Legal News for Tues 6/25 - Judge Gift Getting, Biden Student Loan Relief Halted Again, Spotify Audiobook Push, Assange's Plea Deal and GitHub Sales Tax Collection

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This Day in Legal History: Engel v. Vitale Decided

On June 25, 1962, the United States Supreme Court made a landmark decision in the case of Engel v. Vitale. The Court ruled that the recitation of a state-sponsored prayer in public schools violated the Establishment Clause of the First Amendment. This case arose from a New York State law that required public schools to start the day with a non-denominational prayer drafted by the state education board.

The plaintiffs, led by Steven Engel, argued that this practice amounted to an unconstitutional endorsement of religion. The Supreme Court, in a 6-1 decision, agreed and held that government-directed prayer in public schools was inherently coercive and an infringement on the separation of church and state.

Justice Hugo Black, writing for the majority, emphasized that the government should remain neutral on religious matters to ensure freedom of belief for all citizens. This ruling sparked considerable controversy and debate, reflecting broader tensions over the role of religion in public life. Many supporters of school prayer viewed the decision as an attack on religious traditions, while opponents saw it as a vital protection of individual rights.

Engel v. Vitale set a significant precedent for subsequent rulings on the issue of prayer and religious activities in public schools. It reinforced the principle that public education should be free from religious influence, shaping the interpretation of the First Amendment in relation to religious freedom and governmental neutrality. This case remains a cornerstone of American constitutional law concerning the separation of church and state.

Federal judges on trial and appeals courts have received gifts such as private flights, football tickets, and substantial cash gifts, according to a report by Fix the Court, a judicial transparency watchdog. This report comes amid increased scrutiny over gift acceptance by federal judges, following revelations of undisclosed gifts to Supreme Court justices like Clarence Thomas.

The most notable gift was a $24,000 cash gift in 2022 to Chief Judge Timothy Batten of the Northern District of Georgia from Medicraft Enterprises, a medical device company owned by a close friend. Batten also received a $4,000 gift from Medicraft in 2021. These cash gifts are rare on judges' financial disclosures, as noted by Gabe Roth, executive director of Fix the Court.

The judicial code of ethics prohibits judges from accepting gifts from those with court business or interests affected by court action. Judges can accept travel, lodging for educational or legal events, books, resource materials, and gifts from friends or family, provided they do not preside over related legal matters. Gifts over $480 must be reported in annual disclosures, but the judiciary's slow posting has caused delays.

The Fix the Court analysis also found judges commonly received free tickets, including football tickets from alma maters and local teams. Judge Charles Wilson reported football tickets from Notre Dame, while Judges Steve Jones, Lisa Wood, and Julie Carnes received tickets from the University of Georgia Athletic Association.

Judges also reported gifted vacations. Judge Aleta Trauger disclosed a private flight and hotel stay for a Christmas dinner, and Judge Daniel Crabtree reported travel and golf outings worth $4,100. Congress members face stricter gift limits, capped at $100 per donor annually, with exceptions for close friends and special events.

Judges Disclosed Gifts Include $24,000 Cash, Football Tickets

Two federal judges issued temporary halts to parts of President Biden's student loan debt relief program on Monday. Judge Daniel D. Crabtree of the US District Court for the District of Kansas ruled that large-scale student debt cancellation should be decided by Congress, partially granting a preliminary injunction requested by a coalition of states. Crabtree stated that the Biden administration's plan represented a significant regulatory expansion without clear congressional authorization.

In a separate case, Judge John A. Ross of the US District Court for the Eastern District of Missouri also granted an injunction, stating that the states have a fair chance of proving that the administration overstepped its authority by including loan forgiveness. These rulings challenge the Department of Education's July 2023 rule aimed at reducing monthly student loan payments based on income and canceling loans after ten years for borrowers with up to $12,000 in debt.

The relief plan, known as the Saving on a Valuable Education Plan, was set to take effect on July 1 and is estimated to cost $475 billion over ten years. This legal setback occurs as President Biden faces pressure to fulfill his campaign promise of student debt relief ahead of the November 2024 election. The Supreme Court had previously struck down a plan to forgive up to $20,000 in student loans for 40 million people.

Crabtree's nationwide injunction does not affect parts of the plan already in effect, while Ross's ruling limits the injunction to the loan forgiveness component. The cases involved are State of Missouri v. Biden and State of Kansas v. Biden.

Biden’s Student Loan Debt Relief Program Halted in Two Courts

Spotify's recent reclassification of its premium subscription service has sparked significant controversy in the music industry, leading to lawsuits, legislative pushes, and an FTC complaint. The conflict centers around Spotify's attempt to include audiobooks in its premium plan, reducing its royalty payments to songwriters. This move, seen as a "bait-and-switch," has led to accusations from the National Music Publishers Association (NMPA) and the Mechanical Licensing Collective (MLC) that Spotify is attempting to underpay songwriters.

