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By Scott Nova and Ben Hensler. Nova is Executive Director and Hensler is General Counsel for the Worker Rights Consortium, a university-based organization that investigates working conditions and promotes respect for labor rights in manufacturing facilities around the world.  

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Every year, hundreds of thousands of apparel workers around the world are cheated of legally-earned income when their employers fail to pay mandatory severance benefits. This pernicious form of wage theft, which costs workers the equivalent of at least several months' wages, has afflicted workers sewing clothes for just about every major apparel brand. However, since it is the brands' contract factories that directly employ the workers, the brands insist it's not their problem to fix. Factories close, bosses skip town, the brands wash their hands of the matter - and workers are left high and dry.

On July 21, Nike signed an accord under which it agreed, in effect, to accept financial responsibility for severance owed to workers by two contract factories (workers with the accord pictured left). This sharp break with business as usual by the world's leading sports apparel brand - the result of intense pressure from student activists and the company's university business partners - has significant implications for the global apparel industry.

Outsourcing and Accountability in the Apparel Industry

Outsourcing production to contract factories in the developing world, where labor law enforcement ranges from anemic to non-existent, yields a deregulatory double bonus for American clothing brands. Factories are able to violate worker rights with impunity, affording the brands big savings on labor costs. At the same time, outsourcing insulates brands from any legal accountability, since the lawbreaking from which the brands profit is committed by third parties operating outside the United States.

The primary goal of the contemporary anti-sweatshop movement has been to make it harder for the industry to play this game, by replacing the legal accountability that outsourcing has largely eliminated with accountability to civil society, generated through both consumer and political pressure, and, increasingly, private contractual relations. Activism in the 1990s compelled most apparel brands to publicly accept responsibility for working conditions at contract factories and to adopt private codes of conduct and monitoring regimes ostensibly designed to compel contractors to respect workers' rights.

Unfortunately, these corporate codes have been ineffective at protecting workers and, as a result, sweatshop conditions remain the norm throughout the industry. Brands have taken responsibility in theory, but have been highly adept at avoiding responsibility in practice. Achieving genuine improvements in working conditions would require brands to forego the savings extracted when labor standards are ignored and, instead, pay contractors prices consistent with producing in a lawful manner. Brands have refused to do this, continuing instead to push suppliers to accept prices that can only be met by running roughshod over the rights of workers. Yet despite this, brands have done an effective job of persuading many opinion leaders and consumers that their monitoring programs reflect a sincere effort to raise standards.

The Industry's Financial Firewall

A pillar of the brands' efforts to elude accountability is their long-standing insistence that their self-imposed codes of conduct, which require them to ensure that their suppliers obey the law, somehow absolve them of financial responsibility when they instead allow suppliers to rob workers of legally-owed compensation. The prime example of this self-contradictory posture and its consequences is the widespread failure of contract factories to pay statutory severance benefits and the consistent failure of the brands to do anything about it.

The laws in most apparel exporting countries mandate severance payments to workers in the case of factory closures. Because low wages make saving impossible, and because social safety nets are weak, this severance is often the only thing standing between laid off workers and outright destitution. Yet it is a routine occurrence for factories to shut down without paying severance. National governments generally do little or nothing in response. Although precise data is unavailable, anecdotal evidence suggests that the scale of this theft is massive, involving millions of workers over the decade and a half since codes of conduct were first adopted. To cite just one example: a survey of the operations of a single high-profile brand, in one Southeast Asian country, identified more than $40 million illegally withheld from workers in a three year period.

The apparel brands have been united in their refusal to accept any financial liability in such circumstances and, until last month, none had ever broken ranks. That changed when Nike agreed to pay $1.54 million in cash (and nearly a half million dollars in kind) to the employees of two Honduran contract factories.

A Radically Different Outcome

The garment factories closed last year and failed to pay more than $2 million in legally mandated severance. The Honduran government took very limited action, overseeing a process of liquidation of machinery and goods left at the factories which generated barely 20% of the money owed. Following the industry script, Nike lamented the workers' mistreatment, while insisting that it had no obligation to pay a penny to fix the problem.

