A draft of the online poker bill that Sen. Harry Reid (D-Nev.) and Sen. Jon Kyl (R-Ariz.) plan to introduce was released this week. The bill, known as the “Internet Gambling Prohibition, Poker Consumer Protection, and Strengthening UIGEA Act of 2012” would legalize online poker at the federal level, a step that became possible last December when the U.S. Department of Justice released an opinion stating that the Wire Act does not apply to online poker.
The bill provides an opt-in structure, in which states have to affirmatively choose to participate in the online poker program. A state would be considered to have opted in if it has passed a law legalizing online poker. Thus far, only Nevada and Delaware have passed such laws. An Indian tribe is considered to have opted in if a designated authority of the tribe submits written notice to the Secretary of Commerce saying so. Money could only be accepted from players located in those states or tribal lands at the time they are playing.
The bill would create an Office of Online Poker Oversight within the Department of Commerce to regulate the industry. The Secretary of Commerce would need to designate, not later than 270 days after the enactment of the bill, at least three state agencies or regulatory bodies of Indian tribes that are considered qualified bodies to regulate online poker. If there are not three bodies qualified, the Secretary will designate all state bodies that fit defined criteria including:
(1) A reputation as a regulatory and enforcement leader in the gaming industry.
(2) A strict regulatory regime.
(3) Regulatory and enforcement personnel with recognized expertise.
(4) Adequate regulatory and enforcement resources.
(5) Demonstrated capabilities relevant to the online poker environment.
In making determinations under those criteria, the Secretary is also to consider the number of years that the agency has directly regulated casino gaming, the size of the gaming market that has been regulated, and the demonstrated ability to evaluate complex gaming technologies, among other things.
No game other than poker would be allowed under the bill, even if it is licensed by the state. A state could still legalize other games under their own laws, but this law would not allow them to operate those games interstate. The bill has a carve-out that allows interstate bets on horse racing to continue to operate legally, as well as an exception to allow lotteries to sell tickets online.
The bill would impose a fee of 16 percent tax on revenues generated from online poker. The money generated from this tax would go to a fund known as the “Online Poker Activity Fee Trust Fund.” Seventy percent of the money in that fund would be given to the states or Indian tribal governments where the player was located at the time he played. The other 30 percent would go to the state that issued the license to the site where the money was generated.
For five years after enactment of the bill, no person may be considered suitable for licensing if the person owned or operated an Internet gambling site that accepted bets after December 31, 2006. Such persons are referred to as “covered persons.” Additionally, no assets that were used to take bets after December 31, 2006, can be used for five years after the bill’s enactment. This provision effectively excludes all companies that were shut down by the federal government on “Black Friday” in 2011.
An individual that is considered a “covered person” may apply for a waiver from the Office of Online Poker Oversight and would need to show by a preponderance of the evidence that the person did not violate, directly or indirectly, any provision of federal or state law in connection with the operation or provision of an Internet gambling facility. A similar waiver process exists for tainted assets. The bill also states that a previous criminal proceeding will not be considered in the waiver process.
The bill would prohibit the operation of public Internet parlors where devices are made available primarily for online poker.
There is no provision in the bill that requires a licensee to own a casino, a proposal that had been considered in some online poker legislation.
Criminal penalties of up to five years in prison can be assessed under the bill to operators that violate certain provisions.
We are glad to see that legislation that would legalize online poker is being considered on Capitol Hill and has reached a draft stage. This draft could change significantly over time, but the bill in its current form may face steep opposition.
Several objections are possible. First, many states have recently explored the idea of legalizing online poker, with the intent of possibly generating significant revenue. The language of this bill would take a significant amount of that potential revenue generated from online poker away from the states.
No state other than Nevada, Harry Reid’s home state, has developed its own regulations to govern online poker, or given the criteria listed in the bill, would be considered qualified to regulate online poker. The state that issues the license gets 30 percent of the revenues generated from online poker, which would likely all go to Nevada. States may not support such a large percentage of the money generated going directly to Nevada.