The Music Modernization Act (MMA) of 2018 was designed to simplify royalty payments by creating the MLC, which issues blanket licenses to streaming services. However, dissatisfaction with the MLC's effectiveness is growing. Critics argue that the MLC's song matching process is inadequate, leaving many royalties unpaid. The NMPA has responded by lobbying for legislative changes to allow songwriters to negotiate royalties directly, outside the MLC's framework.

This dispute comes amid a broader debate over the fairness of the current music licensing system. Songwriters and publishers feel squeezed by shrinking revenues from streaming services, and are seeking greater control over their royalties. The FTC complaint against Spotify represents a novel approach in this ongoing battle, highlighting the lengths to which industry players are willing to go to secure fair compensation.

The MLC, up for its first five-year evaluation, faces scrutiny over its handling of unmatched royalties, which amount to significant sums. Despite some support for the MLC, there is a push for more transparency and improvements in its operations. As the industry grapples with these issues, the outcome of this multi-pronged conflict could reshape the landscape of music royalties and streaming.

Spotify Royalty Drama Casts Shadow Over Songwriter Consensus

Julian Assange, the founder of WikiLeaks, is set to plead guilty to violating U.S. espionage law, ending his 14-year legal saga and allowing his return to Australia. Assange will plead guilty to conspiring to obtain and disclose classified U.S. national defense documents. He will be sentenced to 62 months of time already served during a hearing in Saipan, chosen for its proximity to Australia.

Assange left the UK’s Belmarsh prison after being bailed by the UK High Court. This resolution follows a global campaign involving grassroots organizers, press freedom advocates, and political leaders. The Australian government has been pressing for Assange's release, and his wife expressed immense gratitude for the support they received.

The espionage charges stem from WikiLeaks’ 2010 release of hundreds of thousands of classified U.S. military documents, the largest security breach of its kind. The documents, leaked by Chelsea Manning, included sensitive diplomatic cables and battlefield reports. Assange’s prosecution has been controversial, with press freedom advocates arguing that charging him threatens free speech.

Assange’s legal troubles began in 2010 when he was arrested in the UK on a European arrest warrant related to later-dropped sex-crime allegations in Sweden. He sought asylum in Ecuador's embassy in London for seven years to avoid extradition. In 2019, he was arrested and has since been fighting extradition from Belmarsh prison.

The plea deal marks the end of a long ordeal for Assange, who has been compared to other whistleblowers like Reality Winner, who received a similar sentence for leaking classified information.

WikiLeaks' Julian Assange to be freed after pleading guilty to US espionage charge | Reuters

Sales tax compliance in the US is fraught with challenges, largely due to the lack of transparency and a reliable system for reporting and calculating owed taxes. Unlike income tax, where employer reports help bridge gaps, sales tax relies heavily on businesses to self-report, leading to significant discrepancies in what is collected versus what is owed.

A recent example highlighting this issue is GitHub’s announcement that it will begin collecting and remitting sales tax in August. This move underscores a broader problem: the inconsistency in sales tax compliance across corporations. GitHub, a Microsoft subsidiary with $1 billion in revenue and over 1.3 million paid subscribers in 2023, should have been complying all along, which raises questions about the transparency and enforcement of sales tax laws.

The administrative burden on businesses to comply with varied state policies is substantial. For smaller businesses, this burden can be overwhelming and costly, often requiring them to spend a significant portion of their operating capital on compliance. A survey by Avalara/Potentiate found that small and medium-sized businesses spend an average of $2,455 per month on sales tax calculations alone.

The Supreme Court's 2018 decision in South Dakota v. Wayfair, which allowed states to require businesses to collect sales tax regardless of physical presence, aimed to level the playing field between physical stores and online retailers. However, the decision has led to a patchwork of state-specific policies, further complicating compliance, especially for smaller businesses.

To address these challenges, states should not wait for corporations to voluntarily comply with sales tax laws. Instead, they should proactively enforce compliance among major corporations and allocate resources to support small businesses. This proactive approach could include targeted audits of large corporations, increased penalties for non-compliance, and providing tools to help small businesses calculate and remit sales tax accurately.

For example, the creation of state databases of tax rates and an application programming interface for automated calculations could significantly reduce the compliance burden on small businesses. Ensuring compliance among large corporations like GitHub would also help level the playing field, making it fairer for small businesses that are struggling to comply.

In summary, a more transparent and enforced sales tax system is needed. Large corporations should be held accountable, and small businesses should be supported in their compliance efforts. This dual approach can create a more equitable business environment and increase state revenues, ultimately benefiting all parties involved.

States’ Corporate Sales Tax Enforcement Doesn’t Go Far Enough

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