Wednesday, May 20, 2015

Charity Cases

Earlier this week, the Federal Trade Commission announced a massive lawsuit against four cancer "charities" which allegedly misused nearly $200 million in consumer donations. The complaint was filed in federal court on Monday, with the FTC as well as all 50 states' attorneys general offices listed as plaintiffs. As Virginia Attorney General Mark Herring noted in the FTC press release, "This is the first time the FTC, all 50 states, and the District of Columbia have filed a joint enforcement action alleging deceptive solicitations by charities and I hope it serves as a strong warning for anyone trying to exploit the kindness and generosity of others."

The FTC's case infographic starkly illustrates the discrepancy between the defendants' charitable aid and organizational overhead expenses, with the vast majority of donations going to employee compensation and other non-charitable uses, such as cars, tickets to sporting events, trips, and even dating site memberships. The complaint alleges that less than 3% of contributions were spent on direct aid to cancer patients.

Half of the implicated defendants (the Breast Cancer Society and Children’s Cancer Fund of America) have already agreed to settle. Proposed settlement orders (linked from the FTC press release) would dissolve the organizations and ban their executive directors from future charitable management and fundraising, as well as levy multi-million dollar judgments. The remaining defendants (Cancer Fund of America and Cancer Support Services) have opted to continue the litigation.

How can consumers be sure that their charitable donations are funding legitimate aid? The FTC maintains a site to warn about the common Charity Scams, including a helpful Charity Checklist to investigate particular organizations before donating. Duke University community members have access to GuideStar, a leading source of reliable nonprofit information. Charity Navigator is another option to review ratings of charitable organizations, including percentages of revenue spent on actual programs and services versus overhead.

To learn more about the legal issues surrounding nonprofit organizations, search the Duke Libraries Catalog for "Nonprofit organizations – Law and legislation – United States" or Ask a Librarian.

Tuesday, May 5, 2015

New Research Guide to Transactional Resources

The Goodson Law Library website now includes a new research guide Transactional Resources: Tools for Doing a Deal. Reference librarian Laura Scott has compiled a mix of electronic and print resources for transactional practice, including drafting guides, forms and checklists, and sample documents.

Current members of the Duke Law community have access to many resources through Bloomberg Law's Transactional Resources tab, the Lexis Practice Advisor available on Lexis Advance, and WestlawNext's Business Law Center. All of these sources include forms and helpful secondary sources such as glossaries and treatises. The library collection also includes several useful titles, particularly in the area of contract drafting. Of particular interest is the recent textbook Contract Drafting: How and Why Lawyers Do What They Do (Reserves KF807 .S73 2014); this helpful introduction is not available online at Duke. A similar, but older, title, Working with Contracts: What Law School Doesn't Teach You, is available in the library's Reserve collection as well as online in Bloomberg Law (Search & Browse > Books & Treatises > Practising Law Institute).

This new guide has been published at an especially good time. A recently-released white paper from LexisNexis on attorney practice-readiness found that a whopping 95% of transactional attorneys believe that their newer associates lack critical skills for transactional practice. Some of the most important skills for newly-hired transactional attorneys include familiarity with business and finance concepts, simple contract drafting, and research of sample precedent forms and company information. The Transactional Resources guide includes materials which will assist with the development of these basic skills.

The new transactional guide is linked from the Law Library Research Guides page, along with more than 30 other topical guides created by Goodson Law Library reference staff. (If your research topic isn’t listed, there’s also a link to CALI's Law School Website Custom Search Engine, which will help locate research guides from other ABA-accredited law schools.) For help with accessing materials in the Transactional Resources guide or other library guides, be sure to Ask a Librarian.

Tuesday, April 28, 2015

Google vs. The Patent Trolls

Yesterday, Google announced a new Patent Purchase Promotion plan on its Public Policy blog. For two weeks in May, Google will open an experimental web portal through which U.S. patent holders can submit proposals to sell their patents to the search giant this summer. (Patent holders will be granted a license to continue practicing their invention, although Google will assume legal ownership and may also license the patent to others.) Details of the Patent Purchase Program are available at

Google's stated motive for setting up this program (besides adding to its bulky patent portfolio, of course) is "to remove friction from the patent market." In particular, Deputy General Counsel Allen Lo cited the "bad things" that happen when non-practicing entities (NPEs), or "patent trolls," obtain ownership of patents for the sole purpose of filing profitable patent infringement lawsuits against others.

