code the latest draft, the product of several years of effort and countless lawyer- hours —tells us that there is an impropriety if the judge (at a minimum) commits a violation "of law, court rules, or other specific provisions of this Code. "' 10 That definition, if it were complete, only makes the term redundant, a characteristic that would cause little harm. Granted, redundancy is not an attribute of good legislative drafting, but there are worse sins. No, this self - proclaimed "test" is more than redundant. Instead, it is inconclusive and indecisive, for it gives these violations as mere examples. The real test is "whether the conduct compromises the ability of the judge to carry out judicial responsibilities with independence, integrity, impartiality, and competence. ""' The ABA "test" for "impropriety" explicitly provides that "impropriety" is more than a violation of these ethics rules, or any other rules of the court, or any other law. How much more? How do we know when conduct "compromises the ability of the judge to carry out judicial 108. Because the Model Judicial Code, if adopted as a rule of the court, becomes real law, one wonders why the drafters refer to "violations of law, court rules, or other specific provisions of this Code." FINAL DRAFT REPORT, Canon 1, supra note 25, R. 1.02 cmt. 2. One would think that the drafters would refer to "violations of other law, such as statutes or other court rules." 109. See Frye v. Tenderloin Housing Clinic, Inc., 129 P.3d 408, 426 n.12 (Cal. 2006); Nationwide Mut. Fire Ins. Co. v. Bourlon, 617 S.E.2d 40, 57 (N.C. Ct. App. 2005); Ex parte Masonite Corp., 681 So. 2d 1068, 1070 (Ala. 1996). 110. FINAL. DRAFT REPORT, Canon 1, supra note 25, R. 1.02 curt. 2. 111. Id. 20061 THE APPEARANCE OF IMPROPRIETY 1359 responsibilities with independence, integrity, impartiality, and competence "? The proposed Judicial Code is silent. Now that the proposed Judicial Code has told us how to determine what constitutes an impropriety, we need to know what constitutes an "appearance of impropriety." As a matter of logic, "appearance" must be something broader than an impropriety itself, for there would be no need to mention it if it were already included in the concept of an "impropriety." Oddly enough, there is no definition in the Terminology section for "appearance," although this term appears multiple times: in the title of Canon 1, the title of Rule 1.02, and in Rule 1.02 itself.' Z However, we find an attempt at a definition and a test in Comment 2 of Rule 1.02: The test for an appearance of impropriety is whether the conduct of the judge would be perceived by a reasonable person with knowledge of the circumstances to impair the judge's ability to carry out judicial responsibilities with independence, integrity, impartiality, and competence. 113 This test is remarkably similar to the test to determine what constitutes an impropriety. Recall, the proposed Judicial Code tells us that "the test for impropriety is whether the conduct compromises the ability of the judge to carry out judicial responsibilities with independence, integrity, impartiality, and competence."' 14 So what is an "appearance "? Apparently it is something that is not itself an impropriety but appears to be so to "a reasonable person with knowledge of the circumstances." But if this reasonable person knows what is going on—the person has "knowledge of the circumstances" — then one would think that he or she would already know whether it really is an impropriety or not. And, if it is not an impropriety, how can it look like an impropriety, how can it become the appearance of an impropriety, to a reasonable person who really knows what is going on ( "a reasonable person with knowledge of the circumstances ")? If this reasonable person, who knows what both the law and facts are, decides that the judge's action would "impair the judge's ability to carry out judicial responsibilities with independence, integrity, impartiality, and competence," then that action is an impropriety, which 112. Id. 113. Id. (emphasis added). See also, e.g., State v. Ross, 974 P.2d 11, 20 (Haw. 1998) (holding that "the test for disqualification due to the `appearance of impropriety' is an objective one, based not on the beliefs of the petitioner or the judge, but on the assessment of a reasonable impartial onlooker apprised of all the facts ") (emphasis added). 114. FINAL DRAFT REPORT, Canon 1, supra note 25, R. 1.02 cmt. 2. 1360 HOFSTRA LAW REVIEW [Vol. 34:1337 gets us right back to square one. But an "appearance" is supposed to be more than a mere impropriety,115 so we are a further step removed from the litmus paper test that turns red, sometimes, when the solution is acidic. Remember, we are talking about drafting a law. Lawyers should be good at drafting; they should be particularly good at drafting language dealing with the practice of judging, because that is their training. The ABA is telling us that one cannot get more precise than this. Granted, not all tests have the precision of a real litmus test, where a single factor is decisive. Law is more an art than a science. While it is an art, it is not black magic. There is a rhyme and reason when the law must use tests that are imprecise. Consider a common rule in driving, "driving too fast for conditions." We know that if the weather is bad, ice is on the road, visibility is dreadful, and traffic is congested, one drives "too fast for conditions" even if one stays within the speed limit. Yet we cannot make this rule more precise, such as "you must stay five miles under the posted limit when it rains a lot," because it would not solve the problem of driving "too fast" based on all the conditions. We tolerate vagueness in driving law because the risks are high (highway accidents kill people), we cannot think of another way to draft the language, and we all have a good sense of what it means to drive too fast for conditions, so that the limited ambiguity is inherent. We accept vagueness in that circumstance while we would not accept a law that forbade "walking too fast for conditions. "116 As for "walking too fast," the risks are small, we do not have a good sense of what that means, and we have other laws that can take care of truly boorish conduct (for example, laws against public drunkenness and assault and battery). Now compare "driving too fast for conditions" to the "appearance of impropriety," which can, on occasion, lead to a judge being removed from the bench or suspended. More likely, it leads to the judge losing his or her reputation, which is to a lawyer what gold is to a goldsmith; it represents what we are and it is our stock in trade. Think of this another way: If you were nominated for a federal judgeship, would you rather have the Senators reject you because you are not smart enough, or because you are unethical? We all would choose the first alternative. Yet the ABA has armed every disgruntled litigant with the means to tear down a judge's reputation by arguing that, "even if what you did was not 115. See MILORD, supra note 67, at 13. 116. See 4 RONALD D. ROTUNDA & JOHN E. NowAK, TREATISE ON CONSTITUTIONAL LAW § 20.9, at 274 (3d ed. 1999). 20061 THE APPEARANCE OF IMPROPRIETY 1361 wrong, it appeared wrong to me, and so you violated the appearance of impropriety." V. THE CASE LAW AND ETHICS OPINIONS REQUIRING JUDGES TO AVOID THE "APPEARANCE OF IMPROPRIETY" The cases and ethics opinions that refer to the "appearance of impropriety" are numerous. In their judicial opinions, they treat it as the gold standard, something to which we should all strive.' 17 We have now had over thirty -three years of experience, a third of a century, under the present Canon 2: "A Judge Shall Avoid Impropriety and the Appearance of Impropriety in All of the Judge's Activities," or its predecessor, the 1972 version, which was identical except that it used "should" instead of "shall.""' That should be enough time for the case law to give us enough examples of what this prohibition is trying to accomplish. The ABA ought to study the case law, make judgments, and choose what conduct it concludes that law should prohibit, and then draft specific rules to prohibit that bad conduct. The ABA will have plenty of help, for others have already analyzed the case law and have come up with proposed specific rules. 1'9 When we look at the case law, we find that courts often use the "appearance of impropriety" as a make - weight, to label an activity that other provisions of the Model Code already forbid. Removing "appearances" from the Judicial Code will not affect judicial actions in any way. When a specific rule already prohibits certain conduct, there is no need to pile on the "appearance of impropriety. "tz° In some other circumstances, even when the court only uses the "appearances" language, it is easy to codify what the case law decides and replace the general language of "appearance" with more specific 117. One wonders why striving for "appearance" is considered so noble. The proposed Model Judicial Code suggests that the appearance is at least as important as the reality. The novelist Henry Fielding has other views when he warned us that "[t]he most formal appearance of virtue, when it is only an appearance," is "rather less commendable than virtue itself," even though it will "be always more commended." HENRY FIELDING, THE HISTORY OF TOM JONES, A FOUNDLING 615 (Modern Library ed., Random House, Inc. 1994) (1749), available at http://www.literaturepage.com/read/tom-jones-557.html. 118. MODEL CODE OF JUDICIAL CONDUCT Canon 2 (1972). 119. See, e.g., Abramson, supra note 32, at 958 -67; APLR Letter, supra note 7, at 7, 11. 120. Disciplinary Counsel v. Lisotto, 761 N.E.2d 1037, 1038 (Ohio 2002) (per curiam) (holding that a judge's acceptance of tickets to sporting events from the lawyer who appeared before him, and to whom he once referred a potential client, together with his failure to include receipt of tickets on his original financial statements, violated Canons prohibiting (1) a judge's acceptance of gifts from a person who has come or is likely to come before him or her, (2) filing of complete and timely financial disclosure statements, and (3) requiring avoidance of appearance of impropriety). 1362 HOFSTRA LAW REVIEW [Vol. 34:1337 rules that tell us what constitutes the appearance of impropriety., , For example, Canon 4D(1)(b) advises the judge not to engage in business relations with lawyers who appear before him. 122 Canon 413(5) also tells the judge not to accept a loan "from anyone," subject to a few exceptions. 123 The judge may accept a loan from a lending institution in its regular course of business on the same terms available from people who are not judges. A few cases cite the "appearance of impropriety" as a reason for a judge not to accept loans from lawyers who regularly appear before him, yet one does not need that vague term to reach the common -sense result. 124 A. Stock Ownership and the "Appearance of Impropriety " Consider the situation where a judge owns stock in an entity that appears before him. Those were the facts of Huffman v. Arkansas Judicial Discipline and Disability Commission. 125 In this case, the judge and his wife then owned 12,000 shares of Wal -Mart stock worth about $700,000.126 The judge argued that the amount was "de minimis," and so the court avoided that issue by holding that the judge's ownership of the retailer's stock created an appearance of impropriety in ruling on Wal- Mart's motion for a temporary restraining order. 127 Maybe it was de minimis to the judge, for we do not know what his net worth was, and perhaps it is true that nothing he decided in that case could have moved 121. See analysis of case law in, e.g., Abramson, supra note 32, at 958 -67. See also Gray, supra note 31, at 67 ( "Although in most judicial discipline cases, a judge is charged with violating a specific canon such as the prohibition on ex parte communications, there are cases based on findings of an appearance of a violation. Most appearance cases fall into several categories. "). Note however that this author favors the present "appearances" language. See also APLR Letter, supra note 7, at 7, 11. 122. MODEL CODE OF JuDIciAL CONDUCT Canon 41)(1)(b) (1990). 123. MODEL CODE OF JUDICIAL CONDUCT Canon 413(5) (1990). 124. In re Topper, 553 N.E.2d 306, 311 -12, 316 (I11. 1990) (disciplining a lawyer for lending money to the judge presiding over client's case —it was irrelevant that the judge did not rule in the client's favor; similarly irrelevant was the claim that the judge extorted the money from the lawyer); In re Corboy, 528 N.E.2d 694, 698, 700 -01, 703 (Ill. 1988) (concluding that six $1000 loans to a judge, by six lawyers, regardless of their alleged charitable intent, raised the appearance of impropriety— surprisingly, in this case, the court said that it would not censure the lawyers for violating any disciplinary rule, because "they [had] acted without guidance of any precedent or settled opinion "); In re Litman, 272 N.W.2d 264, 266 (Minn. 1978) ( "[R]egardless of a lawyer's innocent intentions or the existence of a long - established friendship and personal relationship with a judge or the judge's urgent need for financial help, making a loan to a judge before whom a lawyer practices as [sic] the ineluctable appearance of tampering with judicial impartiality. As Canon 9, Code of Professional Responsibility, emphasizes, `A Lawyer Should Avoid Even the Appearance of Professional Impropriety."'). 125. 42 S.W.3d 386 (Ark. 2001). 126. See id. at 391. 127. See id. at 390, 393 -94. 20061 THE APPEARANCE OF IMPROPRIETY 1363 the stock in any direction. We do not have the facts to make the decision. The 1990 ABA Model Code provides that the judge (subject to various exceptions not applicable here) must disqualify himself in any case where he or his spouse have "a more than de minimis interest that could be substantially affected by the proceeding." 128 What is "de minimis "? The Model Code tells us that it is "an insignificant interest that could not raise reasonable questions as to a judge's impartiality." 129 The ABA Model Judicial Code loves ambiguity even when precision is easily attainable. In contrast, the federal statute130 and the Model Code of 1972'31 are clear -cut on this issue. If you own even one share of Wal -Mart, you must disqualify yourself because any interest is a financial interest. There should be little hardship on the judge or the parties because, under the 1972 Code, the parties could waive the disqualification. 132 Under this bright -line test, the law gave the judge fair warning, and he or she (and the litigants) knew exactly what the judge must do. The judge did not have to decide whether fifty shares of Wal -Mart stock is de minimis in some absolute sense. The fifty shares might be worth $1200, which is not chicken feed. Or, it may be de minimis in some comparative sense. The judge may have a net worth of $10 million, so even if his decision would reduce the value of the company by 10% in one day (and that is a huge drop to be attributed to one judicial decision), and the judge owns 500 shares of stock worth $22,000, that still amounts to only .22% of his net worth, hardly a ripple. The modern ABA approach, including the proposed new ABA 128. MODEL CODE OF JUDICIAL CONDUCT Canon 3E(1)(d)(iii) (1990). 129. MODEL CODE OF JUDICIAL CONDUCT Terminology (1990). 130. 28 U.S.C. § 455(b)(4) provides: He knows that he, individually or as a fiduciary, or his spouse or minor child residing in his household, has a financial interest in the subject matter in controversy or in a party to the proceeding, or any other interest that could be substantially affected by the outcome of the proceeding. 28 U.S.C. § 455(b)(4) (200 1) (emphasis added). The statute then defines "financial interest' as the "ownership of a legal or equitable interest, however small," subject to various exceptions that are not applicable here. Id. § 455(d)(4) (emphasis added). See also Fed. Comm. on Codes of Conduct, Advisory Op. 20 (revised 1998), available at http: / /www.uscourts.gov /guide /vol2/20.html. 131. Canon 3C(1)(c) of the 1972 Model Judicial Code provided that the judge should disqualify himself if "he, individually or as a fiduciary, or his spouse or minor child residing in his household, has a financial interest in ... a party to the proceeding ...." CODE OF JUDICIAL CONDUCT Canon 3C(1)(c) (1972), reprinted in THOMAS D. MORGAN & RONALD D. ROTUNDA, 1989 SELECTED STANDARDS ON PROFESSIONAL RESPONSIBILITY 335 (1989) [hereinafter MORGAN & ROTUNDA (1989)]. There was no de minimis test. 132. See CODE OF JUDICIAL CONDUCT Canon 3D (1972), MORGAN & ROTUNDA (1989), supra note 131, at 336 (allowing parties to waive disqualification, outside the presence of the judge, in writing). 1364 HOFSTRA LAW REVIEW [Vol. 34:1337 Judicial Code, invites the litigants to inquire of the judge's net worth. A simpler solution —and one that has worked in federal court for decades —is for the judge to disqualify himself if he owns even one share of stock. Or, the judge can avoid this problem by simply investing in mutual funds. 133 B. Ethics Opinions and the `Appearance oflmpropriety" The range of activities that might "appear" improper is even greater when one turns to the ethics opinions. In some cases, they rely on the "appearance of impropriety," when it may be unlikely that a court would ever enact a specific rule prohibiting the conduct. One can find many ethics opinions that worry about any relationship between the practicing bar and judges. 134 These ethics opinions are advisory, and so they share the problem that is inherent in advisory opinions: The authors talk about issues and not concrete cases, and it is simpler to inveigh against "appearances" in a vacuum. For example, a Kansas ethics opinion warned associations of lawyers that awarding a "Judge of the Year" to honor a trial judge would raise the appearance of impropriety. 135 The ABA has similarly advised that "[a] bar association whose members customarily represent the same side of cases in litigation involving a certain area of the law may not establish a judicial award program to honor particular judges since it 133. The 1990 ABA Model Code defines "economic interest" to exclude an interest in a mutual fund unless the judge participates in the management of the fund or the proceeding could substantially affect his investment. MODEL CODE OF JUDICIAL, CONDUCT Terminology (1990). Both conditions are most unlikely. If a judge owns, for example, $20,000 in Fidelity Magellan Fund, or Vanguard Equity Income Fund, it is hard to conceive a judicial ruling that could substantially affect the value of that investment. And, it is most unlikely that the judge will participate in the management of the fund, given that a main benefit of a mutual fund is that professional money managers run the fund. 134. See infra notes 135 -36 and accompanying text. 135. Kan. Ethics Op. 81 -24 (1981), cited in ABA/BNA LAws. MAN. ON PROF. CONDUCT 801:3807 (1984). See also Kan. Judicial Ethics Advisory Panel Op. JE -7 (Sept. 11, 1984), available at http:// www .kscourts.org/clerket/JE609.pdf (opining that a judge's receipt of an award from a special interest bar association may or may not be proper). This opinion had some qualifiers: For example, if the award is given upon the judge's retirement in honor of the judge's years of service, knowledge of the law, and integrity on the bench, the award is entirely proper. On the other hand, if the award is given by a special interest bar association group under circumstances which tend to create the impression that the judge is committed to a particular legal philosophy in accordance with that of the special interest group, then acceptance of the award is violative of Canon 2. Id. These qualifiers ( "under circumstances which tend to create the impression that the judge is committed to a particular legal philosophy ") only serve to make the prohibition more vague. 2006] THE APPEARANCE OF IMPROPRIETY 1365 would be improper for a judge to accept an award from such an association."' 36 One would support this rule if you thought you could corrupt a judge by giving him a statute of brass and a certificate. But most people hope that it is not that easy to buy a judge. We are talking about bona fide organizations. Over the years, many special interest organizations not open to all members of the bar have routinely honored judges as "Judge of the Year" —organizations whose members are primarily plaintiff's lawyers, or defense lawyers, or civil trial lawyers. It is the same with non -bar special interests organizations like Mothers Against Drunk Driving. This prohibition found in some ethics opinions would surprise the various special interest bar association groups and similar organizations that have honored judges over the years by calling them "Judge of the Year," all blissfully unaware of an ethics opinion that cited no case law or other authority. 137 One might argue that the American Judicature 136. ABA Comm. on Ethics and Prof I Responsibility, Informal Op. 86 -1516 (1986). 137. For example, Texas Attorney General Greg Abbot, when he was a Texas judge, received various awards including: "Jurist of the Year" from the Texas Review of Law & Politics; "Trial Judge of the Year" from the Texas Association of Civil Trial and Appellate Specialists; and "Appellate Judge of the Year" from the Texas Chapter of the American Board of Trial Advocates. Attorney General of Texas Greg Abbott Homepage, http: / /www.oag.state.tx.us /agency/ agga_bio.shtml (last visited June 18, 2006). The Monterey County Chapter of the American Civil Liberties Union annually presents the Atkinson Award, named for the distinguished civil rights advocate Ralph B. Atkinson, to a local advocate for civil liberties. In 2002, the winner was Judge Richard Silver. ACLU Monterey County, Ralph B. Atkinson Award Winners, http:// www. acl umontereycounty.org/about_atkinson.html (last visited June 18, 2006). Washington State Court of Appeals Judge Faye C. Kennedy was one of the first women at the appellate level in Washington state. In 2004, Judge Kennedy received the Judge of the Year Award from King County Washington Women Lawyers, another special interest bar association. Washington State Bar Association, Bar News (Nov. 2005), http: / /www.wsba.org/ media / publications ibamews /fyi- novO5.htm (last visited June 18, 2006). Chief Judge Kenneth H. Kato, in 1998, was honored as Judge of the Year by the Asian Bar Association of Washington. He was one of the recipients of National Asian Pacific American Bar Association's Trailblazer Award in 2000, both special bar associations. Washington Courts, Court of Appeals: Members, http: / /www.courts.wa.gov /appellate_ trial_ courts /bios / ?fa= ate_bios.display &folderid =div3 &fileID =kato (last visited June 18, 2006). Justice Bobbe J. Bridge, also of Washington state, has also been honored by multiple special bar associations and special interest groups. She was honored by the Soroptimist International of Kent as a Woman Helping Women in 1999. In 1998, she was awarded the Women Making a Difference Award by YouthCare. She received the Mothers Against Violence In America's Community Catalyst Award in 1997, and the Hannah G. Solomon Award from the National Council of Jewish Women in 1996. The Washington Women Lawyers honored her as Judge of the Year in 1996. In 1982, she was awarded the American Jewish Committee's Edward F. Stern Human Relations Award. Washington Courts, Supreme Court Members, http: / /www. courts.wa.gov /appellate_trial_ courts / supreme /bios / ?fa= scbios.display_file &fileID =brid ge (last visited June 18, 2006). 1366 HOFSTRA LAW REVIEW [Vol. 34:1337 Society has a special interest in that it supports merit selection of judges over popular election. Yet even that Society, which ought to know something about judicial ethics, gives out an annual "Dwight D. Opperman Award for Judicial Excellence. "138 Still, judicial ethics opinions like the ABA or Kansas ethics opinions, which have no legal force, are always in the background waiting for someone to use them to Justice Randy J. Holland of the Delaware Supreme Court received the 1992 Judge of the Year Award from the National Child Support Enforcement Association, another organization whose members tend to be on the same side in litigation involving child support. Vanderbilt University Law School, Affiliated Faculty, http: // law. vanderbilt .edu /faculty /adjuncts.html (last visited June 18, 2006). In November 2005, the Washington chapter of the American Board of Trial Advocates, a special interest bar (to be a full member one has to have tried at least twenty-five civil jury trials to conclusion) presented King County Superior Court Judge Mary Yu its "Judge of the Year Award." Maureen O'Hagan, A Special Ruling: Judge Of The Year, SEATTLE TIMES, Nov. 26, 2005, at B2, available at http: / /seaftletimes. nwsource. com/ html/ localnews /2002647450yu26m.htmi. The newspaper story shows a photograph of the judge, with a bright smile. She also must be unaware of what the ethics committee of Kansas or the ABA thinks. The different local chapters of the American Board of Trial Advocates give out annual awards for various types of judicial excellence. See Robert J. Moss, Orange County, CA THE PRESIDENT'S REPORT, AM. BOARD OF TRIAL ADvocs. Nov. -Dec. 1999, at 3, available at http: / /www.abota.org/_ images /mediacenter/PR1999vl4.pdf ( "Last but not least, we presented our annual Judge of the Year award to the Honorable Robert Jameson. "). In 1998, Judge Anthony Romano received the Judge of the Year Award from Mothers Against Drunk Driving, yet another special interest organization. "That year he discovered the municipalities in the Kansas City Metropolitan Area had no city ordinances enforcing the ignition interlock program initiated by state statute. `I was shocked,' he said." Sheila Thiele, Judge Plans to Continue Making a Difference After Retirement, DAILY RECORD & KANSAS CITY DAILY NEWS - PRESS, July 10, 2002, available at http: / /www.findarticles.com /p /articles/ mi_gn4181 /is_20020710 /ai_n 10065659. In July 2005, the National Council of Juvenile and Family Court Judges, another special interest organization, during its 68th Annual Conference held in Pittsburgh, named Judge Jeremiah S. Jeremiah, Jr., Chief Judge of the Rhode Island Family Court in Providence, as "Judge of the Year." Press Release, Nat'l Council of Juvenile and Family Court Judges, NCJFCJ Names Judge Jeremiah S. Jeremiah, Jr, "Judge of the Year" (July 22, 2005), available at http: / /www.ncjfcj .org/content /view/468/379/. In California, the Sacramento Lawyer, a bar publication, proudly reported that Sacramento County Bar Association (a bar not seeking membership from all California lawyers) awarded the "Judge of the Year" in 2001 to Sacramento Superior Court Judge Richard K. Park. Charity Kenyon, Richard K Park: Judge of the Year, SACRAMENTO LAWYER, June 2001, available at http: / /www.sacbar. org/members /saclawyer /jun01 /cover story. html. The Wisconsin State Bar, one that is not special interest, proclaimed the fact that Barron County Circuit Court Branch II Judge Edward Brunner received the 2005 Lifetime Jurist Achievement Award, and that Milwaukee County Circuit Court Chief Judge Kitty K. Brennan received the 2005 Judge of the Year Award. The Bench and Bar Committee presented both awards at the Annual Convention in May. State Bar of Wisconsin, News, http: / /www.wisbar.org/AM/Template. cfm? Section =News& Template= /CM /ContentDisplay.cfm &C ontentID =56204 (last visited June 18, 2006). 138. See, e.g., The Second Annual Dwight D. Opperman Award for Judicial Excellence, Honorable Ruth V. McGregor, AJS, (Sept. 19, 2005), http: / /www.ajs.org/ajs /awards /opperman/AJSopperman05- final.pdf. 20061 THE APPEARANCE OF IMPROPRIETY 1367 attack a judge. 139 The Florida Committee on Standards of Conduct Governing Judges has advised that there is the "appearance of impropriety" when a judge runs for a bar association office. 140 The rationale: people might question whether the judge is exerting subtle pressure on lawyers who must litigate before the judge, creating at least the appearance of impropriety. 141 If that is a good rule, one does not have to interpret "appearance of impropriety." One simply has to create a bright -line rule that forbids the judge to run for a bar office, even though the bar association members are not always on the same side in litigation, and even though the balloting is secret. But, if one were to propose a clear rule, there would be debate. People would wonder why should there be such a prohibition, when we routinely allow the bar to rate judges. We publish these ratings and there is no concern that judges will exert "subtle pressure" on lawyers for favorable ratings. If there is pressure, it must be too subtle, because some judges routinely earn negative ratings. If there were a proposal for a bright -line rule, other members of the bar might wonder why judges should not be able to run in elections with secret ballots. If the judge runs for an office and loses, that judge will not know who voted against him or her — unless the votes were unanimous. And, in that situation, the entire world should know that the entire practicing bar thinks so little of the judge. Instead, the judicial ethics committee can avoid those pesky things that often accompany a proposed rule when it simply relies on "appearances" and announces the judicial ethics opinion as a fait accompli. In another class of cases, we find ethics opinions refer to the "appearance of impropriety" when neither that phrase nor anything else in the opinion offers any real advice. Here is a complete quotation from an Ohio ethics opinion: A judge whose spouse is a county court judge may serve on the court of common pleas within the same county so long as both judges avoid any appearances of impropriety and do not allow their relationship to 139. The Kansas Judicial Ethics Advisory Panel acknowledges that its opinions are purely advisory and not binding on anyone. See Kan. Judicial Ethics Advisory Panel, supra note 135. Indeed, court rules explicitly provide that these ethics opinions are not "binding on the Commission ... or the [Kansas] Supreme Court ...." KAN. SUP. CT. R. 6500 (2005). 140. Fla. Judicial Ethics Advisory Comm. Op. 94 -44 (1994), discussed in May a Judge Serve as a Bar Association Officer?, JUD. CONDUCT REP., Winter, 1997, at 2. 141. See id. 1368 HOFSTRA LAW REVIEW [Vol. 34:1337 influence their judicial conduct or judgment.142 This analysis is about as helpful as John Wayne's advice: "A man's gotta do what a man's gotta do." 143 VI. APPEARANCE OF IMPROPRIETY AND PUBLIC UNDERSTANDING OF THE ROLE OF JUDGES One of the recurrent arguments in favor of a rule banning the "appearance of impropriety" is that "[a]voiding the appearance of impropriety is as important to developing public confidence in the judiciary as avoiding impropriety itself." 144 On the contrary, there are many examples where the existence of this vague prohibition has led to reducing public confidence in the judiciary, because it arms its critics with the ability to attack a judge's integrity using the vague standard, the "appearance of impropriety." Even if the action is not itself wrong, even if the action is not an "impropriety," there may be an appearance of wrongdoing based on conjecture, supposition, insinuation and innuendo. These issues never reach the status of a judicial opinion or even an advisory ethics opinion. Instead, their forum is the public press. Let us turn to a few recent examples. Recently, the Senate confirmed Judge Samuel Alito of the Third Circuit to the U.S. Supreme Court. Not only did Judge Alito testify at his confirmation hearings —a practice that is relatively recent in the history of confirmation hearings 145--but other judges testified as well: Two current judges and five retired judges testified in person or via videotape. 146 All the judges favored his nomination, even though a few said that they held political views decidedly different from Judge Alito. The Judicial Code does not prohibit this testimony by fellow judges. 147 142. Ohio Ethics Opinion 89 -20 (1989), as cited in ABA/BNA LAws. MAN. ON PROF'L CONDUCT 901:6851 (1991). 143. See Colbert I. King, A Test for Tolerance, WASH. POST, Jan. 1, 2005, at A23 (quoting John Wayne) available at http: / /www.washingtonpost.com /wp -dyn /articles /A40034- 2004Dec31.html. 144. In re Dean, 717 A.2d 176, 184 (Conn. 1998). 145. Ronald D. Rotunda, The Confirmation Process for Supreme Court Justices in the Modern Era, 37 EMORY L.J. 559, 560 -61 (1988). 146. Tony Mauro, Judges Turn Witnesses for Alito: Unusual Endorsement Sparks Worries About Politicization of Bench, Possible Recusals, LEGAL TIMES, Jan. 16, 2006, at 13. 147. The ABA Model Judicial Code provides "a fair endorsement of recent nominees' practice of making themselves available to the Senate Judiciary Committee. The confirmation testimony is an appearance before a legislative body in order to speak about the law." Steven Lubet, Advice and Consent: Questions and Answers, 84 Nw. U. L. REv. 879, 881 (1990). Professor Lubet, who was no supporter of Judge Alito, even accused some of those who opposed Alito of "wast[ing] time on specious charges of bigotry and unethical conduct ...." Steven Lubet, The Alito Confirmation: How Democrats Lost the Political Battle, SAN DIEGO UNION - TRIBUNE, Feb. 1, 2006, at B7, 20061 THE APPEARANCE OF IMPROPRIETY 1369 First, the Model Code of Judicial Conduct, Canon 4C specifically authorizes judges to testify at legislative hearings about the law, the legal system, or the administration of justice. 148 Moreover, the judges were testifying as fact witnesses, about what they saw and heard. 149 Judges testifying about other judges at confirmation hearings is a practice with extensive historical precedent.150 And, this testimony can be very useful. 151 For example, if the testimony had been to the contrary, if a judge had said that the nominee occasionally lost his temper and got angry during judicial conferences, or made sexist remarks, that surely is available at 2006 WLNR 1918446. 148. See MODEL CODE OF JUDICIAL CONDUCT Canon 4C(l) (1990). Another provision advises judges not to testify at trials as character witnesses unless they are subpoenaed. See MODEL CODE OF JUDICIAL CONDUCT Canon 2B (1990). But congressional hearings are not trials, and the character witness rule does not even apply to testimony about facts, even in a trial. The character witness rule in any event does not give judges any immunity from testifying; it only says that they should be subpoenaed if testifying as a character witness, as a way to reduce the number of times that lawyers will be cross - examining the judges before whom they appear. MODEL CODE OF JUDICIAL CONDUCT Canon 2B cmt. (1990). This circumstance does not even apply when appearing before the Senate Judiciary Committee. 149. One judge testified: I can tell you with confidence that at no time during the 15 years that Judge Alito has served with me on our court—and the countless number of times that we have sat together in private conference after hearing oral argument —has he ever expressed anything that could be described as an "agenda." Nor has he ever expressed any personal predilections about a case or an issue or a principle that would affect his decisions. Nomination of Judge Samuel Alito to the U.S. Supreme Court: Hearings Before the S. Comm. on the Judiciary, 109th Cong. (2006) [hereinafter Alito Nomination Hearings] (testimony of J. Leonard Garth, Senior Judge, 3d Circuit), available at 2006 WLNR 733253. Another told the Senate Committee: "In hundreds of conferences, I have never once heard Sam raise his voice, express anger or sarcasm, or try to proselytize." Alito Nomination Hearings, supra (testimony of Edward Becker, former Judge, 3d Circuit), available at 2006 WLNR 733249. 150. For example, in 1987, former Chief Justice Warren Burger testified in favor of Judge Robert Bork during his confirmation hearings when he was nominated to the U.S. Supreme Court. Bob Egelko, Questions Raised About Having Judges Testify, SAN FRANCISCO CHRON., Jan. 13, 2006, at AT Various other federal judges appeared as witnesses for William Rehnquist in 1971, Sandra Day O'Connor in 1981 and Clarence Thomas in 1991. Id. While the Senate Judiciary Committee was conducting its hearings on Sam Alito, other judges were testifying at hearings involving state judges. The confirmation hearing for California Supreme Court nominee Carol Corrigan "included supporting testimony from three former judicial colleagues, including a current federal judge, Martin Jenkins, and a state Supreme Court justice, Ming Chin." Id. Corrigan had invited all three to testify. Like all the judicial nominees (except for Robert Bork), she was confirmed. Id. 151. Judge Timothy Lewis, now a Washington, D.C. lawyer, described himself as unapologetically pro-choice and a civil rights activist. He said that Judge Alito, whether in the courtroom or behind closed doors, never exhibited anything resembling an ideological bent. "I cannot recall one instance when he exhibited anything remotely resembling an ideological bent." Id.; see also Charles Babington and Jo Becker, Alito Likely to Become a Jusice, WASH. POST, Jan. 13, 2006, at Al, available at 2006 WLNR 685733; Senate Judiciary Committee Debates the Alito Nomination, http:// www. washingtonpost .com /wp- dyn /content/article /2006/01/24/ AR20060124005 63.html (last visited June 18, 2006), also available at 2006 WLNR 1464775. 1370 HOFSTRA LAW REVIEW [Vol. 34:1337 useful information that the Senators should know before the confirmation vote. Nonetheless, one can always raise a question about the appearance of impropriety, and some people did so, wondering if the Third Circuit judges were acting unethically by testifying. Some people argued that Alito perhaps should recuse himself in cases where he would review their decisions as a Supreme Court Justice, because the lower court judges could be seen as currying favor through their testimony. 152 Would it raise at least the "appearance" of impropriety if Justice Alito decided a case by affirming a lower court judge who had testified in his behalf? That is an argument that one can always make, but its logic is a bit strained. First, it assumes that judges treat reversal and affirmance rates the way a baseball player treats his batting average, as something personal to himself. But judges, unlike the litigants, have no personal interest in the case. If they did, they could not be judges. Judges have even disagreed with themselves, when they decide to reverse a precedent that they originally joined, 153 or vote as a judge in a way contrary to their view as an author 154 or as an executive branch official. 155 Second, if we assume that a judge should recuse himself from reviewing cases decided by other judges because those judges said nice things about him, then surely he should recuse himself from hearing any cases about lawyers who said nice things about him. Lawyers, unlike judges, really do have an interest in their cases. Their won -lost record is important. 152. See Mauro, supra note 146, at 13; Egelko, supra note 150, at AT 153. The examples are numerous. See Justice Blackmun's opinion in Garcia v. San Antonio Metro. Transit Auth., 469 U.S. 528, 530, 546 -47, 556 -557 (1985), (reversing Nat'l League of Cities v. Usery, 426 U.S. 833, 856 (1976), in which Blackmun had concurred). See also United States v. Gooding, 25 U.S. (12 Wheat.) 460, 478 (1827) (Justice Story explaining his rejection of his own former opinion: "My own error, however, can furnish no ground for its being adopted by this Court, in whose name I speak on the present occasion. "). 154. Compare Henry J. Friendly, The Bill of Rights as a Code of Criminal Procedure, 53 CALrF. L. REV. 929, 953 (1965) (arguing that convictions should not be reversed when the "worst that can be said is that a policeman placed a bit too much credence on the reliability of an informer "), with Williams v. Adams, 436 F.2d 30, 35, 38 -39 (2d Cir. 1970) (Friendly, J., dissenting) (arguing that a writ of habeas corpus should have been granted to the defendant when an officer's cause to stop a car was based solely on what an unnamed informer had said). Judge Friendly (the Judge, not the author) was vindicated when the Second Circuit, en bane, reversed the panel decision, in Williams v. Adams, 441 F.2d 394, 394 (2d Cir. 1971) (per curiam). But the U.S. Supreme Court agreed with Henry Friendly, the author, and not Henry Friendly, the judge, and it reversed the Second Circuit. Adams v. Williams, 407 U.S. 143, 149 (1972). 155. For example, Justice Jackson concurred in McGrath V. Kristensen, 340 U.S. 162, 176 (1950), even though the view he took in that case was contrary to his opinion as Attorney General. Registration of Aliens Under Selective Training and Service Act, 39 Op. Att'y Gen. 504, 505 (1940). 20061 THE APPEARANCE OF IMPROPRIETY 1371 And, if lawyers who say nice things can cause a judge's recusal, then lawyers who say bad things about a judge should definitely cause his recusal. Yet, if that were the rule, any lawyer can create a permanent preemptory challenge against a judge simply by testifying against him at the confirmation hearing (or saying nasty things about him during an election campaign). The lawyer who decides to create this right to recuse a judge whom he does not like will also create a niche practice, for other lawyers can hire this lawyer when they decide that they want to prevent this particular judge from being on the panel. Now, this is not the law. If the powers that be want to create such a recusal rule, it is easy to write one, but, for the logical and policy reasons I have suggested, that is unlikely. Still, the media or pundits can always raise a question of impropriety, which serves to tarnish the judge even if no higher court will order a recusal. Recently, ABC News breathlessly criticized Justice Scalia for violating the "appearance of impropriety" because "Scalia attended a cocktail reception, sponsored in part by the same lobbying and law firm where convicted lobbyist Jack Abramoff [a convicted influence peddler] once worked . „156 No one who has ever played, "this is the house that Jack built,” can ever doubt this reasoning. Lobbyist Jack Abramoff, in early January 2006, pled guilty to conspiracy, fraud, and tax evasion charges in a major corruption case, and agreed to cooperate with prosecutors investigating whether members of Congress took bribes from him in exchange for favors. 117 Abramoff once worked for a law firm, and that law firm later became one of the hosts for a reception, and Justice Scalia went to that reception.15' Nowadays, we call this line of attack the "appearance of impropriety," but in the old days, we would call it "guilt by association." And people think this is progress, a forward move, in the endeavor to be more ethical! ABC News also complained that Justice Scalia was absent when Roberts was sworn in as Chief Justice, because of his previously - scheduled commitment to teach a law course in Colorado. This absence was a "snub" and, ABC News said, may have violated the appearances of impropriety.159 A short time later, Justice O'Connor missed the 156. Brian Ross, Exclusive: Supreme Ethics Problem? What Was Supreme Court Justice Antonin Scalia Doing on Day of Supreme Court Swearing -In?, ABC NEWS, Jan. 23, 2006, http://abcnews.go.com/Nightline/Investigation/story?id=1534260. 157. See Susan Schmidt & James V. Grimaldi, Abramoff Pleads Guilty to Three Counts, WASH. POST, Jan. 4, 2006, at A01, available at http:/ /www.washingtonpost.com /wp- dyn /content/article /2006/01 /03/AR2006010300474. html. 158. See Ross, supra note 156. 159. "Not only did Scalia's absence appear to be a snub of the new chief justice, but according 1372 HOFSTRA LAW REVIEW [Vol. 34:1337 swearing -in of Justice Alito, because of her previously - scheduled commitment to teach a course in Arizona. 160 But those who criticized Scalia for "snubbing" Chief Justice Roberts had no criticism of O'Connor "snubbing" Justice Alito. One of the nice things about charging "appearances of impropriety" is that one does not have to be consistent, because "appearances" require weighing and considering each case as unique, so there is no precedent, and any layperson can make a judgment call. 161 But law is not supposed to be like that. We no longer measure justice "by the length of the chancellor's foot " —so said because in medieval England, the chancellors often had no formal legal training, and precedent was not binding. Loose charges of a violation of "appearances" are not limited to Supreme Court Justices, who are simply at the top of the food chain and so attract more attention. All judges are targets. As I was researching for this Article, I ran across an interesting, albeit not atypical, news item. A developer sued the Winged Foot Golf Club and several others after the Club denied him membership. New York Supreme Court Justice Kenneth W. Rudolph granted the defense motions to dismiss the various causes of action. 162 The plaintiff then moved to recuse the judge, not because Justice Rudolph "exhibited actual bias," but rather that the circumstances gave "rise to the appearance of a bias and impropriety." 163 And what was the "appearance "? The plaintiff, Corey A. Kupersmith, had engaged in other litigation with a golf club on Martha's Vineyard. Years earlier, the judge's daughter used to work for a company that Mr. Kupersmith now says was to some legal ethics experts, it also raised questions about the propriety of what critics call judicial junkets." Id. 160. O'Connor "was in Arizona Tuesday teaching a class at the University of Arizona law school," during Alito's swearing -in. NPR.org, Legal Affairs: Senate Confirms Alito as Supreme Court Justice, Jan. 31, 2006, http: / /www.npr.org/templates /story/story.php ?storyld = 5180411. 161. Scalia spoke at a previously- accepted lecture series sponsored by the Federalist Society, a nonpartisan think -tank in Washington, D.C., which takes no positions on any legal issues or policy issues, does not engage in other forms of political advocacy, and files no amicus briefs, although it often sponsors debates on legal issues between liberals, conservatives, and libertarians. The Federalist Society, Frequently Asked Questions, http: // www.fed- soc.org/Press/FAQs.htm. The Federalist Society invited all of its members to attend the seminar on separation of powers. One who becomes a member has no obligation to ascribe to any particular beliefs. In contrast, O'Connor spoke at the University of Arizona, which does file amicus briefs. See, e.g., Brief of the University of Pittsburgh, Temple University, Wayne State University, and the University of Arizona as Amici Curiae Supporting Respondents, Gruffer v. Bollinger, 539 U.S. 306 (2003) (No. 02 -241), 2003 WL 399066. The University also takes positions on legal issues. See, e.g., Associated Students of Univ. of Ariz. v. Ariz. Bd. of Regents, 584 P.2d 564 (Ariz. Ct. App. 1978), cert. denied, 440 U.S. 913 (1979). 162. Kupersmith v. Winged Foot Golf Club, Inc., 9 Misc. 3d 1123(A), (N.Y. Sup. Ct. 2005). 163. Mark Fass, Judge Spurns Recusal From Suit to Join Club: Blasts Lawyer for `Intrusion' Into His Personal Life, N.Y.L.J., Mar. 6, 2006, at 2. 20061 THE APPEARANCE OF IMPROPRIETY 1373 one of his business rivals. She was an employee at will and never had any equity interest.164 Plaintiffs motion asserted: "Your Honor's daughter, Kelly Mooney, is a former competitor of the plaintiffs with GEM Communications.... This information should have been known to the Court, and disclosed prior to submission of the motion. "165 Granted, the motion does not explain how GEM Communications was a competitor of the plaintiff, or how the judge should have known that. 166 But surely, some people will argue, it would not have hurt the judge to make this disclosure. Is not the failure to disclose an "appearance of impropriety," even though it is not an actual impropriety? The proposed ABA Judicial Code invites this line of argument. But that is not all. "Counsel affirms on personal knowledge that the children of this jurist played golf at Winged Foot," and met with members of the Club, who "stood to be damaged financially should the plaintiff's action be allowed to proceed." 167 The motion did not identify who these people were and the judge said that he did not know when and where his emancipated children played golf. There is more. The judge's daughter was getting married, and her fiance is a member of the defendant Winged Foot Golf Club. "As such, Your Honor's daughter stands to be directly negatively monetarily effected by a continuation of [this] action." 168 The judge protested: "[T]he daughter of this jurist is not by marriage a member of Winged Foot Golf Club, Inc. and is not by extension of her marriage affected by the determination of this litigation." 161) The judge, to put it mildly, was quite upset with the plaintiff's lawyer. The judge said that Mr. Kupersmith's attorney (Mr. Herman), "at the time of the preparation of the submission, was aware that spouses of Winged Foot members are not members as evidenced by Herman's original submissions in opposition." 170 The judge was also none to happy with the plaintiff, who had hired a private investigator to probe possible connections between the judge's family and the defendants. 171 The judge said: "This unwarranted intrusion into the personal life of the jurist and my family can only be intended to intimidate the Court in the administration of justice," and "cannot be tolerated in the civil 164. Id. 165. Id. 166. Id. 167. Kupersmith v. Winged Foot Golf Club Inc., N.Y.U., Mar. 9, 2006, at 22 (N.Y. Sup. Ct. Feb. 21, 2006). 168. Fass, supra note 163, at 2. 169. Id. 170. Id. 171. See id. at 1. 