On its website, Nike insisted that it was "absolutely concerned for the workers in Honduras and...deeply disappointed that the two failed sub-contract factories did not pay the workers their full severance pay. However," the company explained, "it remains [our] position that factories which directly employ workers are responsible for ensuring that their employees receive their correct entitlements and as such Nike will not be paying severance to [these] workers."

The story would normally have ended there, but several dynamics combined to produce a radically different outcome:

• First, the workers demonstrated extraordinary perseverance; they refused to go quietly to their fate and instead organized, protested and kept the issue alive in Honduras for well over a year after the factories closed (see photo, right).
• Second, Nike's own voluntary code is not the only labor code that applied in this case; Nike is also bound by the labor codes of universities across the country that license their logos to Nike and other apparel brands (who then make clothes bearing the universities' names and insignias). Unlike self-imposed corporate codes, the universities' codes are contractually binding on the brands. And, also unlike corporate codes, compliance is monitored by an entity, the Worker Rights Consortium (WRC), which accepts no funding from the industry. The WRC exposed the violations in Honduras and reported them, with extensive documentation, to Nike's university partners.
• Third, student activists, led by United Students Against Sweatshops, dedicated themselves to holding Nike accountable. The students refused to accept Nike's position that it had no financial responsibility. They organized on campus to urge aggressive university action and used a range of creative tactics to pressure Nike directly.
• Finally, universities are increasingly prepared to take strong enforcement measures when warranted - a reality that was illustrated last year when nearly 100 universities terminated the licensing rights of Russell Athletic, a subsidiary of Fruit of the Loom and Berkshire Hathaway, over labor rights violations at one of Russell's overseas factories. Russell responded, to its credit, by adopting sweeping reforms. When two of Nike's university partners - the University of Wisconsin and Cornell University - announced the termination of the brand's licenses this spring, Nike had to consider the prospect of a similar snowball effect.

A Groundbreaking Agreement

At the end of June, Nike entered into negotiations with worker representatives. These discussions produced the groundbreaking agreement signed on July 21. The accord marks the first time a major apparel brand has effectively assumed financial responsibility for labor rights violations committed by its contractors. (NB: Under the accord, Nike is not officially paying severance but contributing to a "Worker Relief Fund.")

Nike has set an example that other apparel brands will feel pressure to follow. As that pressure builds, brands will no longer be able to assume that they can easily evade financial responsibility for their contractors' misdeeds. Brands may thus begin to see the advantages of ensuring that their suppliers fulfill their financial obligations - providing the brands with an incentive both to police suppliers' behavior more aggressively and to ensure that the prices they pay suppliers are adequate to make compliance feasible. Weighed against the prospect of getting socked with millions of dollars in arrears, the short-term savings generated by underpaying for goods may no longer look like such a smart play.

For these reasons, last month's breakthrough may prove to be a watershed moment in the battle to impose the rule of law on the "wild west" environment of global manufacturing supply chains.

 

In the string of decisions issued yesterday by the Supreme Court, the case involving the honest-services provision of a federal anti-fraud drew plenty of media attention, but the high court also ruled in another corporate fraud case that according to some court-watchers continues a trend of weakening regulations aimed at preventing corporate fraud.

Writing for SCOTUSblog, Lyle Denniston states:

Dismantling a legal edifice built up by lower courts over nearly a half-century, the Supreme Court on Thursday ruled that America's main law against securities fraud does not apply to investment deals that occur outside of this country, even if they have some domestic impact or effect. For the first time, the Court declared that the most-used U.S. stock fraud law cannot be used in American courts to challenge a "transnational" securities deal involving a company whose stock is not traded in the U.S., and when the trade does not occur inside the U.S. With evident sarcasm, Justice Antonin Scalia's opinion for the Court rapped Circuit Courts for having created, by judicial invention, the authority to decide such lawsuits when filed by private investors. This, Scalia said, is "judicial-speculation-made-law."