TV host John Oliver recently offered a scathing takedown of patent troll practices on his HBO program Last Week Tonight, declaring: "At least trolls actually do something: they control bridge access for goats and ask people fun riddles." The 11-minute segment is available on YouTube, and provides sobering facts about the profitability of patent troll litigation and settlements, as well as the chilling effect these practices can have on innovation. These concerns were also the subject of a 2013 book available in the Goodson Law Library, Patent Trolls: Predatory Litigation and the Smothering of Innovation (KF3155 .W38 2013).

Congress has attempted to reform patent litigation in the past, and is currently considering a reform bill in the House (H.R. 9) which addresses some of these complaints. A competing Senate bill is expected in the Senate this week, according to recent remarks by Senator Chuck Grassley (story via Law360). News and analysis of these recent reform efforts can be found in Bloomberg BNA's Intellectual Property Resource Center.

For more library resources on the topic of patent law and litigation, check out the Goodson Law Library research guide to Intellectual Property Law. You’ll find titles like the seminal treatise Chisum on Patents (KF3110 .C4 & online in Lexis Advance). For help locating these or other patent titles, be sure to Ask a Librarian.

Thursday, April 23, 2015

The Next Attorney General

Today, the Senate confirmed Loretta Lynch as the next U.S. Attorney General, by a vote of 56 to 43. This afternoon's vote followed a five-month delay since her nomination by the President, the third-longest gap between nomination and confirmation in Attorney General history. Lynch's confirmation had been stalled in the Senate by a group of legislators who expressed concern for her support of President Obama's executive action on immigration law.

When Ms. Lynch assumes the role of U.S. Attorney General at her swearing-in ceremony next week, she will be the 83rd person to helm the U.S. Department of Justice, and the first African-American woman ever to hold the office. (The next Attorney General also has local roots for Duke Law readers, having been born in Greensboro and raised in Durham. North Carolina Senators Thom Tillis and Richard Burr both stated in February that they would oppose her nomination, and voted no on her confirmation today.)

To learn more about Attorneys General in American history, check out historical biographies of the 82 prior AGs at the Department of Justice website, or Ask a Librarian.

Wednesday, April 8, 2015

ABA Membership Now Free for Law Students

The American Bar Association just announced that law students are now eligible for free membership to the ABA. Membership in the Law Student Division provides students with access to ABA publications, member discounts, and continuing legal education (CLE) materials. Students must be currently enrolled in an ABA-accredited law school. To join, visit or call the ABA Service Center at 800-285-2221.

In addition, Duke Law students might be interested in joining the North Carolina Bar Association, which also provides free registration for currently-enrolled law students. The NCBA membership provides students with free individual accounts to the Fastcase research service (currently also available in a shared IP format through the Goodson Law Library) as well as bar publications and additional membership discounts. To join the NCBA, visit

Planning your legal career in a different state? Visit the ABA's State & Local Bar Associations map to look for student membership information in the state of your choice.

Monday, April 6, 2015

The Day the Taxes Died

Resolved by the Senate and House of Representatives of the United States of America in Congress assembled, That the Secretary of the Treasury is hereby directed to cause the immediate destruction of all income-tax returns and any copies thereof, with all statements and records relative thereto, now in possession of the Treasury Department, by reason of "An Act to reduce taxation," and so forth, in effect August twenty-eighth, eighteen hundred and ninety-four.
On this day in 1896, Congress approved House Joint Resolution No. 42, providing for the immediate destruction of income tax returns and records that the Treasury had received. In his 1897 annual report, the Secretary of the Treasury confirmed that the office had delivered all income tax returns and other documents to a specially-appointed committee, which "totally destroyed the same by burning."

As April 15 approaches (see our earlier post for help with locating free or low-cost filing assistance), it's tempting to wish for a world where the Internal Revenue Service is again directed to burn all of its tax returns. But what caused this unusual congressional mandate in the first place? The answer lies in an 1894 statute, found at 28 Stat. 509-71 (HeinOnline view). Section 27 of "An Act to reduce taxation" created a 2% annual income tax on private citizens' gains, income, and property over $4,000, to be collected from 1895 to 1900.

Copy of income tax form 365 (1894),
reprinted in S. Exec. Doc. 53-63.

Treatises like The Federal Income Tax Explained (1894) and United States Income Tax Law Simplified for Businessmen (1895) rushed to explain the new taxation plan, only the second personal income tax in U.S. history (a previous Civil War-era income tax was repealed after the war's conclusion, leaving customs receipts and tariffs as the primary sources of federal revenue).

