The Rise of Artificial Intelligence in Art: What AI Means for Copyright Law and Liability

POETIC AI _ ERROR / OUCHHH (TR) by Ars Electronica is licensed under CC BY-NC-ND 2.0.

Sam Berten, Associate Member, University of Cincinnati Law Review[1]

I. Introduction

The rise of artificial intelligence (“AI”) has left its imprimatur on nearly every facet of society, including the realm of art. Artists are starting to utilize AI to generate digital artworks and push the bounds of traditional art media. AI art, or “neural network art” is art created using mathematical algorithms.[2] While humans create the code behind the AI that generates these digital artworks, human choice does not influence the resultant artwork.[3]

II. Background

One of the foremost AI creations to date is the Portrait of Edmond Belamy, which sold at Christie’s Auction House in 2018 for $432,500—43 times its estimate.[4] Obvious, a Paris-based collective, consisting of Hugo Caselles-Dupré, Pierre Fautrel, and Gauthier Vernier created the painting.[5] This “painting,” or digitally created image, was generated by an AI method called GAN, meaning “generative adversarial network.”[6] GAN is a method of AI that has two parts: a generator and a discriminator.[7] The coders or “artists,”

[feed] the system with a data set of 15,000 portraits painted between the 14th century to the 20th. The Generator makes a new image based on the set, then the Discriminator tries to spot the difference between a human-made image and one created by the Generator. The aim is to fool the Discriminator into thinking that the new images are real-life portraits. Then [the creators] have a result.[8]

The Portrait of Edmond Belamy demonstrated that AI-generated paintings were marketable in traditional auction houses. Currently, researchers around the world are continuing to push the limits of how society defines art by creating new methods to merge AI and art. One such researcher, Professor Ahmed Elgammal, has created a system called “creative adversarial network” (“CAN”).[9] The CAN network is programmed to “produce novelty,” which means CAN creates something different from what it sees in its database of paintings from the 14th century on.[10] Many paintings generated by CAN fall into the abstract art category which Elgammal states is, “because the algorithm has grasped that art progresses in a certain trajectory. If it wants to make something novel, then it cannot go back and produce figurative works as existed before the 20th century.”[11]

The AI trend is not stopping with Elgammal and Caselles-Dupré. Sougwen Chung, a former MIT media lab researcher, now uses her own hands, robots, and AI to “address the closeness between person-to-person and person-to-machine communication.”[12] Memo Atken, a London-based artist, “trained a neural network to ‘see’ images that represent some essential concepts of human life.”[13] Mario Klingemann uses neural networks, code, and algorithms to create his amazing artworks.[14] Refik Anadol, a Turkish artist, uses machine-learning to make “AI projects that inspire audiences around the world.”[15] Additionally, 17-year-old Robbie Barrat developed a program “that could write its own rap lyrics using 6,000 Kanye West lyrics” at his high school programming club.[16]

III. Case Law

Copyright ownership vests “initially in the author or authors of the work.”[17] But, in the case of an AI-generated work, who is the author? While caselaw addressing this issue is scarce, other areas of copyright law are certainly persuasive within the realm of copyright disputes.

For instance, in the “Monkey Selfie” case, Naruto, a crested macaque, took a picture of himself with a photographer’s camera.[18] The photographer who owned the camera, David Slater, published the photograph in a book and claimed ownership of the photograph.[19] This prompted People for the Ethical Treatment of Animals (PETA) and Dr. Antje Engelhardt to sue Slater, “claiming Naruto was the author of the photographs and that Slater . . . infringed Naruto’s copyright.”[20] The U.S. Court of Appeals for the Ninth Circuit held that the Copyright Act implies the author of a copyrighted work must be a human being.[21]

Under English law, when an owner’s animal “runs on to another person’s property and causes damage, the animal’s owner is liable for this damage. This is strict liability, so there is no need to prove negligence or intent . . . it may be appropriate that some forms of physical AI (e.g. robots) could have similar [sic] legal framework put in place.”[22]

The Supreme Court of the United States has stated that “copyright law only protects ‘the fruits of intellectual labor’ that ‘are founded in the creative powers of the mind.”[23] The Copyright Office has stated that “works produced by a machine or mere mechanical process that operates randomly or automatically without any creative input or intervention from a human-author” do not count as works founded in the powers of the human mind.[24] Additionally, the U.K. has granted “copyright protection to the person that makes arrangements for the computer to create the work.”[25]

In Graham v. Prince, Richard Prince, a well-known artist, was sued for appropriation when Prince displayed a screenshot of an Instagram post along with Prince’s comment on the Instagram post in an art exhibit.[26] The district court held that Prince was liable for infringement because this use was not transformative under the fair use defense.[27]

IV. Discussion

Discussion of this issue demonstrates that if an AI-artist “sells or displays AI-art that is substantially similar to the underlying work, it is unlikely that the AI-artist will be able to rely on fair use.”[28] Thus, no matter how “transformative” an AI-generated artwork may be in its process, the artist could still be liable for copyright infringement if the artwork appears too similar to another previous artwork. But, if the resultant work is “quite different in composition and presentation” from the original artwork, then there could be a plausible fair use defense.[29]

This conclusion will likely be challenged, however, in the time to come. AI artworks are, by their nature, based on databases of over 14,000 paintings. The work generated, even if it appears to be similar to another existent painting, is, in its essence, a completely different painting that is an amalgam of pieces, trends, styles, and colors from the paintings in the AI database.

Further, the creators of the AI-code are likely to be the owners of the resultant images based on legal precedent. These owners and creators should be able to succeed on a fair use defense if a copyright infringement claim arises, but there are still a plethora of legal issues that accompany AI-generated artworks. For instance, once an AI-generated work is produced, such as the Portrait of Edmond Belamy, if the AI program creates another work similar to the Portrait of Edmond Belamy, does one infringe the other? Should there be a limit on how many pieces these programs can create? Should the AI program database be limited to works out of copyright (now in public domain), or can copyrighted works be included since the AI program will naturally transform the work?

V. Conclusion

AI cases will force the legal system to grapple with new ideas and adapt precedent to meet the needs of modern technology. Based on the caselaw, it is likely that computer programmers will own the works created by their AI, but there is still latent ambiguity as to many aspects of AI.

Caselles-Dupré stated that “if the artist is the one that creates the image, then that would be the machine . . . If the artist is the one that holds the vision and wants to share the message, then that would be us.”[30]

Professor Elgammal said “there is a human in the loop, asking questions, and the machine is giving answers. That whole thing is the art, not just the picture that comes out at the end. You could say that at this point it is a collaboration between two artists – one human, one a machine.”[31]

The future of technology is brimming with possibility, and the legal field will soon have to adapt to handle the multitude of questions that will certainly arise. AI has already affected the art market and auctions worldwide, and sooner rather later, it will affect the law.

 

[1] The Federal Bar Association’s “Art Law and Litigation Conference” that took place in New York, New York on February 6, 2020, inspired this article. Professor Ahmed Elgammal’s discussion of AI-generated art and his system, CAN, which is a creative AI network, was particularly intriguing and prompted this article.

[2] Christopher McFadden, 7 AI-artists That Are Changing Our Understanding of Art, Interesting Engineering (Nov. 10, 2019), https://interestingengineering.com/7-of-the-most-important-ai-artists-that-are-defining-the-genre.

[3] Id.

[4] Christie’s Photographs and Prints Auction Preview, Is artificial intelligence set to become art’s next medium?: Christie’s The first piece of AI-generated art to come to auction, Christie’s (Dec. 12, 2018), https://www.christies.com/features/A-collaboration-between-two-artists-one-human-one-a-machine-9332-1.aspx; Naomi Rea, Sotheby’s Is Entering the AI Art Fray, Selling a Surreal Artwork by One of the Movement’s Pioneers This Spring, Artnet News (Feb. 8, 2019), https://news.artnet.com/art-world/sothebys-artificial-intelligence-1460332.

[5] Christie’s, supra note 4.

[6] Id.

[7] Id.

[8] Id.

[9] Id.

[10] Id.

[11] Id.

[12] McFadden, supra note 2.

[13] Id.

[14] Id.

[15] Id.

[16] Sarah Ligon, AI Can Create Art, but Can It Own Copyright in It, or Infringe?, The Lexis Practice Advisor Journal (Feb. 28, 2019), https://www.lexisnexis.com/lexis-practice-advisor/the-journal/b/lpa/posts/ai-can-create-art-but-can-it-own-copyright-in-it-or-infringe.

[17] 17 U.S.C. § 201.

[18] Ligon, supra note 16; see Naruto v. Slater, 888 F.3d 418, 420 (9th Cir. 2018).

[19] Id.

[20] Id.

[21] Id., see Naruto, 888 F.3d at 426.

[22] Emily Barwell, Legal Liability Options for Artificial Intelligence, Lexology (Oct. 16, 2018), https://www.lexology.com/library/detail.aspx?g=6c014d78-7f4c-4595-a977-ddecaa3a12e4.

[23] COMPENDIUM OF U.S. COPYRIGHT OFFICE PRACTICES III, § 306 (2017), (quoting Trade-Mark Cases, 100 U.S. 82, 94 (1879).

[24] Id. at § 313.2.

[25] Ligon, supra note 16; Andres Guadamuz, “Artificial Intelligence and copyright,” WIPO Magazine (October 2017), http://www.wipo.int/wipo_magazine/en/2017/05/article_0003.html.

[26] Graham v. Prince, 265 F. Supp. 3d 366, 370-73 (S.D.N.Y. 2017).

[27] Id. at 380-82.

[28] Ligon, supra note 16.

[29] Id.

[30] Christie’s, supra note 4.

[31] Id.

Uninstalling Amateurism: How EA Sports and the NCAA Can Revive NCAA Football Video Games

Photo by Dave Adamson on Unsplash

Nicholas Eaton, Associate Member, University of Cincinnati Law Review

I. INTRODUCTION

EA Sports (EA) broke hearts across the country when it cancelled production of its NCAA Football video games in 2013. Kids could no longer create virtual players with ninety-nine out of one hundred in every attribute and rush for 4,000 yards in a season on their way to a fourth consecutive Heisman Trophy. Due to ongoing litigation concerning student-athletes’ lack of compensation for their names, images, and likenesses, EA decided to cease production.[1]

This article outlines the legal issues that surround NCAA Football’s possible return. Section II details (1) the history of NCAA Football video games; (2) the National Collegiate Athletic Association’s (NCAA) amateurism rules; (3) the lawsuits that spurred EA’s decision to cancel NCAA Football; and (4) recent developments regarding the compensation of NCAA student-athletes. Section III dispels the NCAA’s concerns with paying student-athletes and provides the ideal course of action for the eventual return of NCAA Football games.

II. BACKGROUND

A. EA’s NCAA Football

In 1993, EA brought college football to the world’s fingertips with Bill Walsh College Football.[2] However, without a NCAA license, the game did not feature any real teams or schools.[3] EA spent the next few years producing College Football USA before releasing the first edition of its flagship college football game.[4] In 1997, EA released NCAA Football 98, beginning a thirteen-year tradition of NCAA Football releases.[5]

NCAA Football games gave users the ability to control all facets of their favorite college football teams. Users could call plays, throw for touchdowns, recruit incoming freshman, and even generate fictional teams with custom rosters.[6] Each version of NCAA Football included new game modes and features,[7] as well as updated rosters to reflect real life players at NCAA universities.[8] The athletes in the game were given “the same numbers, skin color, and skills as their real-life counterparts.”[9]

The NCAA Football franchise was loved by many, generating $1.3 billion in sales within the United States alone.[10] Through EA’s licensing deal with the NCAA, schools would make anywhere from $7,500 to over $100,000 a year.[11] Schools were paid in tiers based on the previous year’s Associated Press (AP) rankings.[12] Meanwhile, the athletes on the field did not earn a dime.[13]

B. NCAA Amateurism Rules

The NCAA has enforced amateurism rules since 1948.[14] These rules require student-athletes to refrain from various types of conduct in order to maintain their amateur status. For example, student-athletes are prohibited from (1) receiving scholarships above the cost of attendance; (2) signing contracts with professional teams; and (3) hiring an agent.[15] Furthermore, and most importantly in the context of NCAA Football video games, NCAA amateurism rules prevent students from receiving payment for the use of their names, images, and likenesses.[16]

C. The Litigation that Ended NCAA Football Video Games

EA announced the cancellation of NCAA Football in 2013 amidst ongoing litigation with former athletes.[17] According to EA, “[t]he ongoing legal issues combined with increased questions surrounding schools and conferences [left them] in a difficult position – one that [challenged their] ability to deliver an authentic sports experience . . ..”[18] This announcement left developers and fans of the game massively disappointed.[19]

O’Bannon v. NCAA, which was briefly consolidated with Keller v. Electric Arts Inc., [20] ended the NCAA Football video game franchise.[21] O’Bannon and Keller were deconsolidated after the claims against EA were settled for $60 million.[22] In O’Bannon, the U.S. 9th Circuit Court of Appeals held that, in order to comply with antitrust law, the NCAA must allow student-athletes to receive scholarships up to the cost of attendance.[23] As the NCAA had already voted to allow cost of attendance scholarships in 2014,[24] the court did not require any changes to the NCAA’s amateurism rules.[25]

D. Recent Developments

On September 30, 2019, California pulled the rug out from under the NCAA with its Fair Pay to Play Act.[26] The law, which will come into effect in 2023, allows student athletes to hire agents and prevents the NCAA from punishing students for collecting compensation from their names, images, and likenesses.[27]

While the NCAA originally warned that the Fair Pay to Play Act could affect California schools’ eligibility for NCAA events,[28] it changed course in October of 2019.[29] Against the expectations of many, the NCAA announced it would begin constructing a system for its student athletes to be paid.[30]

California’s Fair Pay to Play Act, coupled with the NCAA’s October decision, has spurred legislation across the country.[31] Almost half of the states are working on similar pay-to-play bills.[32] This has caused a major problem for the NCAA.[33] If student-athlete compensation is regulated through state-by-state legislation, as opposed to a single federal act, “the NCAA risks facing an untenable legal landscape that would grant schools in some states major advantages in the recruiting process.”[34] As the NCAA lobbies for a federal bill, it hopes to protect the idea of amateurism by continuing to prevent players from receiving compensation linked to on-field performance.[35]

III. DISCUSSION

So how does NCAA Football, realistically, make a comeback? Clearly, the players are going to need to be paid. EA made it clear through its cancellation of NCAA Football that it is unwilling to accept the backlash of profiting off players’ names, images, and likenesses without providing compensation. In order for players to be paid, individual states or the federal government will need to devise a plan that works for both the NCAA and the players. Therefore, we are left with a tug of war scenario. The NCAA wants to protect amateurism, as it claims amateurism fuels the popularity of its product.[36] The players, on the other hand, would like to be fairly compensated for the use of their names, images, and likenesses.