Section 10-b of the Securities Exchange Act of 1934, the law at issue, does not "focus...upon the place where the deception originated, but upon purchases and sales of securities in the United States," the Court ruled in a case involving an Australian bank and Australian investors, whose complaint has a link to faulty financial information generated in Florida.. "Only transactions in securities listed on domestic exchanges, and domestic transactions in other securities" are covered by this provision, it stressed.

The Court was unanimous (although Justice Sonia Sotomayor did not take part) in ruling that this particular lawsuit could not go forward, but the Justices actually split 6-2 on the question of whether the securities fraud provision does reach, at least some of the time, beyond this country's shores. Justice John Paul Stevens, joined by Justice Ruth Bader Ginsburg, protested in a separate opinion that the new decision was part of "the Court's continuing campaign" to "render toothless" the right of private investors to sue to enforce Section 10-b. (The case did not deal with the U.S. Securities and Exchange Commission's authority, but only with private investors' lawsuits.)

 

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By Jay Austin & Bruce Myers, Senior Attorneys, Environmental Law Institute

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Big business versus the little guy. The Ninth Circuit running amok. The specter of "frankencrops." All of these tropes -- some familiar to Supreme Court-watchers, one more novel -- were potentially in play last month when the Court considered Monsanto v. Geertson Seed Farms, its first case dealing with federal regulation of genetically modified organisms (GMOs). Yet the oral argument found the justices preoccupied with fine points of jurisdiction, administrative law, and equity, suggesting that their actual ruling may turn out to be a narrow one.

Geertson arose from a Bush Administration decision to deregulate "Roundup Ready" alfalfa, Monsanto's proprietary strain that has been engineered to resist Monsanto pesticides. Mr. Geertson and other conventional farmers sued the Animal and Plant Health Inspection Service under the National Environmental Policy Act (NEPA), claiming the agency failed to produce an environmental impact statement (EIS) that fully considers the risk of cross-pollination between GMO crops and conventional crops. If such contamination occurs, the plaintiffs' GMO-free status -- and thus their entire business model -- could be in jeopardy.

Since no EIS was prepared, the district court had little trouble finding a NEPA violation, a holding that went unchallenged in the Supreme Court, and the agency has in fact agreed to complete the EIS. The current issues emerged at the remedy phase, where Monsanto had intervened to contest the shape of the district court's injunction. Rather than accept Monsanto's proposed conditions for continued planting of Roundup Ready alfalfa, the district judge -- Charles Breyer, brother of Justice Stephen Breyer -- opted for an outright ban, allowing only the planting of previously purchased seed stocks. He also declined Monsanto's request for an evidentiary hearing on the scope of the injunction. The Ninth Circuit affirmed both rulings.

From these proceedings Monsanto engineered a cert-ready tale, often heard in these cases, of a rogue Ninth Circuit that has looked too favorably on environmental plaintiffs and lowered the bar for equitable relief. The company claims the lower courts' decisions "short-circuited" the traditional test for federal injunctions, either by relying on a mere "possibility" rather than a "likelihood" of irreparable harm from cross-pollination, or by outright equating the procedural NEPA violation with a substantive showing of harm.

Geertson's lawyers have defended Judge Breyer's analysis, arguing that he correctly balanced the harms in the case. Once certiorari was granted, they added a tactical twist: Monsanto, they assert, chose to challenge only the injunction issued by the district court, and not the court's underlying decision to vacate and remand the agency deregulation action -- the standard remedy for a NEPA violation. Since Roundup Ready alfalfa would remain illegal even if the injunction were lifted, they argue Monsanto's suit fails on "standing" grounds: its grievance simply cannot be redressed by the Supreme Court. This argument poses a serious test for the Court's conservative justices, who have eagerly endorsed similar defenses raised by industry against environmental plaintiffs. Will they do so when the roles are reversed?

Judging from the questions asked at argument, the justices aren't yet buying the standing claim. But Geertson did, it seems, sow the seeds of doubt with even some conservative justices about what Monsanto is really up to. Justice Alito immediately asked Monsanto's lawyer, former U.S. Solicitor General Gregory Garre, why the Court shouldn't dismiss the appeal as improvidently granted. Chief Justice Roberts -- despite his consternation that the district court had entered an injunction at all -- expressed concern that Monsanto was going after the injunction rather than the "vacatur" of the agency decision. But Justice Scalia, true to form, grilled Geertson's lawyer, Lawrence Robbins, about his own clients' standing.

