Cohen’s Forced Client Disclosure

Look, I enjoy a little schadenfreude as much (if not more so) than the next guy. And it’s especially delicious when it comes at the expense of the cabal of crooks, clowns, and lickspittles currently running our democracy into the ground.

And yet. While I was delighted and amused to hear that Sean Hannity – the bombastic Trumpian water-carrier headlining State TV Fox News – was Michael Cohen’s mystery third client, something about it feels . . . off.

My friends at Davis Wright Tremaine have been justifiably crowing about their partner Rob Balin’s rising from the gallery and convincing the judge that the First Amendment interest in free speech and open trials demanded disclosure of the client’s name.

But did it? Was that REALLY the right call?

I have repeatedly taken the RPCs and authors of Bar ethics opinions to task for failing to respect the First Amendment when it comes to lawyer speech regulation. This includes, most recently, ABA Opinion 480, which interprets Rule 1.6 far beyond its constitutional limitations. But this doesn’t mean the First Amendment always trumps the obligations lawyers have to their clients – or to the protections of the attorney-client relationship built into the Rules.

Cohen did the right thing – really, the only thing he could do – in seeking consent from his clients to disclose their identifies, and resisting the efforts at disclosure when Hannity did not give such consent.

And Balin certainly did the right thing, too, in pressing his argument for openness and disclosure.

But what I can’t figure out is why this disclosure was necessary. The fact that a legal matter is proceeding in a courtroom does not mean that any-and-all facts relating to that proceeding are free game for disclosure. Immaterial facts, matters not relevant to the proceeding, trade secrets, etc, etc – there are numerous instances where facts are not disclosed in order to protect confidences.

So why here? As I understand it, the relative paucity of legal work (as opposed to “fixing” and “consulting”) performed by Cohen was important to the government’s argument about the appropriateness of raiding his office. But why would that require disclosing the identity of his legal clients? Why isn’t their numerosity (or lack thereof) sufficient? Particularly when – knowing what we do about the type of legal work he did for his other two clients – there are significant reputational harms coming from a client being linked to Cohen?

Don’t get me wrong: I think it’s hilarious that Hannity was revealed to be the third client. And this disclosure has turned out to be hugely interesting to the public, implicating as it does questions of journalistic ethics and the relationships between Trumpworld and Foxlandia.

But Judge Wood didn’t know that going in. And the real question wasn’t whether the identity of the client would be interesting, but whether that identity was relevant to the proceeding. It doesn’t seem like it was.

I may be missing some important nuance here; I wasn’t there in the courtroom to hear the arguments. But it’s deceptively easy to just go with the outcome you like. With norms and institutions under attack as they are these days, it’s never been more critical to respect and defend the rule of law.

LegalTech Startup TikD Sues Florida Bar

So the same day I ponder the question of ethics opinions and antitrust, a lawsuit gets filed against the Florida Bar – alleging antitrust violations related to, in part, an advisory ethics opinion!

This will bear watching. The plaintiff in the case is “Tikd,” an innovative service that helps consumers get legal help – with highly predictable outcomes – when dealing with routine traffic tickets. And the lawyers for Tikd are Ray Abadin (who was President of the Florida Bar just a couple of years back) and Pete Kennedy, the Austin, TX antitrust lawyer who successfully represented LegalZoom and Zlien in various UPL fights with states bars.

The ethics opinion at issue apparently deals with both UPL and fee-splitting concerns with Tikd, and it’s not even clear the opinion even exists. But Tikd says its competitors are spreading the word that the opinion is out there, and the Bar isn’t disavowing it – or even meeting with Tikd to discuss the matter.

For the Florida Bar, this is yet another illustration of the problem with ethics opinions in areas involving competition and advertising. Bars are wired to give conservative advice, but what they really should be doing in these areas is not opining at all. Rather, they should flip the script and adopt a policy that affirmatively encourages innovation in the delivery of legal services, and only looks to enforce the Rules in reaction to evidence of public harm.

Intermediate Scrutiny for Professional Speech Regulation?

To what extent should the government be able to regulate what doctors and lawyers say? Sure, the focus of this blog is commercial speech, and that question is relatively settled (at least as far as the speech in question is straightforward advertising). But what about other forms of expression? How far can the state go in controlling what professionals say in that capacity, or when they are working with clients or patients?