Using the NCAA and EA’s former payment model as a starting point, two scenarios present themselves. First, schools could distribute the money from the EA licensing deal directly to the players. Second, schools could follow O’Bannon’s proposal and hold the money in trust until players graduate or leave school.[37]

A. Direct Compensation

The simplest way NCAA schools can compensate student-athletes for the use of their names, images, and likenesses is direct payment. As stated above, schools would receive anywhere from $7,500 to over $100,000 per year from EA’s licensing deal.[38] If the schools took a small cut, ten percent for example, the remainder could be divided equally amongst the players. This scheme would award each player on the 105-man roster approximately $950 if the team was given $100,000. If a team underperformed, players would pocket a measly $70.

This scheme would not be supported by the NCAA. In O’Bannon, the NCAA argued that amateurism is crucial to the popularity of college sports.[39] In a way, college football functions like a minor league organization. It provides players the opportunity to develop before making a jump to the NFL. However, college sports are far more popular than minor league sports. The NCAA claims that student-athletes lack of compensation for on-field performance is the differentiating factor.

B. Compensation in Trust

The NCAA’s opposition to direct payment gave rise to an interesting alternative: delaying payment through trust. In this scheme, recommended by O’Bannon in trial, licensing payments would be held in trust for players until they leave school.[40] Delaying payment, in theory, placates both parties. Players would receive the compensation they deserve, and the NCAA’s precious amateurism principles would be protected. While the NCAA opposed this idea, its expert witness agreed that payments of up to $5,000 per year in trust “would not have a significant impact on [consumer] demand.”[41]

C. Modest Compensation is not Likely to Impact the NCAA’s Product

The NCAA’s fear that compensating players would negatively impact college football’s consumer demand is unfounded. It claims that paying players would separate them from other students and transform college football into a minor league organization. This is irrational in light of the facts. From video game licensing alone, players would earn, at most, $1,000 per year. Even considering television licensing, which is admittedly much more lucrative, players would only receive a few thousand dollars a year. O’Bannon used $5,000 a year as an example figure.[42] This is not enough money to cause a noticeable impact on the lifestyles of student-athletes. As the NCAA only allows eighty-five scholarships per team, many players will use this money to pay tuition.[43] To say that a few thousand dollars a year would turn players into professional athletes is a vast overreaction.

Furthermore, the NCAA is unnecessarily concerned with forming a “social ‘wedge’ between student athletes and the rest of the student body,” as this is practically already the case.[44] College football players are highly recognized and admired figures on college campuses. At larger schools, certain players are national celebrities. It is naïve to believe that a social wedge does not already exist between athletes and the remainder of the student body.

Modest compensation for the use of players names, images, and likenesses is not likely to impact the NCAA’s product. The players may be able to afford a new PlayStation or buy a few more 4 for 4 meals from Wendy’s, but their lifestyle will not be noticeably different. For this reason, there is no need to hold players’ compensation in trust until they leave school. There is no reason for NCAA schools to jump through hoops in order to prevent minor lifestyle changes that will not affect the product on the field.

IV. CONCLUSION

As the NCAA, state legislatures, and the U.S. Congress hash out the details, NCAA Football fans must continue to patiently wait. However, there is hope for a return of the beloved game. If a practical plan is put in place to pay the student-athletes for the use of their names, images, and likenesses, EA could finally resume production. As the interested parties put this plan together, they should not be bogged down by irrational fears that college sports fandom will suddenly disappear. Fans will still fill college stadiums even if the players can spare $60 to buy NCAA Football 2024.

[1] Tony Manfred, EA Sports Cancels Its College Football Video Game Amid A Wave Of Lawsuits, Business Insider (Sep. 26, 2013, 4:34 PM), https://www.businessinsider.com/ea-sports-cancels-ncaa-football-videogame-2013-9.

[2]EA Sports, The History of NCAA Football, EA Sports (Nov. 27, 2013), https://www.ea.com/news/ncaa-football-history.

[3] Id.

[4] Id.

[5] Id.

[6] Id.

[7] Id.

[8] Manfred, supra note 1.

[9] Id.

[10] Roger Groves, EA Sports Will Still Score Even More Financial Touchdowns Without The NCAA, Forbes (Sep. 28, 2013, 10:47 AM), https://www.forbes.com/sites/rogergroves/2013/09/28/ea-sports-will-still-score-even-more-financial-touchdowns-without-the-ncaa/#4e415d0e554a.

[11] Chris Smith, NCAA Football Video Game Is Worth Over $75,000 Per Year For Top Teams, Forbes (Aug. 22, 2013, 10:47 AM), https://www.forbes.com/sites/chrissmith/2013/08/22/ncaa-football-video-game-is-worth-over-75000-per-year-for-top-teams/#1603e67826d4.

[12] Id.

[13] See O’Bannon v. NCAA, 802 F.3d 1049, 1055 (9th Cir. 2015).

[14] Id at 1054.

[15] Id at 1054-55.

[16] Id at 1055.

[17] Manfred, supra note 1.

[18] Id.

[19] Adam Kramer, The Cult of NCAA Football: How EA’s CFB Series Has Lived on Despite Cancellation, Bleacher Report (July 30, 2019), https://bleacherreport.com/articles/2847267-the-cult-of-ncaa-football-how-eas-cfb-series-has-lived-on-despite-cancellation.

[20] O’Bannon, 802 F.3d at 1055.

[21] Adam Kramer, supra note 19.

[22] O’Bannon, 802 F.3d at 1056; see also Jon Soloman, College athletes react on Twitter after receiving EA Sports lawsuit checks, CBS Sports (Apr. 12, 2016, 1:31 PM), https://www.cbssports.com/college-football/news/college-athletes-react-on-twitter-after-receiving-ea-sports-lawsuit-checks/.

[23] O’Bannon, 802 F.3d at 1079.

[24] Id at 1054-55.

[25] See id. See id at 1079.

[26] Jack Kelly, Newly Passed California Fair Pay To Play Act Will Allow Student Athletes To Receive Compensation, Forbes (Oct. 1, 2019, 12:36 PM), https://www.forbes.com/sites/jackkelly/2019/10/01/in-a-revolutionary-change-newly-passed-california-fair-pay-to-play-act-will-allow-student-athletes-to-receive-compensation/#ba381c157d02.

[27] Id.

[28] Joseph Zucker, California State Senate Passes ‘Fair Pay to Play’ Bill for College Sports, Bleacher Report (Sept. 11, 2019), https://bleacherreport.com/articles/2853401-california-state-senate-passes-fair-pay-to-play-bill-for-college-sports.

[29] Colin Dwyer, NCAA Plans To Allow College Athletes To Get Paid For Use Of Their Names, Images, NPR (Oct. 29, 2019, 2:59 PM), https://www.npr.org/2019/10/29/774439078/ncaa-starts-process-to-allow-compensation-for-college-athletes.

[30] Id.

[31] Thomas Barrabi, NCAA athlete pay debate: Why a political showdown is coming in 2020, Fox Business (Jan. 3, 2020), https://www.foxbusiness.com/sports/ncaa-athlete-pay-debate-2020-expert-predictions.

[32] Id.

[33] Id.

[34] Id.

[35] Id.

[36] Id.

[37] See O’Bannon v. NCAA, 7 F. Supp. 3d 955 (N.D. Cal. 2014).

[38] Smith, supra note 11.

[39]O’Bannon v. NCAA, 802 F.3d 1049, 1058 (9th Cir. 2015).

[40] Id. at 1080.

[41] Id.

[42] Id.

[43] Deborah Ziff Soriano, 4 Myths About Athletic Scholarships, US News (June 5, 2019, 9:08 AM), https://www.usnews.com/education/best-colleges/paying-for-college/articles/2017-10-04/4-myths-about-athletic-scholarships.

[44] O’Bannon, 802 F.3d at 1060.

Oops! We Miscalculated Your Bar Exam Score

FAIL stamp” by Hans Gerwitz is licensed under CC BY-SA 2.0.

Chloe Knue, Associate Member, University of Cincinnati Law Review

I. Introduction

Imagine that you are sitting around a campfire telling scary stories with a bunch of law students. One student takes the flashlight, puts it up to his face, and says . . .

A couple of years ago, there were these law students in Georgia—90 of them—who took the bar exam and were told that they failedwhen they had really passed. But it gets worse, he says, as some of them did not find out about this error for over a year and had already taken the bar again. Oh, the horror!

While this may sound like a nightmare, it actually happened.[1] Forty-five examinees from both the July 2015 and February 2016 bar exam “were wrongly told that they failed[.]”[2] And in a spooky twist, on January 8, 2020, the Eleventh Circuit affirmed the district court’s decision not to hold the software company responsible for the disaster liable.[3] Section II of this article provides the factual background and discusses the arguments set forth by the class action plaintiffs in opposition to the software company’s motion for summary judgment. Section III argues that Georgia law permitted an outcome in favor of the plaintiffs or, alternatively, that the law should have been modified to allow those who are injured in this way to recover. Section IV concludes that summary judgment was not a just result.

II. Background

The Georgia bar exam consists of a multiple choice section and six essays; a passing score is a 270.[4] If an examinee comes within five points of a 270, examiners will regrade the essays.[5] If the regraded score puts the examinee above a 270, that score stands, and the examinee has officially passed the bar.[6] This is where the software company, ILG Technologies (“ILG”), comes into the picture. ILG entered into a contract with the Office of Bar Admissions (“OBA”) to create software for its administrative procedures, which included keeping track of exam scores.[7] ILG’s software failed, however, and “the scores on the regraded essays were not properly taken into consideration in calculating the scores.”[8] Thus, 90 examinees, whose essays went through this regrading process and received above a 270, were wrongly told that they failed.[9] It became public record, via the OBA’s website, that the 90 examinees did not pass the bar.[10]

The class alleged negligence and defamation, among other things.[11] The problem with alleging negligence, however, is that the class sought to bring a tort cause of action based on a contract.[12] The state of Georgia, however, has something called the “economic loss rule,” which prevents parties from being subject to double liability on the basis of contract and tort.[13] But in this case, no contractual relief was available to the class because the examinees were not privy to the contract between OBA and ILG.[14] The court noted that the economic loss rule does not apply in two situations.[15] The unifying idea is that there must be an “‘injury done independent[ ] of the contract[.]’”[16] First, “‘[t]he independent duty exception to the economic loss rule applies in cases where the plaintiff identified a statutory or common law duty that would have applied regardless of the existence of an underlying contract.’”[17] Examples include the relationship between attorney and client, and principal and agent.[18] The court was unpersuaded that such a special relationship existed.[19]

The second situation, on the other hand, was much more compelling. “[T]he economic loss rule does not apply to claims where a plaintiff seeks to recover damages for harm to his [1] person or [2] property.”[20] First, the class pointed to their physical symptoms, including, nausea, weight gain, and headaches.[21] The court remained unmoved, and reasoned, “[d]amages for such physical manifestations of psychic or emotional trauma are generally unrecoverable in negligence actions under Georgia’s impact rule: ‘In a claim concerning negligent conduct, a recovery for emotional distress is allowed only where there is some impact on the plaintiff, and that impact must be a physical injury.’”[22] In other words, there must be “‘direct physical contact.’”[23] Second, the representatives argued that a law license is a property right.[24] The court disagreed and cited to a case that said it was a privilege, not a right.[25]

The defamation cause of action was also rejected.[26] The parties disputed the second element;[27] under Georgia law, the statement must be “an unprivileged communication to a third party,” which requires a published communication.[28] Although the list of names was published, the court threw out this argument because the list was not literally published by ILG.[29] The court explained that even if ILG sufficiently contributed to the publication, the communication was nonetheless privileged, under what is called the “intracorporate privilege,” because ILG was under a contractual duty to communicate the test scores to the OBA.[30]

III. Discussion

The application of the economic loss rule was improper. First, the physical symptoms experienced by the examinees were sufficiently “physical.” We, as a society, have evolved beyond the idea that physical injuries are limited to broken bones and black eyes. Human beings can hurt, physically, in a variety of ways, including in the form of chronic headaches and nausea. “[A]lthough some of Appellants’ physical injuries . . . stemmed from their emotional distress,”[31] the fact that an emotional injury occurred first should not be an impediment to recovery. Even if all of the injuries were rooted in emotional trauma, what difference should it make?

This case implicates broader questions about the legal showing required for the tort of negligent infliction of emotional distress. Should plaintiffs have to show direct physical contact when complaining of an emotional injury? Or, is this notion counterintuitive? The heightened requirement stems from our legal system’s reluctance to equate emotional injuries with physical injuries. More and more people have come to understand that mental health is just as important as a person’s physical well-being. Emotional injuries should not be minimized; vomiting and headaches traceable to a person’s emotions are not somehow less worthy of redress than a fractured wrist. Sometimes an emotional injury lasts longer and is more difficult to remedy than a physical one. For the foregoing reasons, the court should have found that the examinees suffered physical injuries, or in the alternative, that their emotional injuries were just as legally significant.

Further, the right to practice law should be recognized as a property right. Although it is an incredible privilege to attend school and receive an education, the path to earning a law degree requires significant time and money. Law school is an investment, like a piece of property. Not only does it cost thousands of dollars a year, but most people take out loans—loans that accrue interest. Additionally, many students accept volunteer positions in the legal field to gain the necessary experience. The impact of these monetary sacrifices transcend the individual. For example, the child of a law student may not be able to attend camp that year or their spouse may have to pick up a second job.