In addition, the provision barring all operators who took bets after the enactment of the Unlawful Internet Gambling Enforcement Act of 2006 is too draconian and could be vulnerable to a constitutional challenge. Finally, the 16 percent fee on revenues generated from online poker is very steep and may face opposition from operators.
It also remains unclear what level of support an online poker bill would have in the lame-duck session of Congress. As Senate Majority Leader, Reid has the ability to dictate the legislative agenda to some extent, but it remains to be seen if he will be able to generate the votes needed to pass the bill. Kyl, although he will be retiring after this term, is the Minority Whip in the Senate and could also help rally support from Republicans. If it seems unlikely that a stand-alone online poker bill could generate enough support in Congress, there may still be an alternative. Perhaps the best chance of online poker legislation getting passed is to attach it to another larger bill, which is something that Reid can be influential in helping to achieve. It is a tactic that has been used in this context before, as in 2006, when UIGEA was passed as part of the SAFE Port Act, a bill that regulated port security.
On October 23, 2012, the European Commission will unveil a series of initiatives and actions that it plans to put into effect relating to online gaming with the overall goal of providing a better framework for online gambling services in the European Union.
One of the main problems that the European Commission is facing is the differences in rules and regulations among member nations governing online gambling. Currently, no EU legislation specifically applies to the online gambling industry, which generated $13.7 billion in earnings in the EU in 2010.
Sigrid Ligne, Secretary General of the European Gaming and Betting Association (EGBA), which represents companies offering online betting games, has said that this is an excellent opportunity for Europe as a whole to offer strong consumer protection in the gaming arena.
Ligne has said, “We deplore the situation today where we see 27 ‘mini-markets’ for gambling in Europe. We are calling for the introduction of European rules to ensure proper protection for consumers and maintain a crime-free environment throughout the EU, while affording open, fair, and transparent licensing conditions for EU-regulated operators.”
Private online gambling operators have expressed frustration with the EC for not forcing member states to open their online gambling markets. According to EU treaties, any business should be able to sell products and services in the EU countries as easily as it does in its own local market. The EGBA has accused the Commission of “failing in its role as guardian of the treaties” by not requiring member states to apply EU treaty rules in the online gambling sector.
Several European national governments, however, have opposed broader EU legislation because they want to protect betting monopolies that generate significant revenues for the state. The EGBA was hoping that the Commission would develop model legislation for its member states, but the Commission stated in June that it would only be developing an action plan at this stage, despite demands from the European Parliament for legislation. The action plan is expected to set out the Commission’s plan in the areas of consumer protection, fraud prevention and sporting integrity. The Commission could still develop legislative proposals in the future.
The EGBA has announced that it will file a complaint against Germany in the near future because its gambling law does not meet the criteria set forth by the EU Court of Justice or the concerns that the Commission raised. The EGBA has said the Germany’s procedure for granting licenses has led to the exclusion of non-German operators in violation of EU treaty rules. The law, which was ratified by 15 of the 16 German states in June, will only allow a limited number of sports-betting licenses and does not allow for online poker licenses. The Commission had been critical of Germany’s gambling law in the past, but gave Germany some time to test the rules before it intervened.
The EGBA is also challenging the Belgian gaming law that has been in place since January 2012, which it argues is an “opaque and protectionist system.” The EC has yet to rule on the challenge.
Time will tell what the European Union action plan will look like, but we think the European Union should strive for universal legislation across states. Universal legislation will allow for greater quality and consistency in games offered to consumers and allow for gaming operators to be more efficient in the delivery of their product by only having to focus on one set of regulations.
We have previously advocated for the Department of Justice to employ a more narrow reading of the term “foreign official” in the Foreign Corrupt Practices Act. Therefore, we were pleased to see that the DOJ recently issued an opinion that parsed the definition and came to the conclusion that a member of a foreign royal family was not a “foreign official” under the FCPA. Although this is a positive development, it somewhat conflicts with the DOJ’s prior opinions and accordingly will probably serve to further muddy the FCPA waters.
In February 2012, an American lobbying firm approached the DOJ to request an opinion regarding the FCPA implications of its proposed partnership with a foreign consulting group. The consulting group was to act as its sponsor in providing lobbying services for the unspecified foreign country’s embassy in the U.S. The lobbying firm was concerned that this arrangement might implicate the FCPA because the foreign consulting group was owned, in part, by a member of the foreign royal family.