1374 HOFSTRA LAW REVIEW [Vol. 34:1337 practice of law, and the ethics of same must be determined by those charged with the review of professional responsibilities of attorneys who practice before the bar. "172 That last sentence is a little complex, but it appears that the judge is suggesting discipline against the lawyer. 173 That leads to a new issue: If the judge is that upset, should he recuse himself in any further case involving the plaintiff or this particular lawyer? I am not arguing that the judge should recuse, only that it would hardly be surprising for a lawyer or other critic to point out that further action by the judge may raise the "appearance of impropriety." VII. CONCLUSION Surely, judges sometimes do violate clear ethics rules, and it is proper to criticize them when they do. 174 Nor is there a problem criticizing judges for the substance of their decisions, even when the commentators are harsh. 171 We are merely criticizing the judges' 172. Id. 173. The judge is clearer in another sentence: "Thus the conclusions of counsel as set forth in paragraph l lc. are baseless, insulting and undignified and degrading to the Court in violation of DR 7- 106(c)(6)." Unpublished opinion, on file with the author. 174. See, e.g., Richard Carelli, AP, Ginsberg Reportedly Heard Cases Involving Firms in Which Husband Had Stock, BuFFALo NEws, July 11, 1997, at A6. ( "Supreme Court Justice Ruth Bader Ginsburg may have violated a federal law 21 times since 1995 by participating in cases involving companies in which her husband owned stock.... Responding to queries by The Associated Press, Martin D. Ginsburg ... said he has ordered his broker to sell all his stock in the eight companies. "). Here we have a clear federal rule, Justice Ginsburg made a mistake and so she responded by correcting the problem. See Tony Mauro, Judicial Ethics Draw Increased Scrutiny, LEGAL TIMES, Jan. 30, 2006, at 12, (noting reports that "10th Circuit appeals court nominee James Payne participated in 18 cases involving companies whose stock he held while serving as a federal district court judge in Oklahoma "). The judge later withdrew his name for consideration. 175. Monroe H. Freedman, The Threat to Judicial Independence by Criticism of Judges A Proposed Solution to the Real Problem, 25 HoFsTRA L. REv. 729, 729 (1997) ( "[C]riticism of judges by lawyers is both constitutionally protected and desirable in a democratic society. "). See also Justice Thomas: As judges, we must expect that our opinions will be dissected not only by the parties, but by scholars, journalists, students, politicians, and the bar. Such scrutiny can even be useful, at times. It can force judges to be self - reflective. Judges do not get everything right; as Justice Jackson has said, we are not final because we are infallible, we are infallible because we are final. Judges can benefit from constructive criticism to improve the quality of their work, just as anyone can. Now, I have some experience with criticism myself. Early in my service on the Court, I was painted by the New York Times as the "youngest, cruelest' justice for a dissent that I had written about the proper interpretation of the Eighth Amendment. Especially now that the gray in my hair has become ever more apparent, I appreciate the "youngest" part of that statement. At that time, no person or outside groups jumped to 2006] THE APPEARANCE OF IMPROPRIETY 1375 reasoning, and — whether we are right or wrong —we are not criticizing their ethics and dressing our accusations in the appearance of impropriety. Proponents of a rule that forbids judges from engaging in the "appearances of impropriety," and then does not define the term, argue that the rule promotes, in the view of the lay public, the integrity of the judges. On the contrary, the power to unfairly criticize a judge as violating the appearances of impropriety serves to bring the judiciary into disrepute. If the judge has violated an ethics rule more precise than "avoiding the appearances of impropriety," then, by all means, one should make the charge. That is how we improve the judiciary's ethics. If the judge has done something that should be unlawful but is not, then enact a rule to forbid it. But the ABA proposed Judicial Code should not give its imprimatur to us to engage in criticism that too easily becomes an ex post facto, ad hoc, or ad hominem attack. These fallacious methods of argument are so old and tired that we use Latin, a language long -dead, to describe them. The 1990 ABA Judicial Code titled its Canon 2: "A judge shall avoid impropriety and the appearance of impropriety in all of the judge's activities. "176 Granted, the language used the command, "shall," but the Code also said that the Canons are intended to be "broad statements." 177 The ABA Annotated Model Judicial Code, which the ABA itself publishes, said that this Canon is "aspirational," 17' although, as we have seen, many courts act as if this Canon is a mandatory command and not aspirational advice. The ABA's proposed Judicial Code goes beyond the present ABA standards by making "appearances" a rule, not merely a title. While the title of Rule 1.02 refers to "appearances," the proposed Rule 1.02 is much clearer: "A judge shall avoid impropriety and the appearance of impropriety. "179 The ABA Commission has specifically taken language my defense, nor did I expect or want anyone to do so.... I am willing to let my opinions speak for themselves, and it is part of my judicial duty to accept outside criticism, however, incorrect or unjust, to go by unanswered. Justice Clarence Thomas, Address at the Federalist Society National Lawyers Convention: On Judicial Independence (Nov. 12, 1999), available at http://fed- soc.org/Publications/Transcripts/justicethomas.htm. 176. ABA MODEL JUDICIAL CODE Canon 2 (1990). 177. ABA MODEL JUDICIAL CODE Pmbl., 12. 178. ABA, ANNOTATED MODEL CODE OF JUDICIAL CONDUCT 4 (2004) (emphasis added). The full sentence says: "Two of the Canons are aspirational (Canons 1 and 2), and the other three address specific types of judicial conduct: conduct when carrying out adjudicative and administrative duties (Canon 3), conduct in various extrajudicial activities (Canon 4), and conduct in campaigning for judicial office (Canon 5)." Id. 179. FINAL DRAFT REPORT, Canon 1, supra note 25. 1376 HOFSTRA LAW REVIEW [Vol. 34:1337 from the 1990 Commentary and lifted it into a formal rule. The whole point of prohibiting (1) an impropriety and (2) the appearance of impropriety is to broaden the first prohibition, not weaken it. The result: The ABA will arm judicial critics with an especially powerful weapon that justifies any criticism of a judge by simply referring to the "appearance" that something might be improper even when the actual act is not improper. Ill- defined and fuzzy ethics rules give detractors a green light to hurl too easily the accusation of ethics violations, and, over time, this overuse will demean the seriousness of the charge of an ethics violation, or it will demean the judiciary itself. Granted, not all rules can be written with crystal clarity, but many can be. The phrase, "appearance of impropriety" certainly offers a reason why the framers drafted some rules as broadly as they did. But it is too vague to be a rule. We can do better. * ** Other attachments noted were contained in previous email also received in this meeting folder Marian Karr From: tony barino <barri notony@g mail. com> Sent: Wednesday, July 18, 2012 2:11 AM To: Council Subject: TRILLIONAIRE COMMUNICATIONS - - - -- TARGETED FOR FRAUD - -- FRAUDULENT NATURE -- VENALITY -- PRAETORIAN ELEMENT REVISED PAGES 6 -9 == -MEET ALL SPECIFIC ELEMENT OF FRUAD -- " FRUAD FORENSICS Attachments: * ** delierate ignoranc fraud.pdf; fiduucallaw.pdf; judicial improppiety- -craft persuasuion.pdf; power courrupts.pdf; CORRUPTION[1][1][1].pdf Wall ll 1 INN PW*l ri Vah3 No Inside this Issue Eeaddes. Can Corruption be Meawree9 ............1.3 Into a world distance: msabinty Policy bewma a mety ................5.) Are You Reeky for a Dip? SAP rollout may used -dip" in productinty ..... 5 Pfomes The Challenge of Inclusion: Bank's Commitment Social Development .....2 Bank Staff Working for the emanation .........6 Economists Forum 1999 ...0 tom the WE Dbasaeon. ... 8 Departments View from SA: coca cola venm the Bank: Pan II ...2.a HR: Tha Value of Feeetwck .0 Aromel-ine .............8 BAN" W®RLD Editor: Morallina Fanwar George Assistant Editor: Julius M. Wamey Editorial and Production Aabtam: Cynthia Cinnamon Design: Patricia Hord.Gfaphik Design CamrihuWa to Nis I.: Bormalkadrwe Jerry Floyd Virginia d.11 -0 Heshrock F. Halsey Rogers heal Sopher Yoshi thoure ra Addisci Board MemMrc Cherilym Barnett MSDIS) Eric ChinJa(EXfRO) Alexander E. Fleming (ECSPF) Lawrence MacWnaM (DECVP) Emmanuel Mbi (AFR2) Maureen M. Moore (ISGDR) Pauline Remained (Hasse) Diana S. Walker (HDNVP) Frederik Wright (ACTIVE) Robert Wrigbt(CEXCR) mmnrypudoamrcwmrar ue,T— r- -i-re. amp. seam. ».....bur ts-p n re.m,a mm.caw ee'..a ran . an.mnmleaww��. aw—l-h m- [eamuss— lur`+nm —.a m rmWMhFbbtJm111 Pmto3rmin evraa upm equ.a. m nl my World Bank Group 1818 H street. NW Washington, Be 20,433 Phaska:(2o2) 471102N2211 Fax:(202) 522-0SON2B38 dell: beNSwvrlt�wxklhenk.ag Can Corruption be Measured? Bank Offers Diagnostic Tools to Measure and Combat Corruption in Member Countries In his address to the Global Fomm on Fighting Corruption last February, US Vice President Al Core resorted to quotations from the Old Testament, the Koran and Confucius to impress on his audience the higher authorities that have denounced the practice before him. This suggests that corruption Is as ancient as It is universal. "Corruption... is a serious crime with devastaing conse- quences," Gore said. "A cold, vicious, often violent sacrifice of citizen security, for a narrow, greedy, private, personal profit on the part of a cooked official." This same conclusion had been drawn at the highest level of the World Bank some years before and underlies the Bank's renewed emphasis on helping Countries develop antt- corruption strategies, as well as adopting a policy of zero tolerance regard - Ingany carupt practices within the institution itself. The Bank now firmly believes that Corruption is a major factor Impeding development. "Corruption hampers economic growth, burdens the poor dis- proportionately, and undermines the effectiveness; of investment and aid.' said World Bank Resident lames D. Wolfensohn, who spoke at the conference attended by high level officials from around the world. "Anti - corruption strategies need to be an inte- gral part of a development framework designed to help countries eradicate poverty." Since 1995, when authorities at the Bank discovered that a staff member had influenced the award of a Bank- financed con- tract to a company in exchange for payment, the issue of corrup- tion remains a sensitive one. Such cases are thankfully rue, but as Wolfensohn so succinctly put It, "even one case of fraud in cor- ruption is one test many." Core cited the examples of Countries like Albania, Georgia and Latvia which. last year, with the assistance of the Bank, count geously undertook to diagnose in -depth corruption within their societies in order to design strategies to combat it and Improve governance. While rest attempts at fighting graft around the world still consist of "anti- corruption campaigns" noisily launched on state radio and television, with the token firing of an agency head or two an flimsy (and usually unsubstantiated) charges of alleged corruption, the systemic approach in these and other emerging economies where it is under implementation. goes farther. The principal innovation Iles in the integration of rigor- ous emp rical measurement and analysis of corruption with the empowerment of civil society and reformists In government, to build coalitions in addressing Component systematically, spear- heading institutional and economic reforms. Measuring Corruption The old myth that corruption by its "intrinsic nature" is Impos- sible to measure delayed the emergence of serious empirical analysis of corruption, wrote Daniel Kaufmann, Manager, Governance, Finance and Regulatory Reform, Wbrld Bank Institute (WBI), in a recent publication. Challenges to the Next Stage of Amt- Corruption. As a result, he said. myths about its prevalence, such as "Africa as a continent is hopelessly conpul as well as fallacies on its causes and consequences, were perpet- uated. The absence of empirical data on corruption obscured its enormous Costs and also gave cotrupt politicians "cover', enabling them to dismiss allegations of corruption as politically motivated. In his presentation at the Core and<oruption conference, Kaufmann highlighted concrete approaches to help design and- corruption strategies, which emphasize broad public participation to diagnose, prepare and implement action programs. In Iransh don economies, corruption was measured using surveys of house- holds, businesses and public officials, to detennine its prove - continued on page 3 Public Positions Are Often 'Sold' Cusbms t. Tax - A6Dnte � ��� iBYB511(�3DlSy Roswabrs IDIriD b.crl df,cbls SON. offit Oh 10 20 30 47 50 60 Nlar2 of PtbEc OBiciais reporting Pwcive aFOXkiol Across. Can Corruption be Measured? (continued from time 1) lence,aswell as its social and economic costs. The result sug- gests, in a number of countries, a picture of systemic corrup- tion that corrodes public welfare and bobbles private sector activity, while in others it is more localized. What also emerged from these surveys was that there are many types of corruption, with differing patterns In each cam - iry; and that its Institutional causes differ, meaning that prior- ities for reform would be cauntry- specific It is emphically found that many enterprises would pay Mghm taxes If corrup- tion were eliminated; that coruption places a disproportionate residual burden on the poor; and that In some settings'pub- lic officials do buy lucrative positions Core was particularly struck by the survey data which showed that in one country, 00 permnt of the customs officials reported that their positions hadbeenpurchased. "You know that if they flay for their post - tions, they will make their positions pay off," he concluded. Former Bank President Robert McNamara also commended the concrete action- orientation of this new approach and sug- gested to the many country officials attending the Gore con- ference to consider its Implementation. In countries where this data - Intensive approach is being Implemented through surveys of households. enterprises and public officials, its use and dissemination has sparked spirit- ed public debates and shifted the focus to Imsdtumnal mea- sures rather than to particular individuals, while also helping to establish reform priorities, in particular institutions. In Albania, for instance, there was so much interest in the publi- cation of the survey dam that the previous day's crucial World Cup soccer match between neighboring Romania and Croatia was bumped off the from pages of the nation's newspapers to make way for charts and graphs. This example brought home to many of the world leaders at the conference the realization of how badly people want to rid their societies of corruption and how effective an informed public can be. "The number one force in our favor in the fight against cor- ruption is our ever - expanding access to information," said the US Vice President. "The one of accountability is the fusion of information and action —actm on the part of public off - cials, private dozens. businesses, and non- governmental organizations.' The WBI and DEC are also developing a major worldwide database on governance indicators. permitting a comparative analysis of institutional performance for over 150 countries. This cross -country dam analysis complements the in -depth country survey diagnostics. Together these data have been pre- sented in local workshops that were organized for and open to members of the government, legislature, businesses, media and civil society. The policy debate was moved from the realm of vague, unsubstantiated accusations to a "process focused on empirical evidence and systemic weaknesses." "The collection, analysis. and dissemination of country - specific data empowering stakeholders to build coalitions in the preparation and implementation of action programs offers hope in making mrmds to improve govemance: Kaufmann observed. In an article on the subject, "New Frontiers in Diagnosing and Combating Corruption," co- authors Kaufmann, Sanjay Pradhan and Randi Rytemmn (ECA), sug- gest some strategies for establishing reform priorities, such as focus groups that discuss issues like petty and grand corri p- tim and the feasibility of potential reforms. They also stress the importance of assessing a country's readiness to reform, analyzing the possible effects that institutional and policy reforms would have out key stakeholders, because the partici- pation of some high -level politicians is indispensable. These reforms can only be sustained with the active par- ticipation of all branches of the stale, civil society and the business community In the policy process, they counsel. While pointing to its strengths in identifying the necessary regulatory, judicial and humitutlonal reforms, Kaufmann cau- tions against any tendency to see this new approach as a sil- ver bullet that would slay corruption world -wide. "It is far from perfect, and we need to continue to push the frontier Furthermore. these methodological and empirical tools can only be one input within a comprehensive and participatory approach, where political will is also key.' Indeed, he points out that the wisdom of adopting this pro- transparency, t mpir- Iwl approach is questioned by the politically entrenched elites ofcertaln countries. Yet, as demonstrated N several countries now imple- menting these diagnostics with World Bank support. defensiveness Is far from universal. In Ecuador for example. President Mahood has made known his commitment to long -term reform, based on survey results which are designed in a participatory fashion with key stakeholders. said Janet Entwistle, the Resident Representative in that comity. "Even before the surveys are complete, the Bank —through the Country Department/ Resident Mission in partnership with the WBI —has been actively promoting civil socl- ety participation in the design of a prelind nary. short-term anti - corruption action plan," Entwistle explained. She said both the gov- ernment and civil society organization, aware that the surveys are underway, are eager to ...... engage in a richer debate on corruption, based on empirical dam rather than suspicion or random accusations. In early May, in a major conference for Latin America at the Carter Center in Atlanta, President Jimmy Carter went an a worldwide CNN program to laud this rigorous approach, cam mending his fellow panelist President Mahuad for his courage in adopting this pro - transparency and participatory diagnos- tics, and urged other national leaders to come to the World Bank for methodological and technical support In fact, the Carter Center, the Bank and Transparency International have embarked on a collaborative effort in restating Ecuador in its anti-cmrrupdon program. "Hypercouruption" or systemic corruption is a public poll - cy issue," states Luis Moreno Deward, head of the lam America region of Transparency International. the global anti- corruption watch -dog. "The work of Transparency International and the new diagnostic surveys developed by the Vi Bank are now paving the way for a new level of order standing on the causes and economic consequences of cmrtup- tion." He said that the power of dam and these diagnostics are vital in the formation of the new alliances -which have to go beyond fire awareness- wising stage into concrete orders and Pmgni Equally Important is the fact that these new diagfmstia have taken the passionate rethoric out of the national debates on corruption. - Strong technical work has made it possible to de-politicize what would otherwise be a very emotional and political issue.' said Carlos Elbin. Resident Representative In Albania where this approach was adopted early on and already reforms are underway in theJudicmry, customs, tax and other Institutions. More broadly, at present the Bank Is active in assisting in an &comindon efforts in a number of insthulional reform dimensions in over 25 connotes ranging from Bolivia to Uganda. In addition to the efforts underway, the new'diag - nostic toga if and coalition- building participatory approach is being requested by a growing number of countries In Latin America, Asia, Africa and in transition. The Bank's efforts are complemented by the assistance of other bilateral donors such as Scandinavian countries and usma N by Julius M. Morey, Assistant Editor. BW Pbr further details and materials on the diagnostic toolkim and upcoming critics, please contact Diane Bouvet at dhouvet @worldbmk.org, or visit the website hop:/ h..worldbmkorg/hbWedi/gac/ind".hn Daniel Kaufmann In Albania, for instance, there was so much interest in the publication of the survey data [on corrup- tion] that the previous day's crucial World Cup soccer match between neighboring Romania and Croatia was bumped off the front pages of the nation's newspapers to make way for charts and graphs. ** Full 109 pages available on City Council website after meeting folder is finalized Marian Karr From: tony barino <barrinotony @gmail.com> Sent: Wednesday, July 18, 2012 2:27 AM To: Council Subject: Fwd: Attachments: ** OBJECTIVE REASONABLENESS - PAGE 6- 9 -- reasoanble diligence.docm ---- - - - - -- Forwarded message ---- - - - - -- From: tony barino <barrinotony&grnail.com> Date: Wed, Jul 18, 2012 at 3:16 AM Subject: To: newsalerts(n,baynews9.com UNITED STATES DISTRICT COURT NORTH CAROLINA WESTERN DISTRICT TONY CURTIS BARRINO Plaintiff/ Pro Se 11 DEPARTMENT OF THE US TREASURY TIMOTHY GIETHNER BARACK OBAMA 950 Pennsylvania Avenue., N.W. Washington, D.C. 20530 Defendants No. 3:11 -cv -247 TONY CURTIS BARRINO Plaintiff/Pro Se 226 N. Long St. Salisbury, N.C. 28144 1 of 109 UNITED STATES DISTRICT COURT NORTH CAROLINA WESTERN DIVISION Tony Barrino Plaintiff/Pro Se, V Department of US Treasury Timothy Giethner Barack Obama Respondents, NCWD Case No. 3:11 -cv -247 US SUPREME COURT Case No. 11 -8563 4" COURT OF APPEALS Case No. 11 -1713 MOTION TO REOPEN - MEMORANDUM OF LAW COMES NOW, I Tony Curtis Barrino, as Plaintiff is pursuant relief from the previous judgment and order by 28 USC 2462. Article III jurisprudence its discretion to grant such a motion court should exercise its equitable powers with respect to substance technical considerations that will prevent substantial justice." The honorable court constitutionally release and address the liabilities in the litigation; ex dolo malo non ortiur actio insist the court not be unconstitutionally impervious to any plausible deniability. The Pinkerton Liability is guidepost under the judicial microscope in a government financial litigations. United States v Holzer, 816 F. 2d 304(7th Cir. 1987).Marshall v. Lovell, 19 F.2d 751, 755 (8th Cir. Minn. 1927). Procedure of Law and Argument Federal Rule of Civil Procedure Rule 15(c) 1 the plaintiff is pursuant in due diligence is addressing the special problems in the original complaint suspicions to exaction and probable fraud. United States v Powell, 379 U.S. 48(1964).Mazzei, 521 F.2d at 650 this motion to reopen prays in the interest of justice to remove the actual prejudice, fiction and address the tortuous 2of109 issues. The pleadings presented are good enough in reasonable conclusion to re- raised by a "suspicious mind ". This requested motion is a judicial act as amicable action to clarify any praetorian elements and venality in the original complaint. Article II section 4 concrete this motion in justifiable legal acceleration to redirect "plausible deniability" and address any "clouded political venality" of specific acts the oppressing to the litigation. United States v Burr, 309 U.S. 24 (1940)Horne v Huddle, CA 94 -1756 (D.C. Dist. 2009). This motions; discussions arguments and pleadings are renewing as well as ratifying factual direction. The lawsuit submission in the honorable court is and was improperly contaminated by the Respondents. The tortuous totality of lawsuit manifests conspiring overacts that have circumvented the proper applications of administrative laws that would have pursed the litigation to settle from the original date. Immediate inquiry should be the main event. 5 USC 702. In Re: Tutu Contamination Litigation, F.R.D. 46 (1995), 78 -79 (D. Virgin Islands, 1995) this motion prays to compel the honorable court reopen and act on its own conscience. "Be it known ", subversive activities that are encroaching the civil liberties of Plaintiff caused the by executive branch Respondents executive acts. Article I section 9 the prejudice is dangers that benefit the Respondents. United States v Mandel, 591 F. 2d 1347 (4' Cir. 1979) materiality presented in the original complaint. The honorable court errors to see the effectuating political fraud. 7 and 70 Am Jur is grounds to readdress subversive acts Korematsu v United States, U.S. 214(1944) the original complaint must go into effect and take an amicable direction encompassing this motions Article III meaning and jurisprudence. 3of109 28 USC 2332 Parr v United States, 363 U.S. (1960) there is corroboration, supporting documentation and supporting fact that will pierce any plausible liability. This litigation's pleadings, purging assertions allegations will not withstand inquiry of judicial challenge on "Canon Grounds ". United States v Kenny, 462 F. 2d 1205(1972) Barret v United States,798 F. 2d 565 [at12]. The original complaint deserve a "main event" and opened the administrative gates of district at minimum a conference should been schedule. The original complaint pointed out and alleged one extreme federal issue. Pryor v US Postal, 769 F. 2d 281 [at 18] pro se asks for "Retroactivity of Jude" by this memorandum of law challenges mistake and failures. In which there was a misinterpretation of foreseeable a scheme. Pryor v US Postal, 769 F. 2d 281 [at12] the honorable court is requested to keep in regard and allow the pro se "benefit of doubt" as to first impressions and impacting presentation of a serious case in a federal court. Clinton v Jones This is an extreme case that requires a new trial. Pryor, 769 F. 2d 281 [at 12] A conference was not scheduled and pro se was afforded the same judicial regard as a practicing attorney at law. Mazzei at 650. is legally capable to challenge the mistake of law. Clearly a matter in Retroactivity of Jude on concrete "Canon Grounds" and justifiable grounds in venue for a diversity case. There is the continued interest of United States in legitimate functioning transaction to beneficiary. Hobson v Gibson The honorable court at minimum should suspect an illicit degree of positional duress. It is not judicial mischief suspicious to suspect any convolution, question the arbitrary desires and object in contrary directions in US Treasury deposits or holding set aside for the Plaintiff. US v Tweel The requirements are met due" injury in fact" should have argued now it imperatively warrants remedial action to reach a different disposition and just settlement. In Re: Eron manipulation leads to fraud and exaction. Moreover, "fraud starts due to the omissions of a number fiduciary duties." Anchorbank v Hof (7th Cir 4 of 109 2011) Newsome v Treasury, 2009- 30199(Fed. Cir.) The original complaint articulated unusual avenues of duress, unique political contact and presented unequivocal outstanding particular circumstances. The judicial panels of the district court and en banc court failed by discernment of the concerning mattes. The initial stages of the litigation were categorically abandoned due process principles administrative law. Hilton v Guyot The silence of poll en banc panel is result of actual prejudice predisposition. Moreover, failed acquiescence of conjugation political assertion or political invasion efforts that "civilly spoke ". The factual assertions are developed effectuation of duress minas. It is within this memorandum of law the primary grounds for remedial action. The Plaintiff has exercised appealing petitions in due diligence thorough superior court submissions. The entire complaint submission record is attempting to diligently purge or cease - desist effectuating duress. This litigation has coercive matter and abrasive assertions that make for way or modalities for a "real political exaction" to occur. The pro se as Plaintiff is at calculated disadvantage to recovery a potential loss. Due to the mistakes of law important aspects in the issue where not challenged. The encompassed civil torts need to nullify action. Allowance of continuation endangers the ability beneficiary claim as pecuniary harm. The Respondents are proximate cause of deprivations. The dismissal is unconscious positional duress. Evans v United States, 504 U.S. 255 (1992). 37 C.J.S. Fraud 51 Cong. Rec is directional justice to re -raise any federal issue to assure there is fair play and assure the honest practice in any government financial affair that involve the Plaintiff. Article II protects piracy of estate property and trust. The tortuous overacts money intended to acquire in the scheme. 37 C.J.S. 76 Am Jur Trust Halbstam v Welch 705 F.2d 472 (D.C. 1972). Barret v United States,798 F. 2d 565 [at12]. The honorable court is queried on the "right to rely" on the political history. The preceding petitions require concurrent judicial action with this motion. The 5of109 concurrent totality is a correcting remedial adjustment or amendment reexamining for exaction probability with this entire complaint. The narrative articulation contains profound categorically ripe merit. Term the contents of this situation "fraud materiality" that should have survived on the cause in the original complaint review; inter alia on federal and constitutional questions. The pertaining materiality is concretely tortuous. The yet undiscovered torts in open court are "persuasive futures" and is outstanding unresolved federal questionability of obstructive procurement. The holistic summation of the issue is derived by egregious retention modalities. United States v Nixon, 418 U.S. 683 (1974).The matter has been raised above a speculative level reopening in an amicable and justifiable direction. The Plaintiff makes effort to avoid a financial loss and avert furthered injustice. The litigating Plaintiff asserts due diligence. The Plaintiff "applies power" to the entailed estate and accounts by amicable federal process. Title 31 [37 C.J.S.]. This motion is due diligence that does not forego any prior pleading submissions to the court nor forego any previously presented legal forms that have been served on the Respondents at this time. 28 USC 2462 The original complaint and this memorandum of law in support of motion is submitted before the honorable in keeping of the statue to limitation. There is concealed information that must be purged. The Respondents holistically conspire against the Plaintiffs civil rights described in this federal suit. The Plaintiff is sustaining the interest to claim the beneficiary property. The litigation Cooper v Aaron. 358 U.S.1 (1958) must be purged and must be accelerated in the acquiescence to purse thorough a maladministration and venality artifice. The honorable court must pierce through all deception and discriminative malpractice invisibilities. This is a government affairs issue is a real conflict. United States v Prudden, 424 F. 1021 at 53. between the named Respondents in which fraudulent activity and constitutional deprivations are occurring. United States v Tweel, 550, F. 2d 297, 299, 300 (1977). 28 USC 6 of 109 2332 the previous order benefit the Respondent. "Continued suppression" will cause a loss and aggravated more the harms of exaction or by facilitating oppressive praetorian element to intercede in a legitimate transaction to a beneficiary of estate and the adjoining beneficiary accounts. Brady v Maryland, 373 U.S. 83(1963). The original complaint must come forward to argue and deduce the opportunities for financial loss. The attestation of the torts involved that adversely effects the Plaintiff. Bohus v Bell, 950 F. 2d 919, 924 (3rd Cir. 1991). United States v Holzer, 816 F. 2d 304(7th Cir. 1987) 18 USC 3 the original complaint has pertinent and materiality sufficient to reopen the allegations are pleading ultimate fact that must stand as general knowledge to commence action by this honorable court as pursuant through this motion. The dispute and refute is the burdens of the Respondent This is a "live case" and should reprocess diligently according to administrative law. Hobson v Gibson Armstrong v Treasury, 2009- 3155 (Fed. Cir.) Burke v Barnes, 479 U.S. 361, 363(1987). The Plaintiff is averring mooting is an unqualified and passive deponent in disposition of this motion. Objective Reasonableness United States v Holzer the previous judgment is unconstitutionally fatal to a financial and beneficiary asset litigation. (citing) [at 81 847 F. 2d 66 (3rd Cir. 1988) reanalyzing and legal acceleration is not mischief manipulation of statues of limitations. This memorandum of law in support of motion is memorandum on the relevant fact and undiscovered issues materiality requiring a new ratified summation. This litigation requires reanalyzed determinations due to inducement of malice or duress minas elements, fraud combined with constitution torts. (citing) [at 5] 847 F. 2d 66 (3rd Cir. 1988) a re- reasoned investigation must enter the establishment where adverse or arbitrary concerns that bear fruit of abuses and fraud. Undiscovered torts will 7of109 a ion lead to fraud. There is an obvious intrinsic extrinsic conflict between the Plaintiff and Respondents. The honorable did not hear both sides of a federal question conflict on specific allegations in the original complaint. 228 USAM the specific allegations need a criminal -civil distinction un- intervened will continue a "natural impropriety" citing at 9 847 2d 66 (3rd Cir. 1988) The 14th Judicial Conference of United States Court of Trade;( 2006) "Recognizing Deliberate Ignorance "(citing) Judicial Discipline and the Appearance of Impropriety. There is some fraudulent activity sufficient to reopen this litigation. (citing) [at 13] 847 F. 2d 66 (3rd Cir. 1988) The original action since has incurred more conclusive overacts and now imperatively justify reversing the previous order target an instant complicated lawsuit with a fraudulent nature and conflict interest of honest services. This memorandum of law is relevant for revised determination to discern and objects to political common schemes. Retro- activation is necessary and prompted by "suspicious mind of the court" that reasonable observes plenary adverse arbitrary activity.( citing) [at 121. 220 F.3d 406 (5th Cir. 2000) United States v Lee, 811 F. 2d 979 [at 39] (citing) [United States v Wilkes] No. 08 -50063 D.C. No. Cr. 00330 -LAB- OPINION(9th Cir. 2011). Federal Rule of Civil Procedure Rulel2g this memorandum is "force of law" forcing a constitutional effort to join all preceding formulized petitions and motion. The pursuit with joint support previous formulized motions will purge all matters to facilitate the transfer or settlement "the pains it takes to remedy ". The "ready pleading presentations" in the honorable superior courts at this time is a joining amending action pursuit. The Plaintiff in this motion is appropriate by a compelling cause of undiscovered torts and already presented briefed materiality purse into 8of109 a consolidated remedial action. The pursuing totality should administratively ignite a reasonable exhaustion on new and undiscovered facts. United States v Holzer, 816 F. 2d 304 (7t' Cir. 1987) this motion is the next appropriate adjustment in diligence and reasonable action to be heard. It is the reasonable attempt for the pro se to compel action and improve the interests before this district court and superior courts. "Consolidation Action" of all motions; inter alia administratively reopens all the superior court submissions. This is an interpretational clarification action to remedially correct all matters. The Plaintiff is pursuing to accelerate on consolidated information submitted to the next stage. The Plaintiff applying judicial power of the to recover beneficiary assets. Article 11 51 Cong. Rec. 37 CJ.S is the appropriate powers of pro se and appropriate powers of the honorable court the " Office of the President" is immune from the Administrative Procedure Act. Revive all matters of 76 Am Jur 33 Am Jur Slander 5 Am Jur Trials is justified canon grounds to revive the lawsuit Fitzgerald v Nixon is unpersuasive. 28 USC 2332 The Office of the Presidents and Secretary of the Treasury has instigated a tortuous civil matter that exceeds limitation and exceeds legal parameters involving government and the civil litigant as pro se. 75 Am Jur Trespassing 60 Am Jur Invasion abusing of position with administrative duress. The pro se is exercising rights in Article IV of the US Constitution imperatively pursuing all tortuous matters in this honorable federal court. Is the proper acceleration in which land and/or money is a tortuous aggravated issue, maliciously argues and slanderously disputes. The Pro Se prays on the faith of Mills v. Duryee, ltl U.S. (7 Cranch) 481 (1813) to remove the actual prejudice on administrative "duty of the court" is requesting to reopen the entire issue. Moreover, inter alia move matters forward immediately up the judicial chain due to the magnitude of the dispute and complexities of the litigation. Article II section 4 is the constitutional action to reopen matters in the original complaint. This financial dispute 9of109 must remedy to administratively cease — desist action of hostile and adverse possession. The Respondents contaminate and convolute matters by initiation of adverse action against the lawful title deed beneficiary. Nebraska v Iowa, 406 U.S. 117 (1972). Oneida Indian Nation v County of Oneida 414 U.S. 661 (1974) "Memorandum of law in support of Motion reanalyzes the complexities" (recognize the invisibilities that will defraud by exaction) The Plaintiff query in this memorandum of law in support of motion is pursuing vicarious assertion. Marbury v Madison The honorable court must purge test the Respondents through a civil - criminal filter to remove popular hostility and amend political reluctance to diligently process this litigation. United States v Burkhalter, 1991 U.S. App. LEXIS 29282 (101h Cir. 1991) 3 CIS Am. Jur. 2d Fraud and Deceit 145 (1968) United States v Keogh, 391 F. 2d 138 (2nd Cir. 1988)The court must confront and narrow the problem that is a tortuously developing artifice of a common political scheme. In Re: Flanagan 34 F.3d 949 [at 351(10th Cir. 1994)this memorandum of law in support of motion is decisional direction on the specific allegation entailed. 495 F. 2d 448 (2nd Cir. 1974) at 43 There is a chance for an ultimate victory for Plaintiff. The duty of court and vicarious liability of fiduciary law adherence make it clear the previous order and flawed. The honorable court is burdened by guideposts of administrative principles that manifest a mistake of law where made. The honorable court is amicable to reanalyze the lawsuit Barret v United States,798 F. 2d 565 [at 12] 495 F. 2d 448 at 43 (2nd Cir. 1974) The court cannot be satisfied with the previous judgment. United States v Kenny, 462 F. 2d 1205, 1229 cert 10 of 109 denied, 409 U.S. 914(1972).The honorable court must overturn and reverse due to the pre- disposition assumption that unduly prejudice the judicial interest. 798 F. 2d 565 [at 12] "For every wrong there is a remedy ". Retroactivity of Judge "renews the justice" under the circumstances and merits. United States v Mandel, 591 F.2d 1347 (4th Cir. 1979)at 60 The inducement of venality is unambiguously prohibited to intercede legitimate expectancy of inheritance sponsored by US Treasury. The Westfall Act is cleans hands perseverance. Article III apply accurate jurisprudence in retrospect of this litigation. 798 F. 2d 565 [at 12] "It is officially time to recognize intentional interference with inheritance expectancy" Retro- activate the original complaint in the hospitality of a just court. Remedial action is a new cause of action due to the imperative fraudulent nature is recognizable. United States v Holzer, 816 F. 2d 1014(7t' Cir. 1987). Administrative Procedural Default coupled with interpretational error is inconvenient in complex litigation. Jersey City v Hague, 115 A. 2d (Supreme Court of New Jersey 1955) 5 Am Jur Trial 76 Am Jur Trust 37 C.I.S. "Right to Rely" Beckwith v Dahl, G044479 (Super. Ct. No. 30- 2010- 00394872) (4th App. Dist. 2012) Oneida Indian Nation v County of Oneida, 414 U.S. 661 (1974) An Interdisciplinary View of Fiduciary Law Boston University Law Review, 2011 [Vol: 91: 973- 990]. 10.153 Consideration in Imposing; Managing Complex Litigation. Complex Litigation at 93. "Civil Litigation Management Manual ", Judicial Conference, Court Administration and Case Management (2001). 11.491 Special Problems and Investigations, Manual for Complex Litigation 2004. ((citing) Administration of Justice Bulletin: "Motion for Appropriate Relief' School of Government 2010, University of North Carolina. Beckwith v Dahl, G044479 (Super. Ct. No. 30- 2010 - 00394872) (4th App. Dist. 2012) . Jones v Jones, 234 US 615 (1941). 11 of 109 MEMORANDUM OF LAW (conflict) PURSUANT TO FEDERAL RULE OF APPEALLANT PROCEDURE RULE 35 I 28 USC 2201This memorandum law moves the honorable court to revisit the entire litigation. This memorandum of law is a judicial amortization of the original complaint and entire en banc petitions. Moreover, the Plaintiff intends for the "powers of court" to commence affirmative actions encompassed by this motion. Federal R. App. P. Rule 3(4) the matter suffers an egregious dismissal. The allegations matters are valid and withstand without perjury. United States v Cox In Re: BIW Deceived v Local S6, Industrial Union of Marine and Shipbuilding Workers of America, IAMAW DISTRICT LODGE 4; No 96 -2311 (1St Cir. 1997) The Respondents have unequivocal intentions that will lead to fraud in the summation and totality of creationism. The relevant facts that are encompassed within this litigation require a thorough re- characterization of the entire complaint and appealing petitions. The Plaintiff adhered to well -pled complaint rules. This memorandum of law in support motion is an amicable to impel the judge's panel within entire district to disturb the previous judgment and take remedial journey. The Plaintiff's understood by due diligence rights and administrative law principle the district court's dismissal is the end -of -case. United States v Holzer recants the orders due to administrative procedural default that are obvious due to merits clearly requiring doctrinal application to lift unconstitutional preemption. The Plaintiff has presented the proper approach according to the nature of the case. Horton v Cockrell, 70 F. 3d 397 (5th Cir. 1996) United States v Roth, 860 F.2d 1382, 1383 (7th Cir. 1988) premature adjudication and actual prejudice require the court to 12 of 109 retro - activate and adumbrate circuitous remedial decisional path. The honorable court should understand and seek to determine the nature and seek the tortuous totality of the entire federal complaint. Political venality, any species of duress verifiable and exaction obscurity in financial litigations should be taken seriously in the panels revamped inquiry journey. In Re: BIW Deceived v Local S6, Industrial Union of Marine and Shipbuilding Workers of America, IAMAW DISTRICT LODGE 4; No 96 -2311 (1St Cir. 1997) The Respondents in the original complaint up until are "targeted suspiciously to fraud" Moreover, estrange the previous judgment discerning the political inducement of preemption, estrange the predisposition and revoke the prejudice it is an illicit silent "ignorance of fraud" United States v Roth remedial and retroactivity of judge is jurisprudence advocating the pro se as well as the honorable court to vacate prior judgments. "Good Canon Grounds" set in motion a renewed amicable decisional path. The judicial inquiry will bring forth more distinguished litigation substance. United States v Syriuth, 98 F. 739, 747 n. 12(3`d Cir. 199) Hainer v Kerner, 404 U.S 519 Galina v INS, 213 F.3d 955, 958(7t' Cir. 2000) The Pro Se litigant has exercised due diligence of process the burden of persuasion weigh in favor of Plaintiff for "powers of the court" to intervene with proper guidepost in the examination of institution. [Bailey v Glover] [Hobson v Gibson] Newsome v Teasury. 2009- 3019(Fed. Cir.) A reconvening judge's panel within this district holistically should ratify all previous judgments. The judge's panel applications of accurate constitutional jurisprudence will arrive at a revised uncolored disposition. Duke Power v Greenwood County, 299 U.S. 259 (1936) the matter prays for more efficient accuracy and improved accountability to pleading allegations. The facts will withstand any refute allegations judicial challenge the Respondents. Moreover, the Plaintiff diligence suffices in justice rights enough to pass test of authenticity profoundly poses judicially ripe to sue. The litigating matter is sufficient to utilize a 13 of 109 secondary administrative recovery arm to intervene with doctrine enactments by the Administrative Procedures Act. 2072(b) is the suggestion to the honorable court constitutionally to "clean up" this case . United States v Powell Respondents has culpability federal laws and rules. Respondents need to answer the questions that "targeted fraud activity ". Particular Allegations 228 USAM "any other type of harm" tortuous original complaint must be taken into consideration. The fraud and corruption strategies must investigate and query. Particular Allegations 228 USAM Mercer v Lence due to the fact of known common scheme remedial action will decide a separate opinion and reverse dismissal. Retroactivity of Judge "re- characterize the original complaint" regards of Plaintiff. 14 Wright, Miller & Cooper Federal Practice and Procedure, 3722 at 564 -66 (1976) Article II the original complaint has a specific objective or specific objective for the court entertain the suit. The tortuous allegations in the original complaint categorically discerns frivolous and prejudice. It is clear unconstitutional substantial fatal variance to financial litigation. Moreover, the previous ruling and orders; a per curiam cannot write true diapositive dispositions. The honorable court panel must comply in accordance with administrative law. Article II protections revokes predisposition of Relevancy and Limits in a financial cause US v Tweel 37 C.J.S. Fraud "Right to Rely" United States v Goldstein, 502 F.2d 526 (3d Cir. 1974). ( "[V]ariance between dates alleged and dates proven will trigger reverse of dismissal as long as the date proved falls within the statute of limitations and before the return date of the indictment." United States v. Alexander, 850 F.2d 1500, 1504 (11th Cir. 1988) There are special problems where presented and discussed in the original complaint. Particular Allegations 228 USAM The complied pleadings are sufficient to meet a remedial motions judicial azimuth asserting "good cause" and amicable to revise the initial determination in the honorable district court .[Fairchild v. Hughes, (1922)] United States v 14 of 109 Burkhalter, 1991 U.S. App. LEXIS 29282 (10th Cir. 1991) revisit the original complaint before a just panel is necessary. The district as a whole cannot be constitutionally be satisfied with the previous ruling due to tortuous materiality. In Re: Skilling remedial action where there is venality and fraud. It is obscured and distorted the administrative functions of the courts. There are potential dangers and threatening a financial loss. The previous judgment creates repugnant risks due to actual prejudice. Dismissal of the original complaint is a providing the Respondents with an egregious "safety harbor" from liabilities in the totality of this litigating matter. The issue is infected with appearance of political criminality and common scheme will purge in truths concerning US Treasury in the open court. 37 C.J.S. Fraud § 124, p. 452. "Right to rely" In Re: Lee, 811 F. 2d 979 [at 391 on the knowledge of the fraud in a secrecy act to suppresses improper procurement in a legitimate government transaction. The original ruling should reverse any egregious predisposition allowance to the Respondents. Zettl v United States, No 89 -1323 (4th Cir. 1989).The original complaint and petitions has a diligent right to process in the superior court appeals. Omit the prejudicial variance 28 USC 351 right to rely on particular allegations and specific issue in the element. Inter alia, the Plaintiff has the right to rely on the courts decisional directions to avert pecuniary harms as well as "any other harms" articulated in the original petitions. 