It’s a messy issue, and one that is surprisingly bereft of easy answers or judicial guidance.

How messy? Well, Florida thinks it needs to protect the second amendment rights of its citizens by restricting how doctors can talk to patients about guns.  And California thinks it needs to use pregnancy-related clinics (including religious ones) to help advance the marketing of its state-funded family planning and pregnancy services, including abortion.

Where does the line get drawn? As I’ve argued before, I believe there are significant First Amendment problems with including “legal advice” within the legal monopoly. I also believe that getting a license to practice law should not deprive an attorney of full free speech rights – at least when those rights are exercised outside of a client’s matter.

But what about speech that’s engaged in within the attorney-client or doctor-patient relationship? While it seems clear that the government shouldn’t have free rein over what is clearly expressive activity, it also seems that the state’s interest in licensing – which is, broadly speaking, to protect the public – would dictate that it gets some leeway here.

But what should the standard be? It’s surprising that this issue hasn’t been more fully-fleshed out by the courts. Outside of speech at the core of professional licensure,[ref]For example, psychological counseling or advocating for a client before a court, either of which would likely be considered by a court to be conduct rather than speech for the purposes of regulation. See, e.g., Pickup v. Brown, 740 F.3d 1208 (9th Cir. 2013).[/ref] it’s a marshy swampland.

While we’re probably not going to get any answers until the Supreme Court directly addresses professional speech regulation, the Ninth Circuit did helpfully wade into the swamp in ruling on the California “abortion marketing” law described above. In its October 14, 2016 decision in NIFLA v. Harris, the Ninth Circuit found that regulation of “middle ground” professional speech – that is, speech that is less than a “public dialogue” yet more than the speech-as-conduct at the core of a professional’s practice – is subject to intermediate scrutiny review (the same as commercial speech).

That sounds right to me,[ref]Although the Ninth Circuit really rushed through – in an unconvincing way – the intermediate scrutiny analysis to find that California could compel pregnancy clinics to market the state’s services.[/ref] and it provides a good way of thinking about the extent of acceptable lawyer speech regulation in areas that don’t involve advertising or advocacy.

But again, this is an area that could really use an assist from the Supreme Court.


Narrowing “Publicity Rights”

I’ve written before about the burgeoning trade in “publicity rights,” which has become one of the sillier backwaters of the already-murky shoals of intellectual monopolization law. What started as a straightforward proposition – a commercial enterprise can’t co-opt a celebrity’s economic value or identity to sell a product – has morphed into all sorts of attempts to censor free expression, creativity, and reporting.

So I was happy to see yesterday that the Ninth Circuit finally decided the “Hurt Locker” case, in the process drawing a finer point on what is – and isn’t – a valid publicity rights claim.

What states a valid claim?

[S]peech which either appropriates the economic value of a performance or persona or seeks to capitalize off a celebrity’s image in commercial advertisements.

What doesn’t?  Pretty much ANY action related to non-commercial speech:

In sum, The Hurt Locker is speech that is fully protected by the First Amendment, which safeguards the storytellers and artists who take the raw materials of life—including the stories of real individuals, ordinary or extraordinary—and transform them into art, be it articles, books, movies, or plays. If California’s right of publicity law applies in this case, it is simply a content-based speech restriction. As such, it is presumptively unconstitutional, and cannot stand unless [the plaintiff] can show a compelling state interest in preventing the defendants’ speech.

But wait, you say – “The Hurt Locker” was made for a commercial purpose; surely it is commercial speech?

No. Not at all.  While the 9th Circuit didn’t even see the need to address this point, I will address it again: just because something is sold for commercial gain, or produced by a commercial enterprise, does not make it commercial speech.[ref]If you don’t believe me, there is a freaking huge stack of cases you can read, starting with New York Times v. Sullivan, 376 U.S. 254, 266 (1964).[/ref] Commercial speech is adverting speech. It’s speech proposing a transaction. My primer on the commercial speech doctrine has more info, but in any event: kudos to the Ninth Circuit for repudiating yet another publicity rights-based effort to compromise free expression.

Protecting Anonymity in Client Reviews

The ABA Journal and several newspapers have picked up the news that we’ve got a legal issue brewing here in Washington over anonymous online reviews, so I thought I’d provide a little context.