By early 1895, legal challenges to the income tax had made their way to the U.S. Supreme Court. In Pollock v. Farmers Loan & Trust Co., 158 U.S. 601, the Court invalidated section 27 of the 1894 act as unconstitutional. (Filings from the Supreme Court case can be found in The Making of Modern Law: U.S. Supreme Court Records & Briefs, 1832-1978.)

In response to the controversial Pollock opinion, Congress began to consider a constitutional amendment, which found bipartisan support in 1909. The Sixteenth Amendment, authorizing Congress with the "power to lay and collect taxes on incomes," was ratified in February 1913. A brief history of this seminal time period in federal tax law can be found in a 2013 article by University of Delaware law professor Sheldon D. Pollack, Origins of the Modern Income Tax, 1894-1913. For more information, check out Richard Joseph's 2004 book The Origins of the American Income Tax: The Revenue Act of 1894 and its Aftermath.

While many readers may fantasize about the "good old days" of burnt tax returns as they fill out their 1040s, even today's Internal Revenue Service must fight continued attacks on its legitimacy. A number of quasi-legal arguments against the IRS and payment of income tax have achieved "urban legend" status, to the extent that the IRS debunks them annually in a detailed publication, The Truth About Frivolous Tax Arguments. Among the many debunked anti-tax myths in the 69-page document include a few complaints about the validity of the Sixteenth Amendment, which superseded the Supreme Court's Pollock ruling and laid the foundation for our current income tax system. As the IRS notes, "The constitutionality of the Sixteenth Amendment has invariably been upheld when challenged. Numerous courts have both implicitly and explicitly recognized that the Sixteenth Amendment authorizes a non-apportioned direct income tax on United States citizens and that the federal tax laws are valid as applied." In other words – don't push your luck; this isn't 1896.

To learn more about the history of American income tax, check out the resources in the Goodson Law Library research guide to Federal Tax. In particular, section 1.1 of the Bittker & Lokken treatise Federal Taxation of Income, Estates and Gifts (Tax Collection KF 6335 .B57 1999 & online in WestlawNext) provides a quick overview of the 1894 statute, its invalidation by the U.S. Supreme Court, and the subsequent effort to ratify the Sixteenth Amendment to the U.S. Constitution. For help locating these or other tax-related resources, be sure to Ask a Librarian.

Monday, March 23, 2015

Defining Corruption in America: A History

This guest post was authored by Marguerite Most, Reference Librarian and Senior Lecturing Fellow.

The library's National Library Week speaker for 2015 is Zephyr Teachout, Duke Law '99. Teachout, an Associate Professor at Fordham Law School, will talk about her latest book Corruption in America: From Benjamin Franklin's Snuffbox to Citizens United on Tuesday, March 24 in room 3041. This event is co-sponsored by the Duke Program in Public Law, the student branch of the American Constitution Society, and the Goodson Law Library. The event is open to the public.

In 2014, when Teachout sought the Democratic Party nomination for Governor of New York against incumbent Andrew Cuomo, she captured over 34% of the primary vote in a campaign with a central focus on anti-government corruption. Teachout supports public financing of elections and limits on corporate donors, and explores these issues, as well as the abuse of political power and the history of campaign finance reform in her recent book.

Zephyr Teachout defines corruption as an act or system that leads to excessive private interests in the exercise of public power. In her book she aims to awaken citizens and the courts to what she calls the anti-corruption principle, and to how this principle played a major role in the concerns of our nation's founders as they struggled with the writing and adoption of our Constitution. She surveys state and federal legislation and court decisions dealing with corruption from the nation's founding to the present. And she tells stories from history of abuse of political power for private gain – stories that have influenced the thinking and actions of our legislative branches and courts.

The first attempt to regulate campaign finance came in 1867 when Congress passed the Naval Appropriations Bill, which prohibited government employees from "shaking down" yard workers. More anti-corruption laws followed. The 1881 assassination of President James Garfield by an office seeker, who believed he had been promised a job in the Garfield administration, led to the passage of a "merit system" to replace the old "patronage" system for government posts. In a 1905 speech to Congress, President Theodore Roosevelt proposed that corporations be forbidden by law from contributing "to any political committee or for any political purpose." Two years later Roosevelt signed the Tillman Act, prohibiting money contributions to national campaigns by corporations and national banks. In the years between 1907 and 1966, Congress enacted other campaign finance laws to limit the disproportionate political influence of wealthy individuals and special interest groups and to regulate individual contributions in federal campaigns. The power of enforcement, however, was also with Congress and was routinely ignored.