228 USAM the original pleadings present particular allegations in which contributing factors in interpretational mention will lead to fraud. United States v. Goldstein, 502 F.2d 526 (3d Cir. 1974) "egregious potentiation will defraud and obstruct ". Moreover, without a minimal exhaustion is suppression and potentiating contamination that will exact or defraud. In Re: Lee, 811 F. 2d 979 [at 391 the original complaint is sufficient to "revive on its own materiality" in the eyes of court. United States v Kenn 462 F. 2d 1205, 1229,cert. denied, 409 U.S. 914 (1972) in the interest of justice and interests of United States avoid the plenary 15 of 109 fraud intervene to inquiry tortuous interference of inheritance expectancy. Jones v Jones, 234 US 615 (1941) 76 Am Jur Trust. Re -raise an imperative argument due to "injury in fact ". The torts involved are contributory factors remaining undiscovered and complains. There is infection within the process of case and is wrongfully dismissing the fraud. The memorandum of law in support of motion requires Retroactivity of Judge to re- analyze the entire lawsuit. The Plaintiff presented the proper complaint. The Plaintiffs imperatively has "targeted fraud ". Article II protections require constitutional adequacy in every stage of duress induce financial litigations matter. This memorandum of law in support of motion requires civil- criminal distinction in totality of the reversal. United States v Holzer reanalyze the previous decision and reanalyze the whole lawsuit. Nation v United States, 10 -382 (Fed. Cir. 2011) [United States v Hollingsworth] remove the vail of venality, remove and clarify through the political filters in the honorable court. The executive order, executive interference and Respondent political identity is an "egregious administrative obstruction filter ". Reanalyze to question specific allegation and address the special problems. Horne v Huddle, CA 94 -1756 (D.C. Dist. 2009) the Respondents are utilizing political filter to conceal scheme to attempt exaction by circumventing administrative mechanics of the court. United States v. Veal, 153 F.3d 1233, 1245 (11th Cir. 1998)_ the previous ruling is a dangers variance to safeguard of the constitution. United States v Nixon The original complaint is " not on a fishing trip ". Mercer v Lence. There foreseeable scheme and tortuous dynamics effectuate to harm as exaction or complex fraud materiality. The court has an obscured judicial viewpoint. In Re. Mandel [at 60]. The Respondents activity exceeds more than three constitutional amendments to cause a predicament and intercede the beneficiary situation. 28 USC 2201 United States v Holzer Retroactivity of Judge is remedial action to "readjust the judicial compass" to pursue totality of pertinent facts; that will and is 16 of 109 defrauding the Plaintiff. This motion is appropriate for relief for a more improved interest as a encompassing comprehensive review of pertinent facts. The Respondents are clearly depriving the Plaintiff rights in federal financial claims process. at 312 Western New England Law Review [ Vol 17:303 -335] THE ENTRAPMENT DEFENSE AND THE NEOPHYTE CRIMINAL (1995) ex dolo malo non oritur actio. United States v Nixon Armstrong v Treasury. Tortuous matter shocks the judicial conscience the honor court is requires a criminal- civil decisional path to arrive at different disposition. Armstrong v Treasury, 2009- 3155 (Fed. Cir.) The presentation in the eyes of the court articulates a specific and "special problem ", inter alia "other causes" that justify reopening suit. The enhancement opportunity, corrupting materiality and ultimate facts bear weight to pursue on the court administrative responsibility. The judicial conscience must avoid furtherance contrary political heresy and avoid furtherance of aggravated conjecture. There are viable compensatory torts and other viable issues that must attest under the "judicial microscope ". The merits and fruit of issue meet requirements. The issues exceed "good cause" to assert the force federal judicial panel. Constitutionally revisit all the torts caused by Respondents as individual members of the executive branch. Marbury v Madison, 5 U.S. 137(1803) The honorable courts must categorically all reject predispositions, reject preliminary preemption and actual prejudice. The honorable court should adhere to application of administrative fundamental jurisprudence.Corrield v. Cornell, 6 F. Cas. 546 (C.C.E.D. Pa. 1823) Galina v INS, 213 F. 3d 955, 958 (7th Cir. 2000) II 28 USC 2072(b) The issue is ripe to reopen due visible to the infection that will purge all overacts that circumvent the administrative of the honorable. The matter entire complaint and petition has an aggravated illicit appearance. The Respondents directly affect the Plaintiff with 17 of 109 an undo or unjustified evil zeal. The prejudice must be stricken to abort a mal justice of unlawful impressments, exaction and misfeasance. United States v Swindall, 971 F. 2d 1531 at 50. The litigation is justifiable to argue on the inference and is justifiable to address the political scheme that causing the Plaintiff a predicament of deprivations. The original clearly described intentional incited dangers that may cause a duress loss of benefits. The honorable court should take into judicial record and account that the Respondents "know of statues" they are transgressing. The Respondents are civilly defiant in chartable ploy to abscond on a legitimate beneficiary transaction. The intent to has been clearly established. United States v Swindall, 971 F. 2d 1531 at 57 request judicial movement in the regards of this motion determining that this litigation be revised and survive on the cause of tortuous allegations. It justice allow all the pleas of all motions to go forward. The matter in complaint is not just to suppress with plausible deniability by force of office nor by the immunities of the executive privilege. The Respondents has "special available authority" to suppress issues in specific litigations before the courts. United States v Johnson, 383 U.S. 169 (1966) that still have constitutional culpability in conflicts of interest that will defraud. [Brady v Maryland ]. Article III jurisprudence is the necessary assertions in the original complaint is not frivolous. This motion going before this honorable court is judicial ajax to remove any fiction. The "Pinkerton Liability" refutes any defense or refutes any demurrer that may obstruct the litigation. This suits litigating problems where submitted through the superior courts. The preceding submission have truth, "good faith" and justifiable due diligence necessary to arrive at a just settlement or different disposition. The prejudice ruling is due to some degree inducement of contamination by political Respondents. There is clearly manifestation a sufficient need to reopen for an intensive inquiry "suspicious in the storms of the fraud ". There is known fact the Respondents have exemplified extraordinary efforts as the 18 of 109 matters that set before in presence of the court to gain calculated advantage unqualified retention or in the procurement of estate and its accounts. The unaddressed effectuations lead to exaction or unlawful procurement. 76 Am Jur Trust This court's review or perspective viewpoint should visualize and recognize tortuous opportunities are created for loss. The wanton conduct of Respondents is easily recognized a negated fiduciary duty that is threatening to sever a beneficiary trust and disbursement relationship. The actual prejudice in the original previous ruling is an egregious amplification in the ability to induce or utilize as a "shame defense to the frivolous" in plausible deniability. The accounts exist and the land is traced concretely to Plaintiff. The executive order is an administrative act that erodes and deteriorates tortuously this litigations pleadings circumventing due process diligence. Thus, there is federal question of invisible contamination that is obstructing with positional duress litigating presentations in the honorable court. Nation v United States, 10 -382 (Fed. Cir. 2011).The duty of court is grounds enough to readdress the illicit attempts and readdress arbitrary problems that surround the estate and accounts. 5 USC 551 unlawful modalities in acquiescence of the usurpation to unqualified re- procurement in a federal beneficiary transaction 51 Cong. Rec.[ 37 C.J.S Fraud] "Right to Rely" The Respondents clearly author of a political scheme Mercer v Lence. Article II section 4 has the judicial task is to provide some practical security for each against the invasion and deprivation of the Plaintiff. Qui Tam The matters that plea throughout the original complaint and supporting petitions have appearing inferences that are seditious liable imperative to sue and warrant protect from further fraudulent activity. United States v Johnson, 383 U.S. 169 (1966). United States v Swindall, 971 F. 2d 1531 at 57. The motion going before the honorable district and court of appeals is a justifiable complaint 28 USC 351. The plausible deniability will not rescue the liability. There is justifiable grounds that is clear in administrative law to compel a 19 of 109 panel re- visitation. This is a reasonable action to avert recourse and redirect the consequence of venality. The pleading are raised the speculative level. The Respondents have substantial liability. Article II section 4 The honorable court has enough alleged implications and due reasoning of important to re -raise federal questions. The memorandum of law administratively ascertains remedial power to reopen. United States v Powell probable cause striking the dismissal as to a correction of interpretational error. All the pleading narrative present true allegations and can prove on the elements as standing facts. United States v Holzer, 816 F. 2d 1014(71h Cir. 1987) McNally v United States, 483 U.S. 350 (1987)The matter emits a strong probable cause on the pleading facts. The entire complaint emits violation encroachment of intangible rights to gain estate and deny access of the beneficiary accounts. 5 USC 702 this motion is amicable action to reopen the suit. There is clear appearance or apparent outstanding and unresolved issue that must dissolve in keeping with the guidepost of administrative and banking laws. The essential elements and essence of the matter presented is infected fruit in the court's plain view. This memorandum of law is support to move and accelerate this litigation forward in a reasonable exhaustion as a remedial review. The entire complaint's pleading prays to arrive at conclusions that are not flawed, nor present as an egregious position. The status of this suit clearly deprive a beneficiary as Plaintiff. Linz v Payne, 476 U.S. 926 at 40.This motion is amicable action to awaken a reasonable for "new un- biased" and justified speculative viewpoint by the honorable court. Horton v Cockrell, 70 F. 3d 397 (5`h Cir. 1996) The intentional torts involved clearly describe an aggravated issue; discern the tortuous propensity in its materiality. Frivolous presumptions, is not be the constitutional improvement by unconstitutional conveniences of plausible deniability. Affirmative action is applicable judicial means to reopen the entire situation of suit. Article II protections and guidepost are persuasive to strike the previous orders. 20 of 109 The venality and praetorian element is obvious due to inducement of executive order activation is egregious and an "erroneous kitchen sink rational" that is irrational to exceed Article I section 9. The constitutional question of exceeding the Ninth Amendment is very apparent inter alia United States v Sharpe, 996 F. 2d 125 (6th Cir. 1993) [at 29]. The court cannot be reasonably believe there is constitutional adequacy and consistent viewpoint of estate asset management. Reopen on the consideration above the speculative level with a reasonable probable cause. The Respondents inducement of tortuous materiality, conjectured controversy and duress minas is enough to reopen in the storms suspicious of fraud. The honorable court has responsibility to rule out there is no concealment considering the aggravating totality of tortuous activity and known overacts. United States v Sharpe, 996 F. 2d 125 at 20. United States v Perrin, 131 U.S. 55 (1889) United States v Mandel, 591 F.2d 1347 (4th Cir. 1979) at 60. United States v Prudden,424 F. 1021 at 53. 76 Am Jur Trust 37 C.J.S. Fraud § 124, p. 452. 'Right to rely" Where there is evidence is so clear, as to be susceptible of only one reasonable inference." This lawsuit has met the requirement in the original complaint. The necessity for a remedial due to, inter alia, interpretation error of the court prematurely adjudicated the suit with less than an inquiries exhaustion .28 USC 2462 This memorandum of law is the support of action in this honorable court to " revive the processes" and pursue through matters all motions. In Re: Bohus; Oneida Indian Nation y County of Oneida. 414 U.S. 661 (1974). Commence action to "purge test" the Respondents civil contempt action by court motion was requested in the US Supreme Court. The issues are obstructed and activity of the executive order is threatening to slander and breech the trust obligation. United States v. Veal, 153 F.3d 1233, 1245 (11th Cir. 1998) United States v Nation, 10 -382 (Fed. Cir 2011) The Respondent initiated executive order that is an overally discriminative, slanderous and tyrannical act; Kitchen Sink. 21 of 109 III [Frothingham v Mellon] The matter as set before is reviewable. There are aggravating torts and obscurities in the issue. Watkins v United States, 354 U.S. 178 (1957) The Plaintiff has been subject political scrutiny and subject of vigilant investigation. The investigations are malicious best termed as "colored "; to intercede in the beneficiary receipt of the estate property and its adjoining accounts that have been set aside. The Respondents instituted an adverse executive administrative order to obstruct and distort the issues adversely ensue a malicious investigation and inducement "false light ". The Respondents assertion against the Plaintiff is kitchen sink justification and kitchen sink incitement. The investigative activity is erroneous and cause possibilities of exaction. The matter is constructive arbitrary zeal and malicious political magnification. Evans v United States, 504 U.S. 255 (1992).The Plaintiff has an amicable direction and has constitutional justification to reopen the matter. The Plaintiff suffers with political discriminative modalities and malicious investigation scrutiny. Watkins v United States, 354 U.S. 178 (1957) Brown v Mississippi, 297 U.S. 278(1936). The executive order is positional duress that contaminates the litigation. The Respondents need to prove allegations. United States v Prudden at 53. The adverse executive action is coloring and manufacturing that creates a "perjured smokescreen constructive moral justification ". United States v Saadey. 393 F. 3d 669, 675 (6th Cir. 2005) The executive order retard the judicial mechanics and stop short the adequacies due to reckless political maladministration to gain advantage in the procurement. There is wrongful use of government agency to inhibit the transaction and taint proceedings issue. It is a intentional delay through a discriminative zeal of agency that clearly has no justifiable merit to purse and magnify the Plaintiff as subject or 22 of 109 target. The honorable court is requested to consider all factors that impact the litigation. The Respondents have no lawful position in it assertions against the Plaintiff. Kucana v Holder, 130 S. Ct. 827, 834 (2010) There is compelling reasons to take the matter seriously in fresh and new legal perspective under the judicial microscope there is merit and agreement that deserves more efficient as well as more accurate jurisprudence in the litigation. The court must address tortuous intrinsic and extrinsic materiality to avert exaction. There is an arbitrary effort in a course action that is possible to succumb to constructive fraud holistically. The executive order is a productive egregious zeal that emits misfeasance propensity and clearly perpetuates administrative impropriety. [Daugherty v Ellis] There is tortuous matter and undiscovered argumentation factual grounds to reopen with general attack on the inference of malfeasance. Ali v Holder, 637 F. 3d 1025, 1031 -32 (9th Cir. 2011) Shin v Muskey, 547 F. 3d 1019, 1025 (9th Cir. 2005). The issue has reckless indifference in which the specific intent is s disguised or convoluted in government matters with plausible deniability. This standing litigation as an encompassed whole and totality is subject to answer on the transgressions of the Maxim's of Law. The motion, original complaint and petition does present constitutional question that must remove fraud from this case. The matter has Article III meaning and redirection as live fact driven to discern the fraud. This memorandum of law is jurisprudence effort discern ways and modalities that unduly procure by exaction. United States v. Veal, 153 F.3d 1233, 1245 (11th Cir. 1998 Cheney v Superior Court, State of California County of Butte, No. CM01607 No.003734 (Jan.2001) The Plaintiff conveys to the court to intervene and reopen on the improved interest of justice. The honorable court is presented with dispositive materiality. The honorable panel should reconvene due in part issue conveying the inference strong enough to sustain viability through a thorough inquiry and available coinciding corroboration can impress 23 of 109 "a live court". United States v Swindall, 971 F. 2d 1531 at 50.United States v Holzer, 816 F. 2d 1014(7" Cir. 1987) IV Korematsu v United States, U.S. 214(1944) The Respondents have signed and incited discriminative executive orders that withhold by undue zeal and politically vigilant duress. United States v Saadev, 393 F. 3d 669, 675 (6th Cir. 2005) the executive act directs and uses others to intercede by investigation encompasses the issue of undue administrative duress. [Younger v Harris]The adverse political vigilance is effectuating hostility that is diminishing the Plaintiff "elbow room ". The Respondent uses the `Democratic Party" public at large as a vehicle of endangering political heresy. The campaign hostility and vigilant zeal intentions is to cause a loss of access and ability to continue the claims process as the rightful beneficiary. The honorable should reject and improve its immediate interest in any civil issue that tend to be impacted by or maybe question in Article I section 9. 76 Am Jur Trust 37 C.J.S. Fraud; Rejects Sovereign Immunity and Eminent Domain is abolished. 28 USC 1291 U 28 USC 2332 There is known executive order to act in which the transactions has been directed as the goal to act its effects in a contrary direction. There is one of several relevant ultimate facts that re -plea. The Plaintiff is applying foremost attention to the fact of induced incitement of duress minas, effectuating political vigilance that is enjoining to eventually spoil matter by dramatic event. United States v Salerno, 481 U.S. 739 (1987) In Re: Swindall the inference conveys to participating agency and political party provokes future dangerous. The executive order conveys and promotes vigilant duress directed at the Plaintiff as business as usual. The pleading situation has been induced with a substantive process originating from an adverse 24 of 109 affirmative act is wrongful use power. The pleading show there was nor has been a gratuitous action to complete transfer of estate and the adjoining set accounts United States v O'Grady, 742 F. 2d, at 691. The matter has conspiring and common connection to imply duress by the direction of other official in the direct chain of command in erroneous investigation is aiding assist the contamination of the litigation. [Levowitz v Cunningham] There is known malicious exercise of authority that is arbitrary shield of plausible deniability to conceal the estate and accounts. The arbitrary action is facilitating abilities not to explanation executive order that is repugnant convolution and egregious to the rights in the transaction. Monroe v Pape, 365 U.S. 167, 187 (1961) United States v Classic, 313 U.S. 299, 326 (1941). The entire pleadings before the honorable court is narrative matter plenary objection to deterioration and erosion by the inducement of malfeasance. The Plaintiff can prove intent contrarily tortuous to inhibit beneficial totality of rights in the transaction that should have completed. There is clear improper influence, political venality element and praetorian elements that meet the requirement of the "suspicious mind" to reopen the original complaint without any proof. United States v Kenny, 462 F. 2d 1025 cert. denied, 409 U.S. 914 (1974) the original complaint and ongoing petitions; in the superior courts have critical matter that should be purged by due process. United States v Bass, 404 U.S. at 349.McNally v United States, 483 U.S. 350 (1987) The simplified overacts delay for contrary directions and intended effectuations of aggravated duress. The flowing adverse affirmative action by executive order is supporting the sufficiency in the element pleading to reopen the litigation. United States v Perrin, 131 U.S. 55 (1889). The merit is clearly dispositive. There does not have to be any transfer nor any movement of money. The Plaintiff does not have any immediate proof in the requirement to meet criteria for review and hearing requirement suspicious of fraud. The pro se prays to bring matter and issue forward on coercive on grounds. 25 of 109 The Plaintiff's renewed and revised acceleration is not conjured nor colored. It is the Article II protection of future dangers and safeguard of all or any financial loss. In Re: Salerno The Respondents conspire against the Plaintiff civil liberties and constitutional rights to take possession of estate and take control to access the set accounts. Article III jurisprudence insist protection and prevent political venality in government financial affairs. United States v Burr, 309 U.S. 24 (1940) tortuous interference of a legitimate government function. United States v Braasch, 505 F. 2d 139, 150 -51 and n.7 (7th Cir. 1974) the Respondent expect to benefit from exceeding the parameters of constitution and evade with plausible deniability or executive privilege of their office. United States v Green, 786 F. 2d 247, 249 -57 (7th Cir.1986) prejudice must not create a "safety harbor" to abscond from transaction and cause a exaction. United States v Holzer, 816 F. 2d 1014(7 1h Cir. 1987). The previous ruling cannot aid deliberate concealment "in the suspicious of fraud" and impacting torts. 28 USC 2201 The pro se utilizes amicable jurisprudence that stipulates to object the previous ruling; dispositive procedural posture and has a concrete perspective in the propensity of the impropriety involved. United States v Dial, 757 F. 2d 163, 168 (7th Cir. 1985) matters pleading to amicable action to revisit and reopen are to "weed out" plausible deniability. United States v Mandel, 591 F.2d 1347 (4th Cir. 1979) at 60. VI Article II section 4 In Re: [McCormick v United States (1991)] The litigating conflict and dispute root out has corruptive matter that conspire the Plaintiff. The materiality, war against the constitutional checks and balance necessary in this civil complaint. The pro se as Plaintiff is at a disadvantage of abuses that effectuate as exaction. "Creationism" for loss of beneficiary holding account as well the estate property encompassed. The Respondents should have transfer into 26 of 109 Plaintiff ownership. The Plaintiff is subject to zeal of maladministration's malfeasance; induces vigilant investigation that would shield matter in proper context of the Plaintiff civil rights to attain possession. The Respondents initiated executive order to carry directives of investigative pursuit against the Plaintiff that would intercede or inhibit. The contamination is a descriptive illicit association; matter has an administrative infection. There are federal questions in wrongful uses of agency. In which the Respondents command directed and orchestrated activity to spoil the transaction. The "wrongful use of agency" situate and induce erroneous allegations. "Kitchen Sink" presumptions coupled with an undue egregious executive order poses to obstruct administratively as "positional duress ". The Respondents attempt to color allegations against the Plaintiff to present appearance of moral justification to assert and deny by plausible deniability or immunities of office. Levowitz v Cunningham, 431 U.S. 801(1977) The is wrongful use agency and law enforce in the matter so that the court will not honor any claims issue; ex dolo malo non ortior actio. This memorandum of law attacks the issue to cease and desist. Plaintiff moves the honorable court to order action for remedy or settlement by transfer. The illicit or unconstitutional transgression in Article I section 9. The scheme's result is deprivation due to wrongful use of agency with an undue evil zeal of an executive order. "Causative effectuation" leads to exaction. Duress minas transgress the Maxim's of Law described partially in the original complaint. The obstructive issue accelerates enhancements persuasive to reopen litigation. The petitions in the superior courts are actually obstructed by a constructive political design. The matter is compelling force of the federal court to reopen and revisit the matter to remove the fraud. The honorable court is compelled to revisit the "special problems" to ensure removal of fraud and move matters into constitutional compliance against the Respondents. The Respondents acts and the prejudice ruling offend traditional notions of fair play as well as 27 of 109 substantial justice. The memorandum is support of motion query the fraud induced by egregious withhold and delay in a maladministration malicious pursuit against. Cheney v Superior Court, No. CM01607 No.CM03734 (State of California, County of Butte, Jan.2001) the executive order evil zeal is imposing undue withhold. A minimal investigation in this review of this litigation will recover all assets administratively impounded. The Respondents directly caused administrative impound an executive order is "wrongful administrative agency ". The court must purge on the revisit the fraud manifesting as intrinsic and extrinsic matters that effectuate into a financial loss. This memorandum is the motion to reopen support, address the unusual species of positional duress. Obstructions endanger the whole litigation obviously due to contamination. The situation describes exaction properties or inference. In Re: Swindall the court has enough provable vigilance and evil zeal is future dangers forming description in the original complaint. Veal v United States,153 F.3d 1233, 1245(11`h Cir. 1998). The Plaintiff presents sufficient fact that where exigent circumstance and dangers due to wrongful use of powers that intended to inflict "specific harms" in the narrative description. Article I section 9 The honorable court is made aware the assumptive, discriminative and unjustified vigilance flowing from the hands of the author under executive order. The complaint's overall ultimate fact is that the Plaintiff is in jeopardized in a political corruptive matter concerning trust accounts. Plaintiff as beneficiary set aside by the US Treasury for possession subject of the entire claim. Jersey City v Hague, 115 A. 2d (Supreme Court of New Jersey 195 5) United States v Nixon, 418 U.S. 683 (1974) This action is recover thorough a species of political duress and avert the dangers that may facilitate the exaction. The describing "special problems" failed to process by administrative law. The honorable court is amicable to purse within the guidepost of 76 American Jurisprudence. 28 USC 2462 The limitations of the law allow the honorable court to revisit on the exigent 28 of 109 circumstance and dangers that are concealed to may gain by unlawful procurement. The narrative matter is conspiring and oppressive. The ultimate pleading fact of duress minas was described in the original complaint. The honorable district court and en banc appeals court; is requested to consolidate the complaint and petition. The simplified threatening issue in the element is clear enough conjugation that stipulate to intervening safety acceleration. United States v Cruikshank, 92 U.S. 542, 557, 23 L. Ed. 588. Mckenna v United States, (C.C.A.) 127 F. 88. The Respondents introduced activity of executive order that manifest as conspiratorial efforts and effectuation that may injure, oppress and prevent the rights to acquire or obtain as well as maintain abilities of said property and account. There was and is federal issue to questioning the original complaint directly to Article I section 9. The honorable court is compelled revisit all impressive matter in the complaining predicament. The issue conspires against the Plaintiff rights in which loss is implied and intentional. In which Respondents, a political individual, is author of evil desire or is author of a expected benefits by egregious and wonton conduct in the overact. Mazzei, 521 F. 2d at 650 United States v Braasch, 505 F. 2d 139, 150 -51 and n. 7 (7th Cir. 1974) United States v Holzer, 816 F. 2d 1014(71h Cir. 1987) VII Armstrong v Treasury, 2009 3155 (Fed. Cir.)Supporting memorandum of law is commencing the action to reopen matters as a remedial independent action due to the extreme circumstances that fraudulently subvert and contaminate the litigation. Levowitz v Cunningham, 431 U.S. 801(1977) the factual matters known and presented is clearly wrongful use of otherwise valid powers. There executive acts are adverse affirmative action that has effectuated dangers since original complaint filing. United States v Salerno, 481 U.S. 739 (1987).The previous order has 29 of 109 furthered and allowed the Respondents to cause damages due with oppressive duress directed at the Plaintiff. The prejudice ruling is allowing the issues fact to be practiced corruptly by Respondent officials involved. The misapprehension of the Plaintiff rights is merit of wrongdoing viewed practicing abusive maladministration to cause exaction. 28 USC 2462 reopen and revisit the original complaint is appropriate due diligence to the merits and extreme circumstance set forth. Butner v Neustader, 324 F. 783 (9th Cir. 1969) Faulk v Allen, 739 F.2d 461 (91h Cir. 1984) previous orders are constitutionally unpersuasive as adequate justice. Moreover, the Respondents continue to introduce and practice modalities of unusual mal- administrative duress from the onset date of original pleading complaint. Pleading to withstand refute the Respondents have implemented adverse measures that attempt frustrate the administration of justice. The motion is due diligence of natural pursuit to remove the difficulties and special problems existing presently that should prevail in the plain views of court. Levowitz v Cunningham, 431 U.S. 801(1977) afferent acts of malicious investigations," is future dangers ". Dangerous things potentiated by evil political zeal is capable of concealment inclusive information. "Pinkerton versus Vicarious Liability" meets the requirement to revisit and reopen the original complaint. In Re: Flanagan 34 F.3d 949 [at 351(10th Cir. 1994) Issue in the element have a fraudulent nature; interpretation errors are gross enough technical revive this suit. Hobson v Wilson The disposition and course have been different, duress minas is articulated in original complaint. Politics must be filtered from the litigation. The Respondents are deceptive and have too many torts that bear weight in a jury review The Plaintiff stipulate to a running objection to all previous order in the dismissal. The previous ruling is not controlling tortuous infringement of abusive positional duress. The previous order is rendered "with prejudice" and plus the inducement implied powers of executive order act as an unconstitutional 30 of 109 coalescence. The coalesce enjoins an "improper active concert" that is clearly construed as egregious exploitation. Article IV the honorable court must examine fully the circumstance in this litigation. [Un]like the frivolous it guards wrongful predisposition in a adverse and arbitrary dispute. 228 USAM compel the reviews of this action to rely solely on the specific allegations "Arbitrary versus Contrary" Affirmative act of inducement nullify the executive order and re- characterize the litigation it requires a remedial judgment in further proceeding United States v Syriuth, 98 F. 739, 747 n. 12(3`d Cir. 199) corrupt practice to that deliberately scheme, oppress and subvert with duress minas makes this motion the necessary step to reopen. The Respondents invoking arbitrary overacts must be purged through plausible deniability. The Respondents reckless indifference overacts are financial threatening. There is enough awareness in the complaint. The tortuous interference and administrative positional duress is a non - advantageous medium. Contributory infection "self- conceals" The executive order is wrongful implied powers and actual prejudice character to conceal itself to avoid detection. [Bailey v Glover][Hobson v Gibson] Prather v Neva Paperbacks, Inc., 446 F. 2d 338(5 1h Cir.1971) Addington v Farmer's Elevator Mut. Ins., 650 F. 2d 663, 668 (5th Cir. 1981) (quoting Hazel - Glass, 322 U.S. at 245- 46). The immunities of privilege and plausible deniability does not rescue the matters of this litigation. The statues of limitations of the suspicious fraud revive the claim appropriately. "Rule of Judicial Thumb" any tortuous compounded concealment materiality is liable to sue and recover any asset. Fiduciary Law is a Title 18 crime. United States v Powell, 379 U.S.48 (1964).Burke v Barnes, 479 U.S. 361, 363(1987). There standing elements of deception and concealed wrongful conduct that goes uncovered. There is self - concealing encompassed within duress minas. The action makes effort to readdress and reopening the litigation to attest the suspicion in the storms of fraud. It is necessary in reasonable diligence and amicable action to 31 of 109 avoid a mal justice. United States v Swindall, 971 F. 2d 1531 at 50.United States v B 524 U.S. 38 (1998 )State of Texas v Allan Construction Company, Inc., 851 F. 2d 1526 (5t" Cir. 1998) disinformation in the scheme of maladministration practice is enough praetorian element. Reopen matters to pierce the vail of invisibilities that conceal aggravating materiality. United States v Tweel, 550, F. 2d 297, 299, 300 (1977) United States v MontillaAmbrosiani, 445 US 930 (1St Cir. 1980). VIII 28 USC 2201 the inducement requirements are met to sufficiency; the wrong doing is well pled. United States v Cox, 342 F. 2d 167 (5t" Cir. 1965)There is corruptive exercise the presentation before the honorable court is an oppressive matter with conspiratorial venality directly practice directly on the litigant civil rights holistically. The prejudiced dismissal is unconscious of dangers and loss. Premature adjudication aggravates the perplexity for the Plaintiff to obtain possession and benefit of financial asset to claim in descendancy.28 USC 2462 this memorandum of law is an organizing amicable action to reopen the entire estate litigation. Federal Rule of Bankruptcy Procedure Rule 9024 the Respondents induce a financial predicament, distress the estate with duress minas and perpetuate concealment with an unconstitutional overacts by executive powers or by undue force office. The tortuous and wanton conduct is the other reason to purge through any immunities assumed to plausibly denial. Wanton conduct conceal of estate and accounts. The request is to vacate from the previous orders and judgment. The Plaintiff is enhancing pleading points; constitutional plenary objection to contrary directed administrative law that causing any deprivations to the litigating matter. Cooper vAaron, 358 U.S.1 (1958) The previous judgment and previous orders are unpersuasive. The Plaintiff compels to honorable court vacate and reopen the matter to make en bane review 32 of 109 adequate. United States v Mandel, 591 F.2d 1347 (4th Cir. 1979). United States v Holzer, 816 F. 2d 1014(7' Cir. 1987) United States v Keogh, 391 F. 2d 138 (2nd Cir. 1988) "separation of power" must nullify political venality that offend the intangible rights of "good government ". [United States v Burr] IX United Sates v Bass, 404 U.S. at 349 this memorandum of law is pursuant as amicable action. The original complaint and en banc petition has critical matter that demands Article III jurisprudence it has civil meaning and direction sufficiently to vacate. 28 USC 2332.33 Am Jur Slander /Libel United States v Salerno, 481 U.S. 739 (1987)United States v Cruikshank, 92 U.S. 542, 557, 23 L. Ed. 588.Mckenna v United States, (C.C.A.) 127 F. 88. The Respondents as political figureheads initiated executive order that induced coercion and duress contrary to Article I section 9. The memorandum of law is amicable support to reopen to abuse of position. The administrative duty must address all special problems. There are effectuating inferences that oppressive and exaction appearance. There is malfeasance, egregious conduct and zeal prohibited in government financial affairs. The totality of executive acts is efferent to severe the obligation and benefit. United States v Graham, 275 F. 3d 490 560, 516 (6th. Cir. 2002) United States v Miller, No. 09 -40438 (5th Cir. 2010) clarifies to in entire litigation there abuse of position and federal questions the "administrative norms and administrative law ". There is clear political venality and contamination that obstruct the transfer of estate as well the transfer of accounts. Anchorbank v Hofer (7th Cir 2011) United States v Kenny, 462 F. 2d 1205, 1229 cert denied, 409 U.S. 914(1972). The impression and in the interest of justice describing matter required a minimal exhaustion and requires an adequate query. Bohus v Be/1,950 F. 2d 919,924 (3`d Cir. 1991) Burke y Barnes,479 U.S. 361, 363(1987) In Re: Salerno the storms suspicious to fraud and exaction. Amicable action, accurate jurisprudence cures and corrects the species of duress 33 of 109 under the judicial microscope. United States y Veal, 153 F. 3d 1233, 1245 (11th Cir. 1998) the Respondents have no moral justification to maliciously neither exceed nor be causative to exceed Article I section 9. The Respondents must answer to the culpability in the situation. [ United States v O'Grady, 742 F.2d at 691]. This memorandum of law in support motion pursues a just and amicable "Retroactivity of Judge" U.S. v Hazel, 385 F. Supp. 1311(D. Mo. 1974) The motion in Article 11 must purse on the facts and Right to Rely. The executive order is intentional to exceed constitutional safeguards and intentional attempt unlawful usurpation. The executive order is undeniable intention to gain unlawful and unqualified procurement of beneficiary estate property and beneficiary accounts set aside for Plaintiff by the US Treasury. "Primary Grounds" In Re: Hazel, 385 F. Supp. 1311(D. Mo. 1974) "Right to Rely" 37 C.J.S Fraud 51 Cong. Rec. join all motions and purge test the Respondents vacating all previous orders attached to original complaint pleading matters should on the courts Pryor v United,769 F 2d 281 [at 18] United States v Sharpe at 20. The Plaintiff must challenge the mistake at law the previous judgment is oppressive. M 5 USC 702 This memorandum law is address to reopen the litigation due error in the application of administrative law that perplex, contaminate, deteriorate and erode the judicial mechanics. The litigation presents special problem that must meet the constitutional adequacy. The matter requires administrative exhaustion that show a just appeal and effective due process. The Plaintiff conveys to the honorable court with reasonable diligence for amicable and affirmative action to move to reopen the litigation in the superior courts. 28 USC 351 Plaintiff as pro se complains to reopen; "storms in the suspicious of fraud" and "pains it takes to remedy ". In Re: Bohus. 34 of 109 XI Manual for Managing Complex Litigation10.13 Effective Management10.153 Consideration in Imposing. 10.21 Responsibilities in Complex Litigation 10.224 Court Responsibilities 11.13 Pre - Discovery Disclosure 11.211 Case - Management 11.33 Identifying, Defining and Resolving Issues Horton v Cockrell, 70 F.3d 397(5th Cir. 1995) [Mercer v Lence] This memorandum of law is support to reopen the litigation in the interest justice. The Plaintiff moves safeguard litigation erosion and deterioration. Article II section 4 The pro se as pursuant to the fraud amicable action through the "powers of the court" In Re: Cement Antitrust Litig. 688 F. 2d 1297 (9th Cir. 1982) XII 28 USC 2201 clarifying the circumstances on the merit and dynamics of the torts involved in matter that impresses a jury on the first impression query. The estate and accounts are in adverse possession. McCandless and Cattle Company v Kealohapauole, No. 28292 Civil No. 92 -0185K (States of Hawaii, 3rd Cir. Kona Division 2011)United States v. Perrin, 131 U.S. 55 (1889) Stewart v Wyoming Cattle Ranch Co., 128 U.S. 383,388 (1888)Tortuous overacts are contributing factors that will defraud the Plaintiff. XIII 28 USC 1404 This memorandum organizes the dispute and supports to reopen matter the litigation for constitutional adequacy. There are federal question and constitutional questions by inquiry. The magnitude of the controversy honorable district court own motion accept and transfer the matter to appeals court due to the pleading en banc materiality. United States v 35 of 109 Graham, 275 F. 3d 490 560, 516 (6th. Cir. 2002) The Respondents holistically are abusing the position of trust that effectuate in the sum as pecuniary harm or is causative of dangerous things to inhibit a financial transaction issue. United States v Salerno, 481 U.S. 739 (1987) [Younger v Harris] the honorable court has enough probable and reasonable suspicious to fraud; inter alia the issue is out of control due to the effectuation of tortuous activity and egregious conduct. [Skilling v United States] "Civil Litigation Management Manual ", Judicial Conference, Court Administration and Case Management (2001) the matter is pursuant of "targeted fraud ". Tortuous materiality is out of control and distorted due to abuses of executive power. In Re: Skilling. This memorandum of law is effort of persuasion to readdress and reopen on the specific issue in the element. The Plaintiff as pro se has disadvantage and request the honorable to take the next administrative step. The refocus on complaint and en banc petition will make need for further judicial assertion more clearer on the particular issue and special problems. The prior presentations before this honorable court have key and logical strategies. Civil Litigation Management Manual - Complex Subject Matter at 93, Fordham Law Review (2006) Vol. 74 pp. 3147- 3187. The substantive law involved may require the honorable district court to move the issue to the superior court. A more effective and insurance of constitutional adequacy is met by "special judicial management" principle application. The pro se request the honorable court for equal justice to avert a political crime and avoid a financial loss by unlawful procurement. United States v Mandel, 591 F.2d 1347 (4th Cir. 1979) at [60]. United States v Nixon, 418 U.S. 683 (1974) The Respondents executive order is obstructing and contamination the litigation. In Re: Tutu Contamination Litigation, F.R.D. 46 (1995), 78 -79 (D. Virgin Islands, 1995). The pleading matters in a litigations sum of exaction are difficult to interpret exaction cross many avenues of jurisprudence. Moreover, the previous judgment is an interpretational error. The 36 of 109 executive is an "kitchen sink" ambiguity and smoke screen that conceals the fraud. The ambiguity conceals most of pertinent materiality. Thus, obscure the court's ability to arrive a different just disposition. Obscured exaction designed by political venality requires a query of accurate jurisprudence and diligence. This memorandum of law clarifies and organizes the predicament to open concealed materiality. The pro se respectfully objects to previous judgments and stipulates to interpretation error. Exaction is disguised and obstructed with the power of invisibility. [US v Tweel] The Respondent use plausible deniability as a egregious "safety" and "shame pleading ". This litigation has coercive materiality that must be nullify and cease - desist proceeding or hearing at a minimum accompanying this reopen the process.. 32 Am Jur 2d, Federal Practice and Procedure at 622. 5 Am Jur, Appeal and Error 4 Am Jur 2d, Appeal and Error 233. Due to the courts interpretational error, this memorandum of law is compelling and supporting to reopen. The original complaint should reopen and purse not to stand on the court record a frivolous claim. United States v Holzer,816 F. 2d 1014(7th Cir. 1987)Sassower v Mangano, (Southern District, New York 1996)United States v Keogh, 391 F. 2d 138 (2nd 1988)United States v Cox, 342 F. 2d 167 (5th Cir. 1965). [Evans v United States] The political venality must be purged thorough guidepost protection in financial matter by the "Pinkerton Liability ". XIV 26 Am Jur 2d, Embezzlement versus Exaction Mandel [at 60] `fraud is fraud in politics ". This memorandum of law is support to join all motions in process to purge test the Respondents to recover beneficiary estate property and set accounts for the Plaintiff. Barret v United States,798 F. 2d 565 [at 12] 28 USC 2462 This memorandum of law makes effort for improvements of interest that delegate duties of the court. Federal Rules of Civil Procedure[ Rule 12(g)] 37 of 109 Retroactivity of Judge "relations back" to the original complaint date. Federal Rule of Civil Procedure [ Rule 15 (3)(c)] Relations Back amend and remove the actual prejudice. The scandalous matter and effectuations of political venality outlined in the pleading claim is neither unambiguous nor frivolous. The previous ruling is an assumption that cannot be true, efferent materiality of the pleading allegations as standing fact. "Ripe materiality" should be purged through a due course of discovery. 11.49 and 11.491 Special Problems and Investigations, Manual for Complex Litigation 2004. The original complaint deserves a response and requires legal relief to the tortuous issue and contamination. The previous prejudice ruling has facilitated and caused the situation to further ripen the positional duress, actual injury and dangers. The litigating matter deserves a fair determination. Freely give relief with retro justice on the merits, special problems and invisible circumstances causing a conspiratorial predicament. United States v Winkle, No.04- 04196(6' Cir. 2007) the Respondents must purge and answer to all previous motions. United States v O'Grady, 742 F.2d, at 691 United States v Swindall, 971 F. 2d 1531 at 50. This is a discriminative exaction issue with political venality and zeal that should reopen to ensure there is improper disposition. Financial examinations administratively purge the praetorian factors likely to change the whole disposition of the suit. Ali v Holder, 637 F. 3d 1025, 1031 -32 (91h Cir. 2011) The Respondent executive officer's controversy and circumventing activity is sufficient and categorically persuasive to continue the legal acceleration. Whaley, supra, at 663 -664; Hanley, supra, at 401 -402, 104 N.W., at 59. The entire litigation is conjectured in the public at large. There is enough conversation and controversy throughout television media. The spawning controversy is enough apparent attention to preliminarily attest and judicially challenge the merits of the case in open court form. There is substantial controversy that perpetuates this litigation "above speculative level" to readdress. On the facts, 38 of 109 arbitrary action is causing a course of traceable adverse activity against the Plaintiff. The Plaintiff has sufficient and justified standing in the original pleading to pursue a remedial inquiries adjustment and amendment. United States v Syriuth, 98 F. 739, 747 n. 12 (3`a. Cir. 1999) The balance of the accounts and values of entire estate is enough to re -raise and re -open on that ultimate fact. The honorable court is just to amend and sustain on apparent materiality. The perpetuating materiality in this review is enough to revamp the "Judicial Compass." Induced incitement is the compelling probable cause rationale; continue a substantive inquiry on the known political opposition activity that is ongoing Younger v Harris. The course of inquiry and course discovery will allow the Respondents to prove their side of their story. XV United States v Holzer, 816 F. 2d 1014 (7t` Cir. 1987) Vernau, 896 F. 2d at 46 (quoting) Deemer v Weaver, 324 Pa. 85, 90, A. 215 (1936) Blair v United States, 250 U.S. 273 at 282. Calandra, 414 U.S. at 345. This memorandum of law is pursing for better administrative remedial action. A pro se is querying for a due course of discovery exhaustion. The original complaint and en banc can be support in the course with witnesses. There is enough in the court's general knowledge to purse with a particular cause for the all submitted motions. This stage of the litigation requires procedural safeguards. Horne v Huddle, CA 94 -1756 (D.C. Dist. 2009) the Plaintiff is a government special programmed due to composite issues surrounding the estate. The fact pleading that there is agency involvement with duress minas and coercion shielded by plausible liabilities. 76 Am Jur Trust The Respondents categorically convoluted the situation. 