The time spent studying and learning the law is another significant consideration. No amount of money can make up for lost time—it is priceless. When preparing for law school exams and the bar, students “go into a cave.” In other words, studying takes precedence over time spent with loved ones. When the examinees were wrongly told that they failed the bar exam and began studying for the next one, they presumably missed out on birthdays and holidays. All because ILG’s software failed. The 90 examinees will never get that time back. For those reasons, the state of Georgia should recognize a law license as a property right. Because the examinees suffered damage to their person and property, the application of the economic loss rule was improper.

The class also should have been permitted to proceed with its defamation claim. The broad purpose of the tort of defamation is to prevent injurious, false statements. Because ILG’s faulty program directly triggered harmful, false statements,  ILG should not have been granted summary judgment on a mere formality. Although ILG did not literally publish a list of successful examinees on its website, it was responsible for providing the OBA with the information.[32] There would have been no test scores without ILG’s software; ILG was an instrumental participant in the communication process. Therefore, the court should have concluded that ILG’s contribution to the publication could potentially be enough to satisfy the second element at trial.

The application of the intracorporate privilege was also questionable in this case. Although organizations should ordinarily have protection when communicating information back and forth, this information did not stay between the OBA and ILG. Instead, the test scores were made public knowledge. And this was very damaging information. An examinee’s absence from the list indicated that he or she did not pass the bar—a monumental obstacle in the field. This public error likely hindered careers and tainted reputations. Thus, summary judgment was improper for both the negligence and defamation claims.

IV. Conclusion

If the facts of this case are narrowly construed, it is about 90 examinees who were told that they failed the bar exam when they had really passed. But more broadly, it is about dedicating your life to something bigger than yourself and being wrongly told that you failed. Whether it be in the context of academics, athletics, politics, or business, all people can relate to having a dream and making sacrifices to achieve it. The examinees suffered an injury when, despite all the sacrifice, their dream was unfairly tarnished. The damage was physical, emotional, and the graduates were deprived of a hard-earned property right. Even though it is not certain that ILG would have been found liable at trial, the examinees were at least entitled to have their day in court.

[1] Murray vs. ILG Techs., LLC, No. 19-11607, 2020 WL 91546, at *2 (11th Cir. Jan. 8, 2020); Murray v. ILG Techs., LLC, 378 F. Supp. 3d 1227, 1233 (S.D.Ga 2019) (“The incidents giving rise to this action came to light on September 6, 2016.” Thus, for students who took the July 2015 exam, they found out about a year and one month later); Stephanie Francis Ward, Software company used in faulty Georgia bar exam scoring gets hit with lawsuit, American Bar Association Journal (September 4, 2016), http://www.abajournal.com/news/article/software_company_used_in_faulty_georgia_bar_exam_scoring_gets_hit_with_laws (“The false notification came after Murray took the July 2015 exam, according to the article, and he retook the test in February 2016.”) (emphasis added).

[2] Debra Cassens Weiss, Tech company accused of bar-exam grading glitch has no liability in test-takes suit, 11th Circuit says, American Bar Association Journal (January 9, 2020)http://www.abajournal.com/news/article/tech-company-accused-of-bar-exam-grading-errors-isnt-liable-to-those-wrongly-told-they-failed-court-says; Murray, 378 F. Supp. 3d at 1233 (“[T]he Georgia Board of Bar Examiners announced that ninety people who took the July 2015 and February 2016 Georgia bar exams—forty-five from each exam—were incorrectly assigned failing scores.”).

[3] Murray, No. 19-11607, 2020 WL 91546 at *3.

[4] Murray, 378 F. Supp. 3d at 1234; Murray, No. 19-11607, 2020 WL 91546, at *5.

[5] Id.

[6] Id.

[7] Murray, 378 F. Supp. 3d at 1234; Murray, No. 19-11607, 2020 WL 91546 at *4 (“The software was used by the OBA to calculate bar exam scores and communicate individual results of the July 2015 and February 2016 bar exams to applicants.”).

[8] Murray, No. 19-11607, 2020 WL 91546, at *5-6 n.2 (“The Bar Applicants (and the OBA) claim this was the result of an error in ILG’s software. ILG disputes this, insisting the error was the result of the OBA’s failure to execute properly the ‘steps’ for calculating the updated scores. However, this factual dispute is not relevant to our analysis here since, like the district court, we assume Appellee’s software caused the grading error responsible for the falsely reported failures.”).

[9] Id. at *6.

[10] Murray, 378 F. Supp. 3d at 1252; Murray, No. 19-11607, 2020 WL 91546, at *16.

[11] Murray, 378 F. Supp. 3d at 1234-35; Murray, No. 19-11607, 2020 WL 91546, at *2 (“In an amended complaint, the Bar Applicants alleged claims of negligence, attorney’s fees, negligent misrepresentation, breach of contract, strict liability (based on product defeat), negligent design, and defamation.”).

[12] Murray, No. 19-11607, 2020 WL 91546, at *9.

[13] Murray, No. 19-11607, 2020 WL 91546, at *7 (quoting O.C.G.A. § 51-1-11(a)); Murray, 378 F. Supp. 3d at 1241 (“The economic loss rule emerged in the products liability arena as a way to prevent individuals from receiving double recovery for the same wrongdoing.”) (citing Gen. Elec. Co. v. Lowe’s Home Ctrs. Inc., 279 Ga. 77, 608 S.E.2d 636, 639 (2005)); Murray, No. 19-11607, 2020 WL 91546, at *8 (quoting Flintkote Co. v. Dravo Corp., 678 F.2d, 942, 949 (11th Cir. 1982) (“‘the purpose of the rule . . . is to distinguish between those actions cognizable in tort and those that may be brought only in contract.’”)).

[14] Murray, 278 F.Supp. 3d at 1244 (quoting Dominic v. Eurocar Classics, 310 Ga. App. 825, 714 S.E.2d 388, 392 (2011)) (quoting J. Kinson Cook of Ga. v. Heery/Mitchell, 284 Ga. App. 552, 644 S.E.2d 440, 446 (2007)); Murray, No. 19-11607, 2020 WL 91546, at *4.

[15] Murray, 378 F. Supp. 3d at 1243-1244 (citing Unified Servs., Inc. v. Home Ins. Co., 218 Ga.App. 85, 460 S.E.2d 545, 547 (1995); (Bates & Assocs., Inc. v. Romei, 207 Ga.App. 81, 426 S.E.2d 919, 921 (1993), et al.); Murray, No. 19-11607, 2020 WL 91546, at *8 (citing Bates, 426 S.E.2d at 921); (Bulmer v. S. Bell Tel. & Tel. Co., 317 S.E.2d 893, 895 (Ga. Ct. App. 1984)).

[16] Murray, No. 19-11607, 2020 WL 91546, at *8-9 (quoting O.C.G.A. § 51-1-11(a) (citing Flintkote, 678 F.2d at 949)).

[17] Murray, 378 F. Supp. 3d at 1243 (quoting In re Arby’s Rest. Grp. Inc. Litig., No. 1:17-CV-0514-AT, 2018 WL 2128441, at *12 (N.D. Ga. Mar. 5, 2018)).

[18] Murray, 378 F. Supp. 3d at 1243 (citing Bulmer, 317 S.E.2d at 895).

[19] Murray, No. 19-11607, 2020 WL 91546, at *12.

[20] Murray, 378 F. Supp. 3d at 1244 (citing Bates, 207 Ga.App. 81, 426 S.E.2d at 921).

[21] Murray, No. 19-11607, 2020 WL 91546, at *12-13.

[22] Id. at 13-14 (quoting Lee v. State Farm Mut. Ins. Co., 533 S.E.2d 82, 84 (Ga. 2000)).

[23] Murray, No. 19-11607, 2020 WL 91546, at *14 (quoting Posesy v. Med. Ctr.—W., Inc., 361 S.E.2d 505, 506 (Ga. Ct. App. 1987)).

[24] Murray, 378 F. Supp. 3d at 1248.

[25] Id. (quoting Eckles v. Atlanta Tech. Grp., Inc., 267 Ga. 801, 485 S.E.2d 22, 26 (“‘The right to practice law is not a natural or constitutional right, nor an absolute right or a right de jure, but is a privilege or franchise.’”).

[26] Murray, No. 19-11607, 2020 WL 91546, at *17.

[27] Id. at *15-16.

[28] Id. at *15 (quoting Boyd v. Disabled Am. Veterans, 826 S.E.2d 181, 184 (Ga. Ct. App. 2019) (quoting O.C.G.A. § 51-5-1(b)).

[29] Murray, 378 F. Supp. 3d at 1252 (quoting Doc. 77 , pp. 7-8) (“Plaintiffs do not dispute that the OBA actually released the results, but instead argue that because Defendants’ software was ‘so integral to the defamatory communications [ ] the software [ ] published the results.’”). Murray, No. 19-11607, 2020 WL 91546, at *16 (“it does not change the fact the allegedly defamatory information at issue here was ‘communicat[ed] to a third party’ by the OBA, not Appellees.”) (quoting Boyd, 826 S.E.2d at 184)).

[30] Murray, 378 F. Supp. 3d at 1252-53 (quoting Koly v. Enney, 269 F. App’x 861, 864 (11th Cir. 2008) (quoting Kurtz v. Williams, 188 Ga.App. 14, 371 S.E.2d 878, 880 (1988) (“‘[W]hen the communication is intracorporate, or between members of unincorporated groups or associations, and is heard by one who, because of his/her duty or authority has reason to receive the information, there is no publication . . . .’”)); (quoting Ass’n Servs., Inc. v. Smith, 249 Ga.App. 629, 549 S.E.2d 454, 463 (2001) (“Where a statement is made ‘in performance of [a] private duty to [a] client,’ the communication is privileged pursuant to O.C.G.A. § 51-5-7(2).”).

[31] Brief of Appellants, at 30, Murray v. ILG Techs., 2019 WL 2866628 (11th Cir.) (emphasis added).

[32] Murray, No. 19-11607, 2020 WL 91546, at *16 (“the Bar Applicants argue the transmission of the incorrect bar results from the software to the OBA is itself a ‘publication[.]’”).

Following the Money: Could RICO Help the Foreign Victims of Embezzlement Bring the Infamous White-Collar Criminal to Justice?

Photo by Christine Roy on Unsplash

Alisher Kassym, Associate Member, University of Cincinnati Law Review 

I. Introduction

In certain foreign countries that have experienced a significant influx of cash without the proper legal environment to control where the cash is coming from, white-collar crimes are frequent, damaging, and problematic.[1] Former Soviet Union countries, where racketeering was an issue even before the states gained independence,[2] are prominent victims of various financially motivated offenses. Perhaps the most infamous scandal abroad came from Central Asia involving Mukhtar Ablyazov—a fugitive embezzler whose past fraudulent actions in Kazakhstan gave rise to litigation throughout the world,[3] including the New-York’s federal district court in City of Almaty v. Ablyazov.[4] In City of Almaty, a plaintiff brought a civil claim against Ablyazov and his co-conspirators under the Racketeer Influenced and Corrupt Organizations Act (“RICO”), but ultimately failed.[5] This article will examine, by the example of City of Almaty v. Ablyazov, under which circumstances foreign governments and corporate entities can invoke RICO to seek a remedy against white-collar criminals that reside or have assets under the jurisdiction of the United States. Ultimately, this article ponders RICO’s effectiveness as applied to criminal conduct taking place outside of the U.S.

II. Background

The RICO federal statute defines racketeering activity quite expansively and, among many other things, deems money laundering, engaging in money transactions obtained by unlawful means, and fraud in the sale of securities unlawful  under the act.[6] U.S.C. Section 1962 makes it unlawful to, directly or indirectly, engage with income derived from racketeering activity and thereafter use the illegal income to invest or acquire an interest in an enterprise.[7] The Section further prohibits anyone associated with an enterprise to manage the enterprise’s affairs by resorting to racketeering and conspiracies to violate any offenses stated under the Section.[8] Lastly, pursuant to U.S.C. Section 1964, any “person injured in his business or property” due to racketeering activity has a civil cause of action and can bring a claim in the U.S. federal district courts.[9] Notably, RICO does not expressly require the injury or the plaintiff to originate in the United States.[10]

A. RJR Nabisco[11] and the Presumption Against Extraterritoriality in RICO Litigation

The Supreme Court’s decision in RJR Nabisco v. European Cmty. clarified the application of RICO claims derived from foreign racketeering activity.[12] In this case, the European Community, alongside 26 of its member states, brought a RICO claim against RJR Nabisco and the associated entities for participating in the multinational money-laundering scheme that involved organized crime groups.[13] Specifically, the European Community alleged that RJR Nabisco played a key role in the criminal scheme by accepting funds from drug traffickers in return for large shipments of tobacco products to Europe.[14] RJR’s actions allegedly harmed the European Community in multiple manners: loss of tax revenue, unfair competition with local tobacco businesses, negative effects on financial institutions and local currency.[15] The district court granted RJR Nabisco’s motion to dismiss, stating that RICO did not apply to violations that took place outside the U.S.[16] The Second Circuit disagreed and reinstated the claims.[17] The appellate court found that Congress intended RICO to apply extraterritorially to the extent that some of the definitions under Section 1961 apply extraterritorially, which in RJR’s case were money laundering and support of terrorism.[18] The panel then supplemented that RICO did not require an injury to occur domestically.[19]

The Court split their analysis into two parts: (1) whether the RICO violations defined in Section 1962 apply to conduct taking place in foreign countries and (2) whether the private cause of action under Section 1964 is available to foreign plaintiffs.[20]

The Court’s inquiry began with the former issue.[21] In the majority opinion, Justice Alito restated the foundational principle of statutory construction—the presumption against extraterritoriality.[22] The presumption against extraterritoriality constructs federal laws only to apply domestically, unless an affirmative instruction from Congress bids otherwise.[23] Manifested by the judicial caution, the presumption against extraterritoriality aims to prevent “international friction” and foreign policy implications that linger whenever an American court can issue a civil remedy based on conduct outside of the U.S.[24] The court continued, stating that although RICO lacked express language granting extraterritorial jurisdiction, it implied foreign application for some of the offenses, which meant that at least some of provisions covered foreign racketeering activity.[25] A clear, albeit unpleasant example of when extraterritorial jurisdiction is implied in the statute would be a pattern of racketeering involving homicides of American people abroad.[26] The Court implied that everything, short of an explicit provision in the statute, pointed to Congressional intent of allowing extraterritorial application of RICO under the aforementioned circumstance.[27] An adverse result would render the statute impotent in situations involving global crimes of racketeering.[28] Still, the Court warned that many predicates under the RICO do not apply to extraterritorial conduct even if other predicates do.[29]