In the years leading up to and during the Vietnam War, growing anger over the war and citizen advocacy groups such as Common Cause kept campaign finance reform in the public eye, and in 1972 the Federal Election Campaign Act (FECA) was passed. The law tightened disclosure requirements for federal candidates, political parties and political action committees (PACs). Following reports of abuses in the 1972 presidential campaign, FECA amendments limited contributions by individuals; 1974 amendments established the Federal Election Commission (FEC), an independent agency. Additional amendments followed a constitutional challenge in the Supreme Court case Buckley v. Valeo. The 2002 Bipartisan Campaign Reform Act of 2002 (BCRA) (the McCain-Feingold Act) banned national parties from raising or spending nonfederal funds (so-called "soft money"), restricted issue ads, and increased contribution limits.

Two recent Supreme Court decisions, Citizens United v. FEC & and McCutcheon v. FEC, have eroded restrictions on campaign finance spending. In Citizens United, the Court ruled that independent political expenditures by corporations and unions are protected under the First Amendment and are not subject to government restriction. The Court struck down a ban on campaign expenditures by corporations and unions – a ban that applied to non-profit corporations like Planned Parenthood and the National Rifle Association, as well as for-profit corporations like General Motors and Microsoft.

In McCutcheon, the Court struck down aggregate limits on the amount an individual may contribute during a two-year period to federal candidates, parties and political action committees combined, concluding instead that "they intrude without justification on a citizen's ability to exercise 'the most fundamental First Amendment activities.'" In a plurality opinion, Chief Justice Roberts wrote: "Congress may target only a specific type of corruption—'quid pro quo' corruption ..." and that "spending large sums of money in connection with elections, but not in connection with an effort to control the exercise of an officeholder's official duties, does not give rise to quid pro quo corruption."

The FEC website provides links to these cases, to campaign laws, to regulations, to an Election Law Library of research materials and to a Campaign Finance Disclosure Portal with "Hot Topics" such as Super PACs and maps showing 2014 House and Senate election expenditures. In addition to court decisions, amendments to the BCRA and regulations implemented by the FEC continue to change campaign finance law. The website also provides a resource for help with reporting and compliance under current law.

As Teachout notes, corruption was a major concern of our nation's founding fathers, a focus of debate during the Constitutional Convention of 1789, and a topic in the popular press in 1789. Headlines about corruption continue to appear in the popular press. In 2014 former mayors of Detroit and New Orleans and former Virginia governor Bob McDonnell were charged or convicted of political malfeasance. A 2013 New York Times article declared, "corruption is a growing business."

The current display in the Riddick Rare Book and Special Collections Room highlights Teachout and her book, as well as an article about her in the Duke Magazine. The display also features books about corruption in politics yesterday and today and several books from the Library's rare book collection, including a rare volume of Spirit of Laws by Charles de Montesquieu. Montesquieu's Spirit of Laws was well known to the drafters of the Constitution. Corruption and the abuse of power were themes in all his discussions from commercial laws to criminal laws. He argued that the executive, legislative, and judicial functions of government should be assigned to different bodies to prevent any one branch of government from overpowering the others. His theories about the separation of powers are said to have had an enormous impact on the framers of the Constitution.

In his blog "The Original Meaning of Corruption," Harvard Law Professor Lawrence Lessig notes that the framers spoke about corruption not only as "quid pro quo"corruption, but also in describing "improper dependence." A blog identifying uses of the word in records of the framers sets out each use by founder’s name and links to a digital copy of the source. Teachout explains in the introduction to her book, "My passion for the book springs out of my own civic patriotism. To quote James Madison, 'My wish is that the national legislature be as uncorrupt as possible.'"

And as Teachout notes – the debate continues. Today the potential payoff for abuse of political position is not the diamond-decorated snuffbox presented to Benjamin Franklin when he returned to America from Paris, but rather new snuff boxes – for example, consider the revolving doors through which some members of Congress and staffers move on to lucrative positions as high-paid lobbyists. Ask North Carolina State Senator Floyd McKissick his view on how donors and money have the potential to change elections. Or read his June 11, 2014 testimony to the Senate Judiciary Committee during a hearing held to discuss a proposed amendment addressing the Court’s ruling in Citizens United.

The debate continues.

--Marguerite Most, Reference Librarian and Senior Lecturing Fellow