37 C.J.S. Fraud The invisibilities abuses are "reckless and deliberate indifferently based" and is confusing. The facts must be address in the open court. The Respondents display 39 of 109 adverse possession due to reactions of previous petition and motion; affirming there is no mischief in reopening. The administrative action pursuing must purge the inclusive actual malice and vigilance. New York Times v Sullivan, 376 U.S. 254 (1964)United States v Salerno, 481 U.S. 739 (1987) United States v Cruikshank, 92 U.S. 542, 557, 23 L. Ed. 588.Mckenna v United States, (C.C.A.) 127 F. 88.Younger v Harris, 401 U.S. 37 (1971). This particular cause of action is plenary exaction and political venality that is "holistically oppressive" as well as scandalous matter. The acting effect of an egregious executive order is intentional subversion and severe connection to a financial estate and account set aside. The infliction of "positional duress" is intentional effectuation to increase by hopes and evils of pecuniary harm or by dramatic event loss abilities to continue. The executive order is egregious authorization for adverse extensional modalities to carry out invisible abuses to intercede and inhibit. This unduly extends the ability to intercede with fraudulent contradictive activity. The contradictive activity deprives fundamental rights to continue a transaction of assets. Extensional modalities increases the ability to inflict undue duress minas occurring continuously. The entire aggravating torts is abrasive acts should yield to the Maxims of Law. The executive order is contrary direction to facilitate the oppressive matter and shield ability for concealment of the abuse as well as the invisibilities. United States v Tweel, 550, F. 2d 297, 29 9, 300 (1977) Cooper v Aaron, 358 U.S. 1 (1958).Cheney v Superior Court, State of California County of Butte, No.CM01607 No.003734 (Jan.200 1) United States v Mandel, 591 F.2d 1347 (4th Cir. 1979) Jersey City v Hague, 115 A. 2d (Supreme Court of New Jersey 1955) .United States v Graham, 275 F. 3d 490 560, 516 (6th. Cir. 2002) United States v Miller, No. 09 -40438 (5th Cir. 2010). United States v Salerno, 481 U.S. 739 (1987). The 40 of 109 particular cause of this action is to remove the fraud and move through all plausible ability that present as obstructive and contamination. The executive order is proximate cause of pecuniary and specific damage by invisible abuses. Duress Minas, Furtado v Bishop, 604 F. 2d. 80 at 55. Particular cause; for remedial review there requirement for procedural safeguards that are observant and adhere to the universal standards of decency. Furtado v Bishop, 604 F. 2d. 80 at 64. [Brown v Mississippi] The Respondents have no justification to exercise any executive order activity against the Plaintiff. Watkins v United States, 354 U.S. 178 (1957) United States v Veal, 153 F. 3d 1233, 1245 (11th Cir. 1998). Levowitz v Cunningham, 431 U.S. 801(1977) The allegations and presumptive reasoning for initiation of adverse executive order activity is purely discriminative as well as obnoxiously erroneous. The Respondents are clearly false and misleading to use force or is repugnant to utilize executive act egregious to Article I section 9. There is a start point of point from in the original complaint to fashion remedy for the tortuous encroachment and fraudulent activity involved. There is course of acts that show enough intent. There is specific issue and special problems that impact 42 USC 1983.Risinger, Honesty in Pleading and Enforcement "Striking" the Problems with Federal Rules of Civil Procedure 11, 61 Minn. L. Rev. (1976).Am. Jur 2d Fraud and Deceit Kassel v Leavitt.No. 23557 (Supreme Court of West Virginia 1998).This memorandum of law is "good faith" to support and enhance or clarify the original complaint that is obviously an error of interpretation. 41 of 109 XVI 28 USC 2332 This memorandum of law is action to move the original complaint and all petition in entirety as they are pled to purge. The issue is induced with duress minas by executive order discrimination effectuating zeal whereby an exaction is federal question. People v Hawkins and Fields, at 5 (Sup. Ill Ct. Jan. 1995)Korematsu v United States, 323 U.S. 214(1944) is due a course of action that is adequate in procedural safeguards. The zeal inference is sufficient to reopen matters. In Re: Hawkins and Fields, [at 51.United States v Veal, 153 F. 3d 1233, 1245 (11th Cir. 1998). The executive order is egregious and no justification for the implementation. The Respondents reckless indifference implementations manifest a desire of dramatic event, dangers and pecuniary harm. The special problems involved are the species of a praetorian element that threatens to impact the situation with reckless slander. The previous judgment should discern deliberate indifference. Plaintiff is a selective subject of undue malicious prosecution and unreasonable freeze. There is clear merit to allegations that must answer to the court. The executive order action is inducement of "warring unconstitutional manners ". Remedial action must readdress any dangerous egregious modalities that intend to sever a fiduciary or culpability connection between the Plaintiff and US Treasury. Duress minas is oppressive and subversion materiality. Nicaragua v United States,( ICJ 1984) The Plaintiff is requesting judicial administrative defense due to the effectuating and futures of dangerous things that threaten to abolish the connection. 76 Am Jur Trust 33 Am Jur Slander/Libel 1 Am Jur Injury. The executive order is act contaminating this litigation; holistically convolute a fiduciary relation between the US Treasury and the Plaintiff. United States v Nation, 10 -382 (Fed. Cir 2011) "Plausible Deniability" by executive order is an excusable unconscious to constitution and a fatal administrative infection. Awabdy v City of Adelanto, No. 02 -57118 42 of 109 (2004) . Barret v United States,798 F. 2d 565 [at 12] administrative enforcement action is required. The executive order increased induced conceivable harm and the original complaint required a legitimate effort clearly stated dangers conceivable harm. The dismissal was unconstitutional fatal adjudication executive order activity arbitrary induces conflict preemption that unduly manipulates this litigation futility. The executive order is obvious hostility and bias, it disproportionately alludes the truth in federal claims issue. The executive order is an act of wanton conduct United States v Cruikshank, 92 U.S. 542, 557, 23 L. Ed. 588.Mckenna v United States, (C.C.A.) 127 F. 88. Mcgowin v Manpower, 363 F. 3d 556 (51' Cir. 2004) [at 11] "allow one chance allow motion to make a legitimate effort" due to insufficient administrative procedure default and compounded nature of case. Breed v Jones, 421 U.S. 519, 528 (1975). The executive order implies or asserts actual prejudice and egregious predisposition. Holistically, the executive order's totality, is inducing a administrative contamination matter warring against the constitution and conspire against the Plaintiff's civil rights. Nicaragua v United States, (ICJ 1984) In Re: Tutu Contamination Litigation, F.R.D. 46 (1995), 78 -79 (D. Virgin Islands, 1995).Extrinsic and Intrinsic Fraud 37 C.J.S. "Right to Rely" The executive order extension creates "future dangerous ", creates a conflict of interest with reckless indifference and enhances positional duress. The totality effects the situation with duress minas. Therefore threaten to slander the entire litigation of claim. This memorandum is amicable action to defend against a discriminative and adverse order. It was rendered to directly target and make the Plaintiff. subject of undue evil zeal and malicious aggression. This motion is not a change of legal position. Awabdy v City ofAdelanto, No. 02 -57118 (2004). This memorandum of law in support motion is plenary effectuations of exigent circumstances foreseeable in the original complaint. This action of motion "opens the gate to court" on all effectuation of undiscovered scandalous 43 of 109 matter and tortuous matter. The litigation meets the judicial requirement by this memorandum and motion to reopen proceedings. 28 USC 2462 There is judicial justification reopen in this venue In Re: Skilling due to a strong inference and strong merit that is a financial threatening by unusual extraordinary oppressive means. United States v Swindall, 971 F. 2d 1531 at 50. Korematesu v United States, 323 U.S. 214(1944)United States v Mazzei, 521 F. 2d 639, 649- 656(3rd Cir. 1975)United States v Salerno, 481 U.S. 739 (1987) United States v Cruikshanl� 92 U.S. 542, 557, 23 L. Ed. 588.Mckenna v United States, (C.C.A.) 127 F. 88 United States v Burr, 309 U.S. 24 (1940). The particular matter and pleading in the entire suit is appropriate to compel the honorable court for an independent remedial action. Article II section 4 there is particular matter, praetorian element, all specific elements of fraud and political venality. Affirmative judicial action is necessary for the act that must survive scrutiny "nature of torts" hearings are necessary at minimum. Breed v Jones, 421 U.S. 519, 528 (1975). The honorable court must function and amend the previous order and vacate the previous judgment due to the "nature of this suit ". The Plaintiff is compelling all aspects of the litigation's situation guarding against erosion and deterioration. 28 USC 2332 The original complaint has inference of the 220 F.3d 406 (5th Cir. 2000) [at 12], Comprehensive Crime Act. Inter alia, in totality of the Plaintiff reasonable conclusion should been the first main event reasoning to target the Respondent in conjunction of fraud due to value of estate and principal balance of the set aside account. United States v Lee, 811 F. 2d 979 [at 39]_ Plaintiff is making appropriate efforts in due diligence to protect the asset as rightful beneficiary of trust account set aside by US Treasury. The Plaintiff is estate property from a political crime and attempt to stop the futures dangers continuation of torts that facilitate concealment by unlawful exaction methodologies in fraud. United States v Mandel, 591 F.2d 1347(4th Cir. 1979) Jersey City v Hague, 115A. 2d (Supreme 44 of 109 Court of New Jersey 1955).United States v Holzer, 816F. 2d 1014(7" Cir. 1987) United States v Keogh, 391 F. 2d 138 (2 °d 1988) The executive order "attempts to ajax the liabilities" of trust. The Plaintiff represents or revamps this litigation with liberal construction, administratively employed corruption strategies and utilized formulized a common -sense approach to deal with wrongful use power or positional duress minas. The action is amicable and just to require the application administrative law principles. The diligence and conscience of the honorable court is appropriate re- address or reopen the entire suit. Bracey v Gramley, 96 -613, 117 S. Ct. 941 (1997) This is an extraordinary case and claim that deserves correction. Political exaction," insider spoliation fraud" and interference with an inheritance expectancy go illicitly hand -in -hand. Moreover, requires a consolidated inquiry; discovery as a new course of action. This litigation deserves to constitutionally arrive at a different disposition. Independent remedial action is required by "Pinkerton Liability" and "Klein Conspiracy" as judicial guidepost categorically rejects all the previous judgments and rejects all other previous opinions [Hilton v Guyot]. The Respondents institute as author of contrary arbitrary activity that is egregious or politically hostile. The litigation has positional duress that is obstructing compliance and intercede in an 42 USC 1983 matter. Cooper v Aaron, 358 U.S.1 (1958)Galina v INS, 213 F. 3d 955, 958(7' Cir. 2000)United States v Cox, 342 F. 2d 167 (5th Cir. 1965). XVIII 28 USC 2201 The totality of pertinent materiality justify pursuing action. The manifestation allegations reopen matter. This litigation pleading facts are clear and undeniable. The venality is apparent. Weigh on one questionable count with Awabdy v City of Adelanto, No. 02 -57118 (2004) against a Respondent's refute. The Respondents induced to created a political financial predicament and created an egregious conflict In Re: Awabdy. Barret v United States,798 F. 2d 565 [at 12] The narrative points out, describes and exemplifies enough elements of fraud as well 45 of 109 as the manners of duress to conflict with the previous judgments and preliminary opinions. [Eldred v Ashcroft] The honorable district court and en banc panel is just to reopen the issue. United States v Perrin, 131 U.S. 55 (1889) this action spells out enough overacts and raises matter above a speculative level; In Re: Perrin is persuasive to reopen the unexamined venality. This action is the prescription for a revisiting as new course of inquiry "in the storms suspicious of fraud ". Bohus v Bell, 950 F. 2d 919, 924 (3`d Cir. 1991)United States v Powell, 379 U.S.48(1964). Kennedy v Silas Mason Co., 334 U.S. 249 (1948) See 6 Moore's Practice 2069 (2d ed. 1953), 3 Barron & Holtzoff, supra, 1235.1. There is a genuine dispute. CONCLUSION United States v Kenny, 462 F. 2d 1205, 1229 cert. denied. 409 U.S. (1972) preserves this suit, reprioritizes diligently to persuade and object all previous orders judgment." Wrongful premature adjudication" Federal Appellant Rule of Rule Procedure Rule 35(b) (1) (A) observed in the previous rulings. The previous ruling are inconsistent and constitutionally inadequate. This memorandum of law is pursuant to Federal Rule of Civil Procedure Rule 60(a) categorically ripe due to the interpretational errors of the entire original complaint and interpretational of entire petition "overlooked effectuation ". United States v Holzer, 816 F. 2d 1014(71" Cir. 1987)Federal Rule of Civil Procedure Rule 60 (b)(6) duress minas and future dangers justify relief from the previous judgment. United States v Swindall, 971 F. 2d 1531 at 50. United States v Salerno, 481 U.S. 739 (1987) the previous order is abandonment failed to address the future dangers and failed to address the fraud. Federal Rule of Civil Procedure 15(c)(1) reopen the suit in the interest of justice and restart the clock running for a new query since the original filing in the district court June 15th, 2011. 28 USC 2462 this action is within the statues of 46 of 109 limitations. United States v Dial, 757 F. 2d 163, 168 (7" Cir. 1985) Federal Rule Civil Procedure Rule 60(b) (4) the previous judgment should voided. There is information that is concealed and withheld. The previous actually prejudiced dismissal orders enhances "egregious elements" of a foreseeable scheme. Burke v Barnes,479 U.S. 361, 363(1987) United States v Holzer. This memorandum of law is attached to the following motion pursuant by Federal Rule of Civil Procedure Rule 60(b) relief on the above stated grounds deserving amicable action. The concerned Motion to Reopen, Affidavit is attached and matter are set forth judicial conflict is organized. United States District Court Local Rule 7.1 matter requires consolidation and vacation of previous order. Federal Rule of Civil Procedure Rule 50(b) the Plaintiff request a new trial. Date: July 12th, 2012 Respectfully Submitted, 47 of 109 Tony Curtis Barrino Plaintiff /Pro Se 226 N. Long St. Salisbury, N.C. 28144 (704) 232 -2498 UNITED STATES DISTRICT COURT NORTH CAROLINA WESTERN DISTRICT Tony Barrino Plaintiff /Pro Se, V Department of US Treasury Timothy Giethner Barack Obama Respondents, NCWD Case No. 3:11 -cv -247 US SUPREME COURT Case No. 11 -8563 4" COURT OF APPEALS Case No. 11 -1713 MOTION TO REOPEN COMES NOW ,I Tony Curtis Barrino, as Plaintiff is pursuant from the previous judgment and order by 28 USC 2201. The Plaintiff, hereby respectfully move this honorable court to reopen the litigations original complaint and en banc petition court. The pleading Writ of Certiorari and extending motions are coinciding with this action also. All presented matter is connected and consolidated. The litigation is impaired, there is inconsistent course of process and the matter is impeded. Federal Rules of Civil Procedure Rule 60 (b)(6). The Plaintiff as pro se stipulates and objects to the previous order. In the interest of justice; void all the previous judgments and pursue by the diligent powers of the court. 28 USC 351 this motion complains 48 of 109 for a new uncomplicated course of remedial action and complains for improved judicial inquiry assertion. PRELIMINARY STATEMENT "Background and Discussion" (A) On May 18th, 2011 The Plaintiff submitted complaint in the honorable US District Court, North Carolina Western District, Charlotte Division. The subject matter is clearly pled and presented throughout the complaint. On June 15th, 2011 the honorable court adjudicated the complaint. There is misinterpretation of a "foreseeable scheme ". Now, the litigation must be constitutionally permitted to argue. This motion is a remedial action to avoid a financial loss and avert further victimization of political venality. On June 15th, 2011the District render ruling. The Plaintiff immediately proceeded with due diligence petitioned to the En Banc Courts, in the US Court of Appeals; Richmond, Virginia. The En Banc court did not answer on the poll. The suit was not afforded a hearing. The last activity in the En Banc Court was October 25th, 2011. The Plaintiff submitted matters to US Supreme Court initiated all petitions in a timely fashion on December 22nd, 2011. The last activity of the court in US Supreme Court was May 21, 2012. The Plaintiff requests to readdress in this honorable court as describing inclusive matters that impact the disposition today. The Plaintiff conveys the entire pleadings suffer interpretation complications and continues to be a duress as well as tortuous. Article III is capable to and will revise this litigation again in Administrative Probate Law/ Estate and Trust Law. The Plaintiff is addressing the "core venality ", applying power to estate and trust. This motion attempts to ascertain remedial action on the central issues that is causing dangerous things. The original conclusion 49 of 109 are flawed. The honorable court is requested to adjust matters with the judicial compass. This improves the integrity and issue with the proper legal acceleration. "In the pains it takes to remedy ", frivolous is extraneous and in plausible deniability is a convenient truth. C.F. v Capistrano (9th Cir. 2011). Frivolous dismissal is hostile and abrupt(citing) Judicial Discipline and the Appearance of Impropriety: What the Public See Is What the Judge Gets, Minnesota Law Review (2010) [ Vol: 94 pp. 1914-1996]; [extrinsic and intrinsic extraneous issue are not to be coupled disposed as the end of litigation; abandoned final ultimate resolution] The matter is unconstitutional contumacious and egregious. The aggravating factors are financial threatening. The invisible acts of maladministration their affects is and can be dangerous to the perspective Petitioner or citizen. The action is pursuing with indirect and direct contumacious assertions against the Respondents. The Respondents are absconding and fail in their ability to comply. The Respondents present severe reckless disregard of their fiduciary duties to complete the transaction. The Respondents are violating and refuse to turn over accounts attached the Estate of Mt .Vernon, Virginia; the Estate of Washington, George. The Petitioner is the legal and rightful heir to the estate as well as the monetary accounts set aside produce from the gold security that is encompassed in the estate of Washington, George. Jones v Jones, 234 US 615 (1941). The Plaintiff is requesting to continue the pursuit in this litigation. (B) 37 C.J.S. Fraud § 124, p. 452. "Right to rely" Where there is evidence is so clear, as to be susceptible of only one reasonable inference." United States v Powell, 379 U.S. 48(1964). 50 of 109 (C) 28 USC 2462 (citing) Judicial Discipline and the Appearance of Impropriety: What the Public See Is What the .fudge Gets, Minnesota Law Review (2010) [ Vol: 94 pp. 1914 -1996] This motion attempts to take affirmative action to reopen the original complaint. There is justifiable doubt as to circumstances which frustrated the administration justice by an actually prejudice assumption and presumptive predisposition. Butner v Neustader, 324 F.2d 783 (9th Cir. 1963) at 18. [United States v Holzer].This is an extreme circumstance and drastic appropriate step to the issue to be on the merits Falk v Allen, 739 F. 2d 461 (9th 1984). Duke v Greenwood County, 299 U.S. 259 (1936) significant prejudice should led the district court to any doubts in connection to pendency of the action. United States v Perrin, 131 U.S. 55 (1889)., Schwab v. Bullock's Inc., 508 F.2d 353 (91h Cir. 1975) at 9. SUMMARY ARGUMENT (A) Article III case and controversy; the Westfall Act encompassed with 28 USC 2072(b) is reasonable to reset this litigation. The Respondents present venality at this point and must be held to a federal question the adverse activity, oppressive facts and have connections to culpability of adverse arbitrary torts that intercede the transfer of estates assets. Lefowitz v Cunnin- ham ,431 U.S. 801 (1977)Lynm v. Payne - 476 U.S. 926 (1986) The Respondents must follow regulation to settle financial disputes. The Respondent induce irregularities and present abnormalities usually not found in financial issue. The Respondents misuse government agencies; in a discriminative scheme to procure and seize the estate's tangible asset. There is manipulation of government agencies to implement undue government inference that threatening 51 of 109 to spoil the benefit expectancy. The issues are viable to revive because inducement materiality. There executive order is misuse of agencies to cause administrative roadblock and make erroneous ability to maliciously investigate the Plaintiff. Galina v INS, 213 F.3d 955, 958 (7th Cir. 2000)Watkins v United States, 354 U.S. 178 (1957) bears sufficient weight to constitutional impact address all discriminative reasons that perpetuate vigilant political zeal. The Respondents utilize executive order that is only for the appearance to be justified and gives them another advantage of administrative duress. The honorable court must use consistent administrative adherence to avoid a miscarriage of justice and readdress inferences of exaction. The Plaintiff exceeds the burden of persuasion. The honorable court must confront all matter and commence the action asserting accurate administrative force to avoid a loss as well as must. The honorable court must confront the species duress that causes a predicament. The Plaintiff rescues and revives the litigation to confront the zeal and duress minas. 37 C.J.S. Fraud § 124, p. 452. "Right to rely" Where there is evidence is so clear, as to be susceptible of only one reasonable inference." Galina v INS, 213 F.3d 955, 958 (7th 2000). The honorable is requested to follow the administrative law make efforts by ruling of logic and common sense as in other cases. United States v Braasch, 505 F. 2d 139, 150 -51 and n. 7 (7th Cir. 1974) based on the hopes of benefit from the exercise of those powers United States v Gorny, 732 2d 597, 601 -02 consider matter of concealment. Lyn,- v Payne, 476 U.S. 926 at 40. Argues and rejects to observing that government officials' liability was is not premised; due to the fact Respondent fail to follow its own regulations. The Respondent are categorically improper and categorically wrong to create any species of duress that is harmful and effectuating future dangers in pecuniary harm to the Plaintiff. The Respondents abuse their position to complicate this litigation, solely due to inducement of executive act that severe accessibility by malicious government modalities. 52 of 109 United States v Nixon,418 U.S.683 (1974)The honorable court should reopen the discussion and query any aggravated procurement of estate property or assets. The litigation is tortuously aggravated as hostile possession. This formulized litigating matter presents an egregious zeal driven to an ultimate procurement. The Plaintiff is reasonable in pursuit against the controversies, overacts and extraordinary effort. United States v Graham, 275 F,3d 490, 516 (6th Cir. 2002) Newsome v Teasury, 2009- 3019(Fed. Cir.) Anchorbank v Hofer, (7th Cir. 2011). United States v Miller, No. 09 -40438 (5th Cir. 2010) Newsome v Teasury,2009 -3019 (Fed. Cir.) The Respondents conceal the estate and accounts by fraud activity. (B) Article III meaning dissuade the prejudice and dissuade popular hostility. The honorable court is requested to have a reasoned analysis of the en banc petition and revisit the original complaint. The District Court and En Banc Appeals conflict with the Supreme Court. There are specified errors of law and is supported by pertinent authority. The motion to be granted is the proper decision. The venality and duress potential is overlooked the nature of complaint demands a different and new course of action. The infection of suit is apparent and judicial conscience cannot be satisfied with previous decision. Accurate jurisprudence under the judicial microscope must show up to prosecute this litigation as a "colorable constitutional issue ". The honorable court should have constitutionally questioned the whole intent. The litigation deserves an explanation for the purpose to subvert a tortuous matter. The lawsuit should have enough general knowledge in the court. The Respondents knowingly have caused a conflict interest. The merits categorically impact the requirement for a new inquiry. The District Court and En Banc should suspend all unjustified, unfounded and deduce all egregious pragmatics involved. 53 of 109 The adverse executive order is clearly circumventing "due processes" diligence. The comity is contaminated with adverse non - advantageous intercede or venality in comity is obstructive and resistant. Westfall Act is the other redirecting judicial compass to ensure the scale is balance in a comity interference rejects all frivolous and prejudice. [Hilton v Guyot] The executive order is a proactive shield or safety harbor. In Re: Swindall, venality inference and duress minas is stronger that Fitzgerald v Nixon, 457 U.S. 731(1982). Article I section 9; inter alia, as all "special problems" and as all facts "due to uncover" impact administrative law profoundly. The Yale Law Journal: I Say Dissent, You Say Concurral (April 2012). "The impression of rampant error ", "Fair opportunity to be Heard" and "posses a dilemma those who would not believe the original opinion is correct ". In Re: Wall, Cooksey v Local 230. The pro se and the reviewing must deaden the political interest and must dead the political vigilance. The federal question of political venality is able to be brought out of "false light" and " bad faith ". The Respondents as political officials in the "Democratic Party" assist to cause conjecture and instigate unusual political hostility directed at the Plaintiff. The evil zeal desires to diminish the Plaintiff's "elbow room ". "Political Engineered Injury in Fact" is another infective dynamic of this situation. That basically threaten to slander and spoil the litigation. The Plaintiff inferring, convey and make relevant connection in the issue to duress minas effectuating pressures. Evans v United States, 504 U.S. 255 (1992) [Younger v Harris]. Key element of subject matter must be given credit to the Plaintiff [Clinton Jones]. Both Respondents are very susceptible to the federal question of effectuating abuse in an administrative government office. The simple improprieties politically have spawned effectuation malicious political opposition. The political party association is being used to intercede increasing "status quo' infecting with conjecture. The Plaintiff is at calculated disadvantaged due to the Respondents proximate cause of dispositive 54 of 109 dynamics that erode and deteriorate the constitutional civility of the litigation. [Marbury v Madison] Communist Party v Control Board, 367 U.S. 1 (1961) The constitution requirement in this action conveys a judicial fact. The en banc and district panel are justified to reopen this litigation. In Re: [Control Board] [ United States v Mandel, 591 F.2d 1347(41h Cir. 1979) [at] 60.] United States v Johnson, 383 U.S. 169 (1966) This court has the requirement and authority to intervene as to any causative inhibitions that are inconsistent "civil norms ". United States v Saadev, 393 F. 3d 669, 675 (61' Cir. 2005) "wrongful inducement" to include any party support scheme where the scheme is result as exaction. The Respondents refute is unconscious to the general knowledge of venality. There is political orchestration in which the scheme is designed to cause a loss life, loss of money and loss of access to land. The discriminating and scrutiny of collective powers cannot cause any loss of any principal balance in any account. Evans v United States, 504 U.S. 255 (1994). The courts is justified to intervene and deaden the political activity. There is organized political coercive activity and coercive calculation induced intentionally to negative impact to inheritance expectancy. Greyhound Corp v Mt Hood Stages., 437 U.S. 322 (1978) Communist Party v Control Board, 367 U.S. 1 (1961) is the judges communication to reconvene on the political history grounds need to talk The district court and en banc court need to re- review to regain control by administrative law procedure of a "out of control" fraudulent lawsuit. The controversy is the results and substantial fact impressive as a "probable cause review" out of control effects of insider fraud. [ Skilling v United States] politically spawn. The "political entity" has an unqualified financial interest in the land; "appreciating values of acreage ", principal balance set aside in accounts. The involved "Democratic Party" is qued by the Respondents is proximate cause of future dangers. The Plaintiff is affected by the undue political pressure. The political party involvement is intended to increase to attain possession by 55 of 109 "diminishing the Plaintiff's elbow room" conjectured for spoilation. The Respondents are causative to the federal question where they influenced others politically affiliated in that employed in the US Treasury. Them and as well as other political individuals assist to obscure, slander and discredit this litigation; interceding the transaction of beneficiary. The political co- hearts are to maliciously discern the transaction, politically discern the right. Therefore is a bureaucracy creationism of political convolution of right dealing, created disregard to honest services. The court needs to deduce the confusion that is politically engineered to block the transfers involving the Plaintiff. The conjectured controversy is engineered to impact the legal procedures. The Respondents activity distort or complicated the natural course of functional procedures that surround the estate property transaction. The common political scheme is clearly negative, political oppressive victimization because to failure to refer to regulations that manage trust of securities; revoked by political improper practice under the color of office. Communist Party v Control Board, 367 U.S. 1 (196 1) Nation v United States, 10 -382 (Fed. Cir. 2011) The Government had no interest; intent of the government as a whole holistically had been established. The US Government had good intent prior, since the Respondents interference induce contrary direction and tyrannical arbitrary action against Plaintiff's beneficiary expectancy estate claim process. The land and money that would disburse to the Plaintiff is blocked with maladministration and adverse political party bureaucracy is compounded. The issue is compounded by bureaucratic inter - government complexity. The situation created simply described as conflict of interest and describe deceptive abuses in the powers of office. The individual Respondents have induced an executive order to act with further egregiousness in this matter. Article II protects the Plaintiff Calder v Bull, 3 U.S. 386 (1798)The matter is clearly deceptive politics is the described political conduct. [51Cong. R Restitution for Consumer 56 of 109 Fraud Under Section Five of the Federal Trade Commission Act, 10 Val. U. L. Rev. 69 (1975) This memorandum of law is an accurate judicial compass for a specific judicial function for a remedial action to prosecute fraud. The Plaintiff's challenge the mistake at law to test the appearance of an illicit lucrative scheme and readdress the reality developing political crime. Mercer v Lence This memorandum of law in support reopen motion and revisit to avert political ploys or scheme that is subject to cause victimization of the Plaintiff. The Respondents wanton conduct and egregious political activity is causing the Plaintiff potential loss of a beneficiary claim on estate as well as the adjoining trust accounts. Enron, 2006 U.S. Dist. LEXIS 43146, at *88 n. 45. The abuse of office and political manipulation is fraud and is financial threatening. The Plaintiff's memorandum of law organizes administrative cumulative fraudulent condition. United States v Graham, 275 F. 3d 490 560, 516 ( 6th. Cir. 2002)United States v Miller, No. 09 -40438 (5th Cir. 2010)Lefowitz v Cunningham,431 U.S. 801 (1977)The Respondents display and politically exhibit wrongful use of office to gain a calculated advantage and wrongfully spawn harmful political nature in a financial and estate matter. The hope is to hide the truth and concealment by convoluting matter. The specific is concealment of asset with political duress due to discriminative reasons. In Re: Joslyn and four other titles (7th Cir. 1952) Community Party v Control Board, 367 U.S. 1 (1961). [Allen v Wright] (C) The Plaintiff conveys to analyze and reason the wrongful use of agency. The wrongful use of agency is abuse of position to direct malicious zeal directed at the Plaintiff. The Respondents executive order has no justification and impact the situation in numerous modalities. United States v. Veal, 153 F.3d 1233, 1245 (11th Cir. 1998)Levowitz v Cunningham, 431 U.S. 801 57 of 109 (1977) is causing a conflict and issues in 42 USC 1983; exaction methodology is continuing. The honorable court is moved to reopen matter in the original complaint. [ Hilton v Guyot] The species of fraud is present and must be revisited. Fraud and executive order should be removed and purged by court action for the Plaintiff in order to recover assets. The wrongful agency interfere with the legitimate transaction, malfeasance involves and implicates the agencies due the fact executive exceed the law. United States v Sharpe, 996 F. 2d 125 [at 29]. Cheney v Superior Court, State of California County of Butte, No.CM01607 No .003734 (Jan.2001). The district court and en banc should recognize agency connected to the Respondents executive order impact in the totality this reiteration. The judicial microscope applies to the revisit on the specific grounds of reckless indifference and deliberate indifference that have inflicted injury. In Re: Levowitz is sufficient and proper in the entirety of inquiry to "root out" the all flawed conclusions. The honorable court is challenged to correct the mistakes at law in the financial examination of institution that conceal tangible property. The holistic scheme exuberates exaction manner that is pertinent materiality. Moreover, the exaction modalities of Respondents is obvious venality In Re: Prudden [at 53]. Nixon v United States. 28 USC 2201 Bonner v City of Alabama, Prichard; 661 F. 2d 1206 (111h Cir. 1981) at 20. Predictability and stability are essential factors in the rule of law. This motion is a litigating act unpersuasive and rejects the previous judgments. The prejudice is allows future dangers of confrontation, allow abuses and invasion. The most of all and strong issue is that the agency manner need to explain all contact with the Plaintiff. Rutger's Law Review [Vol.60:4] at pp. 920 -950. Horne v Huddle, CA 94 -1756 (D.C. Dist 2009)Bonner, 661 F. 2d 1206 at 18 the action is capable on the facts to uncover. It is not judicial mischief nor is the Plaintiff "on a fishing trip" to reopen this litigation. Remedial action is a 58 of 109 requirement on the points of enhancements "fair jurisprudence" overturns and reverses as an objecting action of all previous orders. The original sitting court must be persuaded in the request to revisit matter. Bonner, 661 F. 2d 1206 at 21 The Plaintiff is justifiable to re -raise this complaint. "understanding developments of jurisprudence" the complaint has pled "special problems ". The previous order and the executive order is danger to enhance the element of fraud to continue on a course of actual intent and specific damages. United States v Holzer, 816 F. 2d 304 (7th Cir. 1987) Bonner, 661 F. 2d 1206 at 13. The situation of the suit has all the elements of fraud, suspicious venality, and future dangers. Rutger's Law Review [Vol.60:4] at pp. 920- 950. Reopen the suit for a fair adjudication and utilizing a reasoned judgment. Bonner, 661 F. 2d 1206 at 13. The issue of torts are so strong weigh on the scale of justice. The honorable court is without a question able to understand the pro se original complaint. 28 USC 2072(b) Bonds the honorable court to "take the proper steps" striking all the previous orders. The prejudice is unconscious to administrative complex litigation, unconstitutionally block and plausibly deny a 42 USC 1986 and 42 USC 1983 complaint in which the main event of inquiry should have taken place. The disposition would be categorically different. This case is intricate and has difficult issues to litigate and must imperatively argue. Burke v Barnes, 479 U. 361, 363 (1987) take the appropriate step and make the administrative effort to avert hazards, hostility, and jeopardizing situation. Marbury v Madison "unusual political duress" and "unusual administrative duress" is plain site and in the general knowledge of the court as well as the public at large. The totality of adverse effectuation and infection of the case; is conspiring against the innocent estate owner and accounts beneficiary. Allen v Wright, 468 U.S. 737 (1934)Halbstam v Welch, 705 F.2d 472 (D.C. 1972)United States v Cox 342 F. 2d 167 (5th Cir. 1965)The judicial action is reasonable and amicable to overcome the administrative 59 of 109 obstacles and purposeful discriminations. Tyrannical arbitrary action is depriving the Respondents of civil liberties Cooper v Aaron, 358 U.S.1 (1958)Galina v INS, 213 F. 3d 955, 958(7" Cir. 2000) The pro se legal weakness is protected against political venality in which exaction by maladministration and wrongful use of powers. This honorable court "may see it fit" due to the local courts economy and budget transfer the entire suit to the superior court. Transferring the entire suit, consolidate all pleading matter and consolidate all preceding motions; as instant independent to the superior courts due to the magnitude of this litigation. The entire complaint and all petition on it face articulation is fact are true enough and questionable enough that manifest a situation plenary to [Mercer v Lence] In Re: [Hilton v Guyot]. 10.153 Consideration in Imposing; Managing Complex Litigation. Complex Litigation at 93. "Civil Litigation Management Manual", Judicial Conference, Court Administration and Case Management (2001). (D) 5 USC 702 (citing) Judicial Discipline and the Appearance of Impropriety: What the Public See Is What the Judge Gets, Minnesota Law Review (2010) [ Vol: 94 pp. 1914 -1996] The pro se has issues of egregious materiality, visible venality and special problems of liberty. The Plaintiff is being deprived beneficiary entitlements due to elements of tyrannical coercion and praetorian inducement in the issue. 37 C.J.S. Fraud § 124, p. 452. 'Right to rely" Where there is evidence is so clear, as to be susceptible of only one reasonable inference." The honorable court is requested to make criminal -civil distinction. This motion and encompassed memorandum of law is short argument presented in the prayers "in the storms suspicious of fraud ". Consolidated Remedial action revives the suit and initiates the Motion for Contempt in the US Supreme Court. It is the necessity of summary process and purge test the Respondents in direct criminal 60 of 109 and or direct civil contempt. See Joseph H. Beale, Jr., Contempt of Court, Criminal and Civil, 21 HARK L. REV. 161 (1908). The pro se direction is "in the burden of persuasion." 37 C.J.S. Law of Executors and Administrators. The honorable district court and en banc is compelled by the obvious facts. Plenary exaction schemes maliciously abolish and severe trust beneficiary connection by convoluted modalities. United States v Burr, 309 U.S. 24 (1940). United States v Saadey 393 F. 3d 669, 675 (6th Cir. 2005)The Respondents executive order is obstructing and contamination the litigation. In Re: Tutu Contamination Litigation, F.R.D. 46 (1995), 78 -79 (D. Virgin Islands, 1995) 37 C.JS. Am. Jur. 2d Fraud and Deceit 145 (1968) United States v Lee, 106 U.S. 196 (1882) The motion is striking the balance to guard against deterioration and erosion by a judicial compass; "Westfall Act ". Fitzgerald v Nixon cannot oppose nor frustrate the administration of pursuit in the recovery of estate asset that is for the benefit of the Plaintiff. The entire complaint, petition and all motion have raised specific issue above the speculative level. Eldred v Ashcroft, 537 U.S. 186 (2003) justified on the pleading materiality reverses and objects to the previous judgment. "If the mode of proceeding to enforce it be formal and ceremonious, it is nevertheless a practical and efficient remedy for the invasion by the sovereign power of individual rights." United States v. O'Keefe, 11 Wall. 178. There is no reason why deference to any person, natural or artificial, not even the United States, should prevent him from using the means which the law gives him for the protection and enforcement of that right. Jones v Jones, 234 US 615 (1941). The Plaintiff is requesting to continue the pursuit in this litigation. The Plaintiff as beneficiary has targeted the Respondents for fraud activity concerning the estate matter. 220 F. 3d 406 (5th Cir. 2000) [at 12] outstanding tortuous litigation must imperative argue due to the previous judgment and conclusion are flawed. The Plaintiff is pursuing estate rights and tortuous issue surrounding that estate; inter alia. The Plaintiff requests a remedial 61 of 109 inquiry action due to inconsistency, wrongful actual prejudice and unexhausted frivolity assumptions in the original complaint. Hilton v Guyot The Plaintiff is justified to recall the complaint to an honest docket under the judicial microscope of interdisciplinary view of fiduciary law. "Pinkerton Liability" is the combining protest to adhere to the administrative principles and "Clean Hands Doctrine ". The original complaint without inquiry insist that all matter presented in the eyes of the court be given a just remedial regard as true pertinencies. This is a ripe suit. Imperatively, in the interest of justice prays the honorable court "recognizes the deliberate ignorance" initiated by Respondents egregious and arbitrary executive order activity that effectuate suspicious issues in the element. "Knowledge of fraud" as a matter law. In Re: Lee, 811 F. 2d 979[ at 39] knowledge of fraud requires remedial action and retroactivity. US v Powell ) Nation v United States, 10 -382 (Fed. Cir. 2011) The 14th Judicial Conference of United States Court of Trade;( 2006) "Recognizing Deliberate Ignorance" As A Form Of Knowledge in Customs Fraud Cases. The honorable court is just to arrive at anew reasoning to discern the previous judgment due the facts tortuous activity. The Respondents executive order arbitrary action is highly suspicious and irregularity of public policy. "Pinkerton Liability" coupled with the Westfall Act extends the Respondents liability. Retroactivity Activity of Judge is accurate jurisprudence to purge the any fraud in this estate litigation. (citing) "Retroactivity Activity of Judge "[at] 977 An Interdisciplinary View of Fiduciary L Boston University Law Review, 2011 [Vol: 91: 973- 990] "In every case where as one a thing in keeping, he is chargeable in action of account if has it not his own use" United States v Holzer. The Plaintiff requests the honorable court to open the gate to the court a plenary review and pursue as remedial action against the Respondents. Armstrong v Treasury No. 2009 -3155 United States v 62 of 109 Cox, 342 F.2d 167(5th 1965). Armstrong v Obucino, 300 Ill 140,143 (1921) Lyng v Payne, 476 U.S. 926 at 40. Bohus y Bell. 950 F. 2d 919, 924 (3rd Cir. 1991). PLANITFF'S POINTS TRIABLE POINTS REMEDIAL ACTION I The honorable district court and en banc have jurisdiction overall parties to reconvene on all forthcoming presented material complaint's supplemental briefs and petition's briefing motion that should have pursed matter in remedy. "Justification for Federal Intervention ". There is memorandum of law attached that outline substantiated course of action due to a threatening loss causation, tortuous effectuation activity is sufficient causation. The Respondents attempt to extract and disguise themselves from the contrary directions interceding transaction. The Respondents are a creating "clouded egregious" justification to inhibit this claim. Now, commencing the action that must is imperative. There is scienter in the allegations and scienter totality counts must pursue for more improved litigation diligence. This action is "re- litigating" a confused issue and confused judgment. The Plaintiff has incurred afferent duress minas, relevant injury and potential loss issue; by the same relevant instigator Respondents as author. The Respondent have painted and colored as `false impression" in the eyes of the court. Lvnz v Payne, 476 U.S. 926 at 40. Argues and rejects to observing that government officials involved do categorically have a liability to answer by federal questioning. United States v Prudden, 424 F. 1021 at 53 should be impressive to the court new reasoning and analogy to re -raise matter inquiry. United States v Mandel, 591 F.2d 1347(4th Cir. 1979) [at] 60. The direction of this lawsuit is capable and likely to determine, eruption of venality is threatening to erode and deteriorate the particular area of administrative law. United States v Holzer, 816 F. 2d 1014 (7th Cir. 1987) every means is to be taken where there is a particular concern to common 63 of 109 obedience to law administrative law. The Plaintiff has established a position and has made reasonable submissions. McGrain v Daugherty, 273 U.S. 135 1927 [at 21 should diligently purge matter for proper transfer and settlement. The Plaintiff is asserting the justifiable prosecutorial direction. Complex Litigation at 93. The abstract concerns have been omitted and assumption of frivolity ruling is repugnant. The Plaintiff obviously has objection to the previous ruling. The Plaintiff stipulates and defends that the entire preceding submissions are sufficient as well as correct enough to ascertain intervention and due process. Article Hprotections "Standing as an Non - delegation Doctrine ", William & Mary College of Law (2009) pp. 781 -808. The "Clean Hands Doctrine" brings forth the clarifies all tortuous points imperative to revisit. The Plaintiff is stipulating the Plaintiff retrospectively to utilize the Westfall Act; "Retroactivity of Judge" will minimize and deduce loss and dangers ". C.F. v Capistrano (9th Cir. 2011).Retroactivity of Judge will void all previous order the honorable court negated administrative principle of law in the liability. In Re: Retroactivity of Judge avoids double standards object to actual prejudice. This lawsuit should not have been dismissed. It is an amicable action to intervene and re- decide due to the nature of this case. Retroactivity of Judge is administrative duty of the district court and en banc should purge test the Respondents. In Re: Salerno Appropriate action Motion for Civil Contempt is justified US Supreme Court. "Appropriate Motion for Relief' to purge testing is appropriate federal force to ignite administrative compliance for the Respondents to adhere to constitutional and federal culpability owed to Plaintiff. Retroactivity of Judge ratifies the previous decision void all previous judgment orders. In Re: Retroactivity of Judge is an Article II protections to discern any civil litigation double standard, discern the frivolous and impeach the prejudice. C.F. v Capistrano (9th Cir. 2011). "Good canon grounds" to override the popular political hostility and judicially 64 of 109 impose an adequate inquiry exhaustion in a remedial action. 28 USC 2462 A new intervening Conditional Ruling in this litigation due to "special problems" that are ripe and presents arbitrary categorical reasons; clearly stipulates to accurate jurisprudence is supporting remedial action in this lawsuit. In Re: Salerno stipulating to immediate contempt purging inquiry in the storms suspicious to the fraud. "Avoid double standards" in Retroactivity of Judge amending to "open the gates to the court' Article III The Terri Schiavo Case: In Defense of Special Law Enacted By Congress and President Bush, Northwestern School of Law( 2006) [Vol. 100:151 pp 151 -171] at 165. This litigating matter before honorable court clearly needs a new unprejudiced disposition. United States v Powell II 28 USC 2462 United States v Powell, 379 U.S.48 (1964). Respondents executive order is a erroneous "Kitchen Sink" smokescreen designed to circumvent the administrative mechanics. United States v Tweel, 550, F. 2d 297, 299, 300 (1977). The executive order and enforcement investigative freeze justification is a "Kitchen Sink" inducement to make matters go in a contrary direction. The executive orders activities and its "spawning controversies" should raise matter above the speculative is reasonable suspicious and probable cause is good enough and "ripe materiality" for this action. 37 C.J.S. Fraud § 124, p. 452. "Right to rely" Where there is evidence is so clear, as to be susceptible of only one reasonable inference." United States v Powell, 379 U.S. 48(1964). The executive order activity is a Article I section 9 transgression it exceeds legal, constitution and political constraints. The original matter has duress minas allegations and implications. In Re: Cement Antitrust Litig., 688 F. 2d 1297 (91h Cir. 1982). A generalized per curiam prescription is necessary in tortuous estate and trust. This litigation must 65 of 109 be judicially amortized to dissolved any aggravated species of fraudulent duress against the innocent land owner is an instant case. The executive order activity opens the court to accelerate on duress minas , due to the fact there is intended or implied " material change" to the Plaintiff as beneficiary cannot carry through on the estate and entailed issue. 