I’m going to skip the background (which you can read in the ABA Journal article) and just cut right to the issues.

First of all, anonymous speech: Avvo allows reviews to be left anonymously. Attorneys can argue about whether such feedback is useful, but here’s my take:

  • The US has a long history – including, notably, the Federalist Papers – of anonymous speech.
  • The Supreme Court has repeatedly found that such speech is valuable and constitutionally protected.
  • In my nearly 8 years at Avvo, I have had numerous conversations that expose the reason for this value and constitutional protection: reviewers who fear retaliation from attorneys for speaking, and attorneys bent on exacting such retaliation.
  • Readers can decide for themselves how to weigh feedback. Anonymity is another factor, just like coherence, detail, and reasonableness, that potential clients can take into account when reading a review.

So while we do a lot to try to ensure review quality – including human moderation prior to posting – you shouldn’t expect anonymous reviews on Avvo to go away any time soon.

The issue in this case is what happens when an attorney believes they’ve been defamed by a review.  That’s what the plaintiff believed here; she thought that the review was left by a non-client, and that the facts alleged in the review were false. So she brought a John Doe complaint for defamation and subpoenaed Avvo for records that might “unmask” the anonymous reviewer.

In such cases, I notify the reviewer to let them know that records that might reveal their identity have been subpoenaed. This way, they have the opportunity to fight the unmasking.  What’s more, if they can prove to my satisfaction that they were a client, and they have a good faith argument that their review isn’t defamatory,  Avvo will actually fight the subpoena on their behalf. That feels like something we need to stand up for if we’re going to have a credible, consumer-focused forum for client feedback.

That’s what happened in this case. The reviewer made such a showing, the plaintiff refused to withdraw her subpoena, and Avvo refused to turn over the identity of the reviewer. The plaintiff brought a motion to compel production. We opposed it, and won. The plaintiff appealed, which brings us to last week’s hearing.[ref]In the interim, Paul Alan Levy of Public Citizen agreed to represent the Doe defendant pro bono; both Paul and Avvo’s attorneys at Davis Wright Tremaine appeared at the appellate argument.[/ref]

At stake is how Washington will answer a developing question: under what circumstances can a defamation plaintiff unmask an anonymous defendant?  The coalescing standard – known as the Dendrite standard for the New Jersey case in which the issue was decided –  requires both that the plaintiff make a prima facie showing that they have a case, with evidence, and that the court balance the need for unmasking and the strength of the prima facie case against the first amendment right to speak anonymously.

We’re hopeful that the Washington Court of Appeals will affirm Avvo’s lower court win and help establish a clear rule that protects the right to speak anonymously – while preserving the ability of defamation plaintiffs to move forward with discovery on meritorious cases.

Here’s one additional takeaway for attorneys: subpoenaing the identity of anonymous commenters is different. You can’t expect to get wide-and-unfettered third party discovery the same way you might when subpoenaing say, gas station bathroom cleaning logs.

NY Crushes Anti-Negative-Review Agreements

So there’s this outfit called “Medical Justice.”  They purport to help doctors and dentists stave off malpractice lawsuits and reputational damage.

One of the products Medical Justice used to offer, except for lawsuit settlement, was something called a “Consent and Mutual Agreement to Maintain Privacy.” It was a nasty bit of work, really: slipped into the pile of papers patients signed on intake, the early versions of the form basically said that the doctor agreed to honor the privacy obligations of HIPAA if the patient agreed to not write any negative reviews of the doctor.

It didn’t take too long for Medical Justice to realize that this agreement might have a few flaws. As the Department of Health & Human Services noted in slapping a doctor for using the Medical Justice form,

A covered entity’s obligation to comply with all requirements of the [HIPAA] Privacy Rule cannot be conditioned on the patient’s silence.

So Medical Justice changed the form. Instead of this quid pro quo of “don’t write bad stuff about us online and we won’t give your private medical records out,” the new agreement took an even more devious tack: it assigned copyright, prospectively, from the patient to the doctor for any reviews that the patient might write in the future. This would allow the doctor to use the notice-and-takedown provisions of the Digital Millennium Copyright Act to have such content removed from review websites.