On the merits, the defining moment in the oral argument was an exchange between Mr. Robbins and Justice Scalia about the meaning of "likelihood of irreparable harm," in which Scalia shared his skepticism about the entire case:

This isn't contamination of the New York City water supply. It's the creation of plants of -- of genetically engineered alfalfa which spring up that otherwise wouldn't exist. It doesn't even destroy the current plantings of non-genetically engineered alfalfa. This is not the end of the world. It really isn't. The most it does is make it difficult for those farmers who want to cater to the European market ....

This gives surprisingly little weight to the sort of argument that usually sways the conservative justices -- namely, that conventional farmers have made a rational business decision to "cater to" GMO-free markets. In a skillful parry worthy of his questioner's own wry wit, Robbins responded simply: "I don't think we bore the burden, an end-of-the-world burden, Justice Scalia."

So what will the Court decide? With Justice Breyer sitting out this case because of his brother's role below, Monsanto needs five votes from the remaining eight justices to upend the injunction -- potentially a tall order given the procedural thicket. Certainly, nothing said at oral argument in Geertson signals a sweeping ruling on the future of genetically modified crops, or even standards for injunctive relief in NEPA cases. But if Justice Scalia can be taken at his word, we know that whatever the Court does, it won't be the end of the world.

[Image via tlindenbaum.]

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By Simon Lazarus and Sergio Munoz, Attorneys, National Senior Citizens Law Center

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On May 5 and 6, House and Senate committees held back-to-back hearings on legislation to override a June 2009 Supreme Court decision that stripped older workers of vital protections against bias on which they had relied for over 40 years. In this ruling, which Justice Stevens in dissent characterized as "unabashed judicial law-making," "irresponsible," and in "utter disregard" of the Court's own precedents and "Congressional intent," a narrow 5-4 majority so weakened the 1967 Age Discrimination in Employment Act (ADEA), that employers are left with little incentive to comply. The case, Gross v. FBL Financial Services, illustrates the accuracy of President Obama's recent observation that we "are now seeing a conservative jurisprudence" that is both "activist" and bent on gutting laws that, like the ADEA, were enacted to protect ordinary people.

The case arose out of circumstances all too familiar to older workers at all levels in our economy, especially in the hard times from which much of the nation has barely begun to recover. In 2003, Jack Gross, aged 54 and a 32-year employee of FBL Financial, was demoted from his position as claims administration director, and transferred to a newly created position with drastically reduced responsibilities. Gross sued, and at trial introduced "evidence suggesting that his reassignment was based at least in part on his age" (as stated by Justice Clarence Thomas writing for the majority). Gross' employer responded with the claim that the reassignment was part of a "corporate restructuring." The jury found for Gross and awarded him $46,945 in lost compensation, after receiving the judge's instructions that they must rule for the employee if he proved by a preponderance of the evidence that "age was a motivating factor" in his demotion. "However," the judge instructed, the jury must rule for the employer if the employer proves by the preponderance of the evidence that the employer would have demoted Gross "regardless of his age." This instruction tracked settled law. But the Supreme Court majority changed the law, and held that Gross and others in his situation needed to show that age was the "but for" cause of their adverse treatment, and that evidence that age was a motivating factor would not shift the burden of proof to the employer to prove that the adverse action would have occurred regardless of the employee's age.

After the Supreme Court bounced him back to square one, Mr. Gross testified before Congress that the conservative Justices had "hijacked" his case to make an ideological point. His view cannot be dismissed as sour grapes. On the contrary, this 5-4 reversal of the jury verdict in Mr. Gross' favor creates a veritable perfect storm for older workers. Numerous surveys show that the current financial crisis has forced older workers at all economic levels to shelve plans for retirement, and attempt to stay in, or re-enter the job market. Or hope to. When recession strikes, employers often target veteran employees in reductions in force, and disfavor older candidates for whatever new positions they may need to fill. Age discrimination claims submitted to the Equal Employment Opportunity Commission spiked nearly 30 percent in June 2009 compared with the same month a year earlier.