On September 18, the DOJ issued a statement finding that the royal family member was not considered a “foreign official” under the FCPA. The DOJ stated that, “[W]hether a member of a royal family is a ‘foreign official’ turns on such factors as (i) how much control or influence the individual has over the levers of governmental power, execution, administration, finances, and the like; (ii) whether a foreign government characterizes an individual or entity as having governmental power; and (iii) whether and under what circumstances an individual (or entity) may act on behalf of, or bind, a government.”
As the DOJ explained, in this instance the “Royal Family Member holds no title or position in the government, has no governmental duties or responsibilities, is a member of the royal family through custom and tradition rather than blood relation, and has no privileges or benefits because of his status.” The DOJ concluded that, “the Royal Family Member does not qualify as a foreign official under [the FCPA] so long as the Royal Family Member does not directly or indirectly represent that he is acting on behalf of the royal family or in his capacity as a member of the royal family.”
The DOJ surprised us by undertaking a reasonable, thoughtful, and fact-intensive analysis in finding that the royal family member was not a foreign official. However, the new standard invoked by the DOJ conflicts with the broad reading of “foreign official” that the DOJ has previously applied, which encompasses even employees of state-owned communications companies. Surely a telecom employee does not exert much control or influence “over the levers of governmental power,” nor would his government characterize him as having “governmental power.” Yet the DOJ found telecom employees to be foreign officials.
We applaud the DOJ for taking a reasonable approach in determining whether the royal family member is a “foreign official.” We encourage the DOJ to apply the same three factors every time it analyzes who is, and is not, a foreign official.
In an aggressive step against businesses selling drugs online, the U.S. Food and Drug Administration, in conjunction with the U.S. Department of Homeland Security, took legal action earlier this month against more than 4,100 websites this week that led to criminal charges, seizures of illegal products, and hundreds of domain name seizures.
This year Operation Pangea V, a campaign of law enforcement agencies across the globe to counter the global international prescription trade, resulted in the shutdown of over 18,000 unauthorized pharmacy websites and the confiscation of around $10.5 million worth of pharmaceuticals in 100 countries worldwide. Operation Bitter Pill, a federal law enforcement initiative that is part of Operation Pangea V, seized 686 domain names this week as part of the operation, bringing the total number of domain names seized by the domestic operation to 1,525.
The drugs being offered on the websites included such medications as antibiotics, anti-cancer medications, weight loss and food supplements, and erectile dysfunction pills, authorities said.
The FDA had sent warning letters to the managers of 4,100 websites in late September, warning them that products for sale on their sites were in violation of U.S. law. A copy of the letter that the FDA sent to one site can be viewed here.
The agency also sent notices to registries, Internet service providers, and domain name registrars notifying them as well.
Visitors to the websites that have been the subject of domain name seizures will now see an image informing them that the site has knowingly trafficked counterfeit goods, which is a federal crime. Customers were not targeted as part of the investigation. A government spokesman said they were considered to be unwitting victims who were simply purchasing drugs that they thought would be helpful for their conditions.
We don’t endorse counterfeit drugs or trademark violations. But we are concerned that broad domain name seizures, such as those in Operation Bitter Pill, could potentially shut down legitimate businesses and leave them without an online presence for a long period of time until they are able to obtain legal relief. Companies that operate solely with an online presence could see dramatic and potentially crippling effects on their business. We have previously discussed this issue here, for example.
As digital rights groups have repeatedly noted, seizures such as these can run roughshod over the constitutional rights of website operators, including their First Amendment rights, and need to be undertaken by the government, if at all, with an understanding that a seizure of a domain name is not the same thing as the seizure of a truckload full of illegal drugs.
Previously, domain name seizures had been used in investigations by other federal agencies such as the Immigration and Customs Enforcement, the Commodity Futures Trading Commission, the U.S. Department of Justice, and the Federal Trade Commission. The practice appears to be expanding.
Only if the courts provide an adequate check on the powers of the federal government can it be assured that individuals are afforded their due process rights in cases such as this one.