10.153 Consideration in Imposing; Managing Complex Litigation. The Respondents induce "spoliation" course of conduct and isolation stated in the original. The court's ruling continues a scheme. The executive order is unlawful act that is federal question apparently "alleging intended loss causation" coupled "implied efferent material change" is a tortuous design to impact with duress directly to the Plaintiff. Uniited States v Allibhai, 244, 249 (5th Cir. 1991) The initiation solely is enough for an instant independent remedial action. The "main event" of diligent exhaustion is should have taken place from the starting date of original complaint, inter alia the Respondent executive order and investigative adverse measure is the attempt to bypass liability of foul play or wrong doing. The intent or implied infliction of positional duress has goal to gain any advantage physical or attempt to gain advantage by legal controversy. It is a kitchen sink ploy to bypass administrative law (estate and trust). Duress Minas assertions or implied inter alia against the "innocent land owner" is just one of firsts things revoking the previous order for immediate remedial action. The issue requires an instant action "on the ripeness" for a triable pursuit. Implied infection to a material change is a instant case. Lukman v Director, supra, 896 F. 2d at 1251 -53. Sahara Coal Company v Office of Worker's Compensation Programs, United States Department of Labor, 946 F. 2d 554 (7th Cir. 1991) at 5. The Plaintiff should be afforded new opportunity of remedial trial review. The Plaintiff is accelerating on all facts involved. On this court's own motion support this acceleration on the court's conscience and in the interest of justice. Protect the welfare of Plaintiff and litigation in the assistance for remedy to gain control 66 of 109 and possession in controversy. "Any species of duress ". Nat'l Park Hospitality Assn v Dept of the Interior, 538 U.S. 803, 808 (2003). The complaint complains for remedial action. 28 USC 351 complains for expeditious administration of this honorable court. Guzman v Superior Court, supra, 19 Cal. 4th at p. 708. Fairmont Ins. Co. v Superior Court (Stendall) (2000) 22 Cal. 4th 245 [92 Cal. Rptr. 2d 70, 991 P. 2d 156].The courts had no legal ability to rule this matter as frivolous; issue creates unusual circumstance, induced a political disregarded manner inference of adverse effectuation and vigilant matter with malice in an estate and money issue. The motions and the complaint should create a reasonable doubt to majority for a new trial. Inquiry, by this honorable court due to the improper influence in an estate matter. Smith v Ellison, 171 Or. App. 289, 293, 15 P. 3d 67 (2000) . Sangster v Dillard, 144 Or. App. 210, 216, 925 P. 2d 929 (1996),In re; Grand Jury Investigation of William H. Pflaumer & Sons, Inc., 53 F.R.D. 464 (E.D.Pa. 1971); James, Trial by Jury and the New Federal Rules of Procedure (1936), 45 Yale L.J. 1022 Administration of Justice Act (1933) §6 and amended rule under the Judicature Act (The Annual Practice, 1937), III United States v Holzer, 816 F. 2d 1014(7th Cir. 1987) The Respondents attempt to bypass and circumvent the administrative law mechanics. Federal Rule of Civil Procedure Rule 60(b)(3). There is intrinsic and extrinsic factors that advise a remedial action. Federal Rule of Civil Procedure Rule 38(c). There are specific issues in the original complaint that must be made at once on initial pleading or appearance by investigation. 28 USC 2462 in a revisiting review of the original complaint attached supplemental brief in points of authority states. There are adverse measures affecting the situation. Examinations of a financial institution; "inquiry must enter the 67 of 109 establishment." The narrative articulation conveyance is able construe. The original complaint required further judicial planning and required a reasonable exhaustions course of inquiry. The stated fact inquiry must enter the establishment to address the dynamics of adverse measures are abusive activity of the physically and administrative duress. There must consistency in the examination of a financial institution in which there is any adverse measures that may causative of "any harms ". The Plaintiff contends that he is vulnerable in this very serious situation surrounding money. 76 Am Jur Trust 37 C.J.S. Fraud § 124, p. 452. "Right to rely" Where there is evidence is so clear, as to be susceptible of only one reasonable inference." An inquiry must enter the establishment where there is suspected abuses and suspected egregious activity that suspense in the invisibility as positional duress. There are dangerous adverse measures, oppressive activity and threatening effectuation that is a proximate cause for loss. The holistic merit abusive factual value of the articulated context is subversion and concealment. "Adverse measures" in the totality is pecuniary harm. Exaction is speculative and cures by the same administrative procedures it is a more complex and a more problematic species of fraud. Mercer v Lence . The honorable court in the duty of administrative diligence "test creates a duty to disclose" Breed v Jones, 421 U.S. 519, 528 (1975) The nature of lawsuit that has inference and dangers concerning must create a due course of action to test creates a duty to disclose. Communist Party v Control Board, 367 U.S. 1 (1961) Political conjecture, political vigilant and evil zealous opposition is the first obvious persistently engage avoidance tactics that extract themselves from their duty. Reckless indifference and discriminative egregious rational confuse the requirements of creation of a duty with the requirements of liability for failing to comply with that duty. See Enron, 529 F. Supp. 2d at 739. The court must move litigating action 68 of 109 intrinsic and extrinsic obstructive bureaucracy to apply the disclosure test in the diligent order to purge the Respondents into compliance. IV 28 USC 2201 In Re: Holzer [un]like the frivolous Hobson v Wilson disinformation is a necessary element of the scheme. "Prima facie" The foundation of litigation is strong overwhelming in the totality of the circumstances that warrant a remedial reopening. Bailey v Glover "Liberal Construction" the Plaintiff has preceding petitions and motions that went unanswered in diligent continuation. United States v O'Grady, 742 F. 2d, at 687.United States v Kenn 462 F. 2d 1205, 1229,cert. denied, 409 U.S. 914 (1972) The Plaintiff's preceding submission to this court as well as the superior court where as served on the Respondents with "good faith diligence ". Raising again; the matter above the speculative level in the "suspicious to fraud ". Newsome v Teasury, 2009- 3019(Fed.Cir.) United States v Prudden,424 F. 1021 at 53 United States v Nixon, 418 U.S. 683 (1974). There is conflict of tortuous intrinsic and extrinsic materiality contrary to the administrative principle to solve an issue that is not obvious and not exactly visible to the allegations known knowledge.[ United States v Adams, 383 U.S. 3951 -56 (1966)]. United States v Graham,( 6th Cir 2002) Anhorbank v Hofer, (7th Cir. 2011). Hilton v Guyot,159 U.S. 113 The honorable district court and the en Banc court should constitutionally categorically [unlike] the previous prejudice ruling and cannot be satisfied with the present disposition. Federal Rules of Civil Procedure Rule 15(b)(2) the previous judgment is a flawed conclusion. The scales of jurisprudence would wish to dispose and make a way to recover the assets by action at law. Federal Rules of Civil Procedure Rule 15(d) even if the original complaint and supplemental where defected. In Re: Breed due to the nature of case and considering species of duress. The burden of persuasion should have weighed more favorably for 69 of 109 the Plaintiff. Hainer v Kerner, 404 U.S 519 Horton v Cockrell, 70 F. 3d 397 (5th Cir. 1996). Remedial azimuth, [unlike] the prejudice ruling. Skilling v United States, No. 08- 1394(5th Cir. 2010) at pp. 11 -34 United States v Prudden,424 F. 1021 at 53. There is a conflict in which an executive order and is causative of discriminative duress or termed as positional duress. The executive order is material fact of that contrary direction is taking place and make a misfeasance possible due to the implied egregious effectuation. The fact of dangerous futures and deprivation is the executive order evil desire is repugnant inducement of Article I section 9 constitutionally tortuous by the Ninth Amendment. The inducement of contrary direction and duress minas is obstructive infection as corruptive abuse of power In Re: Levowitz. Monroe v Pape, 365 U.S. 167, 184 (1961) Galina v INS, 213 F.3d 955, 958(7th Cir. 2000) the Plaintiff is encompassing not creating a tort to plea . Galina The Plaintiff is subject and is vulnerable to a selective species of duress. The Respondents exhibit and display a praetorian affect to the Plaintiff. of a erroneous colored allegation to inducement irrational executive order that is the holistic contamination. Enron, CA No. H- 01- 3624(Southern District, Houston Division 2007) the honorable court holds against the Respondents refute and shame pleadings. "One need not be the mastermind" or author of a fraudulent scheme in order to be liable. Hobson v Wilson contradicts the frivolous presumption. There is obvious disinformation. The Respondent must purge from venality and be afforded no shield of plausible deniability United States v Nixon, 418 U.S. 683 (1974). United States v Salerno, 505 U.S. 317 (1992) the executive order is political organized excitation for the future dangers that in totality of effectuation is exaction. In Re: Salerno is instigating subversive, adverse measures and reckless indifference. The political vigilance and evil zeal; is discriminative danger that will cause an ultimate loss or injury in fact. "Material Change and Cause Injury" is an instant case. United States v meal, 153 F. 70 of 109 3d 1233, 1245 (11th Cir. 1998) The executive order is a "dangerous act" in the attempt to abolish the trust connection and contaminate the judicial mechanics. The executive is inducement of reckless discriminative indifference that makes the Plaintiff maliciously targeted and be subject to the administrative repercussions that freeze or unreasonable seize the assets involved. The Respondents have an extraordinary political interest and cause conflict of interest or complication that distort the transaction. Communist Party v Control Board, 367 U.S. 1 (1961) The executive order is the irrational administrative start of undue and unqualified discriminative procurement that deprive the Plaintiff. The politically motivated adverse measures are oppressively harmful, depriving, concealing account information and the honorable court need to resolve this situation by the remedial independent action. Oneida Indian Nation v County of Oneida, 414 U.S. 661 (1974) This is large land estate ligation in controversy legal acceleration is necessary.[ United States v Syrith ] The executive order is selective discriminative that will exact with duress minas in its totality effectuation would an coercive conversion and impressment. Fraud is fraud that will conceal and guard its own venality. Exaction disguises praetorian elements and ingredient of fraud in appearance of the political official's. United States v Mandel, 591 F.2d 1347 (4th Cir. 1979) [at] 60. The honorable court by Federal Civil Rules of Procedure Rules 60(b) is asked to bring forth a different cause of action that is constitutionally adequate and constitutionally justifiable. The Plaintiff has made plain concise explanation that will withstand challenge as true. The "burdens of persuasion" weigh profoundly casting legal acceleration to pursue provisional by 28 USC 2201. The Westfall Act revives the litigation before the honorable court's previous adjudication with sound sufficiency. The litigation presents a concrete argumentation and explains tortuous definition that ordinary people can understand what conduct is prohibited. "Pinkerton Liability" control government manners and does not 71 of 109 encourage arbitrary, omission and discriminatory encroachment. Kolender v. Lawson, 461 U. S. 352, 357. 28 USC 2462 Cooper v Aaron, 358 U.S.1 (1958) Korematsu v United States, 323 U.S. 214(1944) The executive order initiated by Respondents is a Kitchen Sink order; there are erroneous and no justification for malicious coercive assertion that cause a loss nor executive order may be intentional used to infer or communicate afferent intentional financial victimization. 37 C.J.S. Fraud § 124, p. 452. "Right to rely" Where there is evidence is so clear, as to be susceptible of only one reasonable inference." United States v Cruikshank. 92 U.S. 542, 557, 23 L. Ed. 588.Mckenna v United States, (C.C.A.) 127 F. 88.United States v Burr, 309 U.S. 24 (1940). The entire litigation should be reopened and reverse there is an obvious species of scheme with a chartable course of scheme. Hathorn v. Lovorn, 457 U.S. 255, 262 (1982) United States v Swindall, 971 F. 2d 1531 at 50. 11.49 and 11.491 Special Problems and Investigations, Manual for Complex Litigation 2004. Civil Litigation Management Manual - Complex Subject Matter at 93.The honorabe courts analysis of this litigation has the points and facts that manipulation arises and starts "in the absence, omission and evasion of a administrative fiduciary duty." United States v Russo, 74 F.3d 1383, 1392 (2d Cir. 1996) (citing United States v. Regan, 937 F.2d 823, 829 (2d Cir. 1991). The Respondents refute of this motion arguments are egregious and related to the duty issue. Respondents reasoning make extraordinary efforts to evade and abscond with a contrary scheme. The alleged reasoning for inducement executive order is an erroneous and meritless ploy to gain by unlawful procurement, "straw -man distractions ". The honorable court should reject the "kitchen sink" ploys that obnoxiously attack the Plaintiff rights and obstruct ability move this through transactions by the proper legal channels without coercion. The executive order is suppression and oppressive material fact in amicable to action to reopen and continue the inquiry. United States v Perrin, 131 U.S. 55 (1889). 72 of 109 ISSUE NOT RAISED AT A TRIAL — DISTRICT AND EN BANC PREDISPOSITION Formal Jurisprudence Request to Reopen Litigation REINTERPRATATION OF CONTAMINATED IMPRESSION— TRIABLE Formal Remedial Request to the Honorable Justices to ignite a running administrative action Comes Now, Plaintiff as pro se is pursuant against the Respondents on his own behalf thorough the powers of this honorable court. The memorandum of law is the justice grounds for this motion that prays for more acceleration and exhaustion as remedial action. The Plaintiff stipulates to amicable Qui Tam, Austin and Aquinas contends the prayers of the Plaintiff. This motion are keys for Plaintiff to "open the gates" to the honorable courts; ex dolo non ortir actio. This is a formal requesting forth coming action to reopen this litigation by the active dynamics of this motion. Plaintiff/ Pro Se makes formal request motion to make remedial action in this honorable court: In Re: Eron; is the judges panel compass for this motion to act in accordance with administrative law with in this suits complication purging any fraud. In Re: Eron the honorable court is increasing judicial magnification to purge all tortuous administrative inconsistencies that direct involve the Respondents immediately for this litigations predicament. Newsome v Teasury, 2009- 3019(Fed. Cir.) its conveyed in the articulation that manipulation starts with the omission of a duties. The Respondent as political official have induced unusual estoppel and induce unusual positional administrative distress in the estate of Washington, George; Mt Vernon, Virginia and cause arbitrary action on the income that it has produced into account deposits. That stated estate and set aside accounts belong solely Tony Curtis Barrino. Mr. Barrino is blood kindred of Washington, George sole beneficiary of the entire tangible property encompassed. 73 of 109 This motion is judicial acceleration for the amicable reasons an analysis liability to root out any or all venality, administrative impropriety and addresses any deception. In Re: Hopper, 2006 U.S. LEXIS 17772. The litigation requires retroactivity of judge. The previous order and judgments are fatally defected. United States v Holzer discerns fatal variances that cause of ability to purse this claim with constitution diligence. The litigation has procedural default in the original complaint. 28 USC 2462 the issue need to be heard, inter alia there Respondents exhibit at the minimums of observation presents adverse possession. United States v Sharpe, 996 F. 2d 125 [at 20]. The Plaintiff points out before the honorable court; there is continued controversy since the previous ruling. The degree and type of species of duress is in financial processes are due immediately due to Plaintiff. All matter are within the statue of limitations en banc appeals as well as this US District Court NCWD. Hilton v Guyot the Respondents induced executive order as an adverse administrative blocker. That blockage of transaction process due to disburse to the Plaintiff is interagency and circumvent or make judicial mechanics inconsistent. The executive order holistic arbitrary goals and desires is a administrative interceding. Forged by calculated instrument to illicitly perform as administrative deception modality that effectuate in contrary direction. Forging executive order has opened the gateway for future dangers to egregiously spoil the estate and accounts situation that is pending to be transfer to the Plaintiff. Younger v Harris Halberstam v Welch, 705 F. 2d 472 (D.C. Dist. 1971) The executive order is not law; it suggests suggest morally unjustified activity, amplified political effectuation with duress minas. The executive order is an act that cause judicial unconstitutional predisposition. It is unconstitutional obstacle preemption and conflict preemption. The executive order shields praetorian element and conceals all the pertinent information with plausible liability. In Re: Levowitz This motion is action requirement for the government agencies to lift all arbitrary 74 of 109 activity against the Plaintiff .Korematsu v United States is an administrative guidepost to move a court to override executive order actual prejudice is sufficient to objects to executive act in a predisposition in civil executive activity that purely assumptive discriminative as this issuance is clearly executively geared. The predisposition, preemption and actual prejudice allow the Respondents to be continuously noncompliant. The honorable court can intervention by Article IV and Article II immediately In Re: Burkehalter the preemption obstacle, predisposition and actual prejudice require intervention of US v McNally. The honorable court in this motion to apply remedial and retroactivity of judge there must be a inquiry. 37 C.J.S 76 Am Jur Fraud 51 Cong. Rec. Barret v United States,798 F. 2d 565 at 12 United States v Sharpe, 996 F. 2d 125 at 20. United States v Mandel, 591 F.2d 1347at 60. The Plaintiff's pursuit has good faith and amicable justification to remove the actual prejudice and move through the obstacle of venality as the positional duress In Re: Schwartz (U.S. District, Sacramento) United States v Holzer. In the interest of justice and in the "interest of the United States ". 3d editions of Defrauding America and Unfriendly Skies, Justice of the Supreme Court. Zettl v United States, No 89 -1323 (4th Cir. 1989) The executive order operates egregiously by immunity, executive privilege, plausible deniability and secrecy government. United States v Burr, 309 U.S. 24 (1940). Lyng v Payne, 476 U.S. 926 at 40. The executive order activity and conjectured unusual political controversy to discern the original complaint as hearsay. U.S. v. Tweel, 550 F. 2d. 297, (1977) United States v Kenny,462 F. 2d 1205, 1229,cert. denied, 409 U.S. 914 (1972) There is increased general knowledge of this court since the original filing or submission to stipulate to "one good cause "; inter alia on just one good point in ultimate fact of cannon grounds to maintain the appearance of the court to reopen the matter. Barret v United States,798 F. 2d 565 at12 Prudden,424 F. 1021 at 53.Korematsu v United States,323 U.S. 214(1944) convey and compel 75 of 109 on the honorable court there is executive order activity. The is just to arrive by reasonable understanding executive order with an arbitrary tone in its direction does cause a conflict, therefore initiating such act is instant then knowledge and understanding of adverse possession and additionally then extends the ability to conceal pertinent information. Therefore honorable cannot deny there is conflict concerning said estate and said set account. The executive order is as adverse political catalyst in egregious diligence in sustaining totality is unlawful procurement. Barret v United States,798 F. 2d 565 [at12] Huddleston v United States, 485 U.S. 681 (6t' Cir. 1988) United States v Nixon, 418 U.S. 683 (1974)United States v Perrin, 131 U.S. 55(1889) United States v Graham, 275 F. 3d 490 560, 516 ( 6th. Cir. 2002) Prudden,424 F. 1021 at 53. The executive order and controversial activity makes true the original complaint. Since the original complaint filing there has been increased "chatter public at large" stipulates the allegations to stand as true and reopen this litigation. Clinton v Jones, 520 U.S. 681 (1997), Sassower v Man gano, (Southern District, New York 1996). 28 USC 2072(b) The Plaintiff in this motion act to correct the procedural default and interpretational error. In Re: Salerno Breed v Jones, 421 U.S. 519, 528 (1975) The actual prejudice is a danger to Plaintiff. This financial litigation that is grossly tortuous; concerning matter of estate and trust the conflict is true and alive. Hilton v Guyot,159 U.S. 113 Wall Cooksey v. Local 230 et a13:97- CV00942(JCH)( Dist. Ct. Bridgeport Div. 2005 =). Nation v United States,10 -382 (Fed. Cir. 2011) 5 Am Jur Trials Federal Rules of Civil Procedure [Rule 381 Federal Rules of Civil Procedure [Rule 50(b2)(c)] renewing condition ripe on the merits Barret v United States,798 F. 2d 565 (2" d Cir. 1986) [ at12] United States v Sharpe, 996 F. 2d 125 at 20.United States v Chesney, 10 F. 3d 64 (91h Cir.1993) [at 15] The Respondents are not in good faith, presents duress minas and aggravating 76 of 109 tortuous interference that in the totality of the effectuation is administratively warring deprive the Plaintiff in numerous ways. The Respondents are intentionally conceal money account, inhibit the Plaintiff rights to occupy the inherited estates. United States v Chesenev, 10 F. 3d 641 (91h Cir. 1993) [at 15] The honorable court is just and amicable without judicial mischief to reopen this lawsuit to remove venality In Re Chesenev , 10 F. 3d 641 at 15 readdress the issue of wrongful conversion on the impressions of a jury. Harrell Equipment Company v Sun Trust Bank of Georgia, No. 04 -30766 (5th Cir 2005)[at 17] Plaintiff suffers financial injury in fact. The Respondents must prove and refute matter in the open court. This lawsuit has insulating articulation ripeness meets the honorable court requirement to persecute fraud. Mercer v Lence 5 USC 702 the honorable court previous order would have been unconstitutionally fatal to this litigation. 37 C.J.S "Right to Rely" there is active concealment federal participation causing deprivations that violate estate rights. In Re: Barrett, 798 F.2d 565 [ at 1] this is amicable to avoid fundamental miscarriage of justice concerning estate and money accounts.[ Eldred v Ashcroft ] majority conditional remedial ruling "Retroactivity of Judge" should be on the pertinent, relevant and obvious inferences "in the eyes of the court". In Re: Barrett, 798 F.2d 565 [at 12] The executive activity that make Plaintiff a subject duress is a danger to slander and or cause to increase unnecessary vigilant conflict between enforcement, catalyst to shadow of false light and diminishes the Plaintiff elbow room. The courts gates is justified to open the Respondent exceed the powers of their to office and exceed the parameters of constitution to slander trust obligation due to irrational presumptive discriminations. Butner v Nutstadter, 342 F. 2d (9th Cir. 1963) remedial action is necessary due to the magnitude and nature of issue. United States v O'Grady, 742 F. 2d at 691The honorable court must intervene are to nullify executive order activity. It is obviously "purposefully discriminative" and arbitrarily push the 77 of 109 concealed in a contrary direction to gain a calculated advantage concerning any land or money. The executive order has an extrinsic and intrinsic effectuation of torts that directly effect this litigations process and directly effects the person as the Plaintiff. The Westfall Act Retroactivity of Judge is the powers of justice to revive this litigation with a direct action to gain fact and recovery estate for the Plaintiff.. Korematsu v United States. 323 U.S. 214(1944) The Plaintiff argues corrupt exercise of authority obvious that will prove. In Re Mandel, 591 F.2d 1347 [ at 60]. 5 USC 702 the pro se is amicable and just to reopen the litigation before the honorable by the guidepost and compass with profound retroactive reason. 33 Am Jur Slander /Libel 76 Am Jur Trust 37 C.J.S. Fraud. Horton v Cockrell, 70 F. 3d 397 (1996) The issue and situation require Article II protection, reopen and amending the previous order is the proper due diligence. The original complaint was ripe for further process; now the federal claim drastic administrative action. ((citing) Administration of Justice Bulletin: "Motion for Appropriate Relief' School of Government 2010, University of North Carolina. Evans v United States. Legal Standard Governing all Motions Action to Reopen ICY, "Civil Litigation Management Manual ", Judicial Conference, Court Administration and Case Management (2001)Manual for Managing Complex Litigationl1.33 Identifying, Defining and Resolving Issues; 10.224 Court Responsibilities. The undiscovered judicial microscope is capable to constitutionally discern the previous ruling as competent. Misinterpretation is failure in the tortuous recognition points undiscovered in the original complaint. Due to premature adjudication an egregious continuation has implied more arbitrary forbearance against the 78 of 109 Plaintiff. The unqualified early dismissal improved the tortuous ingredients initial onset of pleadings and brought forth new onset scheming that is desired to defraud. The developmental recipe always has a common denominator in the allegation. The judicial microscope discerns as not a good legal couple "mentioned duress minas and money or land" is categorically always trouble. U.S. v Tweel Fraud always follows and to show up with a "forked tongue ". Morrison v Coddington, 662 P. 153, 155 Ariz. 480(1983) requires all previous motions to purse. There is enough inducement activity to raise a new inquiry. In Re: Tutu Contamination The Respondents are players in this scheme use personal education to arbitrarily act and contaminate contradicting points to obstruct in a egregious dispositive. 28 USC 2201 Re- docket this litigation in independent remedial action. Hobson v Wilson. Newsome v Teasury, United States Attorney's Manual manipulation is the allows the Respondents manipulation and exceed the legal allowances versus the Plaintiffs "Faretta Defense" [United States v Castillo] Horne v Huddle, CA 94 -1756 (D.C. Dist. 2009) Due federal involvement agency is another reason why this lawsuit actually prejudice and earns a predisposition by inducement of executive order. This Motion is Appropriate for Relief, inter alia, Convoluted Agency Tracking in regards to the estate land and money induced the purposeful discrimination when the individual Respondent became involved in late 2008. United States Attorney's Manual the US Treasury Secretary as Respondent is abusing official powers of office and exceeding parameters the law. Moreover, the executive order is to conceal beneficiary estate and conceal the coinciding information. In Re: Barrett, 798 F.2d 565 [at 12] Zettl v United States, No 89- 1323 (0 Cir. 1989) The Respondents holistically are categorically obnoxious and repugnant to constitution. McGrain v Daugherty , 273 U.S. 135 (1927)[ at 4 ] There is imperative tortuous matter. The Respondents are profoundly difficult, arbitrarily egregious and will not yield to the Uniform Fraudulent Transfer Act due to the actual prejudice, unconstitutional preemption 79 of 109 allowance and egregious disposition is a unconstitutional gateway to abscond. "Lis Pendens "; Qui Tam National Treasury v US Dept. of Treasury, 25 F. 3d 237 (5t' Cir. 1994) Oneida Indian Nation v County of Oneida, 414 U.S. 661 (1974) On the court general knowledge the executive order is one point that knows deception non - beneficial to the Plaintiff. The constitution bit and amicable hospitality is grounds for remedial action a assert Retroactivity of Judge. Nation v United States, 1 0- 382(Fed. Cir. 2011) In Re: Enron. The executive order is not to own a federal question surrounding the right exact in the matter. In Re: Tutu Contamination Litigation, F.R.D. 46 (1995), 78 -79 (D. Virgin Islands, 1995) A general understanding makes an underlying fact clear. The Respondents executive order makes illicit proposition that acts to "stands not to act" proper in a pending transfers of set aside accounts and land title deed documents. United States v Syriuth, 98 F. 739, 747 n. 12 (3rd Cir. 1999) The topic is first fact in the act not to act; sham or collusive torts is relevant to the judicial microscope. In showing the requisite element of deception is present. See Hooper, 2006 U.S. Dist. LEXIS 17772. Eron, 2006 U.S. Dist. LEXIS 43 146, at 164. The executive order is a "mastermind" of a fraudulent order intended not to be liable for a test of a judicial challenge. Loumiet v Office of the Comptroller, No. 10 -1288 (D.C. Cir. 2011) The values of estate and principal balance of the set aside accounts is the purposeful discrimination to implement the executive order to predisposition the litigation. Awabdy v City of Adelanto, No. 02 -57118 (2004) That executive order induced the actual prejudice This litigation holistic totality is experiencing its own obstruction and implies circumvention that should discerned by a remedial action requested. It implies silent secrecy to impede the natural process of a right forward, therefore complicating the transaction. Hobson v Wilson The executive order has purposeful intentions, pecuniary harm and administratively hopes for "futures dangerous" in its evil silence. 80 of 109 U.S. v. Tweel, 550 F. 2d. 297, (1977) United States v Cruikshanl� 92 U.S. 542, 557, 23 L. Ed. 588.Mckenna v United States, (C.C.A.) 127 F. 88. The executive order act to oppresses things and desires a detrimental effectuation to the Plaintiff directly. The political entity spawns holistically and contrarily empowers "implies no natural right course of transaction" Eron, 2006 U.S. Dist. LEXIS 43416, at *88 n.45. The executive order is meant to be as silent destruction in the continuity estate and makes it an impropriety a question that is fact. United States v Johnson, 383 U.S. 169 (1966) The Plaintiff has a dispute of fraud probability, conflict and controversy in matters concerning the US Treasury. Respondents are agents representative as a political officiators selecting matters ad lib of concern. The honorable court easily construe the executive order is an arbitrary encumbrance against a money account and land is a duty as "tax inference ". United States v Sharpe, 996 F. 2d 125 at 20. Arbitrary administrative action that is threatening and aggravated tortuous activity leads to unqualified usurpation make asset in limbo subject to loss; "taxed by exaction ". As this complaint is a US Treasury concern. The Plaintiff needs equal application of jurisprudence. United States v Sharpe, 996 F. 2d 125 at 29. The Plaintiff makes effort to impact for re- visitation action with prevailing common ground that is present in original complaint and still presents effects in this action. The original complaint and succeeding petitions has "isotonic connection" to a federal questioning all the materiality. The honorable court should question all the modalities that is causing the whole conflict. United States v Prudden,424 F. 1021 at 53. The scales of justice weigh strongly for Plaintiff on "good canon grounds" since the court initial date diligent pursuit through the US Supreme Court last submission. Poe v Ullman, 367 U.S. 497 (1961) Good Canon Grounds the honorable court must be dissuade and discern the administrative conflicts. Poe v Ullman, 367 U.S. 497 (1961)is persuasive to the cumulative totality of a visible "political scheme" in which the Respondents is 81 of 109 author of controversy is enough to consider some venality caused Respondent. The honorable court cannot deny the fact, inter alia there are torts that connect to arbitrary processes causative political adverse " swing scheme" of exaction to spoil inheritance expectancy. Younger v Harris. The Respondents need to explain the unusual political controversy. "Good Canon Grounds" stipulate to the federal question why is there inducement of political tension concerning the estate and accounts. United States v Sharpe, 996 F. 2d 125 at 29 United States v Mandel at 60 There is enough speculation investigative activity against the Respondent to reopen this matter. Zettl v United States, No 89-1323(4 1h Cir.1989) is persuasive to the honorable court for a remedial azimuth due to the fact of usage of executive order activity in government secrecy is suspicious venality procurement of unqualified property belonging to the Plaintiff. Community Party v Control Board, 367 U.S. 1 (1961)United States v Nixon,418 U.S. 683 (1979) United States v Swindall, 971 F. 2d at 50. The matter in a "justice is simple just storm of suspicious fraud" leads to show cause and purge the lawsuit equal application of administrative law in which there are two sides of every story. Zettl v United States, No 89- 1323(4th Cir.1989) The Respondents manipulate facts there money and land involved. The Plaintiff is a special programs agency person connected to government intelligence group . Horne v Huddle, CA 94 -1756 (D.C. Dist. 2009) the honorable court has the justification to rely on the "suspicious unanswered" political controversy and agency history. In which this situation is convoluted easily by invisibilities administrative inconsistency assertions. The executive order misconstrues the whole situation. This memorandum of law conflicting matter and scandalous matter is clearly beyond the guideposts and need remedial requirements for adjust or inquiry. United States v Prudden; 424 F. 1021 atl United States v Sharpe, 996 F. 2d 125 at 29 There is an perpetuating and effectuation of special problem that has unusual inference and dynamic tortuous causation. 82 of 109 Nudd v Burrows 91 U.S. 426. The federal question to reopen under the judicial microscope would not miss the possibility and present complication is making "some venality ". United States v Prudden,424 F. 1021 at 53 should be impressive to the court to question and raise inquiry. Test in question, on the obvious in egregious conduct and egregious facts is persuasive to reopen observing the civil character in modalities that adverse may not procure or detain any asset without the proper due process. United States v Prudden,424 F. 1021 at 53 [United States v Tweel] Eron, 2006 U.S. Dist. LEXIS 43416, at *88 n.45. reasonable cause in suspicious of the torts in articulated throughout the entire complaint is clearly states predicament. This is a remedial request due to the species of duress that makes a complaint before the honorable court good administrative canon grounds. The describing adjectives in the original complaint totality should be discerned by guidepost of the "Clean Hands Doctrine ". United States v Prudden,424 F. 1021 at 53. United States v Holzer, 816 F. 2d 304(7th Cir. 1987).The Plaintiff is not changing the complaint's position. It is as sets in the eyes of the court amicable to purse with neutral and equal control is established by.Mazzei,521 F.2d at 650. (B) 28 USC 2462United States v Powell, 379 U.S. 48(1964) The Plaintiff maintains the litigation position. The Plaintiff moves and request the honorable court for leniency in this litigation to reopen. Oneida Indian Nation v County of Oneida, 414 U.S. 661 (1974). The Plaintiff is protecting interest in estate matter. The litigations present previous judgment is inconsistent with other circuits in trust and estate matter. The honorable district court and en banc is justified to remove the prejudice and assumption in the previous judgment. [United States v Cox] Reed v City of Arlington, No. 08 -11098 (5th Cir. 2011) In Re: Kane, 535 F. 3d 380 (5th Cir. 2008). The 83 of 109 Respondents executive activity in powers of their attempt to undermine the integrity of estate and trust. The matter is mismanagement issue concerning the US Treasury; unqualified and egregious conduct. Wanton Conduct will fail to transfer and acquire prohibited by procurement modalities. United States v Burr, 309 U.S. 24 (1940) United States v Nixon,418 U.S. 683 (1974) Armstrong y Treasury, 2009 3155 (Fed. Cir.). It now as a remedial action of this motion must imperatively argue and arrive at just disposition. 28 USC 351 now the federal claim requires drastic administrative action with "Retroactivity of Judge ". (citing) Administration of Justice Bulletin: "Motion for Appropriate Relief' School of Government 2010, University of North Carolina. (C) 28 USC 351 stipulates to interpretation error; Federal Rule Appellant of Procedure [Rule 42] the litigation was not eligible for dismissal and inter alia revisit the entire complaint as it sets before the court. This motion is amicable action, on particular grounds and specific pleading merit as they are presented to the honorable court in good faith. Federal Rule Appellant of Procedure [ Rule 24(2)] the Plaintiff request action for this motion and all other submitted motions to purge issue in the superior courts. All the narrative articulation requires more efficient constitutional efforts in a inquiry. Hilton v Guyot the comity of the superior and lower court should remove the contaminating duress. United States v Forness,125 F. 2d 928 (2 "d Cir. 1942) obstruct the course of substantial justice. Livingston v. Jefferson, 1811, 15 Fed. Cas. pages 660, 663, 664, No. 8,411 Federal Rule of Civil Procedure [Rule 12g] this action upon the courts remedial action the pursuing to join all other motions in the superior. Article II protections and advises the Plaintiff stipulation in justifiable due diligence. The preceding motions requested actions in their totality are not bombarding the honorable courts. The preceding motions are 84 of 109 submitted in logical sequence and have legitimate function in general as the next appropriate step to purge the lawsuit. "Our Administrative System of Criminal Justice," 66 Fordham L. Rev. 2117 (1998) [at pp 2126]. The succeeding narrative articulation are pled to standard of review and sufficient. Wall, Cooksey v. Local 230 et a13:97- CV00942(JCH)( Dist. Ct. Bridgeport Div. 2005) The pro se has executed a corruption strategy in storms of a "white collar investigation" in which the political entity will try egregiously frustrate the justice and will attempt destroy the cause of action. 28 USC 2332 United States v Keogh, 391 F. 2d 138 (2nd Cir. 1988) "separation of power" [Sassower v Mangano] Article II the pro se petitions and motion must stand to purge all venality. The UnCreation of Rights, An Argument Against Administrative Disclaimer, Hasting Law Journal [ Vol: 62: 559 -596] All preceding motions submitted to honorable court pursue a amicable course of action [at 565] Hasting Law Journal [Vol: 62: 559 -596] The litigation presents and posses a specific elements in the issue that is clearly fraudulent. Mercer v Lence the motions submitted to the honorable superior court and this court raise substantial issue. Federal Rule of Appellant Procedure[ Rule 12.1] the request a conditional new amended ruling that is consistent and adequate. Reed v City of Arlington, No. 08 -11098 (5t' Cir. 2011) United States v Prudden,424 F. 1021 at 53. Federal Rule of Appellant Procedure [Rule 47] the Plaintiff address and articulate the entire litigation with liberal construction the conflict and controversy needs to reach a jury or reprocess the matter for a hearing due to the special problems. This is a complex litigation that is due a new amended adjustment 5 USC 702. Armstrong v Treasury. 85 of 109 ARGUEMENT Impacting Grounds and Impacting Facts — "Quashing to Revive Dismssal" FARP 35(b) (1) The Plaintiff as pro se is pursuant in the honorable courts to void and reject the previous orders; reopening this litigation. The adjudication of matter by order was premature and due diligence has been exercised by the Plaintiff. Federal Rule of Civil Procedure Rule 60 (b) is supported and the initial or original argument and pleading where sufficient . All other allegations or relevant materiality has been narratively presented in the standards of review and sufficiency. The following precedent rulings are to "quash" and clarify the requirement to reopen on all the tortuous materiality. 28 USC 2462 United States v Powell. (2) ((citing)[at 19181 Judicial Discipline and the Appearance of Improprietv)(citing) 183 F. 3d 1 (I" Cir. 1999) [at 15]) increase the judicial assessment with legal intelligence preventing the possible fraud and prevent improprieties of any species of extortion. Plenary exaction effectuation inferred by officials as Respondents involved are not to be absolved from culpability and not to be absolved from arbitrary impropriety. The prejudice and predisposition obstructs "real wrongs" in the assumptions of frivolity is masking some fraud in this litigation. Retroactivity of Judge will purge and judicially challenge to come forward attesting to allegation. United States v Nixon,418 U.S. 683 (1974) Armstrong v Treasury, 2009 3155 (Fed. Cir.) The complexities are compound by wrongful use of power of the Respondents office. The court is queried by this memorandum of law in support of motion unmasks fraud and purses injurious torts in this remedial action pursuing further proceedings. The Plaintiff is making 86 of 109 appropriate effort to clean up the lawsuits infection and contamination. The honorable court is justified to revive the litigation with constitutional jurisprudence. The Plaintiff has narratively articulated sufficiency in ripe for a judicial course that will arrive at different disposition due to outlying undiscovered facts and unanswered federal questions. The Respondents are targeted for fraud and display a fraudulent nature tortuous enhanced evasion is venality. The honorable court in the interest of justice is requested to reverse the previous ruling and void the previous order. There is a require for inquiry and a new trial proceeding. (citing) Judicial Discipline and the Appearance of Impropriety: What the Public See Is What the Judge Gets, Minnesota Law Review (2010) [ Vol: 94 pp. 1914 -1996] United States v Swindall, 971 F. 2d 1531 at 50 Manual for Complex Litigation 2004. Civil Litigation Management Manual - Complex Subject Matter at 93. "Ouashinz - Corrections that must Reopen" (1) This motion is the proper legal acceleration for all matter to be consolidated and go forward. The tortuous issue are true facts to answer in the honorable court. Hilton v Guyot,159 U.S. 113. The prejudice judgment is obstructing due process there is a fraudulent issue. The original complaint is holistically financial accounts and land possession to be taken over in sole control by the Plaintiff as the lawful beneficiary or as the lineal descendant. The honorable court is requested regard the land and property with seriousness. There is aggravating torts and undue duress that threaten or convolute the ligation. The honorable court is requested to apply attention and quash for the relief from the previous orders. Oneida Indian Nation v County of Oneida, 414 U.S. 661(1974) 87 of 109 (2) Wall, Cooksev v Local 230et.A1 224 Fed. 3d 168 (2nICir. 2000) The original complaint ultimate pleading fact required a discovery. The original complaint has tortuous content actus rea mens rea. This motion serves a lawful function to reopen and re -raise matter. The original ruling cannot be true. In Re: Wall, the burden of persuasion moves administrative law to guard the original complaint process uphold the Plaintiff objection. The original complaint's disposition was and is not constitutionally adequate. In Re: Wall insists quality exhaustion and rejects deterioration; rejects the possibility of erosion in the early critical stage. Wall, Cooksev v. Local, 230 et al 3:97- CV00942(JCH)( Dist. Ct. Bridgeport Div. 2005) the original complaint complains, pro se is has justification to assert or apply legal acceleration through [Armstrong v Treasury] to attack the venality and attacks any praetorian element suspicious in the entire litigation. The original complaint narratively and has mention of at least on allegation that implies or qualifies as duress minas. United States v Holzer, 816 F. 2d 1014(7th Cir. 1987) rejects the previous judgment, the diligence and continuation effort made by the pro se in the superior court bears weight to void the previous order. Reopening the suit by this motion has constitutional support that should adjust the honorable district and en banc panel to apply the administrative law no to stagnate litigation any further. 28 USC 2072(b)There exception circumstance and pro se is entitled to opportunity in a hostile or adverse possession matter. In Re: Mazzei, 521 F. 2d at 650. (3) Hanies v Kerner, 404 U.S. 519 (1972) impacts the prejudice not allowing abandonment. United States v Kenny, 462 F. 2d 1205, 1229 cert. denied. 409 U.S. (1972)attacks the frivolous assumptions. The original complaint has inference dangers connected money 88 of 109 and estate property. The original complaint as it sets is above the speculative level and poses sufficient element that awaken probable cause. The adjoining mentioned is accurate jurisprudence to support, See Swindall. The reasonable and suspicious mind was / is appropriate conclude with a strong inference to purse re- raising matter in the storms suspicious of fraud. 76 Am Jur Trust Kessel v Leavitt, 511 S.E. 2d (W.Va. 1998) "recognize requirement for remedial action. The Plaintiff proves by executive order intentional interference. 28 USC 2462 Nation, 10-3 82 (Fed. Cir.2011) In Re: Powell The honorable court in remedial consideration of exaction fraud. Moreover, understand the Plaintiff is identified as a government program child as sole heir of the estate Washington, George; Mt.Vernon, Virginia. 5 Am Jur Trial Jones v Jones, 234 US 615 (1941) cause action due to the Respondents are concealing information. In Re: Barrett, 798 F.2d 565 [at 121 the executive order venality effectuation to bypass statues to abolish the trust. 37 C.J.S. The executive order caused an administrative predicament in fiduciary duty and has unconstitutionally breeched government trust relationship. Maryland Law Review Endnotes, 2009 [Vo1:68 p124 -1411 The honorable court can conclude there is a course of a scheme and suspicious to the invisible potentials can conceal dangerous futures direct at the Plaintiff. The honorable court is requested to reopen an apply legal acceleration in the fraud guidepost to avoid loss by the Plaintiff. United States v Swindall, 971 F. 2d 1531 at 50. 28 USC 2201 "quash" all the denial and stipulate to the ultimate facts the ligation should not have dismissed. The en banc panel did not answer on the poll. Constitutional adequacy is necessary, due to value of estate and principal balance of set aside accounts. Reasonable suspicion should have impacted the first review. This motion make the effort to the next proper steps chartings a new remedial course of action. United States v Syriuth, 98 F. 739, 747 n. 12 (3rd Cir. 1999) Zettl v United States, No 89 -1323 (4th Cir. 1989) premature adjudication and 89 of 109 groundless conspire the Plaintiff rights in this federal claim process that should recover the beneficial property without complication that are described and indicated thus far in this suit. United States v Holzer. People v Barondess, 61 Hun. 571, 576 N.Y.S. 436, 438( App. Div. 1891). The Respondents are egregious and ignore the guideposts of probate and administrative law that should incur any species of duress according to clean hands doctrine. 37 C. J S. Fraud 51 Cong Rec. is the judicial compass to redirect and reopen this litigation immediately. In Re: Sharpe, 996 F. 2d 125 [at 201. Nation v United States, l0 -382 (Fed. Cir. 2011) . Oneida Indian Nation v County of Oneida, 414 U.S. 661 (1974) (4) 28 USC 2201 The original complaint and all petition, the succeeding presentations post is liberal construction. The preceding memorandum of law is liberal construction also. United States v Forness. 125 F. 2d 928 (C.C.A. 2d 1942 )Baldwin County Welcome Center v Brown, 466 U.S. 147, 104 S. Ct. 1723, 80 L. Ed. 2d 196, 52 U.S.L. 3751.United States v Kenny, 462 F. 2d 1205, 1229 cert. denied.409 U.S. (1972). The dismissal was premature. There are federal question and constitutional questions. The pro se has made efforts for an ultimate resolution for amicable action continues to solve all the federal questions contained in the lawsuit. United States v Sharpe, 996 F. 2d 125 at 20. 