For these claimants, the Supreme Court's decision offers a Catch-22. The aptly named decision will largely nullify the ADEA and guarantees that a vast proportion of age bias complaints will fail, whatever their merit. As Senate Health, Education, Labor, & Pensions Committee Chair Tom Harkin (who blogged for ACSblog here) observed in his committee's March 6 hearing on the bill, in real-world workplaces, employers create paper trails purporting to justify adverse actions on legitimate business-related grounds. In such circumstances, it will rarely be possible to prove that age was the "but-for" cause (a standard some courts have interpreted to mean "exclusive"), rather than a "motivating" factor. Virtually any evidence of any other factors, whether business-related or not, suffices to throw a legitimate age discrimination victim out of court. Employee-side lawyers will know that, so they will rarely waste their time and resources to bring cases when age bias victims come to them for help. Business lawyers will also know that, and will counsel clients that they have nothing to fear if they pay lip-service to the ADEA but ignore it in practice.

As noted above, few cases confirm more clearly than Gross v. FBL President Obama's observation that recent conservative judicial activism "ignores the will of Congress" and "democratic processes." "Not only," Justice Stevens wrote in his impassioned dissent, did the Court's own precedents reject the "but-for" standard, but "so did Congress when it amended Title VII (of the 1964 Civil Rights Act) in 1991." Moreover, the majority's "far-reaching" new rule answered a question completely different from the one the parties had raised with the Court or the courts below and which the Court "granted certiorari to decide."

When issued a bit less than a year ago, the Gross decision provoked indignant opposition on Capitol Hill, and on October 6, 2009, Senators Harkin and Patrick Leahy and Representative George Miller, simultaneously introduced identical corrective bills, entitled the Protecting Older Workers Against Discrimination Act. The fact that legislative hearings have now occurred on both sides of the Capitol indicates that Congress may well restore equal opportunity guarantees for older workers - just as it did in February 2009, when it overturned the infamous 2007 5-4 Ledbetter v. Goodyear decision that undermined equal pay opportunity safeguards in Title VII. Only through such prompt action can Congress prevent the further metastasizing of this threat to the economic security of older Americans, and all Americans.

[Image via National Senior Citizens Law Center.]

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By Lee Harris, Associate Professor of Law, University of Memphis, where he teaches coporate law. Prof. Harris' most recent article, "Shareholder Campaign Funds: A Campaign Subsidy Scheme for Corporate Elections," can be downloaded here.

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Goldman Sachs has a stellar reputation. Even Warren Buffet, who recently plucked down around $5 billion to purchase a piece of the firm, trusts Goldman.

But, perhaps the Goldman magic is just that -- smoke, mirrors, a fancy outfit, a distractingly attractive assistant, a show built on illusion.

Consider the Securities and Exchange Commission's recent lawsuit against Goldman and the impending threat of criminal action against the firm for some of its conduct in allegedly deceiving investors and perhaps even helping instigate the mortgage meltdown and current financial crises.

With the lawsuit, Goldman joins the long list of other storied financial services companies that have been accused of misconduct recently, including AIG and Stanford Financial, among others.

According to the SEC, Goldman allegedly helped create, hype, recommend, and ultimately sell investments in housing that was doomed to fail. They charge that Goldman and the employee who allegedly helped size and package the doomed investment, Fabrice Tourre, a French national, committed fraud by failing to disclose details regarding the investment. One e-mail apparently from a Goldman employee, not the Frenchman, described such investments as "sh***y".

Excuse my French.

At the heart of the SEC's case, then, is disclosure.

Unfortunately, though, the SEC faces somewhat of an uphill battle and the Goldman cases highlight the need for financial services reform.

For instance, Congress has generally required significantly less disclosure for transactions, like the one in the Goldman Sachs case.