Three states have joined a lawsuit to challenge the constitutionality of the Financial Stability Oversight Council (FSOC), a Dodd-Frank-created regulatory body headed by the Treasury secretary. The panel, composed of top financial regulators, is charged with overseeing broad threats to the financial system, and has the power to liquidate failing non-bank financial institutions it views as a threat to the that system. The attorneys general of Michigan, Oklahoma, and South Carolina are challenging the legality of the FSOC, arguing that the panel is too powerful and should be subject to additional checks and balances.
The states are bringing their claim as a subset of a larger suit filed by the Competitive Enterprise Institute, a conservative think tank that is also challenging the constitutionality of the power granted to the Consumer Financial Protection Bureau (CFPB). The states do not join the challenge to the CFPB but makes claims only against the FSOC. The state attorneys general argue that the FSOC’s liquidation power creates “death panels for American companies” with little outside oversight.
However, the AGs’ argument overlooks both the substance of the provision and the background against it was implemented. Far from lacking oversight, the FSOC must undergo a multi-level, multi-branch review in order to liquidate a financial institution. In order to initiate liquidation proceedings, first there must be a written recommendation for the Treasury Secretary to appoint the FDIC as a receiver for the failing company. The recommendation must contain a host of information including an evaluation of the likelihood of a private-sector alternative to prevent default. Then there must be a two-thirds vote of the Fed Board of Governors and a two-thirds vote of the FDIC or SEC, or the affirmative approval of the Director of the Office of Federal Insurance in order to appoint a receiver.
If the company does not consent to the appointment of the FDIC as a receiver, the matter goes to U.S. District Court for the District of Columbia, where a judge may strike the receivership if it determines that the secretary’s decision was arbitrary and capricious. Finally, the Government Accountability Office must review and report to Congress on any receivership appointment.
This liquidation power is not entirely new. For decades, the FDIC has had the ability to take over failing federally insured banks. The difference is that this new provision extends to non-bank financial companies. This provision was enacted in direct response to the recent financial crisis, in which the federal government had to step in to save financial institutions whose risky investments threatened to collapse the American economy. The role of the FSOC is to eliminate the expectation that the U.S. government will shield the institutions from losses in the event of a future failure, while simultaneously ensuring an orderly liquidation for failed companies.
At this time, the FSOC has not taken action to liquidate any financial institutions. It has, however, designated a number of nonbank financial institutions as “Systematically Important Financial Institutions” (SIFI). Institutions designated as SIFI are subject to more stringent oversight, including stress tests, higher capital levels and tougher liquidity requirements.
The FSOC began making SIFI designations in July of this year, with the fairly uncontroversial designation of eight financial market utilities. On Monday the FSOC announced that it is considering a number of additional non-banks for SIFI designation. AIG has confirmed that it is one of the institutions under consideration, a development that the company said it both expected and welcomes. Other non-banks rumored to be under consideration as SIFIs include MetLife, Prudential, and General Electric.
It appears that the state AG’s are contesting the FSOC’s liquidity authority out of fear that it gives too much power to federal regulators. However, history has shown how economically dangerous it is for financial institutions to be left to their own devices with little oversight or accountability. The FSOC’s powers are constitutional and within the bounds of the law. The states’ challenge should not survive judicial scrutiny, and the FSOC’s liquidation power should be upheld.
The Supreme Court will soon be considering whether to take up an interesting question involving when monetary sanctions may be imposed for prosecutorial misconduct. More than 50 former federal judges and U.S. attorneys are pushing to get an 11th Circuit Court of Appeals ruling from last year overturned. In early August, the former judges and prosecutors signed onto an amicus brief that urges the Supreme Court to grant certiorari in United States v. Shaygan. The defendant is appealing the appeals court’s overturning of a lower court’s award of more than $600,000 in attorneys’ fees to him after the unsuccessful prosecution of his case.