Despite the ruling that Section 1962 at least partially applied to foreign conduct, the European Community’s claim was ultimately dismissed due to the lack of domestic injury.[30] Per Section 1964, a RICO claim requires proof of injury to a plaintiff business or property.[31] Since the structure of the section did not imply extraterritorial application in the same manner as Section 1962, the Court concluded that a civil RICO claim requires a domestic injury.[32] The opinion left the question of what constitutes a domestic injury open but noted that the determination of whether an injury is domestic “will not always be self-evident.”[33]

B. The Decision in City of Almaty v. Ablyazov

The saga of Mukhtar Ablyazov took a new turn when the city of Almaty and the BTA bank (the Kazakh entities) filed multiple crossclaims of civil RICO violations in the Southern District of New York.[34] The complaint alleged that Ablyazov and his co-conspirators have siphoned billions of dollars from the Kazakh Entities and then laundered the money through a series of sham transactions and operation of shell companies.[35] Most importantly, a portion of the laundered funds was invested in several real estate projects in New York.[36]

The district court’s opinion started with restating the ruling in RJR Nabisco that RICO applied extraterritorially, but had to involve a domestic injury in order for a plaintiff to successfully sue in federal court.[37] Just as Justice Alito predicted in RJR Nabisco, the parties here debated whether the Kazakh Entities’ injuries were domestic or foreign in nature.[38] Since RJR Nabisco provided no framework to tackle categorizing the origin of a racketeering injury, the district court separately scrutinized the underlying facts around the Ablyazov’s activity.[39]

The court determined that the location of the alleged racketeering activity bore no influence on where the actual injury occurred.[40] Consequently, an argument that Kazakh Entities’ injury was foreign simply because the racketeering activity happened in Kazakhstan was meritless.[41] Next, the court investigated the origins of the injury by using a common-sense, two-question inquiry: “who became poorer” and “where did they become poorer” due to the RICO violation.[42] The answers to both of the questions were fairly predictable—the Kazakh Entities became poorer, and they became poorer in Kazakhstan.[43]  In the court’s view, the Kazakh Entities had no “discrete financial base” that was injured in New York.[44] The court also reminded the parties that mere financial connections such as branch office, investments, and bank accounts were deemed insufficient to establish the domestic nature of an injury.[45] Consequently, the injuries suffered by the Kazakh Entities as a result of Ablyazov’s fraudulent activities were foreign, and thus barred by the presumption against extraterritoriality.[46]

III. Discussion

As demonstrated by the Supreme Court in RJR Nabisco, some of the RICO predicates cover foreign conduct of racketeering due to their expansive and particularly harmful nature of the offenses, which in turn hints at the Congressional intent to design RICO to apply extraterritorially. However, finding an applicable extraterritorial predicate is not the only barrier foreign RICO plaintiffs will face, since the requirement of a domestic injury also taints foreigners’ hopeful prospects of litigating their claims in the U.S. This requirement, as will be shown, greatly diminishes the probability of successful extraterritorial RICO claims, and renders the statute ineffective in most situations involving foreigners. Therefore, while RICO can, in theory, make the victims of foreign racketeering whole, the statute will only apply in specific instances where foreign plaintiffs have substantial ties to the U.S., such as tangible property or a considerable business presence.

Other than restating the underlying principle of avoiding “international friction,” the Court supplied no guidance on what constitutes a domestic injury. In the City of Almaty, the alleged complicated scheme involving sham transactions in multiple international venues— including real estate investments in New York—was deemed to cause an extraterritorial injury rather than domestic because no entity in the U.S. “became poorer” as the result of racketeering conduct. In Cevdet Aksut Ogullari Koll. Sti. v. Cavusogluo[47], a Turkish company alleged that it lost business interest in the U.S. due to dealing with another foreign RICO enterprise.[48] According to the court in Cavusogluo, the company did not suffer a domestic injury because the company’s business “was entirely located and operated out of Turkey.”[49] In Dandong Old N.-East Agric. v. Gary Ming Hu [50], a major Chinese soybean oil manufacturer’s civil RICO claim against domiciles of the United States failed because the plaintiff’s deprivation of money was felt nowhere except for China, thus making the injury extraterritorial.[51]

In contrast, the court in Tatung v. Shu Tse Hsu[52] found that a foreign corporation doing business in the United States was domestically injured as a result of racketeering activity.[53] Specifically, the court did not hesitate to define the injury as domestic for two reasons: the plaintiff corporation maintained a presence in California, and some parts of the alleged RICO scheme were directed against the corporation in California.[54] Notably, the opinion deviated from a more popular location-of-the-injury approach and instead argued that the approach unjustly favors the U.S. entities violating RICO at the expense of foreigners.[55]

In the absence of clear instruction from the Supreme Court, proving domestic injury in a civil RICO claim will likely require a strong, tangible connection between a foreign entity and the United States. In recent cases, the majority of federal courts tend to decide the nature of an injury based on where the economic impact of racketeering was felt. Even the court in Tatung, which criticized the said injury-focused approach, found the plaintiff’s physical presence in California to be a significant factor in determining that an injury was domestic. That leaves foreigners with a de-facto requirement for substantial, palatable ties to the U.S. via a business enterprise or property. One can imagine that outside of a few entities that have the incentive to maintain connections on the American soil, the requirement is often unlikely to be satisfied by foreign nationals, corporations, and especially governments. Thus, the majority of civil RICO claims brought by non-U.S. residents are doomed to fail.

Evidently, the Kazakh government and BTA bank did not have sufficient physical ties to the U.S. to prove domestic injury. Due to the circumstances, a civil RICO claim is essentially a closed venue to pursue. Does this mean the Kazakh entities have no way of redressing the injuries caused by Ablyazov and co-conspirators in the American courts? Possibly, but justice may come in a different form than court-awarded damages. The U.S. Department of Justice operates the Money Laundering and Asset Recovery Section (MLARS) that specializes in prosecuting and litigating money laundering cases.[56] Specifically, MLARS has an International Unit which assists foreign governments with recovering embezzled assets that made it into the U.S. financial system.[57] Moreover, other jurisdictions involved in Ablyazov’s sham transactions may be more sympathetic to the problems of the Kazakh Entities. Therefore, even if RICO is off-limits for some foreign plaintiffs like the Kazakh Entities, they still might find relief through MLARS’s International Unit, or the courts of other jurisdiction.

IV. Conclusion

While RICO can apply to extraterritorial claims of embezzlement and racketeering, the foreign plaintiffs seeking damages under the Act will often find themselves struggling to prove that the economic impact caused by racketeering was felt in the U.S. Presumably, not many foreign individuals, companies, and especially governments maintain enough presence in the U.S. to prove a domestic injury successfully. Therefore, although RICO theoretically can apply to foreign plaintiffs, it can be challenging to convince U.S. courts to exercise jurisdiction over their RICO claims. As for the Ablyazov saga, the Kazakh entities seem to be keen on persisting on their claims as evidenced by the recent attempt to amend the complaint.[58] Nevertheless, the prospects of successful litigation against the fugitive in the American courts look grim, and the Kazakh Entities may want to file their claims in a more favorable jurisdiction.

[1] See Douglas Green, White Collar Crimes in Central Asia: The Case of Kazakhstan, Stratfor Worldview (Feb. 6, 2017), https://worldview.stratfor.com/article/white-collar-crime-central-asia-case-kazakhstan.

[2] See id.

[3]Stephen Bland, The Ablyazov Affair: ‘Fraud on an Epic Scale’, The Diplomat (Feb. 23, 2018), https://thediplomat.com/2018/02/the-ablyazov-affair-fraud-on-an-epic-scale/.

[4] City of Almaty v. Ablyazov, 226 F. Supp. 3d 272 (S.D.N.Y. 2016).

[5] Id. at 274.

[6] 18 U.S.C.S. § 1961.

[7] 18 U.S.C.S. § 1962.

[8] 18 U.S.C.S. § 1962.

[9] 18 U.S.C.S. § 1964.

[10] See generally 18 U.S.C.S. § 1961, §1962, 1964.

[11] RJR Nabisco, Inc. v. European Cmty., 136 S. Ct. 2090 (2016).

[12] See Id.

[13] RJR Nabisco was formed in 1985 when Nabisco merged with RJ Reynolds tobacco in a record-breaking deal of its time. Linette Lopez, RJR Nabisco Goes Private And The Street Goes Wild, Business Insider, (Jan. 9, 2012),  https://www.businessinsider.com/rjr-nabisco-lbo-private-equity-deal-2012-1; RJR Nabisco, Inc. v. European Cmty., 136 S. Ct. 2090, 2093 (2016).

[14] Id. at 2093.

[15] Id. at 2098.

[16] Id. at 2093.

[17] Id.

[18] Id.

[19] Id. at 2099.

[20] Id.

[21] Id. at 2100.

[22] Id.

[23] Id.

[24] Id. at 2106-2107 (citing Kiobel v. Royal Dutch Petroleum, 133 S. Ct. 1659, 185 L. Ed. 2d 671, 681 (2013)).

[25] Id. at  2101-2102.

[26] Id. at 2102.

[27] See Id. at 2100-2102.

[28] Id. at 2104.

[29] Id. at 2102.

[30] Id. at 2105.

[31] Id. at 2106.

[32] Id. at 2108-2109.

[33] Id. at 2110.

[34] City of Almaty v. Ablyazov, 226 F. Supp. 3d 272 (S.D.N.Y. 2016)

[35] Id. at 275-276.

[36] Id. at 276.

[37] Id. at 278.

[38] Id. at 280.

[39] Id. at 281.

[40] Id. at 282.

[41] Id. at 282.

[42] Id. (citing  Bascuñan, 2016 U.S. Dist. LEXIS 133664, 2016 WL 5475998, at *4-6)

[43] Id. at 284.

[44] Id. at 285.

[45] Id.

[46] Id. at 287-287.

[47] 245 F. Supp. 3d 650 (D.N.J. 2017)

[48] Id. at 653.

[49] Id. at 659.

[50] Dandong Old N.-East Agric. & Animal Husbandry Co. v. Gary Ming Hu, 2017 U.S. Dist. LEXIS 122471, (S.D.N.Y. Aug. 3, 2017)

[51] Id. at 33-34.

[52] Tatung Co. v. Shu Tze Hsu, 217 F. Supp. 3d 1138, (C.D. Cal. 2016)

[53] Id. at 1157.

[54] See id. at 1156-1157.

[55] Id. at 1155.

[56] The United States Department of Justice, Money and Asset Recovery Section, https://www.justice.gov/criminal-mlars (last visited Feb. 13, 2020).

[57] Id.

[58] City of Almaty v. Ablyazov, No. 1:15-CV-05345 (AJN) (KHP), 2019 U.S. Dist. LEXIS 90556, at *4 (S.D.N.Y. May 29, 2019)

Recent Guidance From Bankruptcy Court: Lien Avoidance Calculation Under § 552(f)(1) of the Bankruptcy Code Cannot Include Previously Avoided Liens

Photo by Melinda Gimpel on Unsplash

Marcus Hughes, Associate Member, University of Cincinnati Law Review

I. The Bankruptcy Code

Article I, Section 8, of the United States Constitution authorizes Congress to enact “uniform Laws on the subject of Bankruptcies.”[1] Under this grant of authority, Congress enacted the “Bankruptcy Code” in 1978.[2] The Bankruptcy Code, which is codified as Title 11 of the United States Code, has been amended several times since its enactment.[3] It is the uniform federal law that governs all bankruptcy cases.[4]

Bankruptcy helps people who can no longer pay their debts get a fresh start by liquidating assets to pay their debts or by creating a repayment plan.[5] Bankruptcy laws also protect financially troubled businesses.[6] In a recent decision, the United States Bankruptcy Court for the Southern District of Ohio provided valuable insight into one of the many provisions meant to help provide this fresh start.[7] While only covering a very small piece of bankruptcy law, the following analysis illustrates how the smallest details create the biggest features of the Bankruptcy Code. 

II. The Avoidance Provision

A key feature of bankruptcy proceedings is the avoidance of liens on a debtor’s property.[8] While this is commonly done by a trustee[9] under 11 U.S.C.A. § 547,[10] in certain instances it is also accomplished by a debtor.[11] One type of such debtor’s avoidance is the avoidance, under the provisions of 11 U.S.C.A. § 522(f)(1)(A), of a judicial lien on exempt[12] personal property.[13] In cases involving avoidance of judicial liens on personal property, courts have expressly stated the purpose of the provisions: to allow the debtor a fresh start through the preservation of bankruptcy exemptions even in instances where creditors have obtained pre–petition liens on property which would otherwise be exempt.[14]

III. The Formula 

Section 522(f) of the Bankruptcy Code allows a debtor to “avoid the fixing of a [judicial] lien on an interest of the debtor in property to the extent that such lien impairs an exemption to which the debtor would have been entitled[.]”[15] The formula to calculate whether a lien impairs a debtor’s exemption is set forth in the statute:

[A] lien shall be considered to impair an exemption to the extent that the sum of—

(i) the lien;
(ii) all other liens on the property; and
(iii) the amount of the exemption that the debtor could claim if there were no liens on the property;

exceeds the value that the debtor’s interest in the property would have in the absence of any liens.[16]

Put another way, lien avoidance can be calculated by: (1) determining the value of the debtor’s interest in property; (2) deducting the value of those liens that are not being avoided; and (3) deducting the value of the debtor’s exemption.[17] If this results in a positive figure, the judicial liens cannot be avoided to the extent of that positive figure because there exists non-exempt equity in that amount to which the liens could attach; if the resulting figure is negative, the judicial liens may be avoided in their entirety.[18] For example, suppose a debtor files a motion to avoid a certain judicial lien encumbering his property under § 522(f)(1) of the Bankruptcy Code. Moreover, assume in that motion the debtor alleges that: the value of (and the value of the debtor’s interest in) the property is $300,000; the debtor is entitled to an exemption in the property of $100,000; and the property is subject to a mortgage in the amount of $250,000 and a judgment lien in the amount of $5,000. The following table would represent the debtor’s impairment calculation:

 Motion #1
Debtor’s Interest  $300,000
Other Liens – $250,000
Debtor’s Exemption – $100,000
   ($50,000)

In the above instance, the judgment lien could be avoided in its entirety because the result of the calculation is negative.