Investment instruments, like the ones at issue, are typically only available to a very limited set of sophisticated investors, a.k.a. accredited investors. As a consequence, these investments are typically unregistered and subject to significantly less disclosure obligations than investments available to the public at large.

The theory of less-disclosure has been that sophisticated investors don't need greatly enhanced protection.
Further, the SEC does not have the manpower to monitor disclosure obligations from everyone, so why have enhanced disclosure obligations for so-called accredited investors at all?

Because the disclosure hurdle is significantly lower, creating investments for sophisticated investors only can be appealing.
When they do, firms like Goldman can look down, put their hands in their pockets, and claim very little disclosure obligation, given the sophistication-level of their investor clientele and the absence of any public interest.

The problem, of course, is that defining the line between public and private has become increasingly difficult.

For instance, though on its face such a transaction looks private, the consequences can have wide-spread consequences. The Goldman Sachs transaction, for instance, may have helped contribute to the housing bust and financial crises. In their complaint, the SEC pulls no punches. In the first full paragraph of that document they allege that investments, like the one hyped by Goldman, "contributed to the recent financial crises by magnifying losses associated with the downturn in the United States housing market."

Regardless of whether this is overstatement, Goldman certainly helped create new ways to bet and profit from a housing disaster.
These deals, therefore, may have negative effects for many. This is not the just the case of a multi-billionaire who loses a measly few million. These deals have ramifications for the US economy and all of us.

Furthermore, some of the so-called sophisticated investors are pension funds and university endowments and other investors that are not necessarily very savvy at all. Such funds, like many of us, rely heavily on the advice and disclosures of their investment professionals.

And such funds are really just an approximation of the public at large. Pension funds, for instance, represent their contributors: thousands and thousands of regular, middle-class families.

In his pitch for financial services reform, President Obama recognizes these issues and has proposed enhanced disclosure of these currently lightly-regulated transactions. If Congress agrees, perhaps financial wizards like Goldman will finally be required to show investors, even so-called sophisticated investors, their cards.

[Image via The Rocketeer.]

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By Jessica E. Schumer, 3L, Yale Law School & Member, ACS Yale Chapter. Schumer is also the author of "Making Sense with Democratic Dollars: How Congress Can Use the DISCLOSE Act to Incentive Small Donor Participation After Citizens United," available here.

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Last Thursday the long awaited congressional response to Citizens United was unveiled in the form of The Democracy Is Strengthened by Casting Light On Spending in Elections (DISCLOSE) Act. While the pressure to fast-track this legislation and enact it before the midterm elections is understandable, the DISLCOSE Act presents an opportunity to do more than just play defense; with slight modifications, the DISCLOSE Act could be a powerful offensive tool. One minor change in the bill would encourage greater small-donor participation by incentivizing all non-profit groups, from the Chamber of Commerce to the Sierra Club, to voluntarily accept contribution limits for independent political expenditures.

One million dollars of political ads paid for with contributions raised in $100 amounts from 10,000 contributors is and should be perceived differently than one million dollars raised in $50,000 amounts from 20 contributors. Distinguishing ads based on their funding as opposed to their content, which is and should be protected by the First Amendment, makes political, legal and practical sense.

The Obama campaign and the recent Tea Party-fueled and -funded candidacy of Scott Brown are evidence of the growing importance of small donors and the democratic legitimacy conveyed by electioneering communications purchased with those dollars. But what was a promising populist trend will likely be drowned out by the torrent of unregulated and unlimited corporate funds that Citizens United threatens to unleash.

The DISCLOSE Act can easily help keep this small-donor trend alive by providing incentives for all non-profit groups, like unions, advocacy groups and trade organizations, to voluntarily limit their contributions. These incentives would be bundled together and labeled "democratic dollars."

In its current form, the DISCLOSE Act allows all non-profit groups, to segregate their political funds into "Campaign-Related Activity" accounts. In exchange for doing this, they only have to report contributions greater than $10,000 to their general treasuries. This democratic dollars proposal goes considerably farther. It offers additional reporting exemptions to groups that voluntarily limit contributions to their Campaign-Related Activity accounts to an amount similar to the contribution cap on candidates for federal office ($2,400 per donor per election). Donations could come from individuals or independent corporations (both for-profit and non-profit) with proper regulations in place to prevent circumvention by manipulating the corporate form. Groups that opt in to this category would get the additional benefit of the "democratic dollar" label - a powerful heuristic implicitly labeling those groups that don't opt in as "undemocratic."