Shaygan, a Miami doctor, was charged with trafficking illegal drugs following the overdose death of a patient. Events leading up to his trial demonstrated serious ethical questions about the prosecutors’ handling of the case. For instance, after Shaygan’s counsel moved to suppress testimony that was illegally obtained, in an act of retaliation the prosecution filed a 141-count superseding indictment. The prosecution initiated a collateral witness-tampering investigation in what defendants saw as a bad-faith effort to disqualify petitioner’s counsel on the eve of trial. And, in a “knowing and intentional” violation of court orders and discovery obligations, the prosecution withheld material information from both the court and the defendant. These actions led the trial court to impose sanctions because the prosecutors’ misconduct constituted “conscious and deliberate wrongs that arose from the prosecutors’ moral obliquity and egregious departures from the ethical standards to which prosecutors are held.”
The government appealed to the 11th Circuit, where a sharply divided panel overturned the trial court. The circuit’s rationale was based upon its interpretation of the statute,the Hyde Amendment, that provides for the award of attorneys’ fees and other litigation expenses “where the court finds that the position of the United States was vexatious, frivolous, or in bad faith, unless the court finds that special circumstances make such an award unjust.”
The circuit ruled that sanctions were not appropriate because the superseding indictment was objectively valid. And if the underlying (or superseding) indictment could be deemed objectively reasonable, the prosecution could not be held vexatious or frivolous and thus attorneys’ fees were not merited. See our earlier discussion of this issue in this blog.
The court’s holding raised the eyebrows of many former federal judges and prosecutors as well as scholars. Their main contention appears to be the 11th Circuit’s reading of the clause “vexatious, frivolous, or in bad faith.” The amicus brief filed on behalf of the former judges and prosecutors raised two main arguments for why the 11th Circuit’s decision was wrong: (1) based upon the canons of statutory construction, sanctions under the Hyde Amendment are appropriate when prosecutors act in subjective bad faith, even if an indictment is supported by probable cause; (2) acknowledging a subjective standard helps judges control their courtrooms and provides a necessary tool to address prosecutorial misconduct.
The first argument focuses on the “or” in the Hyde Amendment’s provision for sanctions where a prosecutor’s position is found to be “vexatious, frivolous, or in bad faith.” The amici argue that the disjunctive “or” separates the “bad faith” prong from the “vexatious” and “frivolous” prongs, indicating that bad faith can serve as an alternative basis for relief under the Hyde Amendment. Their reading of the statute, they argue, “comports with our basic principles of criminal justice. Our system’s greatness rests, in part, on our insistence that the process be conducted in a principled, clean manner. Thus, for example, we permit the guilty to go free when the evidence against them was obtained in violation of their Fourth Amendment rights. We suppress coerced confessions, even when they bear every indicia of reliability. And we do not permit the prosecution even of a guilty person on the grounds of that person’s race. ”
The amici’s second argument emphasizes the need to provide judges with control over their courtrooms, and the need to impose appropriate sanctions for prosecutorial misconduct. To rein in the overzealous, overreaching, or rabid prosecutor, the Hyde Amendment sanctions provide an important mechanism to restore control. The amici note that other sanctions, such as complaints with bar associations, have proved ineffective over the years and that prosecutors are immune from most lawsuits relating to their official conduct.
It remains to be seen whether the Court will take up the Shaygan case — the chances of the Court ever granting certiorari are pretty slim. But a strongly-worded amicus brief from more than 50 former prosecutors and judges and a notably sharp divide in the 11th Circuit could persuade the Court.
In an interesting recent opinion, the U.S. District Court for the District of Columbia rebuffed the Libyan Government’s bid to obtain a transfer to it of the domain name registration for libyanembassy.com from a “legalization expeditor” – a company that certifies documents as one step in the process of international legalization of documents (such as foreign birth certificates).
The Libyan Government brought an action under the Anticybersquatting Consumer Protection Act (ACPA) against Ahmad Miski, who operates the Arab-American Chamber of Commerce, a document certification service. Miski redirected traffic to the domain name to his website promoting his certification services. Libya contended that Miski’s registration and use of the domain name infringed its trademark for “Libyan Embassy.”