IV. The Fundamental Flaw

When a debtor desires to avoid more than one judgement lien, the proposed calculations may suffer from a fundamental flaw: the calculations might conflict with § 522(f)(2)(B), which provides that, “[i]n the case of a property subject to more than 1 lien, a lien that has been avoided shall not be considered in making the calculation under subparagraph (A) with respect to other liens.”[19] As many courts have noted, this means that a debtor must perform a separate calculation under § 522(f)(2)(A) for each judicial lien that the debtor seeks to avoid.[20] It is insufficient to attempt to avoid all liens in one calculation or to use the identical calculation in separate motions seeking to avoid other judicial liens against the same property.[21] Accordingly, where there are pending motions to avoid particular liens, or a lien has already been avoided, such liens are excluded from the calculation.[22] For example, suppose a second debtor files four motions to avoid certain judicial liens encumbering his property under § 522(f)(1) of the Bankruptcy Code. Moreover, assume that in those motions the debtor alleges that: the value of (and the value of the debtor’s interest in) the property is $300,000; the debtor is entitled to an exemption in the property of $89,000; and the property is subject to a mortgage in the amount of $200,000 and four judgment liens in the amounts of $5,000 each. The following table might represent the debtor’s proposed impairment calculation:

 Motion #1Motion #2Motion #3Motion #4
Debtor’s Interest  $300,000  $300,000  $300,000  $300,000
Other Liens – $215,000– $215,000– $215,000– $215,000
Debtor’s Exemption – $89,000– $89,000– $89,000– $89,000
   ($4,000)  ($4,000)  ($4,000)  ($4,000)

In each of the motions, the debtor includes in his § 522(f)(2)(A) calculation the three judgment liens that are not the subject of that particular motion. The calculations appear to show that each judgment lien could be avoided because each result is negative. However, when a debtor factors in the value of all of the other judgment liens in each motion, the calculation method disregards the plain language of § 522(f)(2)(B) and impermissibly shields non-exempt equity from lien attachment.[23]

V. The Correct Calculation

In order to comply with § 522(f)(2)(B), a debtor must omit one of the judgment liens with each new impairment calculation, even if the debtor seeks to avoid each lien contemporaneously.[24] For instance, avoiding one of three liens on a property will require including the two other liens in the § 522(b)(2)(A)(ii) portion of the formula in order to successfully avoid the first lien.[25] If the debtor seeks to then avoid the second lien (having already sought to avoid the first lien, whether pending or granted), the formula would only include the third lien as the first must be deemed already avoided for purposes of the analysis and excluded from the calculation assuming the first is avoidable in its entirety.[26] For example, the following table would represent the above discussed second debtor’s correct impairment calculation:

 Motion #1Motion #2Motion #3Motion #4
Debtor’s Interest  $300,000  $300,000  $300,000$300,000
Other Liens – $215,000– $210,000– $205,000– $200,000
Debtor’s Exemption – $89,000– $89,000– $89,000– $89,000
   ($4,000)  $1,000  $6,000$11,000

Here, only the first motion results a negative figure. Therefore, only the first judgment lien is entirely avoidable. The second, third and fourth liens are not avoidable to the extent of their respective positive result because that number represents the non-exempt equity to which the lien could attach.[27]

As another example, consider a third debtor who also files four motions to avoid certain judicial liens encumbering his property under § 522(f)(1) of the Bankruptcy Code. Moreover, assume that in the motions the debtor alleges that: the value of (and the value of the debtor’s interest in) the property is $350,000; the debtor is entitled to an exemption in the property of $130,000; and the property is subject to a mortgage in the amount of $200,00 and four judgment liens in the amounts of $35,000, $5,000, $5,000, and $5,000 respectively. The following table might represent the debtor’s proposed impairment calculation:

 Motion #1Motion #2Motion #3Motion #4
Debtor’s Interest  $350,000  $350,000  $350,000$350,000
Other Liens – $245,000– $240,000– $235,000– $200,000
Debtor’s Exemption – $130,000– $130,000– $130,000– $130,000
   ($25,000) ($20,000) ($15,000)  $20,000

Here, the table represents the correct calculation. Avoiding the first of four liens on the property required including the three other liens in the § 522(b)(2)(A)(ii) portion of the formula in order to successfully avoid the first lien. When the debtor sought to then avoid the second lien (having already sought to avoid the first lien), the formula only included the third and fourth lien as the first is deemed already avoided for purposes of the analysis and excluded from the calculation assuming the first is avoidable in its entirety. Similarly, when the debtor sought to then avoid the third lien (having already sought to avoid the first and second liens), the formula only included the fourth lien as the first and second are deemed already avoided for purposes of the analysis and excluded from the calculation assuming the first and second are avoidable in their entirety. Finally, when the debtor sought to then avoid the fourth lien (having already sought to avoid the first, second and third liens), the formula included none of the judicial liens as the first, second and third are deemed already avoided for purposes of the analysis and excluded from the calculation assuming the first, second and third are avoidable in their entirety. Consequently, in each of the first, second and third motions, the result is negative. Therefore, the first, second and third judgment liens could be avoided in their entirety. Only in the last motion is the result positive. Therefore, the fourth lien could not be avoided to the extent of $20,000 because that represents the non-exempt equity to which it could attach.[28]

When a debtor’s impairment calculations do not comply with § 522(f)(2)(B), the motions containing those calculations will be denied as disregarding the plain language of the statute and impermissibly shielding non-exempt equity from lien attachment.[29] A debtor wishing to seek avoidance of the liens will then have to file new motions, excluding in each motion’s calculation any lien(s) that the debtor is deemed to have already avoided under § 522(f)(2)(B).[30]  

VI. Conclusion

Providing debtors a “fresh start” is an essential principle of the bankruptcy laws. One way the Bankruptcy Code effectuates this principle is through the avoidance of liens on a debtor’s property. Particularly, section 522(f) of the Bankruptcy Code allows a debtor to avoid judicial liens to the extent that such liens impair an exemption to which the debtor would otherwise be entitled. When used correctly, these judicial lien avoidance provisions provide a valuable opportunity for an individual debtor to obtain relief from indebtedness and begin anew as a productive member of society. 


[1] Process – Bankruptcy Basics (Feb. 14, 2020), https://www.uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/process-bankruptcy-basics.

[2] Id.

[3] Id.

[4] Id.

[5] Bankruptcy (Feb. 14, 2020), https://www.uscourts.gov/services-forms/bankruptcy.

[6] Id

[7] In re Johnson, 609 B.R. 728 (Bankr. S.D. Ohio 2019) (holding that a debtor’s calculation of extent of impairment under 11 U.S.C.A. § 522(f)(1)(A) improperly factored in the value of all three of the other judgment liens that debtor sought to avoid).

[8] 124 A.L.R. Fed. 465 (Originally published in 1995). 

[9] Elizabeth Warren, Jay Lawrence Westbrook, Katherine Porter & John Pottow, The Law of Debtors and Creditors: Text, Cases, and Problems 58 (7th ed. 2014). The trustee administers the debtor’s estate by gathering all the estate assets. In a liquidation case, the trustee sells the assets; in a reorganization case, the trustee administers the bankruptcy case. The trustee has a special obligation (by custom and common law) to unsecured, general creditors and therefore is especially charged with scrutinizing the debtor’s reports to locate any concealed property or to discover any wrongdoing that might result is a failure to get a discharge. The trustee is also careful to be sure that no one creditor tries to take more than its share and thus challenges security interests or claims to special priority treatment.

[10] 11 U.S.C.A. § 547(b) provides that “the trustee may, based on reasonable due diligence in the circumstances of the case and taking into account a party’s known or reasonably knowable affirmative defenses under subsection (c), avoid any transfer of an interest of the debtor in property—(1) to or for the benefit of a creditor; (2) for or on account of an antecedent debt owed by the debtor before such transfer was made; (3) made while the debtor was insolvent; (4) made—(A) on or within 90 days before the date of the filing of the petition; or (B) between ninety days and one year before the date of the filing of the petition, if such creditor at the time of such transfer was an insider; and (5) that enables such creditor to receive more than such creditor would receive if—(A) the case were a case under chapter 7 of this title; (B) the transfer had not been made; and (C) such creditor received payment of such debt to the extent provided by the provisions of this title.”

[11] 124 A.L.R. Fed. 465. 

[12] Elizabeth Warren, Jay Lawrence Westbrook, Katherine Porter & John Pottow, The Law of Debtors and Creditors: Text, Cases, and Problems 79 (7th ed. 2014). The law in every state makes at least some property exempt from execution and other legal process so that no debtor can be reduced to absolute destitution. “Exempt” property under state law means exempt from seizure by writ through the formal collection law. When the debtor waives that exemption, by granting a voluntary security interest with a home mortgage or car lien, the exemption protection falls by the wayside. In bankruptcy, all property not listed as exempt is denominated nonexempt and will be sold by the trustee so that the proceeds can be distributed to the creditors.

[13] 124 A.L.R. Fed. 465.

[14] Id.

[15] In re Johnson, 609 B.R. 728, 729 (Bankr. S.D. Ohio 2019) (quoting 11 U.S.C. § 522(f)(1)). 

[16] Id. 

[17] Id.

[18] Id.

[19] Id. at 730 (quoting 11 U.S.C. § 522(f)(2)(B)). 

[20] Id.

[21] Id.

[22] Id.

[23] Id.

[24] Id.

[25] Id.

[26] Id.

[27] Here, $4,000 of the second lien could be avoided whereas the third and fourth liens are entirely unavoidable. 

[28] Here, $15,000 of the fourth lien could be avoided which would still leave $20,000 to which the lien would attach. 

[29] 01-15-20 West’s Bankr. Newsl; In re Johnson, 2019 WL 6903972 (Bkrtcy. S.D.Ohio, Judge Hoffman).

[30] In re Johnson, 609 B.R. at 731. 

Premature Petition for Review of Immigration Court Ruling: Departure From Precedent or Necessary Relief?

Legal Gavel” by Blogtrepreneur is licensed under CC BY 2.0.

Blythe McGregor, Associate Member, University of Cincinnati Law Review

I. Introduction

Imagine receiving notification that an immigration judge has ordered your removal to a country where you have not resided for over two decades. The government amended the factual allegations against you, and you were never given notice. The judgment for removal was made in your absence. You have five children depending on you in America, two of whom have medical issues. This was the plight facing Celia Diaz Martinez after her Notice to Appear (“NTA”) was amended by the government and an immigration judge issued an order for her removal.[1]

Martinez appealed to the Board of Immigration Appeals (“BIA”) after an immigration judge denied Martinez’s motion to reopen her case (“MTR”).[2] Prior to the BIA’s decision, Martinez filed a petition pro se for review of the immigration judge’s decision in the Ninth Circuit Court of Appeals.[3] The BIA dismissed the order two months after Martinez filed in the Ninth Circuit.[4] The Attorney General filed a motion to dismiss for lack of subject matter jurisdiction because Martinez filed the appeal before the BIA had issued a decision on the merits.[5] The Ninth Circuit denied the Attorney General’s motion and considered this issue on appeal of the denial of this MTR, as well as the appeal of the denial of a second MTR.[6]

The Ninth Circuit determined that it had subject matter jurisdiction over the appeal of the first MTR and, in doing so, broadened an existing circuit split. Previously, the Second, Third, and Eleventh circuits determined that a circuit court has jurisdiction to consider an appeal even when a lower court issues a decision regarding the same subject matter after the appeal petition has been filed. The Fifth and Sixth circuits disagree. 

II. Background

A. Overview of American Immigration Courts

A brief overview of the structure of United States immigration courts is appropriate before discussing circuit court appellate jurisdiction.  The immigration court system is part of the U.S. Department of Justice’s Executive Office of Immigration Review (“EOIR”).[7] Under the EOIR, there are fifty-eight immigration courts and a Board of Immigration Appeals (“BIA”).[8] Unless a federal court overturns the immigration judge and BIA decisions, the Attorney General has controlling oversight over the immigration courts and BIA as to questions of law.[9]  Immigration court decisions can be appealed to the BIA, and BIA decisions can be appealed to federal appeals courts.[10]  The charging document[11] used to initiate removal proceedings in Martinez is the notice to appear (“NTA”).[12]  This document states the charges and factual allegations surrounding the case.[13] It was this document that was amended without notice in Martinez, thus creating the substantive basis for Martinez’s MTR.[14] Additional controversy lies with the procedural issue of premature appeal. 

B. Support for Ripening Pending Appeal

In Martinez, the Ninth Circuit recognized that previously the court had made it clear that relevant statutes limited jurisdiction to review “final orders of removal from the BIA.”[15] This precluded review of decisions that the BIA remands to the immigration judge, but the Ninth Circuit had never before addressed whether cases can ripen while an appeal is pending in the circuit court.[16] Thus, the issue was not whether the circuit court could review the case when first filed, before the BIA made a decision, but whether the case could ripen while when there was an issuance of a final order and the circuit court appeal was still pending.

The Ninth Circuit identified two factors that weigh in favor of allowing an appeal to ripen: an existence of substantive rights and a lack of experience by the appellant. First, the court provided that there is a prioritization of substantive rights of parties, rather than allowing procedural defects to preclude appellate review.[17] This “pragmatic approach” allowed an assumption of jurisdiction when “subsequent events can validate the prematurely filed appeal.”[18]The court recalled allowing premature notices of appeal in a variety of circumstances, such as when notice of appeal was filed before an order was amended.[19] The Ninth Circuit also discussed the importance of being lenient when dealing with pro se parties, such as Martinez.[20] Thus, when an appellant lacks legal experience and expertise, allowing an appeal to ripen may only be fair.