631 F. Supp. 1364, 1375 (S.D.N.Y. 1986) Revive the suit in the honorable district court to serve the interest of justice due to nature this case. Political ploys are unacceptable that rely on ill manners of business. Government affairs are to be conducted without an infection or inference nor mention of duress minas initiated by the official intentionally to manipulate the Plaintiff in order to gain a calculated advantage in a financial geared and stage for the said intended rightful owner . The matter pleading requires Article II intervention to recover and obtain the estates property. The honorable courts must recover the 90 of 109 adjoining accounts due to "ill manners of management" of that said estate. United States v Aguon, 851 F. 2d, at 1166. United States v Burr (5) 28 USC 2332 The original complaint ruling assist the inducement of arbitrary action, the prejudice forte' has allowed in the use executive order to enhance the ability to accomplish unlawful procurement, increased the zeal and increased the discriminating vigilance. United States v Bass, 404 U.S. at 349. The previous order ruling is egregiously adjoining and assists the Respondents in a calculated advantage. Acts to federal question are mentioned in the original complaint. The executive order is not law and the entire suit is contaminated from that said executive activity. Korematsu v United States,323 U.S. 214(1944). United States v Kirby, 7 Wall.482, 486 (19.L.Ed 278) There is duress minas mention in the original complaint, abuses facilitated by positional duress and the executive order circumvent the court process. The futures dangers of political vigilance procuring by oppressive modalities lead to an absurd consequence of financial loss. The tactics induced is adverse and arbitrary effort to make the transaction or transfer go in contrary direction egregious to Article I section 9. (6) Article II section 4 the facts are situated in honorable court. Stump v Sparkman, 435 U.S. 349 the prejudice is egregious and plausible ability is unpersuasive in the Plaintiff's pursuit. 31 USC 3733 is pro se powers of justice and civil powers strong enough to reopen this suit and re- docket this case as to the "storms of a inquiry ". Bohus v Bell The honorable court is constitutionally compelled to reopen and revive all presented submissions. Westfall Act is the power of the honorable court to reopen and sustain all the succeeding submissions. The honorable court is queried by this memorandum of law and by this motion; re -raise argument, 91 of 109 and reopen discussion and revamped by a prescribed standing administrative procedural law. The merits ask for a different reasonable "new conclusion ". The honorable court is requested to ratify the dismissal and open an inquiry 28 USC 547. Respondents attempt illicit procurement with political venality. The honorable court should not persuaded by Fitzgerald v Nixon, 457 U.S. 731 (1982). The Westfall Act protects the Plaintiffs in this suit. The values of estate, venality and positional duress is stronger more pronounced in jurisprudence to reopen by United States v Nixon, 418 U.S. 683 (1974)United States v Mandel, 591 F.2d 1347 (4th Cir. 1979) tortuous procurement and duress inducement to conceal is fraud; conflicts interest are improper by United States v Burr, 309 U.S. 24 (1940)Korematsu v United States,323 U.S. 214(1944). "in the interest of the United States" and the Westfall Act is sufficient to reopen on all the issue before the honorable court. The suit is true and must reverse and pursue in the superior courts. In Re: Cement Antitrust Litigation, 688 F.2d 1297 (9th Cir. 1982) The court has enough knowledge of the controversy and the is enough specific element in the issue that will defraud. Without intervention and may incur more tortuous that intercede. United States v Powell, 379 U.S. 48 (1964). The statues of limitations 28 USC 2462 sustains the pursuit and reopens the litigation. This motion is efforts due to the exceptional circumstances that surround or create under lying and outlying torts. Article III requires that the honorable court vacate all the previous the judgment. Horne v Huddle, CA 94 -1756 (D.C. Dist. 2009).United States v Holzer, 816 F. 2d 304(7th Cir. 1987) there is interpretational error, venality and scandalous matter that was prematurely adjudication furthers the concealment of information. The ruling is also unpersuasive to In Re: Dial [Frothingham v Mellon] the attached memorandum of law and this requesting motion is an amicable action vacating to "quash" all orders. Article I section 9 materiality in the argumentation [un]blocks Federal Appellant Rule of Procedure Rule 35(b); 92 of 109 consolidate let at matter go forward in a "new query" "Civil Litigation Management Manual ", Judicial Conference, Court Administration and Case Management (2001). Motion request and stipulate to void to remove the appearances of abandonment. In Re: [Holzer]Federal Rules of Civil Procedure Rule 60 (b)(6). (7) 28 USC 2679 Stump v Sparkman, 435 U.S. 349 (1978) the Plaintiff deduces and simplifies to pursue as new trial or extending a inquiry through any plausible deniability that may continue to allude the culpability in this suit. [ Horne v Huddle ] is an exact start point of suit this is an government agency issue that is clearly contaminated and requires a conditional ruling due to the fact the Plaintiff has not fully heard. The honorable court must overthrow the previous judgment and orders due " in fact ". The litigation is constitutionally and categorically ripe "as in entitled" to new adequate exhaustions "inquiry storms ". Federal Rule of Civil Procedure Rule 60(b) is requested to onset on cited narrative submission before the honorable court that should clearly be logically and reasonably considered in the totality of the pleading materiality. The allegations and controversy is obviously scandalous matter. Affirmative action of this honorable court purges out the appearance or inferences of venality as well as fraud. 28 USC 2072(b) the Plaintiff rights are constitutionally guarded to avoid a financial loss and confront all tortuous issues encompassed; in the entire petitions and original complaint. The Plaintiff, as pro se , requests by Federal Rule of Civil Procedure Rule 60(b) to amend and reverse as an independent amicable action on the expressed grounds that should remove all interpretational error and mistakes. Westfall Act is the judicial compass to "reopen and quash" FARP 35(b) See Dobie, Federal Procedure pages 760 -765, compare 639. 93 of 109 TRIABLE POINT OF MOTION NEW TRIAL IS REQUIRED OPPORTUNITY EXERCISE A PREMEPTORY STRIKE COMES NOW, this memorandum of law and Motion to Reopens to open the gate to court with accurate jurisprudence; "Peremptory Challenge of Judge", "Retroactivity of Judge" Marbury v Madison for the benefit of further investigation. The Plaintiff/ Pro Se adopts and legally requires the "Farretta Defense ". The Plaintiff has incurred executive order in which there is conflict of interest involving a large estate and large amount money is produced from that estate gold holding. The Plaintiff is subject to undue political coercion. Inter alia, Barret v United States,798 F. 2d 565 at 12 United States v Sharpe, 996 F. 2d 125 at 20. This honorable court in reasonable request to reopen this litigation due to the value of estate and amount of money involved. State of Maryland v Dixon, Case No.109210015 (Cir. Ct. Md. Dec 2009) Awabdy v City ofAdelanto 02 -57118 (2004) The honorable court by this motion should discern any political posture and remove any appearance of venality. The previous ruling are an adversary process in there is a financial problem that has acquired a illicit conflict of interest. Bias that is not apparent is discoverable at any stage. The Respondents executive order and political ploy did actual prejudice this lawsuit from the very initial original complaint submission in this honorable court. The Plaintiff is not changing the grounds. The Plaintiff sustains this litigation argument and request this honorable court to open the gate the court by this motion remedial independent action. The Plaintiff objects to previous judgment. Plaintiff request the judicial panel of this 0' District to re- decide with constitutional concurrence. Retroactivity of Judge to address venality in this litigation. McGrain v Daugherty, 273 U.S. 135 (1927)[ at 41 The Plaintiff compels the entire litigation in liberal construction. There is fundamental miscarriage of justice. This amicable action for investigation of all circumstance and facts. United States v Keogh, 391 F. 2d 138 (2nd 1988)-[United States v Cox] (1) Big Money and 94 of 109 Impartial Justice, Can They Live Together; Arizona Law Review[Vol:52 pp 207 -217] (2) The Impact of Gender and Race In The Decisions of Judges On the United States Court of Appeals, University of South Carolina, Department and International Studies pp 1 -15(3) Gender and Racial Bias in Courtroom, ABA section Litigation 2012 Trial Tactics In a Diverse World. [Eldred v Ashcroft] . The original complaint was ripe for further process; now the federal claim requires drastic remedial administrative action. ((citing)) Administration of Justice Bulletin: "Motion for Appropriate Relief' ' School of Government 2010, University of North Carolina 76 Am Jur United States v Nation 10- 382(Fed. Cir. 2011) United States v Lee, 811 F. 2d 979 (7th Cir. 1987)[ at para. 24 -26] The honorable court must combat political corruption. The honorable court must prevent fraudulent conduct regardless of whether or not there is any loss or damage to the victims of the crime. The Plaintiff previous petitions and motion should be counted as good should in affirmative action against the Respondents. "Neither the ultimate success of the fraud nor the actual defrauding of a victim is crucial to a successful prosecution." United States v Lee, 811 F. 2d 979 [at 39] United States v Kenny, 462 F. 2d 1205, 1229 cert. denied. 409 U.S. (1972) there must a true inquiry and the docket must be set for new trial executive order is actual prejudice. Cooper v Aaron This action is not a surprise the Respondents where served and they continue to exceed the constitution of the United Sates with malicious tortuous activity; holistically desiring defraud the Plaintiff by a sophisticated political scheme. In totality conspires against the Plaintiff right and civil liberties 28 USC 2332. The executive order are categorically egregious and transgression Article I section 9. United States v Lee, 811 F. 2d 979 at 39. United States v Swindall, 971 F. 2d 1531 at 50 The must be a new trial there is politics involved without a doubt is impacting this lawsuit. The 95 of 109 honorable court with a "cognitive filter" root out and dispose of all bias and actual prejudice. " No can man judge his own cause" United States v Keogh, 391 F. 2d 138 (2nd 1988) This motion is appropriate action to improve the quality of pursuit in this litigation. Hainer v Kerner, 404 U.S. 519 justifying the actions and legal techniques amicable to reopen matters under the judicial microscope in a "slandered" and "egregious" financial estate litigation United States v Forness,C.C.A. 2d (1942) The Plaintiff by powers of the honorable court purse a just resolve and prays for liberal allowance of narrative articulation to stand as fact in this revamped remedial action. Burke v Barnes, 479 U. 361, 363 (1987). United States v Perrin, 131 U.S. 55 (1889) United States v Burr, 309 U.S. 24 (1940) 37 C.J.S. Fraud § 124, p. 452. "Right to rely" Where there is evidence is so clear, as to be susceptible of only one reasonable inference." United States v Powell, 379 U.S. 48(1964). The litigation is impaired, there is inconsistent course of process and the matter is impeded. Federal Rules of Civil Procedure Rule 60 (b)(6). The Plaintiff in the honorable court is formally requesting a new trial. This motions action is "disposing to quash" the previous judgment and previous orders. POWER TO REMEDIAL ACTION LITIGATION MISCONDUCT 220 F.3d 406 (5th Cir. 2000) [at 121. In Re GRAND JURY SUBPOENA The Respondents are targeted for fraud activity and Retroactivity of Judge requires a remedial investigation will purge test the Respondents. Administrative Procedural Default: executive order activity in government secrecy is suspicious venality procurement of unqualified property belonging to the Plaintiff. Community Party v Control Board, 367 U.S. 1 (1961) in the original complaint and previous motions would have purged the concealed fraud. In the storms suspicious of the fraud it is not unrestricted to argue . United States v Lee, 811 F. 2d 979 [at 39]See Bounds, 430 U.S. at 96 of 109 823; Wolff, 418 U.S. at 578 -79. The mistakes of law, misinterpretation and duress minas in political venality should reviewed and bound over in pursuit for new trial as the main event. This memorandum of law and motion for discovery is has a justifiable requirement for a further discussion "of what the right has been construed to require." Parisie v Greer, 705 F.2d 882, 898 (7th Cir.) (Swygert, J.) (advocates duty on trial court to enlighten pro se litigants of procedural requirements when litigant is "in state of natural confusion "), cert. denied, 464 U.S. 918 (1983); Hooks v. Wainwright, 536 F. Supp. 1330, 1345 (M.D. Fla. 1982) (low level of most pro se litigants' education precludes assumption the court cannot discern procedural obligations), rev'd on other grounds, 775 F.2d 1433 (11th Cir. 1985), cent. denied, 107 S. Ct. 313 (1986). In Re: Levowitz. The is procedure default, actual prejudice, unconstitutional predisposition and wrongful administrative preemption, Galina v INS, 213 F.3d 955, 958(7th Cir. 2000) Dobrowski v Prrister,380 U.S. 479 (1965)In Re: Grand Jury Investigation of William H. Pflaumer & Sons, Inc., 53 F.R.D. 464 (E.D.Pa. 1971) . In Re: Grand Jury Investigation Investi atg ion of Misconduct and Mismanagement ICITAP. OPDAT and Criminal Division Office of Administration (Committee on the Judiciary House of Representatives 2000) Lyng v Payne, 476 U.S. 926 at 40. The pro se need Article II protection is necessary to a avoid loss 28 USC 2462 The previous dismissal would a fundamental miscarriage of justice and abandonment. Actual prejudice and presumptive frivolity erodes the public confidence in this court. Retroactivity is the judicial compass to explore with sound remedial effort to protect the impartiality of the judiciary of 4th Circuit US District and En Banc Court Dobrowski v Pr ister,380 U.S. 479 (1965)The Respondents presents purpose discriminative, maliciously tortuous and venality in the powers of office that manifest adverse possession. The Respondents are retaining possession due to egregious and wanton conduct. United States v Nixon, 418 U.S. 97 of 109 683 (1974) Constitutional Rights and Civil Forfeiture Actions, 88 Volum. L. Rev. 390, 391 (1988) Lindgren, 141 U. Pa. L. Rev.at 1708. Specific issue in the element and tortuous inducement is ripe in the materiality. The situation meets a new trial requirement could be related to a procedural definition of extortion versus exaction. The extent of tortuous inducement is undiscovered do to the government official and agency plausible deniability. This honorable court is requested by this motion to initiate the negotiation and inquiry. United States v Roth, 860 F.2d 1382, 1383 (7th Cir. 1988) The political contamination impact is pre - dispositional double jeopardy. Moreover, over due to the use if implied powers of executive and increased due actual prejudice of the honorable is unconstitutional preemption that holistically conceal veniality and probable fraud United States v Mandel, 591 F.2d 1347 (4t' Cir. 1979) at 60. Barret v United States,798 F. 2d 565 [at 12] Zettl v United States No 89 -1323 (4t' Cir. 1989).((citing) An Extension of the Right of Access: The Pro Se Litigant's Right to Notification of the Requirements of the Summary Judgment Rule, 55 Fordham L. Rev. 1109 (1987)), Armstrong v Treasury No. 2009 -3155 Cobell v Norton, CA #96 -1285 F. Supp. 2d 24, 27 (RCL) (D.C.C. 2001). Contempt to prevent the Respondents from taking potentially adverse actions trust related activities See Joseph H. Beale, Jr., Contempt of Court, Criminal and Civil, 21 HARK L. REV. 161 (1908). The Plaintiff submitted civil contempt in US Supreme Court remedial action will purge test the Respondents. 76 Am Jur Trust United States v Nation 10- 382(Fed. Cir. 2011). Oneida Indian Nation v County of Oneida, 414 U.S. 661 (1974). United States v Powell, 379 U.S. 48(1964). The memorandum of law and motion to reopen is the amicable acquiescence of fraudulent activity that was overlooked. This lawsuit is to survive on the cause and revived on the merit for a remedial inquiry or investigation. Article IV is the judicial microscope pursuit recommends consolidation of pertinent materiality and process 98 of 109 in the superior courts to facilitate the required settlement. The Plaintiff categorically meets the requirement and exceeds the standard of review. This requested action is sufficient to judicially discern exaction venality. Start the clock since original complaint filing in the prayers to open the gates to the 4th District Courts as a remedial purging appeal. ((citing)) Administration of Justice Bulletin: "Motion for Appropriate Relief' School of Government 2010, University of North Carolina. United States v Lee, 811 F. 2d 979 (7th Cir. 1987)[ at para. 24 -26] Hilton v Guyot The Pro Se has a legitimate lawsuit and tortuous argument that requires an imperative revised conditional ruling. The executive order unconstitutionally predispositions impacts the Plaintiff with actual prejudice. Article IV section 3 discern the prejudice and malice executive order effectuation 51 Cong Rec. Article IV section 3 It implies invokes civil powers to override the egregious act that pecuniary harms the Plaintiff. New York Times v Sullivan, 376 U.S. 354 (1964) inter alia, pro se litigant in this federal court exists special administrative problem. The executive order is kitchen sink and is a fatally circumvents the judicial administrative mechanics. The executive order activity or effectuation is tortuous anomaly. Executive order actions arbitrarily creates an oppressive fundamental miscarriage of justice. The honorable court in Article II protections must safeguard the federal claim in order to take possession of estate and deduce the duress that affect the Plaintiff. See Mmoe v. Commonwealth, 473N.E.2d 169, 172 (Mass. 1985) (pro se litigants held to less stringent standards. This litigation has serious problems it is crucial that pro se litigants improved interest of the and in the interest of justice The duty of court has administrative principle obligations under the rule to facilitate "an opportunity to present every factual and legal argument available." Amend and reverse the previous judgment as a remedial jurisprudence bequest on the court conscience of fair play. This suit has genuine issues of material fact exists entitling a revised conditional ruling on those merit set 99 of 109 forth in all matters presented consolidated re- docketed for a new trial. United States v Holzer 37 C.J.S. Fraud § 124, p. 452. "Right to rely" Burke v Barnes, 479 U. 361, 363 (1987) LOCAL RULE STATEMENT VIODING PREVIOUS JUDGEMENT (Meritorious motion and triable pursuit) United States North Carolina Western District - Local Rules of Civil Procedure Rules Rule 5.2.1(E) memorandum of law in support of motion is constitutional communication to open the gate to the court in retroactivity. Federal Rule of Civil Procedure Rulel2g this memorandum of law force is forcing an administrative constitutional procedural effort to reopen the lawsuit. Qui Tam this action follows Local Rule 5.2.1(D) consolidate all motions with retroactivity in the superior courts. Local Rule 5.2.1(D) this action must re -raise all issues and civil - criminal distinction must be made at this stage. [Beagels v Robertson] This litigation should not be compromised without a hearing nor a without counsel present to address the particular specifics of the allegations. 228 USAM "Right to Compromise" and "Right to Rely" there is fraud as well as improper practice in which Plaintiff has cited a species of duress that threatens to destroy and abolish culpability in the beneficiary asset of interest. 33 Am Jur Slander/Libel The litigation has not arrived at legal conclusion [ Beagels v Robertson (citing) Cases Determined 135 Missouri Appeal Report pp. 322- 323 (1909)] US v Powell the issue have been pled sufficiently the court must and the malice and venality . This motion and memorandum is the communication to re- raise matters that are allegations as injury in fact above the speculative level. Barret v United States, 798 F. 2d 565 [at12]. "Motion for Appropriate Relief' administrative principles and liberal construction is the Plaintiff common sense approach in submission sequence. On the duty of court and due to the particular allegation 100 of 109 allegations Stump v Sparkman, 435 U.S. 349 the previous orders created and intensified exigent duress. "was plainly reasonable under the circumstances." the Court cited Mincey v. Arizona, 437 U. S. 385, 393 -394 (1978) New York Times v Sullivan, 376 U.S. 354 (1964):tortuous procurement and duress inducement to conceal is fraud Rutger's Law Review [Vo1.60:4] at pp. 920- 950McGrain v Daugherty, 273 U.S. 135 1927 [at 2] Wall Cooksey v. Local 230 et a13:97- CV00942 (JCH) ( Dist. Ct. Bridgeport Div. 2005). The court must address the tortuous interference. This litigation is not sealed 5 USC 702 the administrative provisions insist consistent and adequate remedial action. Reed v City of Arlington, No. 08 -11098 (51h Cir. 2011) "Right to Rely" Beckwith v Dahl, G044479 (Super. Ct. No. 30- 2010 - 00394872) Litigation Management Manual ", Judicial Conference, Court Administration and Case Management (2001). 11.491 Special Problems and Investigations In Re: BIW Deceived v Local S6, Industrial Union of Marine and Shipbuilding Workers of America, IAMAW DISTRICT LODGE 4; No 96 -2311 (1St Cir. 1997) The Plaintiff is pursuant in retroactivity of judge. Federal Rule of Civil Procedure Rule 60(b) the previous judgment is requested to be ratified and reverse due to administrative default procedural abandonment. US v Holzer Local Rule 7.1( A) on ratify the judgments on the total cannon grounds summation pleading materiality is ripe due to duress minas and fraudulent nature. Local Rule 7.1(E) the suspicious minds of the judicial conscience should see it fit acquiescing the potential magnitude of the lawsuit and local impact is imperative to transfer all argument in this remedial retroaction to Appeals open court venue (Richmond)Skilling v United States. Local Rule 16.3(b) The court must the appropriate facility. The original complaint require an early intervention in the examination of financial institution. This litigation is out of control and the superior court must intervene in the solution and remedy also. 28 USC 2462. There are litigation has impacting 101 of 109 federal law that requires this lawsuit be reopen and reanalyzed. Local Rule 16.3(b) Westfall Act is mandatory consideration safeguards the abandonment, deterioration and erosion in government ligations that must sue against arbitrary torts. United States v Kenny, 462 F. 2d 1205, 1229 cert. denied.409 U.S. (1972). The memorandum of law in support of motion makes effort to adhere and institute revisions be fairly evaluated by the presiding judicial officer's of the North Carolina Western District and superior courts panels Local Rule 16.3(3) Retroactivity of Judge In Re: BIW Deceived v Local S6, Industrial Union of Marine and Shipbuilding Workers of America, IAMAW DISTRICT LODGE 4; No 96 -2311 (1St Cir. 1997) The honorable must hear and decide there are two sides to every story. The matter has all specific element of fraud plus inter alia tortuous materiality. Retroactivity of Judge [Frothingham v Mellon] Local Rule 72.1 (A) hear and decide in the consideration treasury litigations have securities regulations and the court should evade vicarious liability matter as such technically class action. 51 Cong Rec. Fraud and Corruption strategies in administrative directs litigation where there is obvious undiscovered information class actions in securities always has first impression in the open court. The original complaint has special problems, aggravated tortuous allegations and specific duress. United States v Perrin, 131 U.S. 55 (1889). 5 Am Jur Trails Retroactivity of Judge Local Rule 72.1 (A) 220 F.3d 406 (5th Cir. 2000) [at 121 Eldred v Ashcroft 102 of 109 RETROACTIVITY OF JUDGE PREAMBLE TO TRIAL "Requesting Cease and Desist Administrative Hearing" Finding of Facts and Conclusion of Law Article II protects this litigation from consequence of contamination and protects against administrative deterioration. 28 USC 2462 This motion is appropriate for relief to corruption in arbitration materiality. The honorable court cannot absolve the Respondent from this dispute. United States v Foreness the previous frivolous is inconsistent and distorted. 37 C.J.S. Fraud. this action ignites the remedial administrative proceedings to purge the fraud in fair dispute process In Re: Case Industries LLC v KPMG LLP (2012)Shearson /American Express Inc., v McMahon, 482 U.S. 220 (1987). The previous order is masking a tortuous beneficiary. The Plaintiff has been susceptible to malicious arbitrary activity to intercede with a legitimate benefit transaction. (citing) [at pp.717] Power Corrupts: Honest Services and Fiduciary Duties, Washburn Law Journal (2011) [ Vol. 50 pp 713 -742]. The previous judgment is distorted and should have analyzed a "full range of political venality and possible political impropriety" that exist in this case "as it sets in the eyes of the court". (citing)[ at 714] Power Corrupts: Washburn Law Journal (2011) [ Vol. 50] Retroactivity of Judge is a prelude and preamble to a new trial geared to purge matters "protecting the execution of fraud ". In Corrective Relief the previous orders were unconstitutionally fatal and has distorted diligent processes in this litigation. ((citing) Administration of Justice Bulletin: "Motion for Appropriate Relief' School of Government 2010, University of North Carolina. This memorandum of law in support motion is joining to seeking cause of action fiduciary law versus administrative law in "Pinkerton Liability". ((citing) [United States v Wilkes] No. 08 -50063 D.C. No. Cr. 00330 -LAB- OPINION(9th Cir. 2011)) Power Corrupts: Honest Services and Fiduciary Duties, Washburn 103 of 109 Law Journal (2011) [ Vol. 50 pp 713 -742]. Administrative Procedural Default and "reliance on political vices" is discerned by this motion preamble action. In Re: Wilkes, No. 08 -50063 (9th Cir. 2011) This remedial action reanalyzes the suit; "must right the scale ". Amicable action make a reasonability from complaint. The Respondents as a holistically now are target for fraud. The original complaint presented exceptional issue and an exceptional case. Retroactivity of Judge and revised decisional direction clarifies the distorted facts and restarts the fact finding process. (citing) In Re: Wilkes: The Respondents executive order is an illicit political vice effectuation "exceeding amount of latitude ". (citing) "Recognizing Deliberate Ignorance" Judicial Discipline and the Appearance of Impropriety: Minnesota Law Review (2010) [Vol: 94 pp. 1914 -1996] This judicial call in this action is not judicial mischief the original complaint is susceptible to plausible interpretation re- raised federal question to liability. Moreover, the honorable court in remedial action is applying the "foreseeability test" In Re: Case Industries LLC v KPMG LLP United States v. Perrin, 131 U.S. 55 (1889) "the foresee ability test" was abandoned in the last review obvious overacts is an alert to fraud. The honorable court owes a duty and bound by cannon duty that reasonably foresee the nature of case. "Consider the totality of the framework of the case" Barret v United States,798 F. 2d 565 [at 12]. ((citing)[at 1] 321 F. 365 (3rd Cir. 2003)) The honorable court is justified to revive this suit. Beagels v Robertson (citing) Cases Determined 135 Missouri Appeal Report pp. 322- 323 (1909). The Respondent are abusing power office and legal skill in dominance attempt adversely filter by arbitrary obstructive politics. Marbury v Madison invisible political filters in the courtroom is trickery and plenary fraudulent avoidance to voluntarily succumb to an uncomplicated transfer to a beneficiary as Plaintiff. Retroactivity of Judge is a justifiable attack on scheme and "targets a fraudulent craft of egregious procurement" Otero v. Vito, et al., 2009 104 of 109 U.S. Dist. LEXIS 86638 (M.D. Ga. Sept. 22, 2009). The Respondents "rely on political vices" that will continue defraud and deprive the Plaintiff. There is a bit of constitution question and some inference as fact of fraud. The fraud is impossible to hide given the knowledge of conjunctive torts that intercede and inhibit in the litigation at this stage. The illicit and issue is in plain sight of a reasonable or logical court. This review's panel must apply accurate jurisprudence and must apply rational legal intelligence to remedial action request. The 14th Judicial Conference of United States Court of Trade;( 2006) "Recognizing Deliberate Ignorance "(citing) Judicial Discipline and the Appearance of Impropriety: What the Public See Is What the Judge Gets, Minnesota Law Review (2010) [ Vol: 94 pp. 1914 -1996] This motion to reopen is next appropriate step toward a cease and desist administrative proceeding. The powers of the court must retroactively purge and ascertain the assets by "judicial disgorgement techniques ". This memorandum of law in motion support is enough ajax to remove contamination that cloud this litigations issues and hide undiscovered facts. [at 14] 959 F. 2d 579 (5"' Cir. 1992) US v Powell The honorable court must discern and nullify any or all means that facilitate the ability to procure by exaction modalities and deduce the opportunity of future conversion. The malicious zeal is obvious to federal question desire of appropriate and federal question the entailed aggravated concealment that will ultimately defraud the Plaintiff . Hilton v Guyot [at 12] 959 F. 2d 579 (5t' 1992) The specific allegations require a hearing due to financial institutional involvement. The memorandum of law in support of motion is instituting judicial action for imperative corrective relief due to the Plaintiff. The original complaint was ripe for further process; now the federal claim drastic administrative action. ((citing) Administration of Justice Bulletin: "Motion for Appropriate Relief' School of Government 2010, University of North Carolina. United States v Kenney the court must determine the degree 105 of 109 of malpractice in the issue and recognize tortuous interference that deprive the innocent beneficiary. Beckwith v Dahl, G044479 (Super. Ct. No. 30- 2010 - 00394872) 37 C.J.S. Fraud "Right to Rely" there is clearly unjustified and egregious positional duress implemented due" evil kitchen sink zeal or rational ". 28 USC 2072(b) The honorable court deducing the complexities that obstruct the lawsuit This litigation is simple to revive in remedial action as hostile and adverse possession effectuate into a wrongful procurement. United States v Graham, 275 F. 3d 490 560, 516 ( 6th. Cir. 2002) Huddleston v United States, 485 U.S. 681 (6th Cir. 1988) [at 7] 959 F. 2d 579 (5th Cir. 1992) Beckwith v Dahl, G044479 (Super. Ct. No. 30 -2010- 00394872) The dismissal unconstitutionally absolves the liability and conceals impropriety of a fraudulent nature. The Respondents display reckless indifference and reckless disregard for the law. This memorandum of law in motion is a justified and vivid requirement to challenge the prejudicial interest in the asset. The interest and conflict of this lawsuit is not barred to re- litigate in courts. The national economics is not a concern to the court. "State of Economic Affairs" has no bearing on this lawsuit what so ever. The Respondents are unattested and without a constitutional excuse for unethical compulsion that instituted or initiated unconstitutional executive order that is an overall undue administrative suppressant. City FedFiniacial Corp. v Office of Thrift, No. 94- 5254(D.C. Cir. 1995) §3CLI. Obstructing or Impeding the Administration of Justice §1B1.3 Relevant Conduct United States v Burr, 309 U.S. 24 (1940) Brady v Maryland, 373 U.S. 83(1963) In Re: The Discipline of Bablis, 0159 Bar No. 960167 Loumiet v Office of the Comptroller. No. 10 -1288 (D.C. Cir. 2011) Bank of Nova Scotia v United States, 487 U.S. 250 (10th Cir. 1988). Judicial enforcement is necessary due to the extreme federal issues must be reanalyzed in this lawsuit in cease and desist proceeding Pryor v US Postal, 769 F. 2d 281 [at 18] this motion is preamble and remedial action 106 of 109 "Retroactivity of Jude United States v Nation. 10 -382 (Fed. Cir. 2011). This action is "reviving the case" and it is a viable suit. This motion's implementation is preamble that will convince the justice to preserve and prescribe settlement arrived by a new course of exhaustive action. Oneida Indian Nation v County of Oneida, 414 U.S. 661 (1974) CONCLUSION For the foregoing reasons, Plaintiff as pro se respectfully urges in the interest of justice and "in the interest of the United States" to reopen matters by this motion to reopen. 28 USC 2332 vacate the all orders and review the previous decision for different disposition by inquiry. Federal Rule of Civil Procedure Rule 60(b). United States District Court, North Carolina Western District Local Rule 20.1 transfer to superior appeal courts and void the previous judgment. 28 USC 2462 US v Powell United States District Court Local Rule 7.1 matter requires consolidation and vacation of previous order. Federal Rule of Civil Procedure Rule 50(c) the Plaintiff request a new trial. Dated: July 12'', 2012 Respectfully Submitted, 107 of 109 Tony Curtis Barrino Plaintiff/Pro Se 226 N. Long St. Salisbury, N.C. 28144 (704)232 -2498 AFFIDAVIT OF SERVICE I, TONY CURTIS BARRING, hereby certify; under the penalty of perjury. I have served a copy of the foregoing Memorandum of Law and Motion to Reopen against US Treasury as to an answer from the individual Respondents named on the cover page. I , Tony Curtis Barrino, on my own behalf as pro se is pursuant, declare under penalty of perjury that the foregoing is true and correct. The Solicitor General was served by mail: at 950 Pennsylvania Ave. N.W., Rm. 5114 Washington, D.C. 20530 on July 13th, 2012. Signed and Sworn before me on this day of July 2012. My Commission, expires on Notary Public 108 of 109 [Seal] Tony Curtis Barrino Plaintiff/Pro Se 226 N. Long St Salisbury, N.C. 28144 (704)232 -2498 109 of 109 Marian Karr From: Tam Bryk <tbryk @mchsi.com> Sent: Sunday, July 22, 2012 12:00 PM To: Council Subject: Moen tower support Dear Councilors, 2f(11) I am writing to express my support for your decision to fund Marc Moen's mixed use tower project on our pedestrian mall. I have been a small business owner in Iowa City for the past 23 years and it is very encouraging to see this council proactively supporting wise economic development. I am convinced appropriate development and redevelopment will create an economic ripple effect on existing businesses in the greater Iowa City area. I anticipate this decision will have a significant and measurable affect on our local economy. Thank you for the courage and vision to vote to move Iowa City forward. Tam Bryk Tam Bodkin Bryk Bodkin Bryk Fine Art E -mail: tamktambodkinbryk.com Web: www.tambodkinbryk.com 1 Marian Karr From: susan boehlje <sichance @iowadsl.net> Sent: Sunday, July 29, 2012 12:14 PM To: Council Subject: Fwd: Correction for Letter to Editor Attachments: Correction for Letter to Editor I apologize to the Councilors that my letter to the editor re: the Moen tower bonds was published Saturday while inaccurate. In fact VERY inaccurate. I had sent an immediate revision to the P -C editor, and I am surprised that the original version was not amended before publication. At any rate, the corrections are detailed in the attachment. The original was an embarassment to me as well, since it appears that I was needlessly trying to stir up the issue. Sincerely, Susan Boehlje Marian Karr From: susan boehlje <sichance @iowadsl.net> Sent: Saturday, July 28, 2012 7:48 AM To: opinion @press - citizen.com Subject: Correction for Letter to Editor Thank you for printing my letter about the recent approval of the revenue bonds for the Marc Moen tower project. I had sent in a correction, shortly after sending the original letter, deleting all reference to general obligation bonds, and substituting "issuer" for "city ". It is not widely known that bondholders (investors) do have recourse to the issuer in the event that the project goes bad. The idea is that the bondholders should be the last to suffer in the event of a project's failure that they did not cause. There have been a number of very painful and public defaults that have cost investors millions of dollars. One of the best known was the "whoops" case, Washington Public Power Supply, in which thousands of investors lost heavily when a power plant under construction suddenly went bad and WPPS could not cover the debt. A lot of states updated their "blue sky" laws because the stakes today are so high when projects default. In many states, any investor can now call the issuer daily, if s /he wants, to see how the project is doing -- before, during and after development (I haven't researched Iowa's law). I don't know the total structure of the bonds -- whose buying them, what their terms are, etc. But in this instance perhaps the full story should be checked into. Marian Karr 2f(12) From: Al and Bobbie Paxton <al loverrovers@g mail. com > Sent: Tuesday, July 24, 2012 10:03 AM To: Council Subject: predatory lenders. Please do whatever that you can to cut down on the number of predatory lenders in our city. They prey on those who can least afford it and we don't need any more of that. Thanks, Bobbie and Al Paxton, Iowa City 52245 • • • Iowa Citizens for Community Improvement We talk. We act. We get it done. July 23, 2012 Iowa City City Council c/o Mayor Matt Hayek City Hall 410 East Washington Street Iowa City, Iowa 52240 Dear Mayor Hayek: 2001 Forest Avenue Des Moines, IA 50311 ph 515.282.0484 fx 515.283.0031 www.iowacci.org Iowa City members of Iowa Citizens for Community Improvement (Iowa CCI) write you today to put on record our support of city staff's recommendations regarding a new zoning ordinance to crack down on predatory payday lending. As your council deliberates this request, please take into account the following enclosed studies. 1) Payday Lending: Who Borrows, Where They Borrow, and Why, released by the Pew Charitable Trusts, July 2012. 2) Controlling the Growth of Payday Lending Through Local Ordinances and Resolutions, November 2007. If you have any questions, please do not hesitate to contact local Iowa City CCI members Sarah Clark at (319)338 -1841, sclark52245Ca@gmail.com; Ryan Downing, (319)337 -9986, ryandowning73 @gmail.com; Bryson Dean, (319)541 -8806, brysondean.iowa @gmail.com; Helene Hembreiker, (319)354 -3940, Jeff Strottman, (319)248 -3198, Susan Goodner, (319)354- 4162, rindys3 mchsi.com; or Misty Rebik, (319)855 -3379, mistvrebik @gmail.com. We urge you to pass the draft zoning ordinance without amendments and without delay. Sincerely, l_ David odner Iowa City Community Organizer THE PEW CHARITABLE TRUSTS PAYDAY LENDING IN AMERICA: Who Borrows, Where They Borrow, and Why Executive Summary & Key Findings This report series, Payday Lending in America, presents original research findings from the Pew Safe Small - Dollar Loans Research Project on how to create a safe and transparent marketplace for those who borrow small sums of money. www.pewtrusts.org /small -loans Executive Summary Payday loan borrowers spend approximately $7.4 billion' annually at 20,000 storefronts and hundreds of websites, plus additional sums at a growing number of banks. The loans are a highly controversial form of credit, as borrowers find fast relief but often struggle for months to repay obligations marketed as lasting only weeks.2 While proponents argue that payday lending is a vital way to help underserved people solve temporary cash -flow problems, opponents claim that the practice preys on overburdened people with expensive debt that is usually impossible to retire on the borrower's next payday. Many state officials have acted to curb payday lending. However, there has been little opportunity for federal policy on payday lending until now. Resolving the debate over the ways in which payday loans and lender practices may help or harm borrowers will fall to the Consumer Financial Protection Comptroller of the Currency (OCC), and Federal Trade Commission (FTC), also will have important roles to play as banks and online providers continue to enter the payday loan field.' Existing data show that, in at least two significant respects, the payday lending market does not function as advertised. First, payday loans are sold as two - week credit products that provide fast cash, but borrowers actually are indebted for an average of five months per year-Second, despite its promise of "short- term" credit, the conventional payday loan business model requires heavy usage to be profitable— often, renewals by borrowers who are unable to repay upon their next payday. These discrepancies raise serious concerns about the current market's ability to provide clear information that enables consumers to make informed decisions. This report, Who Borrows, Where They Bureau (CFPB), which Congress recently Borrow, and Why, is the first in Pew's created and charged with regulating payday lending. Other federal agencies, such as the Federal Deposit Insurance Corporation (FDIC), Office of the Payday Lending in America series. The findings provide policy makers with research to address concerns about small - dollar loans and to promote a safe and WWW.PEWTRUSTS.ORG /S MALL- LOANS EXECUTIVE SUMMARY transparent marketplace. In addition to discussing Pew's focus groups, the report presents selected results from a first -ever nationally representative telephone survey of payday borrowers. The report answers six major questions: Who are borrowers, demographically? How many people are borrowing? How much do they spend? Why do they use payday loans? What other options do they have? And do state regulations reduce payday borrowing or simply drive borrowers online instead? WW W.PEWTRUSTS.ORG /SMALL -LOANS Key Findings H Who Uses Payday Loans? Twelve million American adults use payday loans annually. On average, a borrower takes out eight loans of $375 each per year and spends $520 on interest. Pew's survey found 5.5 percent of adults nationwide have used a payday loan in the past five years, with three - quarters of borrowers using storefront lenders and almost one - quarter borrowing online. State regulatory data show that borrowers take out eight payday loans a year, spending about $520 on interest with an average loan size of $375. Overall, 12 million Americans used a storefront or online payday loan in 2010, the most recent year for which substantial data are available. Most payday loan borrowers are white, female, and are 25 to 44 years old. However, after controlling for other characteristics, there are five groups that have higher odds of having used a payday loan: those without a four -year college degree; home renters; African Americans; those earning below $40,000 annually; and those who are separated or divorced. It is notable that, while lower income is associated with a higher likelihood of payday loan usage, other factors can be more predictive of payday borrowing than income. For example, low- income homeowners are less prone to usage than higher- income renters: 8 percent of renters earning $40,000 to $100,000 have used payday loans, compared with 6 percent of homeowners earning $15,000 up to $40,000. © Why Do Borrowers Use Payday Loans? Most borrowers use payday loans to cover ordinary living expenses over the course of months, not unexpected emergencies over the course of weeks. The average borrower is indebted about five months of the year. Payday loans are often characterized as short -tenn solutions for unexpected expenses, like a car repair or emergency medical need. However, an average borrower uses eight loans lasting 18 days each, and thus has a payday loan out for five months of the year. Moreover, survey respondents from across the demographic WWW. PEWTRUSTS.ORG/S MALL- LOANS KEY FINDINGS spectrum clearly indicate that they are using the loans to deal with regular, ongoing living expenses. The first time people took out a payday loan: ■ 69 percent used it to cover,a recurring expense, such as utilities, credit card bills, rent or mortgage payments, or food; ■ 16 percent dealt with an unexpected expense, such as a car repair or emergency medical expense. © What Would Borrowers Do Without Payday Loans? If faced with a cash shortfall and payday loans were unavailable, 81 percent of borrowers say they would cut back on expenses. Many also would delay paying some bills, rely on friends and family, or sell personal possessions. When presented with a hypothetical situation in which payday loans were unavailable, storefront borrowers would utilize a variety of other options. Eighty - one percent of those who have used a storefront payday loan would cut back on expenses such as food and clothing. Majorities also would delay paying bills, borrow from family or friends, or sell or pawn possessions. The options selected the most often are those that do not involve a financial institution. Forty -four percent report they would take a loan from a bank or credit union, and even fewer would use a credit card (37 percent) or borrow from an employer (17 percent). a Does Payday Lending Regulation Affect Usage? In states that enact strong legal protections, the result is a large net decrease in payday loan usage; borrowers are not driven to seek payday loans online or from other sources. In states with the most stringent regulations, 2.9 percent of adults report payday loan usage in the past five years (including storefronts, online, or other sources). By comparison, overall payday loan usage is 6.3 percent in more moderately regulated states and 6.6 percent in states with the least regulation. Further, payday borrowing from online lenders and other sources varies only slightly among states that have payday lending stores and those that have none. In states where there are no stores, just five out of every 100 would -be borrowers choose to borrow payday loans online or from alternative sources such as employers or banks, while 95 choose not to use them. WWW.PEWTRUSTS.ORG /SMALL -LOANS STAY CONNECTED ► pewstates.org ttwitter.com /pewstates r0®u youtube.com /pew ' f face book.com /pewtrusts pewstates.org /newsletter Controlling the Growth of Payday Lending Through Local Ordinances and Resolutions A Guide for Advocacy Groups and Government Officials November 2007 Updated March 2010 Written By: Kelly Griffith, Deputy Director Southwest Center for Economic Integrity kellyAgconomicintegrily.org Linda Hilton, Director Coalition of Religious Communities Crossroads Urban Center - Utah lindaA,crossroads -u -c.org Lynn Drysdale, Staff Attorney Jacksonville Area Legal Aid - Florida L nnn.D sr sdale@jaxlegalaid.org Preface Neighborhoods across America are witnessing the resurgence of predatory small loan operations. In the last fifteen years, payday lenders have exploited deregulated interest rates, won special treatment from state legislatures, or designed products that slip through regulatory loopholes. As a result, payday lending legally operates in about thirty-eight states, costing consumers as much as $6 billion a year in interest for up to $40 billion in loans. Payday loans cost cash - strapped borrowers triple digit interest rates, trap borrowers in repeat loans, foster coercive debt collection practices, and endanger bank account ownership for families that live on the financial edge. Payday lending has become increasingly controversial as the consequences of this defective financial product have become painfully apparent. Payday lenders now outnumber Starbucks and Burger King outlets across the country. Billions of dollars in usurious interest flows out of communities to the national chain lenders. Mapping of payday loan locations by neighborhood characteristics and studies of payday loan use issued by regulators and academics document that these high cost loans disproportionately harm minority families and low to moderate - income borrowers. (For more information, please visit Consumer Federation of America's www.paydayloaninfo.org) Local leaders see the impact of payday lending on economic development, requests for financial assistance, and financial distress in communities with high levels of low to moderate income and minority families. While industry lobbying and campaign contributions have thwarted reform in many state legislatures, local officials are taking action to stop payday lenders from exploiting their neighborhoods by enacting restrictive zoning requirements and local ordinances. Local policymakers interested in preventing predatory payday lending can also lend their support to state -level reform efforts to cap annual interest rates at an all- inclusive 36 percent or repeal payday loan authorization outright. As documented in North Carolina, reinstating small loan caps allows responsible credit to flow, while saving consumers the billions of dollars now lost to predatory payday lenders. Resolutions urging state legislative reform have been adopted by local governments in Virginia and Ohio in 2007. Local officials who are closest to their communities have a powerful role to play in the nationwide campaign to stop predatory payday lending and improve the financial lives of millions of families. This guide has been developed to assist community consumer advocates and government officials take action to combat payday lenders in local communities and at state legislatures. The guide is divided into the following sections: * Introduction - How payday loans work and their harmful effects on consumers and communities. * How to pass an ordinance for advocates * Assistance for Government Officials - Understanding payday loans, the type of ordinance that might be best for their community, and legal challenges that have been faced in the past. Along with this section are the following appendices: o Appendix 1 - List of Payday Lending Ordinances o Appendix 2 - Legal Challenges to Local Payday Lending Ordinances 0 Appendix 3 - Ordinance and Resolution Examples Introduction Local governments have a right and a responsibility to protect the economic health, welfare and safety of their communities using whatever tools they have available to them. High cost payday lenders are proliferating in low to moderate income areas of cities and towns in states where this form of lending is authorized. As a result, land use code amendments, commonly known as ordinances, have been enacted to reduce the negative impacts of payday lenders in areas within their jurisdictions that are particularly vulnerable. In most cases payday lenders present a classic example of an industry that creates local community financial drain. The more money that is exported out of the local economy by excessive fees, the less money there is to spend within the local economy. This creates not only individual financial spirals but community economic spirals as well. The capital that could be circulated within a local economy is lost to outside interests. Payday loans are small cash advances ranging from $100 to $500. The average loan amount is $325 and the full amount of the loan plus interest is typically due and payable in full on the borrower's next payday. Because the borrowers cannot afford to live until the next payday after repaying their high -cost payday loan, they find they must take out another loan to make ends meet. On average, in America borrowers renew their loan 8 times before they are able to pay the loan in full and ended up paying $800 on the original $325 loan. Finance charges are generally calculated as a fee per hundred dollars borrowed. This fee is usually $15 to $30 per $100 borrowed. The average interest rate for a payday loan is between 391% and 782% APR for a two -week loan. The loan is secured by the borrower's personal check or some form of electronic access to the borrower's bank account. These balloon payment loans can equal 50 to 95% of bi- weekly paychecks of the typical borrower. Loans secured by personal checks or electronic access to the borrower's bank account endanger the banking status of borrowers, facilitate coercive collection tactics, and constitute unfair wage assignments. I Simply put, payday loans are bad for business because the lender is going to get paid first even if the borrower entered into an obligation with other businesses before getting into a payday loan. The payday lender is going to get paid even before basic .living expenses such as rent, utilities and child support payments. This is because the payday lender is holding the borrower's checking account hostage, thus having the effect of a "super priority lien." Local economies rely heavily on viable small businesses. Ordinances to restrain the .supply of payday loan outlets are not likely to have an adverse impact on the price of loans to consumers. Competition does not drive down the price of payday loans. An FDIC report found "payday advance stores tend to charge an effective APR near the applicable statutory limit "Z. SEC annual filings by publicly traded payday lenders show consistently high rates even in seemingly saturated markets. Payday lenders irrespective of the number of storefronts consistently charge the maximum interest rates allowed by. state law. Tucson, Arizona illustrates the growing interest in restraining high - density payday loan storefronts. The results of a study released by the Southwest Center for Economic Integrity conservatively estimated that $20 million dollars in fees. were being extracted annually from residents'in Jean Ann Fox, Director of Consumer Protection Testimony before the Subcommittee on Domestic Policy of the House Committee on Oversight and Domestic Reform, March 21, 2007 2 Flannery & Samolyk, Payday Lending: Do the Costs Justify the Price ?, FDIC, June 2005, endnote 34 at 9 3 Pima County, which includes the City of Tucson. These fees were being extracted from the very neighborhoods where the city and the county were investing approximately $8 million dollars in federal revitalization grant monies. The number of payday loan storefronts in Tucson and Pima County has increased exponentially. In 2002 there were 78 storefronts in the city and in 2005 there were 130. Further mapping studies initiated by the Southwest Center for Economic Integrity report that 83% of the payday loan storefronts were located within' /4 mile of low - moderate income neighborhoods. 