The case raised two issues that are often misunderstood. First, the court dealt with a claim under an unregistered trademark – “Libyan Embassy” – and had to determine whether it could be enforced under the ACPA. Second, the court had to examine whether the term “Libyan Embassy” is descriptive or suggestive under trademark law. The determination of whether a trademark is descriptive or suggestive is crucial to determining whether trademark rights in the phrase are enforceable, as a merely “descriptive” phrase is enforceable as a trademark only if it acquires “secondary meaning.”
The court quickly dispensed with the issue surrounding the unregistered trademark. It correctly noted that while an unregistered trademark is not entitled to the presumption of validity enjoyed by a registered trademark, it can nonetheless be enforced. However, the Libyan Government’s claim then collapsed. Libya took the position that the phrase “Libyan Embassy” was suggestive under trademark law (meaning that the term itself tells a customer that it refers to a brand and immediately signals to a consumer a brand or product source), which would have entitled it to protection under trademark law.
Miski, conversely, took the position that the phrase was merely descriptive (meaning that it just describes a product’s features, qualities or ingredients, or describes the use to which a product is put), which would preclude its enforceability under trademark law, unless it acquired secondary meaning in the market (the classic example of a merely descriptive mark clothed with secondary meaning is “American Airlines”).
Ultimately, the court performed a cogent and concise analysis of the issues under trademark law, and determined that the term “Libyan Embassy” was merely descriptive, as little imagination is necessary to understand from the name what services (consular services) are being offered. A suggestive mark, on the other hand, requires that there be some element of imagination necessary to tie the mark to the goods or services offered (think Coppertone™ – for suntan products).
Libya could have overcome this ruling, however, by showing that the term “Libyan Embassy” had obtained secondary meaning – which occurs when in the minds of the public, the primary significance of the mark is to identify the source of the product rather than the product itself. It seems that Libya should have had little trouble making this showing. All it needed to do was present evidence – typically through use of a survey showing public perceptions of what is meant by “Libyan Embassy” and the services it provides – showing that the public associates “Libyan Embassy” with the services provided by the Embassy of Libya. This would seem to be an easy task. But Libya presented no such evidence. Therefore, the Court found that it failed to meet its burden to show secondary meaning.
Libya’s failure in this regard is a cautionary note to those who enter into trademark litigation without adequate preparation. Obtaining evidence through the use of surveys, economic analysis, and tracking down persons who have actually been confused by infringing behavior can be expensive, time-consuming, and difficult. But in the world of trademark litigation, it also can be indispensable. It seems likely that had Libya taken these steps before pursuing the registrant of, it would have had a reasonably strong chance of prevailing. Having not done so, its case was irretrievably compromised.
The Foreign Corrupt Practices Act (FCPA) prohibits the bribing of foreign officials. While that may seem like a straightforward concept, previous posts on this blog have shown that the precise definition of who constitutes a “foreign official” has long been the subject of much uncertainty, debate, and litigation.
The FCPA defines a “foreign official” as an “officer or employee of a foreign government or any department, agency, or instrumentality thereof.” The Department of Justice takes a broad view of this definition, consistently using the FCPA to prosecute individuals who allegedly bribed employees of state-owned companies that act merely as commercial entities, such as utility companies, rather than those that act as a sovereign.
For the first time, a U.S. court of appeals is considering a case that tests this question. An appeal in the Terra Telecommunications case, previously discussed in a post on this blog, is currently pending before the U.S. Court of Appeals for the 11th Circuit. The defendants in that that case, Joel Esquenazi and Carlos Rodriguez, are former executives at Terra Telecommunications. They were convicted of bribing officials at the state-owned telecommunications company Haiti Teleco.
Prosecutors successfully persuaded the trial court that Haiti Teleco was an “instrumentality” of the Haitian government, thereby making its employees “foreign officials.” However, on appeal the defendants are asking the court to find the word “instrumentality” in the FCPA unconstitutionally vague and ambiguous. The Justice Department filed a brief on August 21, 2012, arguing for a broad reading of the term “foreign official.”
The defendants’ argument is not novel. For years, businesses and legal groups have been seeking guidance on the definitions of “foreign official” and “instrumentality” under the FCPA. In February, a coalition of businesses and organizations sent a letter to the DOJ seeking clarification of those terms. The letter highlighted the concerns that without proper guidance, businesses suffer uncertainty and risk when trying to comply with the FCPA because the authorities take a “highly fact-dependent and discretionary approach” in interpreting the terms.