The Second Circuit came to the same conclusion.[21] In Herrera-Molina, an immigration judge denied Herrera-Molina’s application for withholding of removal. Herrera-Molina filed an appeal with the BIA and a petition for review with the Second Circuit.[22] After the BIA dismissed the appeal, the Attorney General contested the Second Circuit’s jurisdiction.[23] The Second Circuit rejected the Attorney General’s contention and held that, so long as there is no prejudice to the Attorney General, an appeal can become ripe for review after filing when the lower court adjudicated the remaining issues.[24]

The Third Circuit agreed.[25] In Khan, the petitioners filed a motion for emergency stay of removal and MTR with the BIA.[26] Before the BIA issued a decision, the petitioners prematurely filed a petition for review of the BIA’s denial almost two weeks before the motion was actually denied.[27] The Third Circuit adhered to the Herrera-Molina reasoning and held that because the Attorney General had been shown no prejudice, the premature petition had ripened.[28]

Finally, the Eleventh Circuit agreed that the ripening approach to premature petitions is consistent with the court’s precedent.[29] In Jimenez-Morales, an appellant was in the midst of immigration court proceedings surrounding the reinstatement of a previous removal order when the appellant petitioned for review in the Eleventh Circuit.[30] The BIA decided against the appellant in the form of a finding of no reasonable fear of persecution or torture and a reinstatement of the appellant’s order for removal.[31] The Eleventh Circuit had to determine whether the lower court’s decision made the petition ripe for review.[32] They determined that it did, so long as no action had been taken on the merits and there was no prejudice to the government.[33] The Eleventh Circuit placed premature appeals in two categories: those that are filed from an order dismissing a claim or party and those that are filed from interlocutory order that are not immediately appealable.[34] The court placed this situation in the former category, because once the proceedings came to a close, the reinstatement of the appellant’s removal order was final.[35]

Even though the nature of the appealed order differed in each case, the Ninth Circuit in Martinez found the type of order was irrelevant. [36] In each case the appellant filed a petition for circuit court review of a non-final immigration judgement or BIA order that became final while the appeal in the circuit court was pending.[37]

C. Fifth and Sixth Circuits: A Premature Petition is Nonreviewable

In Martinez, the Attorney General advanced the positions of the Fifth[38] and Sixth[39] circuits in support of the contention that the Ninth Circuit could not review a premature petition. In Jaber, the Sixth Circuit found that it did not have subject matter jurisdiction to review a not yet final BIA decision.[40] The court reasoned that the appellant could have filed a petition after the BIA did issue a final decision.[41] Importantly, this case differs because neither the appellant nor the appellant’s counsel filed the petition in the circuit court.  Instead, after the immigration judge denied Jaber’s motion, Jaber filed a habeas corpus petition in federal district court and the district court transferred the case to the Sixth Circuit, finding that the petition was actually challenging a “final administrative order of deportation.”[42] The implications of this distinction will be discussed in the next section. 

In Moreira, the Fifth Circuit determined that review of an undecided BIA case was outside the court’s jurisdiction when a district court transferred the case following the appellant’s filing of a habeas petition. The Fifth Circuit reasoned that because it did not have jurisdiction to review the immigration judge’s decision independently, it could not consider a petition filed before the BIA makes a final order.[43] Notably, the Fifth Circuit relied on Jaber and a 2002 Ninth Circuit case[44] in making this determination. In the Ninth Circuit case, the court held that it did not have jurisdiction to consider a petition that had been filed before the case had been remanded to the immigration judge and before the BIA issued a final deportation order, and that a BIA order issued when the appeal was pending did not “cure” a premature petition.[45]

III. Analysis

Each side of the circuit split presents distinct procedural posture and factual distinctions. Also, at least one circuit has changed its position on this issue.[46] This raises the question of whether those factual differences should affect the outcome of this matter and whether changes in the courts’ view of immigration have an impact.

A. Structure of Immigration Courts

The structure of the immigration courts, a largely administrative system where all rulings are subject to the Attorney General’s oversight, may support allowing petitions to ripen for review after they are filed. Although the BIA does act as a separate appellate body and is able to review orders issued by the immigration courts, both the immigration courts and the BIA operate under the Attorney General’s control. Thus, the two courts have a sort of unity under this control. Depending on the political regime in power at a particular time, legal experts have theorized that the system is stacked against “asylum seekers and immigrants of color.”[47]

If litigants are unable to obtain favorable decisions in immigration courts or in the BIA, their next option is to appeal to federal circuit courts. Because of the apparent unity of the immigration courts and BIA, it may seem obvious to the litigant, even before the BIA issues a ruling, that an appeal to a federal court of appeals is imminent. It is important to note that, while an automatic stay of removal is in place while an appeal is pending with the BIA,[48] filing a petition for review in a circuit court does not stay the petitioner’s deportation from the United States.[49] Although the petitioner could file a stay motion with the court of appeals, a pro se litigant, like Martinez, may not have the legal acumen to take advantage of this option. In the immigration context, there is a time limit which likely prompts petitioners to file in the Court of Appeals before a final BIA ruling. 

Although the above cases describe this filing as “premature,” it is unlikely that a petition filed pre-BIA-ruling feels premature to these parties. Adhering to the intricacies of civil procedure is likely not a priority for those whose way of living is on the line. This urgency is exemplified in Khan. There, the petitioners “prematurely” filed in the Third Circuit within hours of petitioners’ scheduled removal from the United States.[50] A clerk at the BIA allegedly informed the petitioners that the BIA would not be considering the motion for an emergency stay of removal prior to the BIA issuing a final ruling.[51] It is not difficult to understand why these petitioners felt like the odds were stacked against them and wanted to appeal to the Third Circuit before adverse actions were taken.  The nature of the immigration court structure and the urgency involved in immigration cases weighs in favor of the “premature” petition ripening for review upon an unfavorable BIA ruling.

B. Postural Differences 

As discussed above, the Fifth and Sixth Circuit cases that rejected the ripening approach have procedural differences from cases on the other side of the circuit split. Most importantly, neither the appellants nor the appellants’ counsel filed a petition in the circuit court: a federal district court transferred the cases after the appellant filed a habeas corpus petition. Deciding to transfer the case to the circuit court requires a determination of what the petitioner is intending to challenge when filing the habeas petition.[52]  For example, in Jaber, the district court had to determine whether the petitioner wished to challenge the immigration judge’s final order or the pending BIA case. This lack of clarity stemmed from the fact that the petitioner did not specify which decision he was seeking to have the court review. Courts may reject an ambiguous petition and this ambiguity might be the reason the petitions were rejected in Jaber and Moreira.  

C. Social and Political Attitudes

Circuit court attitudes have changed, and will change, as political and social attitudes change. As explained in the previous section, the court in Moreira relied on a Ninth Circuit case from 2002 to support a holding that prematurely filed petitions are nonreviewable. Seventeen years later the same circuit exercised a pragmatic approach and leniency toward pro se parties in adjudicating the Martinez case and reached an opposite conclusion.

Notably, the cases that condemn the ripening approach were decided in the mid to late 2000s, while the cases supporting the approach were decided in the 2010s. The change in decade and a major shift in political ideology affecting immigration courts after the 2016 election, may have impacted circuit courts’ outlook on this issue. [53] If this trend continues, the circuit split may be narrowed in years to come.

IV. Conclusion

Martinez perpetuated a circuit court trend for procedural leniency toward BIA appellants and established a similar permissiveness towards pro se litigants in this context. This approach is essential to ensure fair outcomes in removal proceedings, especially against the backdrop of an apparent ideologically unified immigration court structure. It would be helpful if the Supreme Court could shed some light, but perhaps circuit courts will continue to decide this issue according to the social and political environment. At least in the current era, circuit courts should allow petitions to ripen for review post-filing when the BIA issues an unfavorable decision for a petitioner while the appeal is pending because of the urgent nature of immigration appeals and the postural differences in Jaber and Moreira.


[1] Martinez v. Barr, 941 F.3d 907 (9th Cir. 2019).

[2] Id. at 914.

[3] Id.

[4] Id.

[5] Id.

[6] Id.

[7] U.S. Immigration Law Research Guide: Structure of U.S. Immigration Law, Loyola Law School, http://guides.library.lls.edu/c.php?g=497692&p=3407350.

[8] See EOIR Immigration Court Listing, The United States Department of Justice,  https://www.justice.gov/eoir/eoir-immigration-court-listing.

[9] See 8 U.S.C.A. § 1103 (a)(1). 

[10] See Zhou Hua Zhu v. U.S. Attorney General, 703 F.3d 1303, 1307 (11th Cir. 2013). 

[11] Charging documents in general commence criminal charges against someone. See United States v. Cortez, 930 F.3d 350, 359 (4th Cir. 2019). 

[12] Martinez, 941 F.3d at 911. 

[13] Karingithi v. Whitaker, 913 F.3d 1158, 1160 (9th Cir. 2019).

[14] Id. at 921. 

[15] Id. at 915.

[16] Id.

[17] Id. at 916.

[18] Id.

[19] Id.

[20] Id.

[21] Herrera-Molina v. Holder, 597 F.3d 128 (2d Cir. 2010).

[22] Id. at 131.

[23] Id.

[24] Id. at 132.

[25] Khan v. Attorney General of the U.S., 691 F.3d 488 (3d Cir. 2012).

[26] Id. at 492.

[27] Id. 

[28] Id. at 493.

[29] Jimenez-Morales v. U.S. Attorney General, 821 F.3d 1307 (11th Cir. 2016).

[30] Id. at 1308.

[31] Id.

[32] Id. 

[33] Id. at 1309.

[34] Id.

[35] Id. 

[36] Martinez v. Barr, 941 F.3d 907, 919 (9th Cir. 2019).

[37] Id. at 920.

[38] Moreira v. Mukasey, 509 F.3d 709 (5th Cir. 2007).

[39] Jaber v. Gonzales, 486 F.3d 223 (6th Cir. 2007).

[40] Id. at 228.

[41] Id. at 230.

[42] Id. at 227.

[43] Moreira, 509 F.3d at 713.

[44] Brion v. I.N.S., 51 App’x 732 (9th Cir. 2002).

[45] Id. 

[46] See id. at 732.

[47] See The Attorney General’s Judges: How the U.S. Immigration Courts Became a Deportation Tool, Southern Poverty Law Center,  https://www.splcenter.org/20190625/attorney-generals-judges-how-us-immigration-courts-became-deportation-tool.

[48] See Merritt v. United States Immigration & Customs Enforcement, 737 F. App’x 66 (3d Cir. 2018).

[49] Seeking a Judicial Stay of Removal in the Court of Appeals: Standard, Implications of ICE’s Return Policy and the OSG’s Misrepresentation to the Supreme Court, and Sample Stay Motion, National Immigration Project, https://nationalimmigrationproject.org/PDFs/practitioners/practice_advisories/fed/2012_May_judicial-stay-remov.pdf.

[50] Khan v. Attorney General of the U.S., 691 F.3d 488, 492 (3d Cir. 2012).

[51] Id. at 495.

[52] See Jaber v. Gonzales, 486 F.3d 223, 227 (6th Cir. 2007).

[53] See The Attorney General’s Judges: How the U.S. Immigration Courts Became a Deportation Tool, Southern Poverty Law Center, https://www.splcenter.org/20190625/attorney-generals-judges-how-us-immigration-courts-became-deportation-tool.

State Constitutions: What’s the Point?

We the People” by Steven Nichols is licensed under CC BY-NC-SA 2.0.

Katie Basalla, Associate Member, University of Cincinnati Law Review

I. Introduction 

The United States Constitution[1] is the “Supreme Law of the Land” and may not be contradicted by state law.[2] Each state has its own constitution with its own set of rights, separate and apart from the Constitution. While states cannot infringe rights protected the Constitution, state courts are the ultimate interpreters of their own constitutions. When a plaintiff asserts a violation of his constitutional rights, the rights at issue could be contained in a state’s constitution, the Constitution, or both. Even with the supremacy of the Constitution, an individual state’s interpretation of its constitution may be more favorable than an equivalent right’s interpretation under federal law. Despite the fact that state constitutions may protect broader rights, the Constitution remains at the forefront of many discussions surrounding constitutional rights. 

In 1977, United States Supreme Court Justice William Brennan authored a law review article that focused on the interplay of state and constitutional law.[3] He focused on the power of state courts to construe their own state constitutional provisions more broadly than their federal counterparts, even when the provisions are phrased identically.[4] The article stressed that “state courts cannot rest when they have afforded their citizens the full protections of the federal Constitution” and must go beyond the reach of the Constitution.[5] States were at risk of the power of federal law inhibiting the independent power of state law.[6] While his article could have been a turning point in how lawyers present constitutional issues, many states still do not treat their constitutions as separate, but equal sources of rights.[7]  

Same sex marriage is an example of state constitutional law preceding federal constitutional law. In 2015, the Supreme Court of the United States held that the right to marry was protected by the Constitution, making same-sex marriage a legal right throughout the country.[8] But the story did not start there. In 1972, the Supreme Court shut the door on hearing cases where states refused to recognize same-sex marriages for lack of a “substantial federal question.”[9] This did not stop states from legalizing same-sex marriage, however; it merely forced them to do so through their state constitutions.  By the time the Supreme Court heard a same-sex marriage case, 37 states had already established that their constitutions protected the right of same-sex couples to marry.[10]

States began to interpret the right to same-sex marriage from their own constitutions because the Supreme Court of the United States determined the Constitution did not govern the issue. However, state courts did not have to wait for this. They had the power to decide the issue of same-sex marriage rights under their own constitutions before the Supreme Court ever addressed the issue under the Constitution.[11]

On the other hand, in areas where the Supreme Court of the United States has heard a matter and made a ruling, states typically adhere to that ruling, despite their own constitutional language and history being distinct.[12] In Tinker v. Des Moines, the Supreme Court interpreted freedom of speech as applied to school children.[13] As Supreme Court precedent, this case has been widely cited when interpreting the First Amendment to the United States Constitution.[14] While all courts are bound by the Supreme Court’s interpretation of the First Amendment, state courts have also relied on Tinker when interpreting speech protections in their state constitutions.[15]

State courts have the authority to decide cases independently under their own constitutions.[16] Where state and federal constitutional guarantees overlap, state courts have the power to align their interpretations of state constitutional guarantees with the state’s judicial and political history within the bounds of the Constitution.[17] They do not need to rely on how the Supreme Court interpreted the federal counterpart. However, they often do.[18] This post will argue that there are two reasons state courts follow federal constitutional precedent when they could differ: (1) the failure of attorneys to bring claims under both documents and (2) when they do, judges evaluate both claims under federal law. 