In exchange for agreeing to these caps, democratic-dollar groups would be exempt from other parts of the DISCLOSE Act. For example, the DISCLOSE Act mandates that the top donor and the head of the organization have to "stand by the ad" by saying on camera that they approve the message. The names of the top five funders of the ad also have to appear on screen. Democratic-dollar groups, instead of having their top donor stand by the ad, would be able to say "this ad was paid for with democratic dollars" and have a logo shown on screen instead of the names of the top five funders. Another benefit of taking the democratic-dollar option would be qualification for the lowest media rates of which the DISCLOSE Act allows candidates and political parties to take advantage.

The tangible benefits are only part of the carrot. One of the biggest advantages is the branding of certain ads as "democratically" funded. The "democratic dollar" label provides voters with a powerful tool in sorting through the cacophony of often manipulative 30- and 60-second spots that flood the airwaves during election season. Knowing which groups have the backing of a wider swath of the public helps place political ads in context and allows voters to evaluate their content with better information.

Not only is such an ad more likely to be viewed as legitimate by the audience, it also implicitly casts those groups which don't opt-in as "undemocratic" and sponsored by wealthy special or corporate interests. The lack of the "democratic dollar" label would be a quick way for voters to know when a few rich corporations or individuals were funding ads. It might even be more effective than having the top donor "stand by" the ad. Few voters will be able to easily identify these CEOs, and even fewer will bother to look them up.

This idea is not particularly radical, seeing as we do something similar in the tax code. Groups get to choose what sort of organization they want to incorporate as, and with that choice the government confers certain benefits and certain burdens. A group that wants § 501(c)(3) status doesn't have to pay federal income tax and its contributors can deduct their donations. In exchange, these groups can't endorse candidates or engage in any political activities designed to influence the outcome of an election. Besides these tangible benefits and burdens, § 501(c)3 status conveys reputational benefits. Furthermore, in Washington v. Reagan, the Supreme Court upheld these restrictions, rejecting the claim that they violated the First Amendment.

For all these reasons Congress can and should rewrite the DISCLOSE Act to contain a "democratic dollar" option.

[In the spirit of the DISCLOSE Act, it should be noted that the author's father is Senator Charles Schumer, the chief sponsor of the legislation in the Senate. Image via Beverly & Pack.]

The operator of the Upper Big Branch mine in West Virginia, where 29 miners died earlier this month, is coming under increasing scrutiny from law enforcement officials. News broke today that the FBI is interviewing dozens of current and former employees of Massey Energy, the mine operator, as part of a criminal investigation into the deadliest American mining disaster in 40 years. Massey denied any wrongdoing, and offered full cooperation with federal law enforcement officials.

In the wake of the Upper Big Branch disaster, as well as two other deadly mining accidents this month, some legislators are seeking ways to strengthen mine safety. Despite the Mine Safety and Health Administration having notoriously weak enforcement tools, coal-state "lawmakers remain reluctant to enter the emerging debate over what's gone wrong, and whether Congress should step in with new laws to protect the nation's miners," reports Mike Lillis at The Washington Independent.

Though some families have already filed wrongful death suits against the mine operator, Massey is reportedly offering each family $3 million. In exchange, the families are being asked to dismiss pending suits or forgo their right to sue, one family said. According to Mark Moreland, an attorney involved in one of the suits, these settlement offers so soon after the deaths come at a tough time for families and help Massey "avoid answering hard questions raised publicly in litigation." Massey spokespeople refused to comment about the reported settlement offers.

[Image via ChuckHolton.]

More than a year after oral argument, a narrowly divided federal appeals court affirmed certification of the largest class action in American history. In Dukes v. Wal-Mart, more than one million potential plaintiffs are suing the retailer for gender discrimination. 