How would that make a difference? You see, ordinarily, a review website isn’t going to pay much attention to your typical cease-and-desist-you’re-defaming-me demand letters. Reviews are user-generated-content, and review sites have solid immunity from defamation liability for such content, thanks to CDA 230. But claims based on copyright aren’t subject to that statute’s sweet protection. As a result, many sites will automatically take content down in response to DMCA takedown notices in order to take advantage of the DMCA “safe harbor” from liability that such a takedown affords.

I would have loved to have tested that out if I’d gotten such a takedown demand; as you might gather, I find these attempts to silence patients completely vile. But before Medical Justice could get these agreements into the hands of too many doctors, they stopped, grudgingly recanting their efforts (the Doctored Reviews undertaking can probably take some credit for that).

However, it was too late for at least one dentist.

Stacy Makhnevich used this form, and when a patient submitted a negative review on Yelp, she invoiced him $100/day for as long as the review was up. The story is amusing – Makhnevich got her desserts in spades – but the news here is what happened in the class action lawsuit that was filed against her: a federal district court judge entered a default judgment against her, finding that:

  • Even if copyright was assigned by the agreement, any use in a review would be protected by fair use;
  • Obtaining the agreement was a breach of the dentist’s fiduciary duty and a violation of dental ethics;
  • The agreement constitutes “copyright misuse;”
  • The agreement is unconscionable; and
  • The agreement is a deceptive act in violation of New York General Business Law section 349(a).

The court basically eviscerated the idea that these sorts of agreements are remotely acceptable. That’s a good thing; hopefully more professionals will get the idea that the best way to maintain a good reputation is to do good work, be responsive to patient/client concerns  . . . and not try to muzzle your customers and abuse the legal system at the same time.

“He Who Shall Not Be Named”

If you follow local and statewide policy-making, you’ll find no shortage of nuttiness. The bar for holding many positions of public trust is quite low, and there’s no particular guarantee that those holding elected positions at this level are familiar with the fundamentals.[ref]This charge can also be leveled at many members of the U.S. Congress, but the traps that must be run to be elected at the federal level eliminate most of the real loons – or at least discipline them enough to stay “on message.”[/ref]

Case in point: Frederick County (MD) Councilman Kirby Delauter, who has threatened a local reporter with legal action for using his name without permission.

Kirby Delauter Facebook ThreatThe result is predictable. Thanks to the Streisand Effect, Kirby Delauter’s name is being used orders of magnitude more times, in ways he presumably does not like, and would not give his permission to – if he only had that right.

The mocking is particularly brutal in some quarters:

Popehat Kirby Delauter

Delauter’s position is obviously ridiculous. The First Amendment gives anyone, reporters or otherwise, the right to comment and write about other people. And this right is particularly critical when it comes to government officials.

However, the sobering thing is that if Kirby Delauter decides to double down on stupid, he may well find a lawyer dumb enough to take his case.  I talk to attorneys all the time who think – or at least argue – that some bastardization of the publicity rights doctrine permits people to control when and how their name is mentioned.

Attorney Licensing and Restraint of Trade

Tomorrow, the Supreme Court hears oral argument in North Carolina Board of Dental Examiners v. Federal Trade Commission.  It’s a case of not-inconsiderable interest to state attorney regulators, as the central issue is the extent to which state licensing boards can clear the field of non-licensed competition.

The primary point is based in antitrust law, and whether the “state action doctrine” (which immunizes state agencies from most antitrust law) applies to entities – like licensing boards – which have been granted regulatory authority by the state, but which are made up largely of market participants rather than neutral regulators.

You can see why this would be a problem.  Grant competitors the right to regulate the field, provide minimal-to-no objective oversight, and you’ve set the stage for all manner of anti-competitive behavior.

In North Carolina, this predictably enough resulted in the Board of Dental Examiners (an entity largely composed of practicing dentists) ordering non-dentists to stop providing teeth whitening services.

The parallels to law aren’t hard to see.  Most states have very loosey-goosey definitions of “the practice of law,” which are often used to exclude non-attorney businesses that do something that remotely smells of “legal.”  Real estate brokers, document preparers, accountants, etc. – all have at one point or another been the legal industry equivalent of mall kiosk teeth whiteners.