II. Discussion 

Lawyers can and should be making both federal and state constitutional claims on behalf of their clients. The Supremacy Clause establishes that rights under the Constitution are the same in every state, but those rights are not coextensive with state constitutional rights. A party’s claim can fail under the Constitution but prevail under a state constitution. Many states have failed to heed Justice Brennan’s call to treat their foundational documents as separate but equally powerful sources of rights. The system of federalism in the United States exists to allow for the variations on a common set of values.[19] When state courts concede interpretive supremacy to federal courts, they elect not to engage in the project of American federalism.

States establishing rights beyond the protections provided by the Constitution may also influence federal rights. While state courts’ interpretations of constitutional law do not bind the Supreme Court, the timeline of the same-sex marriage narrative illustrates how a strong foundation at the state level can bolster the argument for a federal right. When the Court rendered its decision in favor of the existence of a right to marriage regardless of sex in Obergefell, it noted the changes in public attitudes towards same-sex marriage, especially focusing on the trend in state courts at the time.[20]

States’ constitutional interpretations played a role in the Supreme Court case deciding same-sex marriage. This happened because states interpreted the right from their own constitutions when the Supreme Court refused to hear the issue in 1972. States do not have to wait for federal courts to shut the door on rights before interpreting the rights themselves. State courts can and should consider state constitutional claims under a separate body of state law insofar as that body of law is consistent with the Constitution.   

III. Conclusion 

State and federal constitutional law are separate bodies with separate authority to decide cases. Advocates must consider whether their clients are best served by appealing to both when they have claims cognizable under both. Lawyers should be making both of these claims when presented with the opportunity.[21] State and federal constitutional law are not entirely independent, but the Constitution should be a floor on which states can build additional rights. 


[1] For purposes of this post, “Constitution” always means United States Constitution. 

[2] U.S. Const. art. VI, cl. 2. 

[3] William Brennan, State Constitutions and the Protection of Individual Rights, 90 Harv. L. Rev. 489 (1977). 

[4] Id. at 5. 

[5] Id. at 2. 

[6] Id.

[7] See Simmons-Harris v. Goff, 711 N.E.2d 203 (Ohio 1999) (The Supreme Court of Ohio interpreted the Ohio Establishment Clause by adopting the three-part Lemon test created by the Supreme Court of the United States).

[8] Obergefell v. Hodges, 135 S. Ct. 2584 (2015). 

[9] Baker v. Nelson, 409 U.S. 810 (1972). 

[10] Julia Zorthian, These are the States Where SCOTUS Just Legalized Same-Sex Marriage, Time, (June 26, 2015), https://time.com/3937662/gay-marriage-supreme-court-states-legal/. “While 37 states had already fully legalized same-sex marriage, the Obergefell v. Hodges decision means the remaining 13 states will have to hand out marriage licenses to LGBT couples.” Id. 

[11] Michigan v. Long, 463 U.S. 1032 (1983). 

[12] Joseph Blocher, Reverse Incorporation of State Constitutional Law, 84 S. Cal. L. Rev. 323, 325 (2011). 

[13] Tinker v. Des Moines Indep. Cmty. Sch. Dist., 393 U.S. 503 (1969). 

[14] See, Defabio v. E. Hampton Union Free Sch. Dist., 623 F.3d 71 (2d Cir. 2010). 

[15] See, Solmitz v. Me. Sch. Admin. Dist., 495 A.2d 812 (Me. 1985) (evaluating a violation of freedom of speech under the first amendment of the United States Constitution and under article I, § 4 of the Maine Constitution, both under the Tinker standard).

[16] Michigan v. Long, 463 U.S. 1032 (1983). 

[17]See Ohio v. Robinette, 519 U.S. 33, 40 (1996) (Ginsburg, J., concurring) (focusing on the “unique vantage point” the state had when interpreting the Fourth Amendment).

[18] See Simmons-Harris v. Goff, 711 N.E.2d 203 (Ohio 1999) (The Supreme Court of Ohio interpreted the Ohio Establishment Clause by adopting the three-part Lemon test created by the Supreme Court of the United States).

[19] Alison Grey Anderson, The Meaning of Federalism: Interpreting the Securities Act of 1934, 70 Va. L. Rev. 813, 854 (1984).

[20] Obergefell v. Hodges, 135 S. Ct. 2584, 2597 (2015). 

[21] Attorneys should evaluate claims under both and present their client the option; other considerations, such as cost, time, and likelihood of success can and do enter the equation. 

The Impact of Food Marketing Institute v. Argus Leader Media on Trade Secret Litigation in Government Contracting

Photo by Philip Strong on Unsplash

Sam Berten, Associate Member, University of Cincinnati Law Review

I. Introduction

On June 24, 2019, the Supreme Court held in Food Marketing Institute v. Argus Leader Media that “commercial or financial information that is customarily and actually treated as private by its owner and provided to the government under an assurance of privacy is ‘confidential’ under exemption 4 to the Freedom of Information Act (FOIA) and is therefore shielded from disclosure.”[1] FOIA allows citizens to request the government to disclose unreleased information and documents in the government’s possession, with a few crucial exceptions. 

One of the key exemptions to FOIA requests is exemption 4. Exemption 4 of FOIA protects “trade secrets and commercial or financial information obtained from a person [that is] privileged or confidential.”[2] This exemption serves dual purposes: (1) it encourages submitters to voluntarily provide information to the government that will be reliable; and (2) it gives submitters protection from the competitive harm that could result from disclosure of the submitter’s protected information.[3]

II. Background

From 1974-2019, National Parks and Conservation Association v. Morton was the controlling test for Exemption 4 cases.[4] In National Parks, the D.C. Circuit created the “competitive harm” test, which said that “commercial or financial matter is ‘confidential’ [only] if disclosure of the information is likely . . . (1) to impair the Government’s ability to obtain necessary information in the future; or (2) to cause substantial harm to the competitive position of the person from whom the information was obtained.”[5] The D.C. Circuit created this test because of the lower court’s conclusion that the FOIA statute was not clear on its face, so it needed interpretative aid. 

The Supreme Court criticized the D.C. Circuit’s approach in 2019 in Argus Leader. The Supreme Court held that the statutory text of Exemption 4 was clear on its face, and the circuit court overstepped its authority when it created the “competitive harm” test.[6] Thus, the Supreme Court rejected the “competitive harm” test. Therefore, after Argus Leader, the government does not have to prove that the disclosure of information would result in financial harm to the submitter.[7] The Court further held that “at least where commercial or financial information is both customarily and actually treated as private by its owner and provided to the government under an assurance of privacy, the information is ‘confidential’ within the meaning of Exemption 4.”[8]

III. Discussion

Argus Leader significantly changed the trade secret landscape because it alleviated the need for contractors to prove competitive harm in the event of a public disclosure.[9] Additionally, contractors must take measures to ensure that their trade secrets, as well as any other competitively-sensitive information they hold, are kept secret.[10] These measures will often include restrictions, even within the corporation, to ensure the safety of this protected information.[11] Thus, when bidding on a government contract, contractors should be careful to ask whether their competitively-sensitive information will receive an “assurance of privacy” from the government. 

However, this explanation leaves an open door for further trade secret litigation where the commercial or financial information is both customarily and actually treated as private by its owner, but the government provides no assurance of privacy. The lower courts will have to grapple with this residual issue in the coming years. Argus Leader has already been interpreted by the 9th Circuit, which held in Center for Investigative Reporting v. United States DOL that publishing data in an annual report would demonstrate that the information was not confidential.[12] Additionally, the 9th Circuit has followed Argus Leader in Animal Legal Defense Fund v. United States FDA. In Animal Legal Defense, the 9th Circuit Court of Appeals remanded the case to the district court to determine whether the information was “customarily and actually treated” as private, and, “if necessary, the court shall decide whether the term ‘confidential’ requires a governmental ‘assurance of privacy’ and, if so, whether the FDA provided the necessary assurance.”[13]

Thus, Animal Legal Defense may present an answer to the remaining question of whether both prongs are necessary under the Argus Leader test. This decision will be a critical tool for future courts to determine whether simply keeping information confidential within your organization, and from the public, is enough to ensure an exemption under Exemption 4, or whether the government must also assure that the disclosed information will be kept private. If Animal Legal Defense states that both prongs must be satisfied, government contractors must heighten their contractual terms to ensure that any confidential information given to the government during requests for proposals (RFPs) or in furtherance of the government contract, is adequately protected from disclosure under Exemption 4.

IV. Conclusion 

The United States District Court for the Northern District of California is also currently deciding American Small Business League v. United States Department of Defense. This case will test the strength and application of Argus Leader. This is particularly true because the presiding judge, Judge Alsup, has described the Pentagon’s efforts to exempt information under Exemption 4 as “trying to suppress the evidence,” and further said “the purpose of the Freedom of Information Act is so the public can see how our government works. Congress passed this law to make small businesses have access to some of these projects, and here is the United States covering it up.”[14]

Judge Alsup has called the case a battle of “David vs. Goliath.”[15] Thus, while Judge Alsup will surely be bound by the Supreme Court’s interpretation of “confidential” under Exemption 4, government contractors should watch this case closely for Judge Alsup’s interpretation and application of Argus Leader.


[1] Food Mktg. Inst. v. Argus Leader Media, 139 S. Ct. 2356 (2019). See Peter J. Toren, Trade Secrets Review: Key 2019 Decisions and Trends (Part I), IP Watchdog (Jan. 21, 2020), https://www.alstongovcon.com/food-marketing-institute-v-argus-leader-media-enhanced-foia-protection-for-contractors-confidential-commercial-or-financial-information/.

[2] 5 U.S.C. §552(b)(4)(2000). 

[3] Freedom of Information Act Guide, United States Department of Justice (May 2004), https://www.justice.gov/oip/foia-guide-2004-edition-exemption-4#N_2_See Attorney General’s Memorandum for Heads of All Federal Departments and Agencies Regarding the Freedom of Information Act (Oct. 12, 2001), reprinted in FOIA Post (posted 10/15/01) (recognizing fundamental societal value of “protecting sensitive business information”).

[4] National Parks and Conservation Association v. Morton, 498 F.2d 765 (D.C. Cir. 1974). See Andrew Howard, Food Marketing Institute v. Argus Leader Media: Enhanced FOIA Protection for Contractors’ “Confidential” Commercial or Financial Information, Alston & Bird (Jan. 6, 2020), https://www.alstongovcon.com/food-marketing-institute-v-argus-leader-media-enhanced-foia-protection-for-contractors-confidential-commercial-or-financial-information/.  

[5] National Parks, 498 F.2d at 770.

[6] Howard, supra note 4.

[7] Argus Leader, 139 S. Ct. at 2364.

[8] Id. at 2366.

[9] Howard, supra note 4.

[10] Id.

[11] Id.

[12] Ctr. for Investigative Reporting v. United States DOL, No. 4:19-cv-01843-KAW, 2019 U.S. Dist. LEXIS 213793, at *17 (N.D. Cal. Dec. 10, 2019).

[13] Animal Legal Def. Fund v. United States FDA, No. 19-15528, 2020 U.S. App. LEXIS 1633, at *3 (9th Cir. Jan. 16, 2020). 

[14] American Small Business League Provides Update on “David vs. Goliath” Department Of Defense Lawsuit, PR Newswire (Feb. 13, 2019), https://www.prnewswire.com/news-releases/american-small-business-league-provides-update-on-david-vs-goliath-department-of-defense-lawsuit-300794695.html.  

[15] Id.

Booking.com and Not-So-Generic Internet Based Trademarks

“Booking.com Corporate Identity” by German Kopytkov is licensed under CC BY-NC-ND 4.0 

Mike Chernoff, Associate Member, University of Cincinnati Law Review

I. Introduction

Words, symbols, and phrases (hereinafter referred to as “marks”) can receive trademark protection in the United States when the mark is used to identify and distinguish products.[1] This protection does not extend to words that are deemed “generic,” that is, when the mark describes the category underlying the product.[2] However, the prevalence of internet based business has raised the question of whether adding “.com” to the end of a generic term could remove the generic label attached to the mark, and thus, become eligible for trademark protection. The Supreme Court will soon decide this issue in the upcoming case United States Patent and Trademark Office v. Booking.com B.V.[3] This article will analyze Booking.com’s trademark application and potential applicable law that will guide the Supreme Court’s decision.