"The lawsuit, brought in 2001, accuses the retailer of systematically paying women less than men, giving them smaller raises and offering women fewer opportunities for promotion," The New York Times reports. "The plaintiffs stressed that while 65 percent of Wal-Mart's hourly employees were women, only 33 percent of the company's managers were." 

Considering the case en banc, the U.S. Court of Appeals for the Ninth Circuit sided with the plaintiffs by a vote of 6-5. Casting the deciding vote was Clinton appointee Judge Susan Graber, who wrote in concurrence, "If the employer had 500 female employees, I doubt that any of my colleagues would question the certification of such a class. Certification does not become an abuse of discretion merely because the class has 500,000 members."

The Recorder reports: 

Judge Michael Daly Hawkins wrote Monday's majority 9th Circuit opinion, joined by Graber and Judges Stephen Reinhardt, Raymond Fisher, Richard Paez and Marsha Berzon. All were appointed by Democrats.

"It would be better to handle some parts of this case as a class action instead of clogging the federal courts with innumerable individual suits litigating the same issues repeatedly," Hawkins wrote in Dukes v. Wal-Mart, 04-16688.

Judge Sandra Ikuta dissented, joined by Chief Judge Alex Kozinski and Judges Pamela Rymer, Barry Silverman and Carlos Bea. All of them are Republican appointees except for Silverman, a moderate Clinton pick much like Graber.

Wal-Mart is expected to appeal the decision to the Supreme Court. Considering some observers' assessments of the Roberts Court as hostile to justice accessibility, plaintiffs' victory this week remains far from final.

[Image via Dystopos.] 

A recent symposium at the Brennan Center for Justice at New York University School of Law featured several frequent ACS participants as part of what legal expert Stanley Fish called "a group of A-list first amendment scholars." The Brennan Center convened the cadre of scholars "to rethink the relationship of money, politics and the Constitution" in the wake of the Supreme Court's 5-4 decision in Citizens United v. FEC, which loosened regulations of corporate electioneering.

Af the event, Fish writes: 

[I]t is the spirit of the occasion rather than any one thing said during it that impressed. This crowd thinks that it is going to win, thinks, as one participant put it, that Citizens United was "a huge reach" and "sits on a bubble," ready to be toppled. At most of the conferences I attend, talk like that would be little more than blowing smoke. But in this one the speakers and respondents were high-profile law professors, deans of prestigious law schools, lawyers who have argued before the Court and interacted, formally and informally, with its members. It occurred to me as I left at the end of the day that as a result of what had been said and proposed something in the world might actually change. The very thought made me nervous. 

[Image via charamelody.]

Before enactment of the so-called Franken Amendment, government contractors were permitted to contractually deny employees the right to sue for sexual assaults on the job. This was the hurdle faced by Jamie Leigh Jones, a former employee of Halliburton-subsidiary KBR in Iraq's "Green Zone."

The facts leading to Jones' dispute were provided by the U.S. Court of Appeals for the Fifth Circuit as follows: 

Jones alleges that, following a social gathering outside her barracks, at which alcohol had been consumed, she was drugged, beaten, and gang-raped by several Halliburton/KBR employees in her barracks bedrooom. 

A clause in Jones' contract, however, initially prevented her from suing KBR for its role in the alleged sexual assault she survived. While Jones appealed the mandatory arbitration clause in federal court -- a claim fought all the way to the U.S. Supreme Court by KBR -- Sen. Al Franken submitted an amendment to pending legislation restoring Jones' right to her day in court. 

According to a statement by KBR spokesperson Heather Browne, KBR dropped its Supreme Court appeal as a direct result of the Franken Amendment: 

KBR's decision to withdraw its petition from the Supreme Court was related to the Franken amendment. It is our belief that the language of the amendment is very broad and vague. As a result, KBR did not want to risk being in violation of the amendment, so the company withdrew its petition. 

With the Franken Amendment in place, Jones may now proceed to sue her former employer for the harms she alleges, without being forced into mandatory arbitration. The case is currently pending in federal district court.

[Image via the Office of Sen. Al Franken.]