Despite the DOJ’s long-standing position that the FCPA is not vague, it has announced that it will release new guidance this year on the act’s criminal and civil enforcement provisions. While the guidelines will provide clarification and guidance to businesses, they will almost surely perpetuate the DOJ’s absurd position that it can pursue employees of commercial entities merely because the companies are state-owned. This is clearly not what Congress intended in enacting the FCPA. Last year, FCPA expert Michael Koehler pointed out that the DOJ’s legal interpretation of “foreign official” is “the functional and substantive equivalent of the DOJ alleging that General Motors Co. or American International Group Inc. is an ‘instrumentality’ of the U.S. government (given its ownership interests in these companies) and that all GM and AIG employees are therefore U.S. ‘officials.’ ”
We hope that the appeals court will accept these arguments and will find that this case does not implicate the issues that the FCPA was designed to address. The courts need to keep the DOJ in check and prevent it from abusing its authority by prosecuting individuals under statutes that Congress did not intend to apply to them.
When online gaming is successful, Ifrah says, players participate in all aspects of the industry – including in the casinos. This is a great development for the gaming industry and great for business and for the nation’s economy.
Earlier this summer, a U.S. district judge in Denver rejected a plea bargain in a child pornography case because the defendant had agreed to waive his right to appeal. The decision sheds new light on the extent of prosecutorial power in the practice of negotiating plea agreements and the need for checks and balances to maintain a level of consistency in sentencing.
The concept of appellate waiver is simple. At the sentencing phase, the defendant gives up his right to appeal, simply because the prosecutors ask him to do so.
Timothy Vanderweff, the defendant in the Denver case, entered into such an agreement with the prosecutors. Facing up to 20 years in prison for the most serious of three charges against him, Vanderweff agreed to plead guilty to one of those charges and face no more than 10 years in prison. While agreeing in the deal not to ask for a sentence of less than five years, Vanderweff also agreed to waive his right to appeal, so long as the judge didn’t sentence him to more than the negotiated range.
It was this final detail of the plea agreement that gave Senior U.S. District Judge John Kane pause. Rejecting the plea deal — a rare occurrence in itself — Judge Kane noted that such waivers can do serious damage to the justice system.
Specifically, Judge Kane wrote: “Indiscriminate acceptance of appellate waivers undermines the ability of appellate courts to ensure the constitutional validity of convictions and to maintain consistency and reasonableness in sentencing decisions.”
Undeterred by the fact that other courts, including the 10th Circuit that includes his district court, have found appellate waivers acceptable, Judge Kane further noted: “[S]acrificing constitutional rights at the altar of efficiency is of dubious legality.”
Although Judge Kane viewed appellate waivers dimly, a 2005 study in the Duke Law Journal found that they are common across the country, occurring in as many as 90 percent of plea deals in some jurisdictions. The frequency of appellate waivers, however, is more likely a reflection of the degree of power that prosecutors wield in plea bargains than anything else. By almost any measure, prosecutors are the most powerful officials in the criminal justice system. They decide whether to institute criminal charges, what those charges should be, and whether to offer the defendant the option of pleading guilty to those charges, and they exercise virtually limitless discretion in reaching those decisions.
While charging is a quintessential prosecutorial or executive decision, that power should not encroach upon traditional judicial powers. Appellate waivers undermine the role of appellate courts to review sentences for fairness and consistency, which is especially important given the lack of transparency in closed-door plea negotiations in general. With such waivers, it is almost impossible to challenge differential treatment in the types of deals that similarly-situated defendants receive.
Moreover, certain rights should be beyond bargaining. A defendant cannot bargain away his right to counsel or his right to a jury trial, so too he should not be able to bargain away his right to appeal. Such waivers may result in judicial efficiency in the short term, but they perpetuate an unequal and unbalanced playing field in the long run.
If more judges emulate Judge Kane and reject prosecutors’ unfair tactics, prosecutors may get the hint and stop using tactics such as this one.