3 A study by the Center for Responsible Lending found that African - American neighborhoods have three times as many payday lending stores per capita as white neighborhoods. "The findings show that race matters, even when we control for other factors. Variables the payday industry claims are key demographics of its customer base - income, homeownership, poverty, unemployment rate, age, education, share of households with children and gender - do not account for the disparity.s4 Ace Cash Express, a leading nation -wide lender, reported in an SEC filing that its growth strategy is to open new stores, franchise stores in new and existing markets, opportunistically acquire stores, and introduce new services into its store network. This illustrates intent to saturate specific markets and to maintain existing customers caught in the payday loan trap. These storefronts crowd out local businesses such as non - franchised restaurants and cafes. Given that we are able to geographically demonstrate the payday lending industry continues to expand its storefronts into minority, low- middle income, economically distressed neighborhoods within cities and counties brings us back to the local land use issue. Local governments restrict all types of businesses and enterprises from liquor stores to adult entertainment facilities. Restricting payday lenders through ordinances can be an effective strategy in curbing economic blight while efforts at the state and federal levels to reign in these abusive lending practices proceed. Clustering by Pavdav Lenders - Payday lenders cluster in low to moderate - income neighborhoods in urban areas, in rural communities and around concentrations of lower wage workers, and military bases. Steve Graves, a geographer at California State University, Northridge, has provided maps for three communities to graphically illustrate the patterns of store distribution as follows: San Fernando Valley, CA. The first map, found on the next page, is of the San Fernando Valley, California which would be Americas' fifth largest city if it were separate from Los Angeles. What you will see from this map is the concentration of payday lenders in the Latino neighborhoods of the East Valley. Alex Padilla's 20th State Senate district in the San Fernando Valley has 96 payday lenders and 76 banks, an inverted ratio that is quite rare in California. Padilla's district, gerrymandered to insure a heavily Latino constituency, also has a very high per capita density of payday lenders, earning it the distinction of `worst' in California. Meanwhile, the adjacent, but largely white and middle class 23rd class district has 31 payday lenders and 270 banks, making it 38th out of 40 statewide for payday lending. Other nearby, largely white middle class districts have similar figures5. 3 Payday Lending in Pima County, AZ, Southwest Center for Economic Integrity, December 2003 4 "Race Matters: The Concentration of Payday Lenders in African- American Neighborhoods in North Carolina" Delvin Davis, Keith Ernst, Uriah King, Wei Li, Center for Responsible Lending 2005 5 Usury Law and the Christian Right: Faith Based Political Power and the Geography of American Payday Loan Regulations, Steven M. Graves and Christopher L. Peterson, not yet released. 4 Van Nuys zip code, 91406, also heavily Latino, has eight payday lenders and only one bank. Zip codes in Pacoima, North Hills, North Hollywood, Reseda and Panorama City also have zip codes with badly inverted ratios. Meanwhile, neighboring white neighborhoods have .very few payday lenders and many banks. Woodland Hills, in the West Valley, has 27 banks and only one payday lender. Encino has 24 banks and no payday lenders. It is absolutely clear that Latinos are a favorite target of payday lenders. This business robs capital poor areas of the city of precious resources and is correlated with higher crime. Chillicothe, OH. Small town America is also facing a payday lending crisis. While much of the spotlight has focused on the manner in which payday lenders blanket minority neighborhoods; military towns and big cities, small towns and cities across the heartland have also proven to be fertile ground. The map below shows Chillicothe, Ohio, a small city of roughly 30,000 people in Central Ohio that relies on manufacturing, service sector jobs and a dwindling farm economy. Surrounding communities, both in the farming districts to the northwest and the Appalachian areas to the southeast use Chillicothe, as a retail service center. Twelve payday lenders now operate in Chillicothe, only two shy of the number of banks there. At the present rate, Chillicothe will have an inverted ratio of payday lenders to banks, of the type typically found now only in the Deep South and ghetto areas of big cities. 5 Neighboring Washington Court House already has more payday lenders than banks. Many small towns in Ohio, such as Steubenville, Marietta, Mansfield, Alliance, Heath, Bellefontaine, Middletown and Portsmouth also have a nearly even ratio of banks to payday lenders. Nashville, TN. Nashville, Tennessee may be typical of large cities in the South. Payday lenders in Nashville tend to be most heavily concentrated in and around black neighborhoods and poor neighborhoods, especially where strip malls exist on heavily traveled commercial thoroughfares. However, payday lenders are almost completely absent from middle class, white neighborhoods in the Southwestern suburbs. In the map below notice the disparity between the number and density of bank branches in the 95 %, White, middle class suburb of Brentwood and the more diverse and working class parts of Nashville. P Payday Lenders and Banks: Greater Nashville Legend 0 Payday Lender • Banks Census Tracts Percent Non -White ® 0 % -20% 21% - 40% :3 41 % -60% • '.61 % -80% 81%-100% �e Jacksonville, FL �ens�ale l 1 `. Hen ,111e e. vd 1P 1 • 00§, • ': ti In Florida and other parts of the country, payday lenders are disproportionately located in counties with military installations. This phenomenon is shown by mapping and demographic studies contained in Predatory Lending and the Military: The Law and Geography of "Payday" Loan in Military Towns, 66 Ohio State Law Journal 653 (2005), Stephen Graves, Ph.D., Associate Professor of Geography, California State University Northridge and Christopher L. Peterson, J.D., Assistant Professor of Law, University of Florida College of Law. Jacksonville, Duval County, Florida is home to Jacksonville Naval Air Station and Mayport Naval Base and was the home of two recently closed facilities at Whitehouse Field and Cecil Field Naval Air Station. Duval County ranks first in the state for payday lending. Hillsborough County, Florida which is home to MacDill Air Force Base has the second highest payday lender density statewide. Professors Graves and Peterson found that ZIP code data confirmed payday lenders disproportionately target sailors and Marines stationed in Jacksonville. "For example, out of 916 ZIP codes statewide, ZIP code 32210, which is adjacent to the Naval Air Station in Jacksonville, ranks first in the state for total number of payday lenders (11) and ranks 15th worst in a composite measurement of payday lender density relative to bank density and population. Moreover, ZIP code 32205, which is a commercial district near the base, has the second worst composite density of payday lenders in the state. Together, these two ZIP codes have approximately 87,000 people; 24 banks and 22 payday lenders; 15.2 more than are statistically justified by the local population." 7 Similarly they found that airmen stationed at MacDill Air Force Base in Tamp were targeted by payday lenders." About 5 miles up US 92 from MacDill Air Force Base is a group of Tampa ZIP codes containing over 50 payday lenders, 33 more than we would predict given the population in the part of Tampa." See Summary of Florida Results, page 1. Payday Lenders and Banks: Jacksonville, FL t a � • ,I* f • ♦ • ♦ M • • 8 Ja6k on H I o _. f • t s 0 ' • A M Gansus Tracts h "� 3 Percent White „ a 21% - 40% pR ' .. 41X -60`4 x 61`.4 •Hoge r 81 `.S • i G4�4 �` s yam .� ■ t a � • ,I* f • ♦ • ♦ M • • 8 How to Pass an Ordinance This section has been written to educate advocates on how to get an ordinance presented to local government officials and get it passed. A six step process is proposed. Following this section is information that can be given independently to a government official. Step 1 - Learn all you can about payday lenders in your area. Before you can approach an elected official for help in curbing payday lending in your city or town, you will have to do a little legwork and answer a few questions. How many outlets are there within your community limits? Your state licensing agency should be able to answer this question for you. Once you obtain a list from your state licensing agency of all the licensed check cashers /payday lenders in your area (ask for it in city order if possible) you can compare that list to your local government licensing. You will often find that they do not match and local check cashers /payday lenders do not have the required local license. Or you might find that local check cashers /payday lenders have the required local license, but are not licensed with your state licensing agency. This issue will need to be resolved. You may be able to get some outlets closed immediately due to improper licensure. Obtain a map of your local community by district, neighborhood, or other division of your community. This is usually available on -line on your community's web site. Try to also obtain the population of and income level for each district. This information may be old, dating back to the last census, but may be the best available information in the local community. This will help you understand and show your local government officials the clustering of payday lenders within your community. In what areas of town are most payday lenders located? The easiest way to get addresses for payday lenders is through your local or state licensing agency. As a double check look in your yellow pages. These businesses often advertise under more than one heading. Try check cashing, loans, payday loans, and financing. Are outlets in close proximity to one another? Look for strings on major streets in lower income neighborhoods. Pay attention to their proximity to low - income housing, community colleges, or any other place you think lenders may be targeting vulnerable clients. Find out if adjacent suburbs or nearby towns have passed ordinances relating to payday lending. This may add motivation for you to pass an ordinance, as lenders who cannot open outlets in an adjacent incorporated area will move into your community and open more outlets there. Is their appearance gaudy or rundown? What types of businesses surround payday lenders? This will help determine if payday lenders are contributing to neighborhood blight. Step 2 - Choose the type of ordinance that fits your community and will help you accomplish your goals. A number of local constraints on payday lenders have been used throughout the country. More often, cities have used a combination of constraints in an ordinance to achieve their goals. Types of ordinances includes: 0 a. Moratorium During Study Period - Suggest passing a moratorium before the word gets out you are considering a payday lending ordinance. Otherwise lenders will rush to open outlets before your doors are "closed ", or before the process becomes more difficult. b. Permanent Moratorium — Existing outlets can be grandfathered in forever, or phased out over time. c. Limits on Density and/or Distance — Limits allow only a certain number of outlets per number of residents; grandfather existing outlets and make a waiting list for others. Consider setting the density level three times higher than currently exists in your community. For example, if the current density is 1 store per 3,000 residents, the ordinance should limit density to 1 store per 10,000 residents. Prescribing how far outlets must be from each other can also regulate density; ranges that have been used are 600 ft. to one mile. Consider an ordinance combining both density and distance. d. Special Zoning — Limit payday lending outlets to special zoning districts or a limited number of existing zoning districts. e. Special/Conditional Use Permit — Requires special non - conforming use permits for payday lending outlets. Some cities also require public hearings in conjunction with issuance of special permits. f. Prohibition — Place an immediate moratorium on new outlets and set a deadline for closure of existing outlets. Other ordinances include restrictions on use of neon signs, hours of operation, size /type of building the outlet must occupy, distance of outlets from schools, military bases, certain types of housing etc. All existing outlets will have to be grandfathered in. The one feature of payday loans that generally cannot be regulated by local ordinance are, interest rate limitations. Examples of ordinance types can be found in Appendix 1. Step 3 - Learn what system your city or town has in place for passing ordinances. Call your local planning and zoning offices, listed in the local community's governmental pages of your phone book. In most communities you will start the process by finding a sponsor such as the mayor or an elected city or county official. Sometimes you must start work with a planning commissioner. Usually citizens cannot present ordinances without an official government sponsor. Ask your sponsor if an ordinance has been proposed before and defeated. If so, research the ordinance and why it was defeated. That will help determine a successful strategy for getting a future ordinance passed. Find out if your payday loan ordinance must first be presented to a planning or zoning board in your local jurisdiction. Does this group hold public hearings where people can testify or is the ordinance presented to the committee for their discussion only? How many readings of a proposed ordinance are required and can multiple readings occur at the same meeting? If the ordinance will go directly before the city council/board of supervisors, ask if a public hearing will be part of the agenda. If so, it is imperative that you gather a variety of advocates, citizens and victims to testify. The payday loan industry will show up in force. 10 Step 4 - Talk to your local mayor, neighborhood, city or county elected official. See if the representative you have chosen is supportive of the issue. If not, talk to the person who represents a low income neighborhood where a large number of payday loan stores are located. Talk to your local mayor and determine the best approach to getting an ordinance passed. The mayor knows the political climate of the community and can give you ideas of how to best proceed. In some cases it may be better to work with county government instead of a local governmental body. Call your local city government office to obtain a list of council/board members, their aides and their contact information. Call or email your local representative and ask for a meeting to present your idea for a new city ordinance and draft if available. Ask if they are aware of the number of payday lenders in town. Present the information you have gathered. Find out if they are sympathetic to your cause. Ask if they would be willing to sponsor an ordinance for the community and present the facts you have gathered. Ask your sponsor who else in the governing body would be supportive of the ordinance. Talk to those members well in advance of any hearing and give them talking points that will support your position. Step 5 - Get a temporary moratorium in place immediately! Once you get a sponsor, ask him/her to pass a measure imposing a six -month to two -year moratorium on new payday lenders at the next possible council meeting. Often, when payday lenders learn that you are working on a more restrictive ordinance there is a rush to open outlets before they lose the chance or the application process becomes more difficult. Step 6 - Find some advocates and payday loan victims to testify at your planning, zoning or council hearing. Presenting a variety of views at a public hearing will give more credence to the issue than testimony from your group alone. Seek out other groups in your community who support your position. Sympathetic groups may include those who work with minority, low income, elderly, military, or refugee populations. Places where you might find payday lending victims include: outside payday lending stores, local legal services office or at an unemployment office, social services office, local credit counseling-agency, bankruptcy attorneys, Habitat for Humanity affiliates, the unemployment office, food banks and soup kitchens, churches that provide emergency assistance, and any large membership organizations with low and moderate income members (local chapters of NAACP, AARP, Latino organizations, etc.). Ask around to see if you can find a builder, developer or investor to speak about how payday loan stores contribute to blight. Also, contact your-local law enforcement authorities to see if they have established or could establish a relationship between higher instances of crime near payday loan stores. Step 7 - Be prepared to counter payday loan industry and council member arguments. These will probably include: • A certain type of business cannot be singled out for special zoning restrictions. That's illegal/unfair /restricting free commerce. Certain types of business are probably already restricted in the community. Among them may be liquor stores, bars, strip clubs, and adult bookstores. Payday Lenders contribute to the local economy by providing jobs and 410(k) benefits to their employees. The amount these storefronts add to local economies is miniscule compared to the amount of money they take out of communities (see Financial Quicksand CRL Report for exact dollar amounts being extracted from your state hiip://www.responsiblelending.orp-/issge s /pavda��. The vast majority of these storefronts are owned my major corporations whose corporate offices are located out of state. Step 8 — Ask your local officials to support state legislative reforms. City Councils, City Commissions or County Boards of Supervisors can adopt resolutions calling on the state legislature to repeal payday loan laws or enact rate caps to protect borrowers from triple - digit interest rates and to enact other consumer protection. Local governments can also include payday loan reform in their legislative agendas that form the basis for lobbying by the unit of local government. This shines a local spotlight on the case for reform, and brings influential local governments to work with reformers at the state legislature. In Virginia, a number of cities,. including Saunton, have adopted local resolutions calling for a 35% annual rate cap for payday loans. Other cities and counties in Virginia are considering similar actions. (See appendix for Saunton resolution.). The Ohio Coalition for Responsible Lending is promoting a similar local government resolution in support of.state legislation to cap rates at 36% APR and "other measures to break the cycle of chronic borrowing payday lending creates." The York County Board of Supervisors in Virginia put a payday loan state bill on the County's legislative agenda, calling for a state bill to "cap rates at 36% annual interest." 12 Assistance for Government Officials This section will assist government officials to better understand the type of ordinance that might be best for their community and past legal challenges to those ordinances. The following appendices supplement it: o Appendix 1 - List of Payday Lender Ordinances o Appendix 2 - Legal Challenges to Local Payday Lender Ordinances o Appendix 3 — Ordinance and Resolution Examples Step 1 - Learn what you can about payday lenders in your town. Identify consumer advocates and nonprofit groups doing economic justice work in your community. Utilize these resources to gain a broader depth of knowledge about the negative social and economic impacts of payday lending. Step 2 - Choose the type of ordinance that fits your community and what you want to-accomplish. You may want to have staff review similar ordinances that have passed in other communities around the country. Planning staff will have a good idea of what types of ordinances your charter allows and what might work best in your community. Review options for having the ordinance drafted. Step 3 - Have your city or county attorney review the ordinance. You may want to have legal staff contact Lynn Drysdale at Lynn.Drysdale Qaxlegalaid.org for a consultation. There is always the potential for legal challenges with any type of ordinance. A number of relevant cases are reviewed in Appendix 2. Step 4 —'Prepare the document and prepare for the vote Revise the ordinance if necessary. Contact local advocates to arrange for their presence at any public hearing held before the final vote. Ask them to bring victims, advocates, media, and government officials from other communities near yours who have successfully passed similar ordinances. Step 5 - What else can cities do? City or county governing bodies can adopt resolutions calling on the state legislature to close the payday lending loopholes by having all small lenders meet the same small loan usury cap, usually about 36 %, repeal laws that allow payday lending, or to enact rate caps to protect borrowers from triple -digit interest rate caps or other consumer protection. Local governments can also include payday lending reform in their legislative agendas which form the basis for lobbying by the unit of local government. This shines a local spotlight on the case for reform, brings influential local government bodies into the fight, and authorizes lobbyists for local governments to work with reformers at the state legislature. Several cities in Virginia are passing formal resolutions asking that the state General Assembly cap payday interest rates at 36% APR. The first city was Staunton, Virginia followed by Harrisonburg; Shenandoah, Blacksburg, Lexington, and Winchester Virginia. Rate cap resolutions are a great way to. put pressure on your state legislature. They focus on the rate cap solution, the only proven way to rein in this industry. The vice -mayor of Harrisonburg was quoted as saying, "Four times prime rate sounds like a good cap to me. I think that covers a lot of risk." 13 Summary Double digit growth of usurious payday lending outlets continues to be a problem across America. Passing local ordinances to restrict growth and activities of payday lenders in your community is a step forward in addressing this problem. Ideally state legislatures should pass effective laws to protect consumers from triple digit loans that quickly become debt traps, but that is not the case in many states. Local governments are left to address the problem of payday lenders on their own. West Valley City, Utah, a large suburb of Salt Lake City, was one of the pioneers in using local ordinances to control growth and density. Payday lenders who wish to do business in the city are now placed on a waiting list for years. Since 1996, the year their ordinance was passed, no new payday loan stores have been allowed to open. Growth has bumped lenders to adjacent cities that are now passing similar ordinances. Local attention to the issue of payday lending has many benefits. Media coverage of council hearings regarding zoning ordinances helps publicize the problem to city residents. Coverage also educates citizens and local community leaders on the pitfalls of payday loans and the problems associated with having numerous, often gaudy, outlets through out their town. Above all, coverage starts to build critical mass for a united front against payday lending in your state. This in turn pressures state lawmakers to pass more restrictive laws that provide uniformity across your state. Oregon is a shining example of this success. Payday lending is now prohibited in 13 states and the District of Columbia. Until all other state legislatures join this movement it is important to keep the issue of usury and usurious loans in the news. Passing a local community ordinance to restrict, prohibit, or otherwise regulate payday lenders in your community keeps the dangers of payday lending in the forefront and helps build momentum for other steps. 14 PAYDAY LENDING ZONING LAWS /LEGISLATION APPENDIX 1 - List of Payday Lender Ordinances JURISDICTION BASIS FOR DETAILS CITATION LIMITS Casa Grande, AZ Distance No details. Mesa, AZ Density 1,200 feet between outlets Peoria, AZ Density 1,000 feet between outlets Phoenix, AZ Density Proposed zoning rule first considered at Chapter 2, Rules of Planning Commission meeting on 11/9/05: construction and check- cashing stores must be at least 1,000 ft. definition, apart section201 Pima County, AZ Permit/Density New payday lenders not allowed to locate within 1,320 ft (one quarter mile) of existing operations or 500 ft. of homes or residentially zoned property. Also requires a special use permit. Scottsdale, AZ Draft South Tucson, AZ Zoning /Density Limited to three business zones. Cannot open City Council within 1,000 feet of existing operations or within Ordinance No:05- 500 feet of houses. 03 amending Chap. 24, Article I SEC. 24 -1, Article IV Tempe, AZ Density One quarter mile between outlets Tucson, AZ Density One mile of separation between payday lending Ordinance no. stores and 500 feet between payday lending 10252 stores and neighborhoods Youn town, AZ No details, referred to in other literature North Little Rock, AR Moratorium 24 month moratorium on establishment of new Zoning ordinance check cashing businesses beginning 9/10 /07 #7985 Baldwin Park, CA Moratorium Permanent for payday lenders and check cashing stores. Long Beach, CA Moratorium One year for downtown area, six months city wide beginning 7/1/08 Montebello City, CA Moratorium Six month moratorium beginning 4/25107 — extended into 2008 Norwalk, CA Moratorium 2008 - ? Oceanside, CA Permit Requires special operating permit, payday lenders classified as adult businesses, not permitted within 1,000 feet of similar businesses or within 500 feet of home, church, park or school. Oakland, CA Permit Special Use Permit, must not be closer than Oakland Planning 1,000 ft. from another check casher /payday Code 17.102.430 lender; must be at least 500 ft. away from: - Community education civic activities (schools) -State or federally chartered banks, savings associations, credit unions, or industrial loan. companies - Community assembly civic activities (churches) or - Liquor stores (excluding full service restaurants or liquor stores with 25 or more full time employees). Pico Rivera, CA Moratorium Extended for one year 1/2008 15 JURISDICTION BASIS FOR DETAILS CITATION LIMITS Sacramento, CA Distance Bans payday lender from being within 1000 ft of another lender, check casher, church, school or bank. Prohibits new stores from opening within 500 ft of homes and limits hours from 7 a.m. to 7 p.m. San Francisco, CA In process Santa Monica, CA Permit Conditional use permit. Intern survey South Gate, CA Conditional use Limits hours of operation from 7 a.m. to 10 p.m. Minimum security requirements include burglar alarm, operating public address system, and full time security guard who must a approved by police chief. Washington, DC Interest rate 9/07 — repealed ordinance tha exempted Washington, DC restriction consumer loans from interest iate cap Payday lenders can now charge no more than 24% APR on payday loans. Ordinance will go into effect in early 2008. Ft. Lauderdale, FL Permit City Zoning Code does not pr hibit or permit Notes* Pembroke Pines, FL check cashing services — decision on a case -by- case basis. (Requires public hearing?) Special use permits. Belleville, IL Density City limits number of outlets in city to three. Bellwood, IL Licensing Requires special licensing process. City Ordinance 117.999 Chicago, IL Zoning Change Change zone classification from a service Notes* district to special use, which would require public hearing. Elmhurst, IL Conditional use Payday lenders and pawn sho s limited to Propose 9/09, not certain zoning districts after meeting other yet passed by full requirements committee Fairview Heights Outlet Cap Limits number of outlets in cit to two Glendale Heights, IL Permit Special Use Permits Title 4, chapter 1 Springfield, IL Distance Requires that outlets are at least 1500 Ft apart Blue Springs, KS Density and Requires hearing and conditio al use permit, Permit 200 ft. between the business and residential lot, 1000 ft. from a school or park facility, 1000 ft. from another loan service, pawn shop or precious metal or gem dealer, 1000 for from city limit, conditional use permits limited to 1/4500 residents Desoto, KS Prohibition Prohibits payday lenders from the city. Kansas City, KS Land Use Prohibits payday lending or ch ck cashing outlets on parkways or boulevards Shawnee, KS Moratorium and Bans new cash - advance busin asses on the Density eastern side of city. No new ce sh- advance outlets within on a mile of anot ier cash - advance business Superior, MN Permit Special Use Permits 2,500 ft. required between pay Jay lenders. 16 JURISDICTION BASIS FOR DETAILS CITATION LIMITS Arnold, MO Permit Conditional Use Permit for "small loan business ". Limits business to certain commercial areas. Berkeley, MO Licensing Creates a classification for payday institutions Notes* different from" financial institutions ". Fairview Heights, MO Density City limits number of payday lenders to two. Gladstone, MO Density One mile between outlets, 200 ft. from residential area, outlet must be in a multi- tenant commercial building housing at least four separate entities City of North Kansas Permit Conditional use permit. Restricts payday City, MO lenders and check cashers from doing business in certain zones. Restricts amount of signage allowed in windows. Oak Grove, MO Permit Passed — density of 1 store per 5000 residents. Proposed — special use permits with certain restrictions St. Ann, MO Cap No more than 3 payday lenders allowed in city, St. John, MO Licensing Creates a separate license category for payday Notes* lending. St Joseph, MO Density. Per capita limit of one store per 15,000 residents St Louis, MO draft St. Louis County, MO Permit Conditional Use Permit for each location. Requires public hearing for each request. Jackson, MS Moratorium 45 moratorium while city comes up with plan to reign in payday lenders. 11/09 - extended Starkville, MS Moratorium 12 moratorium 1/10 Clark-County, NV Permit/ Density Same as for city of Las Vegas. Henderson, NV Permit Essentially banned in Downtown Redevelopment Area. In 2004, began requiring a Conditional Use Permit for all new payday loan centers and declared several zoning categories off limits to them. New rules considered: separation requirement from schools, residential areas, and other check- ashing businesses. Las Vegas, NV Permit/ Density Special use permit requirement. May not be within 200 ft. of residences. Must be 1,000 ft. Title 19.06 from other financial institutions, auto title loan businesses, and pawn shops. Restricted hours. North Las Vegas, NV Moratorium A 6 mo. moratorium on new payday lenders started in July 05 Clayton City, OH Moratorium 3/08 one ear? Cleveland, OR Density Ordinance limits outlets to one per 20,000 residents, must be at least, 1,000 feet apart. Cuyahoga Falls, OH Density Ordinance limits outlets to one per10,000 residents, must be at least 1,000 ft apart. Lakewood, OH Density/ permit Ordinance defines number of terms and limits Ordinance No location of payday loan business. They cannot 1365 -2006 be within 750 ft. of any other payday loan or similar business. Oberlin, OH 17 JURISDICTION BASIS FOR DETAILS CITATION LIMITS Parma, OH Density/ Limits density 1/10,000 and 1000 ft. apart, caps prohibitions stores in city to nine, limits stores to certain zoning districts, prohibits stores on listed busy streets. Xenia, OH Moratorium One year, beginning Aril 2008 Beaverton, OR Loan restriction Same as Portland, OR Title 7, chap. 7.12 Bend, OR Loan restriction Same as Portland, OR Eugene, OR Loan restriction Same as Portland, OR Council ordinance #20372, code sec. 3.550 -3.560 Gresham, OR Loan restriction Same as Portland, OR Chap 9, Art. 9.90 Oregon City, OR Loan restriction Same as Portland, OR Ord. 06 -1005 Portland, OR Loan Lenders may not renew loan unless borrower Chapter 7.26 restrictions has paid at least 25% of principal prior to renewal. Borrower may cancel loan within 24 hours with certain restrictions. After max number of rollovers, lender shall allow borrower to convert to payment plan prior to default. Passage of 2007 Oregon state law capping rates at 36% had no effect on local ordinances. Troutdale, OR Loan restriction Same as Portland, OR Chap 5.06.050 -070 Woodburn, OR Loan restriction Same as Portland, OR Pittsburg, PA Density 500 ft. from residence, 1000 ft. from a similar Notes* business Columbia, SC Permit Special use permit required, proposed Notes* vote Sept. ordinance 8/08 to require %2 mile separatinon 24 2008, need an between payday lending businesses update Easley, SC Temporary Voted to suspend the issuance of business suspension — licenses to any new payday loan, cash advance, Ban extended title loan, pawn broker, bail bondsman or similar 11/07 types of businesses until Dec. 11, 2007 Greenville, SC Payday lenders must RELOCATE when lease expires if within 300 feet of another payday or title lender. Rock Hill, SC No details — passed "an ordinance" Memphis city and Density and Payday and title loan lenders must be 1,000 ft. Shelby County, TN distance apart, title lenders must not be within quarter mile of residential or landmark district. <. Brownsville, TX Proposed 6 month moratorium on new lenders 12/09 El Paso, TX draft Garland, TX Irving, TX Cap Limit on number of stores — no details Little Elm, TX Mesquite, TX Density and Stores must be 1,000 feet apart, in freestanding prohibited buildings, at least 200 ft. from residential areas districts and 500 ft. from freeways. Cannot be in special 'overlay' districts Richardson, TX Cap Limit number of outlets — no details Sachse, TX Cap Must obtain special use permit — no other details 18 JURISDICTION BASIS FOR DETAILS CITATION LIMITS American Fork, UT Density One store per 10,000 residents Brigham City, UT Density One mile between non - depository institutions. One store per 10,000 residents. Cottonwood Heights, draft Murray, UT Density One outlet per 10,000 residents, minimum of 1,000 feet apart Ogden, UT Draft One outlet per 10,000 residents, amortize all Vote on 4/22 stores to take "last in -first out' until density is met OR alternate proposal is to take out until all removed from city over a period. of years. Orem, UT Density One outlet per 10,000 residents, minimum % Ord. 0 -07 -0037 mile between outlets Sec. 22 -14 -21 A Riverton, UT Draft Lenders must be 600 ft apart, cap lenders at 1 per 10,000 residents Roy, UT Tomp mort. 6/09 — No electronic signs, new apps halted, zoning change being considered for payday and minor wholesale auto brokers Salt Lake City, UT Distance, Half mile between outlets, payday lenders Chapter 5.49 Zoning allowed only in CG zoning districts Salt Lake County Density One outlet per 10,000 people and 600 feet (unincorporated) between outlets Sandy, UT Density Minimum 1000 feet between outlets; one outlet per 10,000 residents. South Salt Lake City, UT Density Restricts businesses to 600 ft. from the nearest residential zone (some exceptions). Restricts 5.48.240 5.48.200 the number of facilities to 1 for every 5,000 people. Prevents all check cashing establishments from certain districts of city. South Jordan, UT Density Outlets must be a minimum of one mile apart. Ta lorsville, UT Density Only one outlet per 10,000 residents. West Jordan, UT Density Minimum 1000 feet between outlets, Ono outlet Chapter 17 per 10,000 residents. West Valley City, UT Density 600 ft. between payday lending outlets. One outlet per 10,000 residents. City Code Section 7 -1 -103, Subsection 30 Chesterfield, VA Conditional Conditional use process that allows a site - Use specific review by the Board of Supervisors. Chesterfield County, Zoning Limited to certain commercial zones VA Henrico Co Moratorium Established "sunset" period to phase out (Richmond, VA ) locations Langley, VA Zoning Outlets allowed only in an enclosed mall with C3 commercial zoning. Norfolk, VA Permit Payday loan and /or auto title loan Chapter 6 - 4 establishments must receive permission from the city council in the form of "special exception use" permits Burlington, VT Prohibition Zoning does not include check cashing. Notes` Green Bay, WI Density Prevents stores from opening within 5000 feet Sec. 13- 1606(v), of each other Code of Ordinances 19 Madison, WI Density Prevents stores from opening within 5,000 feet City Code of each other 28.03 -28.08 Milwaukee, WI Permit Special use permits, 1,500 ft. from similar Milwaukee Code of business; 150 ft. from single or two- family zoned Ordinances, Sec. property. 295 - 311 -2 -h Racine, Wl Zoning/ permit Makes payday loan stores a conditional use, Sec. 114 - 468(28), and sets distance requirement of 2500 feet Code of between stores and 250 feet from residential Ordinances districts. Superior, Wl Zoning /density 2,500 ft. separation; commercial highway locations only. Wauwatosa, WI Moratorium Within 300 feet of residentially zoned parcels Sec. 24.46.100, and 1500 feet. of similar businesses Code of Ordinances If you have additional information on other local payday loan ordinances, please email linda@crossroads-u-c.org. crossroads- u- c.org. During 2007 and 2008 at least 37 cities in Virginia passed a resolution asking the state assembly to cap payday loan interest rates. This project has spread to other states in the last two years. 20 APPENDIX 2 — Legal Challenges to Local Payday Lender Ordinances Often advocates find that local governments are much more approachable and willing to enact consumer protection payday loan legislation than state and federal legislators. Potential reasons for this phenomenon are that often local residents are unable to participate in statewide or national legislative actions in distant locations logistically in accessible to most citizens. Local legislation is also more widely covered by local press, putting civic leader under much more of a microscope than state legislators. The main challenges to local legislation tend to be based upon preemption arguments (express, implied and/or conflict). Samples of specific preemption arguments involve arbitration clauses or price controls. Challenges can also be based upon procedural irregularities. Advocates can look to home rule provisions for support of local legislation and can fashion legislation that addresses gaps in state and federal legislation. Local governments generally have more leeway in enacting local land use and zoning legislation. A discussion of arguments used to defeat and support local ordinances and a discussion of home rule, land use and zoning principles follow. Lastly, a sample of court decisions addressing challenges to local ordinances regarding credit products is included below. Preemption Arguments Lenders argue that local ordinances are "preempted" from enacting ordinances by pre- existing state or federal law. There are three types of preemption: 1) express or complete preemption, 2) field or implied preemption and, 3) conflict preemption. Express preemption is when the federal or state law explicitly recites intent to preempt state or local law. Field preemption applies when federal or state laws are so pervasive, that there is no room left for states or local governments to supplement them. Conflict preemption occurs when it is impossible to comply with both federal or state law and the local law, for example when a local law prohibits what a federal or state law allows. Express or Complete Preemption Express preemption is often found in language contained in the "policy and legislative intent" section of the state or federal law. This language clearly prohibits enactment of ordinances or other laws to the contrary or gives exclusive jurisdiction in all matters addressed by the law to the state or federal government. The legislature usually claims the need for uniformity in the subject matter throughout the state or country. An example of a price control express preemption is found in Florida Statutes. § 125.0103: Except as hereinafter provided, no county, municipality, or other entity of local government shall adopt or maintain in effect an ordinance or a rule, which has the effect of imposing price controls upon a lawful business activity which is not franchised by, owned by, or under contract with, the governmental agency unless specifically provided by general law. Implied or Field Preemption 21 If there is no express preemption, there may be field or implied preemption. Implied preemption occurs when preemption is not specifically stated but the state or federal legislative scheme is so pervasive that it is deemed to "occupy the entire field of potential regulation" creating a danger of conflict between local and state laws. Implied preemption is actually a decision by the courts to find preemption when there is no explicit legislative directive. The courts are understandably reluctant to "find" a state or federal government intent to prevent a local elected governing body from exercising its local or "home rule" powers. (See Home Rule below). If a state or federal legislative body can easily create express preemption by including clear language in a statute, there is little justification for the courts to interject such an intent into a statute. In the absence of express preemption, normally a court will only find implied preemption if there is a direct conflict between the state or federal law and a local law or they can reasonably find the legislative scheme is so pervasive that there is little or no room left for enacting additional laws covering the area. The court usually finds strong public policy reasons for finding such an area to be preempted by federal or state law. With implied preemption courts tend to limit the preemption to the specific area where the federal or state legislature has expressed a will to be the sole regulator. Conflict Preemption Even if there is no express or implied preemption, portions of a local ordinance that expressly conflict with state or federal law are unenforceable. It is well established that no local ordinance may specifically conflict with a federal or state law. A conflict exists when a local ordinance directly prohibits what the state has expressly licensed, authorized or required, or authorizes what the state has expressly prohibited. It is not necessarily a conflict when an ordinance imposes requirements not provided by state or federal laws. Instead, an ordinance conflicts with a federal or state law when the ordinance and the state or federal law cannot coexist. Put another way, legislative provisions conflict when in order to comply with one law you must violate another. An ordinance is not superseded or preempted by a federal or state law where their subjects are at most only incidentally related. The fact that an ordinance covers a topic that relates to, but is not specifically covered by a subsequently enacted federal or state law dealing with the same topic, does not make the ordinance in conflict with, or repealed by, the law. Where the statute is silent, the ordinance may speak. So long as the ordinance is within the scope of municipal power and does not exceed or is not inconsistent with the new state or federal law, there is no conflict which would render the ordinance void. Courts are reluctant to find conflict unless there is a direct conflict between local legislation and state or federal law and generally indulge every reasonable presumption in favor of an ordinance's constitutionality. Generally speaking, a properly enacted ordinance will be presumed to be valid until the contrary is shown, and a party who seeks to overthrow such an ordinance has the burden of establishing its invalidity. General Strategies for Avoiding Successful Preemption Challenges Draft your ordinance to complement preexisting state or federal law. A local ordinance has a greater chance of avoiding a successful conflict preemption challenge if the ordinance references the 22 potentially conflicting state or federal law as its guideline. Local authorities should determine what the state or federal law covers and how it operates so they can determine how to draft an ordinance in terms meant to "complement" the state or federal law in the area they regulate. Draft your ordinance to fit within the exception provided to state or federal law. State and federal laws may contain gaps in coverage in the subject matter the local government seeks to regulate. For example, a state or federal law may reserve certain subjects for local regulation; draft the ordinance to fit within those subjects. Even if the state or federal law does not specifically reserve subjects for local regulation, attempt to draft the ordinance so it falls outside of the category of state or federal laws that are expressly preempted. If the ordinance deals with an area traditionally left to local governments, such as zoning, the courts may be less inclined to find preemption. Use a statement of legislative purpose. If a state or federal law expressly preempts local ordinances enacted for a specific purpose, include a statement of legislative purpose in an ordinance to show the ordinance is enacted for a different purpose. Home Rule Home Rule is the principle of local self-government arising from a state constitutional grant of a charter or right to draft a charter that creates a structure and powers for city or county governments. The specific character of home rule varies by state. Some home rule states allow a "structural home rule" permitting communities to incorporate and create local governments. Another form of home rule is often called "functional home rule" where city or county governments can exercise power in such areas as public works, social services, and local economic development. Advocates of the expansion of home rule claim that local control makes government more responsive, allows for flexible and innovative approaches to local problems, and relieves state legislatures of addressing local issues. Detractors claim few issues are strictly local in nature, especially as the populations of central cities decline and metropolitan areas become more important. They argue greater local autonomy may thwart cooperation among neighboring local governments and create disputes over policies involving overlapping federal, state and local jurisdictions. An example of home rule is found in the Jacksonville, Duval County, Florida Municipal Charter. The consolidated county and city government: (a) Shall have and may exercise any and all powers which counties and municipalities are or may hereafter be authorized or required to exercise under the Constitution and the general laws of the State of Florida, including, but not limited to, all powers of local self - government and home rule not inconsistent with general law conferred upon counties operating under county charters by s. 1(g) of Article VIII of the State Constitution; conferred upon municipalities by s. 2(b) of Article VIII of the State Constitution; conferred upon consolidated governments of counties and municipalities by section 3 of Article VIII of the State Constitution; conferred upon counties by ss. 125.85 and 125.86, Florida Statutes; and conferred upon municipalities by ss. 166.021,166.03 1, and 166.042, Florida Statutes; all as fully and completely as though the powers were specifically enumerated herein. 