While not every state is regulated in this way, many have boards and commissions that carry out regulatory functions with little to no state oversight.  Advertising review commissions come immediately to mind.  Attorneys practicing in less benighted jurisdictions may not be aware that in places like Florida, most advertising must pass a gauntlet of review by a board of one’s competitors.  And, to add insult to injury, attorneys have to pay for this little exercise.  It’s a practice rife with problems and obvious antitrust concerns.

It certainly wouldn’t be a bad thing if state licensing boards had their wings clipped. There’s little to recommend the granting of state monopoly power to a group of market participants and then letting them exclude competition with impunity.  The practice is bad for consumers, protects entrenched interests, and acts as a drag on innovation. Pulling the state action doctrine back wouldn’t prevent the Bars from regulating, but it would be a step toward them – and all licensing boards – doing so in a more measured and appropriate way.

More Compelled Speech Knocked Down

I was traveling in Scotland when this opinion came out last week, and it warms the cockles of my Scots-Irish heart to see more comeuppance for the state trying to tell us what to do.

In Nat’l Assn. of Manufacturers v. SEC, the DC Circuit dispensed with the “conflict free” labeling requirement for diamonds.  As the court rightly notes, the state only enjoys the easy-peasy “rational basis” standard of review when the compelled disclaimer is “reasonably related to the State’s interest in preventing deception of consumers.”   Otherwise – like when it wants to send a political message or inform consumers about something or other – its requirement must meet intermediate or strict scrutiny.

For the Love of Disclaimers

Jonathan Adler has a fascinating post up at The Volokh Conspiracy titled “What are the Constitutional Limits on Compelled Commercial Speech?”  The post explores litigation over the USDA’s “country of origin” labeling rules for meat – you know, when you buy hamburger at Trader Joe’s and the label says something like “contains beef from the United States, Canada, and Brazil.”  Yeah . . .

But besides providing consumers with some interesting information (and likely driving interest in the American grass-fed cattle industry as a result)[ref]I love grass-fed beef; if you’re in Washington State, I can’t recommend Nelson Ranch in Olympia highly enough.  Wonderful people; great beef.[/ref], what do country of origin regulations really do for us?

It bears repeating that compelled speech is supposed to be subject to the same constitutional analysis as prohibited speech – meaning that such speech regulation must meet the Central Hudson standards, including the finding of a substantial state interest.

Unfortunately, the analysis is often lost on judges evaluating disclosure or disclaimer requirements.  As Adler explains, the D.C. Circuit, relying on Zauderer v. Office of Disciplinary Counsel, found that meat purveyors have only a “minimal” First Amendment interest in not disclosing purely factual information.

Problem is, that’s not what Zauderer stands for.  Rather, as I explain in the Disclaimers section, the lesser, “reasonably related” standard of review only kicks in if the advertising would be inherently misleading without the disclosure of additional facts.  Absent that finding, the full Central Hudson analysis would apply.

Adler takes this a step further, noting that the Zauderer case may be understood as having pre-met the first prong of the Central Hudson test: it inherently involved the government’s substantial interest in preventing consumer deception.  I don’t think that’s quite right, as Zauderer allows the government an easier pass on the other prongs, assuming the finding of an inherently misleading communication has been made.  But that’s where the mischief comes in; too many courts – and state bar regulators – take the latter part (the “reasonably related” test), and apply it to ALL disclosure requirements, regardless of whether or not they are intended to cure inherently misleading communications.

Such as country of origin requirements.  There’s nothing inherently misleading about selling meat without disclosing what country it came from.  It’s simply a matter of consumer curiosity.   But as Adler notes, the government has to have a substantial interest in forcing a particular communication.  And there’s little chance that a free-floating “consumer right to know” meets that bar, as proponents of bovine growth hormone labeling have learned.[ref]But by the same token, efforts by states and agribusiness to prevent producers from touting their products as being free of bovine growth hormone are similarly unlikely to pass First Amendment scrutiny.  See Int’l Dairy Food Assn. v. Boggs, 622 F.3d 628 (6th Cir. 2010).[/ref]

The good news is that the D.C. Circuit may provide more clarity.  It has agreed to re-hear the case en banc, and will likely shed some important light on the conditions under which the government can compel speech.

Let’s hope that the attorney regulators, with their love of disclaimers, are paying attention.