II. United States Trademark Law Background

Trademark law protects the goodwill represented by particular marks and prevents consumers confusion between products and their sources.[4] Four categories of marks determine the amount of protection offered to a particular mark.[5] These categories include: (1) arbitrary or fanciful, (2) suggestive, (3) descriptive, and (4) generic.[6] Arbitrary, fanciful, and suggestive marks are considered inherently distinctive and are entitled to trademark protection as they are able to identify the particular source of a product.[7] Descriptive terms require certain showings to receive protection, while generic marks can never receive protection.[8] A descriptive mark describes a characteristic of the product and must acquire secondary meaning to receive trademark protection.[9] Secondary meaning is acquired by the mark when the term establishes a mental association in the public’s mind between the mark and the product or service.[10] A mark is generic if the mark is the “common name” of the underlying product.[11] When a mark is assessed for the proper category of protection, the entire mark must be considered, as the subsequent decision is dependent on the public’s understanding of the entire mark.[12]

Terms that include a generic term and end with a “top-level domain,” such as “.com,” have been found to be generic due to other longer domain names including the same generic term.[13] For example, the Federal Circuit found “Hotels.com” to be a generic term due to other domain names such as “all-hotels.com” and “web-hotels.com.”[14] However, some courts have have allowed consumer surveys to be introduced to prove that a “.com” site deserves descriptive mark status based on the results of a consumer survey.[15] A consumer survey is a common method for proving whether a term is generic in the eyes of the public and can help guide a fact-finder in determining the appropriate level of protection for a term.[16]

III. “Booking.com” Trademark Dispute

In 2011 and 2012, Booking.com, a travel booking website, filed four trademark applications with two seeking protection for the name “Booking.com” and two seeking protection for stylized logos featuring the company’s name.[17] These applications referenced services offered under the mark which included hotel reservation services for others, providing information about hotels, and similar hotel related booking related services.[18]

All four applications were initially rejected by the United States Patent and Trademark Office (“USPTO”) on the grounds of “Booking.com” merely being descriptive of the services that are provided by Booking.com.[19] After Booking.com argued that the mark had acquired distinctiveness, the USPTO issued a new refusal claiming the mark as generic because the mark was the same as the services provided and that the mark had failed to establish acquired distinctiveness.[20] Booking.com sought an appeal before the Trademark Trial and Appeals Board (“TTAB”). TTAB affirmed the registration refusals stating that “Booking.com” was a generic term for the services offered and “.com” did not negate the generic character of “booking.”[21] Alternatively, TTAB concluded that “Booking.com” is descriptive of the services provided and Booking.com “failed to demonstrate that the term has acquired distinctiveness.”[22]

Booking.com appealed TTAB’s decision arguing that “Booking.com” was a descriptive or suggestive mark that was eligible for trademark protection.[23] In support of this argument, Booking.com submitted a survey indicating that 74.8% of consumers recognized “Booking.com” as a brand and not a generic service.[24] The United States District Court for the Eastern District of Virginia ruled that as a whole, “Booking.com” was a descriptive, rather than generic, mark.[25] The District Court also held that Booking.com demonstrated that the mark had acquired secondary meaning and the term “Booking.com” was, therefore, eligible for trademark protection.[26]

The USPTO appealed this decision and argued that “Booking.com” was generic, but conceded that if the term was found to be descriptive, then the mark had acquired secondary meaning.[27] The Fourth Circuit  upheld the District Court’s ruling and agreed that the mark “Booking.com” must be viewed as a whole in a generic analysis.[28] The USPTO petitioned the Supreme Court of the United States for an appeal and was granted a writ of certiorari on November 8, 2019.[29]

IV. Discussion

When the Supreme Court decides the result of this case, the Justices will be deciding whether the addition of a generic top-level domain, such as “.com”, to a generic term transforms the entire phrase into protectable mark. This decision should result in an affirmation of the Circuit Court ruling because of the nature of website domain names and the mindset of the consuming public.

The nature of internet domain names supports the notion that including a top-level domain in a website-based mark should receive a “descriptive” level of trademark protection. Every domain name on the internet can only lead to a single website. This specific and distinct website that is found by the associated domain name will inherently form a strong association in the mind of the consuming public with the associated domain name. When a consumer has typed in the entire domain of a website, the consumer is expecting to be brought to a specific website. This would be analogous to a consumer looking for a specific brand of a product in a store. When a consumer seeks a specific brand in this fashion, the mark is descriptive of the ultimate product and has acquired secondary meaning. Due to the increased differentiation in the marketplace by the addition of a top-level domain, this top-level domain should provide an opportunity for trademark protection.

A central purpose of a trademark is to distinguish one’s product or services from those of others.[30] Booking.com provided evidence that their company name had formed a connection in the minds of the consuming public by showing 74.8% of consumers recognized “Booking.com” as a brand rather than a generic service. The USPTO did not provide evidence that the consuming public would refer to an online travel booking service as a “Booking.com.” Had this been the case, then “Booking.com” would be a generic term for the service of online booking. However, this has not been shown to be the outlook of the public and “Booking.com” should not be declared generic as a result.

V. Conclusion

The Supreme Court has the opportunity to expand trademark protection for some marks incorporating domain names by holding that “Booking.com” is not generic. This decision would be in agreement with the purposes of trademark law and continue to protect consumers from confusion.


[1] 15 U.S.C. § 1127 (2019).

[2] Abercrombie & Fitch Co. v. Hunting World, Inc. 537 F.2d 4, 9 (2nd Cir. 1976).

[3] Booking.com B.V. v. U.S. Patent and Trademark Office, 915 F.3d 171 (4th Cir. 2019), cert. granted, 2019 U.S. LEXIS 6782 (U.S. Nov. 8, 2019) (No. 19-46).

[4] OBX-Stock, Inc. v. Bicast, Inc. 558 F.3d 334, 339-340 (4th Cir. 2009).

[5] Abercrombie & Fitch Co., 537 F.2d at 9.

[6] Id.

[7] Booking.com B.V., 915 F.3d at 177.

[8] Id.

[9] Abercrombie & Fitch Co., 537 F.2d at 9.

[10] George & Co. v. Imagination Entm’t Ltd., 575 F.3d 383, 394 (4th Cir. 2009).

[11] OBX-Stock, Inc. v. Bicast, Inc. 558 F.3d 334, 340 (4th Cir. 2009).

[12] Estate of P.D. Beckwith, Inc. v. Comm’r of Patents, 252 U.S. 538, 545-46 (1920).

[13] Booking.com B.V. v. U.S. Patent and Trademark Office, 915 F.3d 171, 182 (4th Cir. 2019).

[14] In re Hotels.com, L.P., 573 F.3d 1300, 1303 (Fed. Cir. 2009).

[15] Id.

[16] Princeton Vanguard, LLC v. Frito-Lay N. Am., Inc., 786 F.3d 960, 970 (Fed. Cir. 2015).

[17] Booking.com v. Matal, 278 F. Supp. 3d 891, 896-897 (E.D. Va. 2017).

[18] Id.

[19] Id. at 897.

[20] Id.

[21] Id. at 898.

[22] Id.

[23] Booking.com B.V. v. U.S. Patent and Trademark Office, 915 F.3d 171, 178 (4th Cir. 2019).

[24] Booking.com v. Matal, 278 F. Supp. 3d at 915.

[25] Id. at 924.

[26] Id. 

[27] Booking.com B.V., 915 F.3d at 179.

[28] Id. at 181

[29] Booking.com B.V. v. U.S. Patent and Trademark Office, 915 F.3d 171 (4th Cir. 2019), cert. granted, 2019 U.S. LEXIS 6782 (U.S. Nov. 8, 2019) (No. 19-46).

[30] Trademark, Black’s Law Dictionary (11th ed. 2019).

Smartphones and the Fourth Amendment: When is Access to Password-Protected Information Permitted?

iPhone Unlock” by Eliane Smith is licensed under CC0 1.0.

Katie Basalla, Associate Member, University of Cincinnati Law Review 

I. Introduction

Like all areas of the law, Fourth Amendment doctrine must adapt to ever-changing technologies. This becomes increasingly difficult in an era of social media and smartphones. One device can hold thousands of pieces of information, ranging from finances to intimate conversations. Traditionally, the Supreme Court has held that an individual does not have a privacy interest in information divulged to third parties.[1] In Riley v. California, the Court held that due to the fast amount of information stored on a cell phone and its unique character, people have privacy interests in information stored on their cell phones, despite the fact that it was exposed to third parties. [2] The implication of this ruling is that officers may seize a cell phone from a person as a search incident to arrest, but may not search the cell phone’s contents without a warrant.

Post-Riley, many questions remain about how an officer may proceed with a search warrant for a cell phone. Many smartphones are equipped with password-protected capabilities, such as a numerical password, fingerprint reader, facial recognition, and other security features. May the officer force the phone’s owner to turn over the password? May the owner unlock the phone without giving up the password? May officer call him down to the station to use his thumbprint or face to unlock the phone? While there is no specific case on point, a series of cases, taken together, suggest that when the warrant requirement is properly fulfilled, officers may direct an individual to unlock the phone, but may not force an individual to reveal the password to law enforcement.

II. Background

As technology advances and more information becomes password protected, the question of how law enforcement may access protected data becomes increasingly important. Riley makes it clear that information on a cell phone is not immune from all searches, but that a warrant is generally required before a search.[3] What is unclear post-Riley is how law enforcement may proceed with a valid search warrant for a phone that is password protected.

The Supreme Court has not addressed the issue of whether a person must reveal a password to a law enforcement officer. A series of Circuit Court and District Court decisions may shed light on how the Supreme Court would rule in this area. The Fifth Circuit held that if a person voluntary provides the password to law enforcement, the officers may use it to search the phone.[4] The District Court for the District of the Virgin Islands, St. Croix Division held that officers were incorrect in telling a phone owner that if he did not unlock the phone, “the phone would be seized, unlocked by a ‘lab,’ and examined whether or not [he] unlocked it.”[5] Nonetheless, that search was ruled constitutional because the officers were operating in a good faith reliance on an exception to the warrant requirement.[6] While there have been multiple cases where an individual refused to give over a password following an officer’s demand, these cases do not address whether it is permissible for the officer to demand the password in the first place.[7]

Courts seem reluctant to address the question of whether an officer may require an individual to reveal a password so that an officer may search the phone. In both Thomas-Okeke and Poccia, officers demanded that the individual give over the password, rather than merely unlock the phone themselves. The courts decided each case on separate grounds and left the question of forcing an individual to give up a password untouched.

Many smartphones can also be unlocked by means other than typing in a password.  Before the age of smartphones, the Supreme Court left open the possibility that detentions for the sole purpose of fingerprinting may be permissible under the Fourth Amendment. In Davis v. Mississippi, the Court mentioned that under specific circumstances, detentions for the purpose of fingerprinting may “be found to comply with the Fourth Amendment even though there is no probable cause in the traditional sense.”[8]

III. Analysis

Although information on a smartphone is highly sensitive and deserves heightened protections, if an officer has a valid search warrant for the phone specifically, that warrant should carry with it inherent ability to unlock the phone. Looking at the policy reasons behind Riley and the dicta in Davis help settle the question of whether an individual must turn over a phone’s password. While an officer may not require an individual to reveal the password, if the standard set out in Riley is to have any significance, a warrant for a cellphone should carry inherent authority to access the phone. This may be by the individual unlocking the phone for law enforcement, or, as Davis suggests, it may be permissible for law enforcement to use an individual’s fingerprints to unlock a phone.

To carry out a search warrant for a cellphone, law enforcement may ask the individual to unlock the phone or may ask for him to voluntarily give over the password. As the Fifth Circuit held in Venegas, voluntarily giving up a password is equivalent to consenting to the search.[9] The main issue focuses on whether law enforcement may force an individual to reveal a password when he refuses to do so voluntarily.

The importance of privacy interests in cellular data was made clear in Riley. Since the Riley decision in 2014, the storage capacities and abilities of smartphones has increased. As more things become password-protected, privacy interests in one’s password becomes increasingly important. Many individuals use the same password across various accounts, including their cell phones, banking pins, or social media accounts. However, this should not mean that officers are not able to carry out the warrant or have to hack into the phone merely because it is locked. Just as law enforcement does not obtain the right to possess the keys to a house with a search warrant, officers do not gain the right to possess the password to a locked phone, but may nonetheless be given temporary access to the phone.

An individual should be required to unlock the phone if an officer has a valid search warrant. As Davis stated, detaining an individual to use his thumbprint may not violate the Fourth Amendment in certain circumstances. Although non-existent at the time of Davis, one of these narrowly defined circumstances could be using a fingerprint to unlock a phone to fulfill a legitimate search warrant. Not only would using a fingerprint in this circumstance be necessary to carry out a valid search warrant, it is even less of an intrusion than physically being fingerprinted because the individual has the choice of unlocking the phone for law enforcement through other means, whether it be voluntarily giving up the password or merely typing in the password himself.

While courts have not addressed how an officer may carry out a warrant for a cell phone, the Court’s reliance in Riley on the ability of a phone to be searched with a warrant suggests that Riley was meant to create a workable standard.[10] This standard would be frustrated if officers could not access a locked phone, even with a warrant. Having a legitimate search warrant for a locked smartphone could be compared to having a valid search warrant for a locked home. Even though the Supreme Court has continuously granted the greatest protections to one’s privacy in his own home,[11] the officer is not simply out of luck if the door is locked.

IV. Conclusion

Turning over a password to law enforcement is an invasion of privacy that goes beyond a warrant to search the phone. If officers obtain a valid search warrant for an individual’s cell phone, that warrant should include the authority to direct the individual to unlock the phone. However, an officer may not force an individual to reveal the password. If an individual refuses to type in the password, officers may require him to use his thumbprint or facial recognition (if applicable) to unlock the phone.

[1] See, United States v. Miller, 425 U.S. 435, 443 (1976).

[2] 573 U.S. 373 (2014).

[3] Riley v. California, 573 U.S. 373, 386, (2014). By using “generally” the Court left open the possibility that officers may search a phone without a warrant in exigent circumstances. Id. at 402. This Article will refer to instances where there are no exigent circumstances, and therefore a warrant is required before searching a phone.

[4] United States v. Venegas, 594 F. App’x 822, 826 (5th Cir. 2014).

[5] United States v. Thomas-Okeke, No. 2018-0008, 2019 U.S. Dist. LEXIS 92345, at *22 (D.V.I. June 3, 2019).

[6] Id. This case focused on whether or not the officers needed a warrant to search the phone. It still left open the question of whether or not the officers had the authority to direct the individual to unlock it.

[7] See, Gold v. Poccia, No. 17-104WES, 2018 U.S. Dist. LEXIS 161933, at *9 (D.R.I. June 29, 2018).

[8] 394 U.S. 721, 727 (1969). Although mainly dicta, the Court focused on the lack of personal intrusion giving a fingerprint involves. Id.

[9] United States v. Venegas, 594 F. App’x 822, 827 (5th Cir. 2014).

[10] Riley v. California, 573 U.S. 373, 403 (2014). “Our answer to the question of what police must do before searching a cell phone seized incident to an arrest is accordingly simple—get a warrant.” Id.

[11] See, Silverman v. United States, 365 U.S. 505 (1961). “At the very core stands the right of a man to retreat into his own home and there be free from unreasonable governmental intrusion.” Id. at 511 (emphasis added); see also Florida v. Jardines, 569 U.S. 1 (2013). “But when it comes to the Fourth Amendment, the home is first among equals.” Id. at 6.