23 (b) With respect to Duval County, except as expressly prohibited by the Constitution or general laws of the State of Florida may enact or adopt any legislation concerning any subject matter upon which the Legislature of Florida might act; may enact or adopt any legislation that the council deems necessary and proper for the good government of the county or necessary for the health, safety, and welfare of the people; may exercise all governmental, corporate, and proprietary powers to enable the City of Jacksonville to conduct county and municipal functions, render county and municipal services and exercise all other powers of local self - government; all as authorized by the constitutional provisions mentioned in subsection (a) and by ss. 125.86(2), (7), and (8) and 166.021(1) and (3), Florida Statutes Regulating by Land Use and Location Restrictions Local governments have historically had jurisdiction to regulate local land use and planning ordinances couched in zoning terms. Many states have adopted comprehensive land use plans that act as a guide for cities. Often there are state and federal limitations regarding land use in special geographic locations such as coastal areas. Many cities have successfully enacted land use ordinances that limit the saturation of title and payday lenders and excluded them from certain areas of town unless allowed after a request for an exception or "variance" to local zoning laws or unless allowed by request for a "special use permit." A variance is a device that permits a property owner to do something on the land which is prohibited by zoning laws. Variances are awarded to avoid practical difficulties or unnecessary hardships in individual cases. Generally speaking the difficulties or hardships must be a function of the nature of the land and not personal issues. A special use permit allows the property owner to put property to a use expressly permitted by the law after obtaining a special permit. Special uses are specifically permitted under certain circumstances specified by the local government in the zoning law. This amounts to a finding that the use permitted is harmonious with neighborhood character and ought to be allowed. Special use permits are referred to by a variety of terms in local practice and court decisions. These terms include special exception use, special permit, special exception permit, conditional use permits, and special exceptions. An example of a special use is the use of a home office or home occupation in an area zoned for single - family use. An ordinance may permit single - family homes without seeking a special use permit in a residential district and allow a home occupation upon the successful request for a special use permit. This means the local government body has concluded this special use is harmonious with the residential district, but that conditions may need to be imposed on the use to ensure that the size, layout, parking, and lighting do not adversely affect the residential neighborhood. Generally local government staff will review the application for a variance, permit for special use or use by exception and make a recommendation to a local board which ultimately makes the decision or makes a recommendation to the city's governing body. Decisions granting or denying an application are "quasi-judicial" in nature. This means the local governmental authorities are required to explain the basis for their actions. The explanation must show the decision was not arbitrary and was based upon factors set out in the ordinances as the bases for granting or denying an application. The decision must also be based upon facts presented to the authority at a public hearing and on the record. 24 If these decisions are reviewed by the court, the court must determine if the decision is supported by "substantial evidence." Specific Judicial Challenges and Legislative Actions against Local Legislation Milwaukee Wisconsin Title and Payday Loan Ordinance The court in Title Lenders Inc d /b /a USA Payday Loans v. Board of Zoning Appeals, Milwaukee County, Circuit Court, Case No. 04- 000115, July 29, 2004. reviewed the City of Milwaukee Board of Zoning's decision to deny Loan Max's application to open a title loan business in an area where other title and payday loan businesses were already located. The Alderman for that area opposed the request based not upon inconsistencies with the local land use plan but because he objected to the interest rates charged. The City zoning board considered: 1) protection of public health, safety and welfare, 2) protection of property, 3) traffic and pedestrian safety and, 4) consistency with the comprehensive plan. When Loan Max sought judicial review of the Board's decision, the court was bound by these standards: 1) whether the Board kept within its jurisdiction, 2) whether it proceeded on a correct theory of law, 3) whether its action was arbitrary, oppressive or unreasonable and represented its will and not its judgment and, 4) whether the Board might reasonably make the order or determination in question, based on the evidence. The Board denied the special use permit because the payday loan entity: 1) attracts clientele that are in financial trouble or unable to manage money; 2) may attract robbers and other criminals to the area and, 3.) did not comport with the efforts of the Department of City Development to develop the area. The Board was also concerned that there was another payday loan agency in the immediate area. The Court upheld the denial of the special use permit. Madison Wisconsin Payday Loan Ordinance The Payday Loan Store filed an equal protection and due process violation claim against, Madison, Wisconsin as a result of its ordinance prohibiting.payday lenders from operating between the hours of 9:00 p.m. and 6:00 a.m. The District Court in The Payday Loan Store of Wisconsin. Inc. d/b /a Madison's Cash Express v. CityofMadison, 333 F.Supp.2d 800 (W.D.Wis. 2004) upheld the ordinance finding the city was attempting to regulate location and hours of operation and not the financial terms or conditions of the loans and, therefore, was acting within its authority as a local government to regulate the "good order of the city and for the health, safety and welfare of the public." Philadelphia Pennsylvania Predatory Lending; Ordinance In June, 2001, Pennsylvania Governor Tom Ridge signed a state law explicitly overriding the Philadelphia Predatory Lending Ordinance. The state law specifically prohibits local governments from regulating sub -prime lending practices in Pennsylvania. The rationale was to guarantee lenders would face a uniform set of regulations throughout the state. The ordinance regulated mortgage lending practices on loans of less than $100,000 that otherwise are covered under the federal Home Ownership and Equity Protection Act. The new state law claimed a well - developed sub -prime market was important and provided benefits and placed some restrictions on these loans. The state law provided protections already contained in HOEPA and did not require mandatory pre -loan counseling required by the ordinance when consumers obtained sub -prime loans. 25 Oakland. California Predatory Lending Ordinance The California Constitution has a home rule provision: Article XI, Section 7 `[a] county or city may make and enforce within its limits all local, police, sanitary, and other ordinance regulation not in. conflict with general law." Charter cities such as Oakland, California may adopt and enforce ordinances that conflict with general state laws, provided the subject of the regulation is a "municipal affair" rather than one of "statewide concern." Cal.Const., Art. XI, §5, Oak.City Charter, § 106. Pursuant to California law "A conflict exists if the ordnance duplicates or is coextensive with a state law, is contradictory or inimical to the state law, or enters an area either expressly or impliedly fully occupied by general law. Oakland's predatory lending ordinance was struck down because even thought the state Legislature did not expressly preempt the field of mortgage lending, the Court found field preemption by implication because the state law "fully occupied the field" of regulation of predatory practices in home mortgage lending. The Court found local regulation is invalid if it attempts to impose additional requirements in a field which is fully occupied by statute. Factors California Courts consider as indicia of legislative intent to "fully occupy a field of regulation" are: 1) the subject matter has been so fully and completely covered by general law as to clearly indicate that it has become exclusively a matter of state concern, 2) the subject matter has been partially covered by general law couched in such terms as to indicate clearly that a paramount state concern will not tolerate further or additional local action or, 3) the subject matter has been partially covered by general law, and the subject is of such a nature that the adverse effect of a local ordinance on the transient citizens of the state outweighs the possible benefit to the locality. American Financial Services Association v. City of Oakland, et al., 34 CalAth 1239 (2005) Norwalk. California Zoning Ordinance After the Court found Oakland's predatory lending ordinance invalid, Norwalk, California took an alternative approach to regulating pay day lending. The City Council passed a zoning ordinance limiting the number of pay day lending business allowed in the city to eight (8) and providing spacing/location limits. The ordinance grandfathered certain then - existing pay day lending businesses. City officials met with representatives of several payday lending institutions. These representatives also attended the Planning Commission and City Council meetings and did not oppose the ordinance. The ordinance was passed on February 23, 2010 and has not been challenged. It can be distinguished from many of the other ordinances because it regulates the industry from a zoning perspective, a function traditionally associated with municipalities. Jacksonville Florida Payday Loan Ordinance The City of Jacksonville enacted a payday loan ordinance that reduced the interest rate to 36% per annum and added consumer protections not provided by the Florida Deferred Presentment Act. The ordinance also included distance requirements between other payday lenders and the area military bases. All sections, except those relating to zoning, were overturned by the Court in a summary final judgment. The Court found the interest rate sections of the ordinance created unlawful price controls which conflicted with a state law that expressly preempted local price control legislation. The Court also found express preemption by applying the Florida mortgage predatory lending law to payday loan transactions. The Court found the mortgage law prohibited enactment or enforcement of local laws regulating all financial entities licensed by the Florida Office of Financial Regulation. The Court also found that the 26 Florida Deferred Presentment Act implicitly preempted the field of payday loan legislation and, if not, there was a direct conflict between the local ordinance and state payday lending law because the local ordinance reduced the rates lenders were allowed to charge by state law. The Court also found the arbitration provisions were preempted by the Federal Arbitration Act (FAA), rendering arbitration agreements valid and enforceable, finding the FAA's breadth is consistent with Congress's liberal federal policy favoring agreements to arbitrate. Under the FAA, which applies in both state and federal courts, states may not "require a judicial forum for the resolution of claims which the contracting parties agreed to resolve by arbitration." The Court disregarded the City's argument that payday lending involves relatively small loans and does not encompass loans that involve interstate commerce, finding that Courts, not legislatures, determine when a transaction involves interstate commerce. The Court found a legislative body may not simply declare that certain categories of transactions do not involve interstate commerce. Advance America Cash Advance Centers of Florida Inc v The Consolidated ON ofJacksonville, Florida, In the Circuit Court, Fourth Judicial Circuit, in and for Duval County, Florida, Case No. 16- 2005 -CA- 7025-MA, summary judgment order entered June 1, 2005 After the summary, judgment order was entered the City repealed the entire ordinance including the zoning provisions which were upheld by the Court. St Ann Missouri Ordinance Prohibiting Payday Lenders Within the City Limits Sunshine Enterprises was licensed by the state to operate a business providing unsecured, under- $500 loans, but was denied a merchant's license by the City of St. Ann pursuant to a city ordinance prohibiting the operation of short -term loan establishments within the city. The ordinance defined a short-term loan establishment as a business engaged in providing short-term loans to the public as a primary or substantial element of its operations and prohibited their operations in all zoning districts of the City of St. Ann. Sunshine challenged the city's ordinance as being a complete prohibition, rather than a regulation, and therefore in conflict with state law. The Court held cities may not enact ordinances that conflict state statutes or regulations. While ordinances that are regulatory are allowed, those that prohibit activities permitted by state law are in conflict and invalid. Because the state law allowed the operation of lending businesses and the Court determined that Sunshine's primary business was lending, Sunshine was in compliance with state law and its operations could not be prohibited by the city ordinance. The Court held that it was the city's burden to show that the ordinance did not conflict with state law, and the City of St. Ann was unable to do so. State of Missouri, ex rel. v. Sunshine Enterprises ofMissouri Inc d /b /a Sunshine Title and Check Advance, Case Number: SC83502, Appeal from the Circuit Court of St. Louis County, January 8, 2002. St Louis Missouri Title Loan Ordinance Missouri Title Loans appealed the denial of a permit to operate a title lending business within an area of St..Louis zoned for limited commercial purposes. The ordinance set requirements for businesses to satisfy for operation in this particular commercial zone. The St. Louis Board found that Missouri Title Loans did not satisfy those requirements. The ordinance provided the commercial district's purpose was to establish and preserve the commercial and professional facilities found useful in close proximity to residential areas, so long as the uses were compatible with the residential uses. The types of businesses allowed in the commercial district included general office uses, financial institutions, and other similar uses. Title Loans challenged the denial of its permit by stating that it was a financial institution as defined in the St. Louis code. The Court looked to the definition of "financial institution" and 27 determined by state law that Title Loans was not a bank, savings and loan association, or similar to one, and therefore did not qualify as a financial institution for the purposes of the ordinance. Title Loans further alleged that it intended to use the property for general office purposes allowing it to qualify for the permit. The Court held "general offices," as used in the code, referred to general business offices where employees do not engage in regular contact with the public, and the operations of Title Loans did not fit this category. Title Loans further argued that it qualified for a conditional use permit as allowed under a separate section of the code, claiming that it would satisfy the required standards. The code would allow a business to operate under a conditional basis if the business would contribute to the general welfare and convenience of the location, would not reduce or impair property values, and would not impact the adjacent uses or community facilities in a negative way. The Court accepted testimony from numerous sources that Title Loans would not satisfy the standards and would have an adverse impact on property values and the ability to attract other businesses to the area. Because the evidence supporting the denial of the permit was competent and substantial, the Court upheld the Board of Adjustment's decision and denied the permit. Missouri Title Loans. Inc. v. City of St. Louis Board ofAd justment, Case Number: ED77866, Appeal from the Circuit Court of the City of St. Louis, decided May 1, 2001. Cleveland and Dayton, Ohio Predatory Lending Ordinances The Ohio Supreme Court struck down the Cleveland and Dayton, Ohio predatory lending ordinances in American Financial Services Association, et. al. v. City of Cleveland, 858 N.E.2d 776 (Ohio 2006). The Court was reviewing predatory mortgage ordinances enacted by Cleveland and Dayton, Ohio The American Financial Services Association (AFSA) claimed these ordinances were preempted by or in conflict with the Ohio predatory lending law that mirrored the federal Home Ownership and Equity Protection Act in providing protections in high cost or high interest loans. The ordinances lowered the thresholds for loans included in the ordinance widening the restrictions and protections to more loans. The Court was asked to determine: 1) if the state predatory lending law which did not expressly preempt local ordinances constitute such a wide ranging law so as to preempt the entire field of consumer lending regulation and bar local governments from adopting local ordinances regulating lending practices enforceable as "general laws" and, 2) does the "home rule" provision of the Ohio Constitution permit a municipality to impose on local consumer lending institutions regulatory requirements that are different from or more restrictive than the state predatory lending law as long as the local requirements are not in conflict with the state requirements? Ohio's home rule law provides "Municipalities shall have authority to exercise all powers of local self - government and to adopt and enforce within their limits such local police, sanitary and other similar regulations, as are not in conflict with general laws." In their respective briefs, the key issue argued by the industry group and Cleveland is what standard the Court should apply in determining whether a local ordinance is or is not "in conflict" with the provisions of the state statute. The AFSA argued an "implied permission" standard applied claiming when the state enacts a law that sets specific numerical limits or spells out specific procedural requirements for a certain type of conduct or activity, the state law is presumed to permit conduct or activity that falls within the prescribed numerical limits and/or does not violate the prescribed procedure. In this case, AFSA claimed imposing the restrictions on more loans improperly included them for restrictive regulations not imposed by state law. They claimed the ordinance was unconstitutional and invalid because the city ordinance clearly "prohibits that which the state law permits." 28 The City of Cleveland responded that a more demanding "affirmative permission" standard should be applied. Under this standard, a local ordinance may only be voided for direct conflict with a state law if the local ordinance affirmatively permits something that the state law plainly prohibits, or the local ordinance prohibits something that the state law explicitly permits. Cleveland argued both the state law and the Cleveland predatory lending ordinance were written in prohibitive (rather than permissive) form — meaning the text of both laws lists predatory terms and conditions that may not be imposed on borrowers. In terms of "home rule" analysis, Cleveland claimed the language of the state law could not be read to "permit" specific actions prohibited by the city ordinance because the state law did not permit anything, it only listed prohibitions. AFSA argued that the state express preemption of all regulatory authority over commercial lending activity should be read broadly to cover all lending activity because the state law sets forth a detailed statewide regulatory scheme for oversight of mortgage and home improvement lending, including civil fines, rescission of loan contracts and other remedies that borrowers may pursue in state courts and that statewide laws provide a more necessarily uniform statewide regulation of the mortgage loan industry. Cleveland argued because the constitution granted municipal governments power to adopt and enforce police regulations within their own borders, no state law could take away that power. In the absence of a clear and explicit contradiction between the terms of a state law and a local ordinance the Court must uphold the ordinance. The Ohio Supreme Court answered both questions above in the affirmative and found the state law was a general law as it affects the ordinances at issue, found the ordinances conflicted with the state law and deemed the ordinances unenforceable. 29 APPENDIX 3 — Resolution and Ordinance Examples Density — West Valley City, UT West Valley City Code Section 7 -1 -103 Subsection 30 30) "Check Cashing" means cashing a check for consideration or extending a Deferred Deposit Loan and shall include any other similar types of businesses licensed by the State pursuant to the Check Cashing Registration Act. No check cashing or deferred deposit loan business shall be located within 600 feet of any other check cashing business. Distance requirements defined in this section shall be measured in a straight line, without regard to intervening structures or zoning districts, from the entry door of each business. One check cashing or deferred deposit loan business shall be allowed for every 10,000 citizens living in West Valley City. The term Check Cashing shall not include fully automated stand alone services located inside of an existing building, so long as the automated service incorporates no signage in the windows or outside of the building. Land Use - Jacksonville, FL ORDINANCE 2005- 1012 -E AN ORDINANCE CONCERNING CONSUMER PAYDAY LOANS AND LENDING PRACTICES; MAKING FINDINGS; ESTABLISHING A NEW PART 3 (PAYDAY LOAN PRACTICES) OF CHAPTER 200 (SMALL LOAN AND CONSUMER FINANCING AND PAWNBROKERS), ORDINANCE CODE, TO ESTABLISH OBLIGATIONS, RESPONSIBILITIES, LIABILITIES AND CIVIL AND CRIMINAL REMEDIES IN THE PAYDAY CONSUMER LOAN BUSINESS; AMENDING CHAPTER 656 (ZONING CODE), ORDINANCE CODE, SECTION 656.401, (PERFORMANCE STANDARDS AND DEVELOPMENT CRITERIA), CREATING A NEW SUBSECTION 656.401(ii) TO PROVIDE DISTANCE REGULATIONS AND TO DEEM LEGALLY NONCONFORMING USES; PROVIDING AN EFFECTIVE DATE. WHEREAS, there exist business lending practices, commonly referred to as "payday" lending practices, whereby lending businesses advance money on paychecks of low and financially challenged persons, subject to very high interest rates; and WHEREAS, payday lending practices in general have proven to be detrimental to numerous individuals including military service members who use these loans as a way of overcoming immediate needs for cash; and WHEREAS, payday lending practices often have an unreasonable adverse effect upon the elderly, the economically disadvantaged, and other citizens of Jacksonville; and payday lending involves relatively small loans and certain payday lenders have attempted to use forum selection clauses contained in payday loan documents in order to avoid the courts of the State of Florida, and such practices are unconscionable and should be prohibited; and WHEREAS, the regulation and monitoring of the practices of payday lenders would serve an important public interest; and requiring payday lenders to provide both the Division of Consumer Affairs and the Council with demographic information on the individuals taking out payday loans to ensure better tracking and public education in the future would be in the public interest; now, therefore, all BE IT ORDAINED by the Council of the City of Jacksonville: Section 1. Legislative Findings The City Council finds as follows: (a) There exist business lending practices involving deferred presentment of checks, commonly referred to as "payday" lending practices, whereby lending businesses advance money on paychecks of low and financially challenged persons, subject to very high interest rates; and (b) Payday lending practices in general are recognized and have proven to be detrimental to the elderly, the economically disadvantaged, and to military service members and other citizens who have chosen these loans as a way of overcoming immediate needs for cash; and (c) Payday lending practices often have an unreasonable adverse effect upon the elderly, the economically disadvantaged, military service members, and other citizens of Jacksonville; and (d) Payday lending involves relatively small loans and does not encompass loans that involve interstate commerce; and certain payday lenders have attempted to use forum selection clauses contained in payday loan documents to avoid the courts of the State of Florida, and such practices are unconscionable and should be prohibited; and (e) That the monitoring of the practices of payday lenders would serve an important public interest; and requiring payday lenders to provide both the Department of Consumer Affairs and the Council with demographic information on the individuals taking out payday loans to ensure better tracking and public education in the future would be in the public interest; and (f) That companies both subject and not subject to state and federal regulatory policies are engaging in the practice of payday lending without following the Florida Deferred Presentment Act, Chapter 560, Part Four, Fla. Stat. ( "FDPA "); that various payday lenders have created certain schemes and methods in order to attempt to disguise these transactions or to cause these transactions to appear to be products other than loans and/or loans made by a national or state bank, chartered in another state in which this type of lending is unregulated, even though the majority of the revenues in this lending method are paid to the payday lender; and (g) The Council intends to take action where permissible and require lenders to follow the Florida Deferred Presentment Act and to take action to prevent abusive payday lending practices that harm military and civilian families; and (h) Payday lenders shall not use forum selection clauses and/or mandatory, unilateral arbitration clauses in order to avoid the courts of the State of Florida. Such clauses are unconscionable and shall be deemed unenforceable. (i) Payday lenders shall not require electronic access to a borrower's account in a financial institution as a condition of entering into a deferred presentment transaction. Section 2. Chapter 200 amended to create a new Part 3, Payday loans. Chapter 200 (Small Loan and Consumer Financing and Pawnbrokers), Ordinance Code, is amended to create a new Part 3 (Payday Loan Practices) to read as follows: CHAPTER 200. SMALL LOAN AND CONSUMER FINANCING AND PAWNBROKERS. PART 3. PAYDAY LOAN PRACTICES. Sec. 200.301. Application. This Part shall apply throughout Duval County with respect to: (a) all transactions in which any person who, for a fee, service charge, administrative charge, or other consideration, accepts a check dated on the date it was written and agrees to hold it for a period of days prior to deposit or presentment, or accepts a check dated subsequent to the date it was written, and agrees to hold the check for deposit until the date written on the check. (b) any person who facilitates, enables, or acts as a conduit for another person, who is or may be exempt from licensing, who makes deferred deposit loans. This Part is supplemental to all other laws or ordinances, and in no way impairs or restricts the authority granted to the Florida Department of Financial Services, or any other regulatory authority with 31 concurrent jurisdiction over the matters stated in this chapter. This Part shall apply to the above transactions, notwithstanding the fact that any transaction contains one or more other elements, but shall not apply to the transactions of federally- chartered depository banks. Sec. 200.302 Definitions. In addition to the definitions otherwise provided in this Part and unless otherwise clearly indicated by the context, for purposes of this Part: (a) Affiliate means a person who directly or indirectly through one or more intermediaries controls or is controlled by, or is under common control with, a deferred presentment provider. (b) Business day means the hours during a particular day during which a deferred presentment provider customarily conducts business, not to exceed 15 consecutive hours during that day. (c) Days means calendar days. (d) Deferment period means the number of days a deferred presentment provider agrees to defer depositing or presenting a payment instrument. (e) Deferred presentment provider means a person who engages in a deferred presentment transaction. (f) Deferred presentment transaction means providing currency or a payment instrument in exchange for a person's check or agreement to provide access to a drawer's account in a financial institution and agreeing to hold that person's check or maintain rights to access a drawer's account for a period of time prior to presentment, deposit, or redemption. (g) Drawer means any person who writes a personal check and upon whose account the check is drawn or any person who enters into a deferred presentment transaction. (h) Rollover means the termination or extension of an existing deferred presentment agreement by the payment of any additional fee and the continued holding of the check, or the substitution of a new check drawn by the drawer pursuant to a new deferred presentment agreement. (i) Fee means the fee authorized for the deferral of the presentation of a check pursuant to this part. 0) Termination of an existing deferred presentment agreement means that the check that is the basis for an agreement is redeemed by the drawer by payment in full in cash, or is deposited and the deferred presentment provider has evidence that such check has cleared. A verification of sufficient funds in the drawer's account by the deferred presentment provider, shall not be sufficient evidence to deem the existing deferred deposit transaction to be terminated. (k) Extension of an existing deferred presentment agreement means that a deferred presentment transaction is continued by the drawer paying any additional fees and the deferred presentment provider continues to hold the check for another period of time prior to deposit, presentment, or redemption. (1) Payday lender is a person or company who makes or facilitates a deferred presentment transaction, such that the person or company provides currency or a payment instrument in exchange for a person's check or agreement to provide access to a drawer's account in a financial institution and agrees to hold that person's check for a period of time prior to presentment, deposit, or redemption or facilitates this process. Sec. 200.303 Prohibitions - Generally. (a) Contractual provisions — venue. A payday lender shall not include in any loan contract made with a resident of this county, any provision by which the laws of a state other than Florida shall govern the terms and enforcement of the contract, nor shall the loan contract designate a court for the resolution of disputes concerning the contract other than a court of competent jurisdiction in and for the county in which the borrower resides or the loan office is located. (b) Contractual provisions — dispute resolution. An arbitration clause in a payday loan contract shall not be enforceable if the contract is unconscionable. In determining whether the contract is unconscionable, the court shall consider the circumstances of the, transaction as a whole, including but not limited to: 32 (i) The relative bargaining power of the parties; (ii) Whether arbitration would be prohibitively expensive to the borrower in view of the amounts in controversy; (iii) Whether the contract restricts or excludes damages or remedies that would be available to the borrower in court, including the right to participate in a class action; (iv) Whether the arbitration would take place outside the county in which the loan office is located or any other place that would be unduly inconvenient or expensive in view of the amounts in controversy; and (v) Any other circumstances that might render the contract oppressive. (c) Loan Disguises. A payday lender shall not use loan disguises or agency or partnership agreements between in -state entities and out -of -state banks, whereby the in -state agent holds a predominant economic interest in the revenues generated by payday loans made to Duval County residents to avoid compliance with this Chapter. Any such disguise, agency or partnership agreement. by a payday lender shall be deemed a scheme or contrivance by which the agent seeks to circumvent state law and the usury statutes of this state and, therefore, are illegal. (d) Threats. A payday lender shall not threaten to use or use the criminal process in this or any other state to collect on a deferred payment loan or use any civil process to collect the payment of a deferred payment loan not generally available to creditors to collect on loans in default. (e) A payday lender shall not require electronic access to a drawer's account in a financial institution as a condition of entering into a deferred presentment transaction. Sec. 200.304 Prohibitions. In addition to the other obligations and duties required under this chapter, the following prohibitions apply to any payday lender: (a) . Lending rate. A payday lender shall not charge interest and administrative or service charges or costs (cumulatively, "the.rate ") that, when added together, are in excess of 36% per annum (defined as a 365 day year) on the amount of cash delivered to the consumer. The rate charged on the outstanding balance after maturity shall not be greater than the rate charged during the loan term. Charges on loans shall be computed and paid only as a percentage of the unpaid principal balance. Principal balance means the balance due and owing exclusive of any interest, service or other loan - related charges. (b) Garnishment. A payday lender is prohibited from garnishment of any military wages or salaries. (c) Collections — Combat duty. A payday lender is prohibited from conducting any collection activity against a military customer or his or her spouse when the military member has been deployed to a combat or combat support posting for the duration of the deployment. (d) Contact with Commanding Officer. A payday lender is prohibited from contacting the commanding officer of a military customer in an effort to collect on a loan to a military member or his or her spouse or dependent; Sec. 200.305 Limitations. (a) Insufficient Fund fees. If there are insufficient funds to pay a check on the date of presentment, a payday lender may charge a fee, not to exceed the lesser of $1'5 or the fee imposed upon the licensee by the financial institution. Only one such fee may be collected with respect to a particular check even if it has been re- deposited and returned more than once. A fee charged pursuant to this subsection is a licensee's exclusive charge for late payment. (b) Unearned Interest. When a loan is repaid before its due date, unearned interest charges must be rebated to the consumer based on a method at least as favorable to the consumer as the actuarial method. (c) Special Repayment Agreements. Payday lenders shall comply with and be bound by the terms of any repayment agreement that it negotiates through military counselors or third -party credit counselors. (d) Military Statements and Proclamations. Payday lenders shall honor any statement or 33 proclamation by a military base commander that a specific payday lender branch location has been declared off limits to military personnel and their spouses. Sec. 200.306 Disclosures. The following disclosures shall be made in writing by a payday lender: (a) A notice that the lender is prohibited from garnishment of any military wages or salaries; (b) A notice that the lender is prohibited from conducting any collection activity against a military customer or his or her spouse when the military member has been deployed to a combat or combat support posting for the duration of the deployment; (c) A notice that the lender is prohibited from contacting the commanding officer of a military customer in an effort to collect on a loan to the military member or his or her spouse; (d) A notice that the lender agrees to be bound by the terms of any repayment agreement that it negotiates through military counselors or third -party credit counselors; (e) A notice that the lender agrees to honor any statement or proclamation by a military base commander that a specific payday lending branch location has been declared off limits to military personnel and their spouses. Sec. 200.308 Advertising Disclosure Requirements for Lenders Promoting Payday Loan Services. (a) Definition. For purposes of this section "unit of advertising space" shall mean any real property, space, facility or instrumentality, or any portion thereof, owned or operated by the City of Jacksonville, or which is located or operates on real property owned or operated by the City of Jacksonville, and which is the subject of the same contract, lease, rental agreement, franchise, revocable consent, concession or other similar written agreement with the City of Jacksonville which allows the placement or display of advertisements, but not including any real property, space or facility leased from the City of Jacksonville for a term of thirty years or more during the entire term of the lease or any real property, space or facility leased from or to the industrial development agency. (b) Requirements. Any lender, bank or other financial institution that provides payday loan or grant services and which promotes its payday loan or grant services, however described or designated, via a unit or units of advertising space, and which, because of the application of other state of federal law, is exempt from the fee limitations of Jacksonville, and charge interest, fees and other charges greater than those authorized in Jacksonville, shall comply with the following disclosure requirements with respect to a unit or units of advertising space: (1) Advertisements shall disclose, in clear and prominent letter type, in a print color that contrasts with the background against which it appears, of at least a 20 -point type size: i. The maximum annual percentage rates (APR) of the institution's payday loans, computed in accordance with regulations adopted pursuant to the federal Truth -in- Lending Act; and ii. Any membership fees, finance charges, annual fees, transaction fees, lender's fees or any other possible charges that may be incurred by a consumer in relation to the institution's payday loans, including any interest, fees and other charges due at the time of any loan renewal; iii. The state in which the lender /financial institution is chartered; iv. The fact that the consumer will be required to supply personal information to receive the institution's payday loan, including information regarding his or her personal financial history; V. The fact that a fee schedule for all charges related to the institution's payday loans will be provided to all consumers before execution of a binding agreement; vi. Contact numbers, including the Florida Department of Financial Services Consumer Hotline, and the City of Jacksonville's Consumer Affairs Division, identifying the local, state and federal agencies, where a consumer /applicant can direct complaints against the lender /financial institution; vii. The name of the lender /financial institution offering the payday loan. Sec. 200.310. Distance requirements. Consistent with Section 656.401(ii), Ordinance Code, no 34 payday, check cashing or deferred deposit loan business or their agents or facilitators shall be located within 600 feet of any other check cashing business or within five (5) miles of any active military installation. Distance requirements defined in this section shall be measured in a straight line, without regard to intervening structures or zoning districts, from the entry door. of each business. Payday, check cashing or deferred deposit loan businesses lawfully operating within their current zoning district on August 23, 2005 shall be deemed legally nonconforming uses until the business is transferred or sold to another owner, or otherwise loses legally nonconforming status in accordance with Chapter 656, Sec. 200.311 Enforcement (a) Provisions Supplemental. The remedies provided herein are cumulative and supplementary and apply to licensees and unlicensed persons to whom this Act applies and who failed to obtain a license. (b) Rights to relief forfeited. The violation of any provision of this Act, or regulation there under, except as the result of accidental or bona fide error of computation, shall render the applicable loan void, and the lender shall have no right to collect, receive or retain any principal, interest, or other charges whatsoever with respect to the loan. (c) Civil remedies. Any person or entity found to have violated this ordinance shall be liable to the consumer for actual, consequential, and punitive damages, plus statutory damages of $500 for each violation, plus costs, and attorneys fees. Each day of violation shall be a separate violation. A consumer may sue for injunctive and other appropriate equitable relief to stop any person or entity from violating any provisions of this Act. The consumer may bring a class action suit to enforce this Act. The remedies provided in this section are not intended to be the exclusive remedies available to a consumer nor must the consumer exhaust any administrative remedies provided under this Act or any other applicable law. (d) Criminal violations. Any person, including members, officers, and directors of the person or entity who knowingly violates this act is guilty of a Class D offense. Sec. 200.312. Severability. If any portion of this ordinance is determined to be invalid for any reason by a final non - appealable order of any.court of this state or of a federal court of competent jurisdiction, then it shall be severed from this Act. All other provisions of this Act shall remain in full force and effect. Sec. 200.313. Reporting. Not later than the first day of July, 2006, and on a quarterly basis thereafter, (no later than October 1St, January 1st, April 1st, and July 1St of each year), any person offering, providing, or facilitating a payday loan in Duval County shall submit to the City's Division of Consumer Affairs and the Chief of Legislative Affairs, the residential zip code of each consumer who lives within the city boundaries and has entered into a payday loan during the immediately preceding quarter. The Consumer Affairs Division shall track and evaluate all information and provide education to consumers as needed. Section 3. Chapter 656 (Zoning Code), Ordinance Code, Section 656.401, (Performance standards and development criteria), is amended to add a new subsection (ii).to read as follows: CHAPTER 656. ZONING CODE. PART 4. SUPPLEMENTARY REGULATIONS. Sec. 656.401..Performance standards and development criteria. It is the intent of the City of Jacksonville that these supplementary regulation standards and criteria be read in addition to, rather than in lieu of, any other requirement in this Chapter. The following uses, whether permitted or permissible by exception, must meet the criteria listed under each use as a prerequisite for further consideration under this Zoning Code. (ii) Payday, check cashing or deferred deposit loan businesses (1) General requirements. (a) No payday, check cashing or deferred deposit loan business, as defined in 35 Chapter 200, Ordinance Code, no payday, check cashing or deferred deposit loan business or their agents or facilitators shall be located within 600 feet of any other check cashing business or within five (5) miles of any active military installation. Distance requirements defined in this section shall be measured in a straight line, without regard to intervening structures or zoning districts, from the entry door of each business. Payday, check cashing or deferred deposit loan businesses lawfully operating within their current zoning district on August 23, 2005 shall be deemed legally nonconforming uses until the business is transferred or sold to another owner, or otherwise loses legally nonconforming status in accordance with Chapter 656. Section 4. Effective Date. This Ordinance shall become effective upon signature by the Mayor or upon becoming effective without the Mayor's signature. Form Approved: Office of General Counsel Prepared by: Steven E. Rohan Resolution — Saunton, VA RESOLUTION OF THE COUNCIL OF THE CITY OF STAUNTON, VIRGINIA TO REQUEST THAT THE GENERAL ASSEMBLY AND GOVERNOR OF VIRGINIA TAKE ACTION TO PREVENT EXPLOITATIVE PAYDAY LENDING PRACTICES IN THE COMMONWEALTH WHEREAS, the Council of the City of Staunton, Virginia, represents the citizens of the City of Staunton, Virginia; WHEREAS, the Council of the City of Staunton, Virginia, senses from the citizens of the City of Staunton significant concern over what are perceived to be some exploitative payday lending practices in the City of Staunton and elsewhere in the Commonwealth, including practices which may exploit dedicated, brave women and men who are called for deployment as part of the armed forces of our Nation both in the United States and various parts of the world in the cause of freedom and security of our Nation; WHEREAS, the Council of the City of Staunton, Virginia, shares these same significant concerns and wishes to express the collective sentiments of the People of the City of Staunton, Virginia, that the General Assembly and Governor of Virginia, ought to take action to prevent further exploitative payday lending practices; and WHEREAS, it is vital that the General Assembly and the Governor of Virginia give their earnest attention to these matters at the next regular session of the General Assembly and enact laws that will prevent further exploitative payday lending practices. we NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Staunton, Virginia, that the General Assembly and the Governor of the Commonwealth of Virginia are requested to take action in connection with the next regular session of the General Assembly of Virginia to enact laws that will prevent further exploitative payday lending practices, including but not limited to: 1. Enactment of an annual interest rate cap of 36% for any consumer loans made in the Commonwealth of Virginia; 2. Prohibition of the use of a personal check or other method by a creditor to gain access to a consumer's bank account or method to gain title to a consumer's motor vehicle as collateral for a payday loan; and 3. Enactment of supplementary and complementary provisions which mirror the provisions of what is commonly referred to as the Talent - Nelson Amendment (Senate Amendment 4331), entitled "Terms of Consumer Credit Extended To Service Member's Dependent" and referenced on page 56352 of the June 22, 2006 Congressional Record — Senate, a copy of which is annexed to and incorporated by reference in this Resolution. Adopted this 13th day of September 2007 Lacy B. King, Jr., Mayor Attest: Deborah A. Lane, Clerk of Council 37