[00:00:01] Speaker 00: Case number 16-5034, Matthew A. Goldstein, a PLLC appellant versus United States Department of State ML. [00:00:09] Speaker 00: Mr. Goldstein for the appellant, Ms. [00:00:11] Speaker 00: Allen for the appellees. [00:00:51] Speaker 06: Good morning. [00:00:52] Speaker 02: Good morning, Your Honors. [00:00:53] Speaker 02: May I please the Court? [00:00:55] Speaker 02: I am Matthew Goldstein, Counsel for the Plaintiff Appellant Matthew A. Goldstein, PLLC, my law firm. [00:01:01] Speaker 02: I request two minutes for rebuttal. [00:01:05] Speaker 02: This case presents a pre-enforcement challenge to the State Department's application of arms brokering regulations under Part 129 of the International Traffic and Arms Regulations to attorneys providing legal advice to clients on criminal law. [00:01:19] Speaker 02: Now, Part 129, violations of Part 129, are punishable civilly and criminally with fines of up to $1 million per violation. [00:01:30] Speaker 02: And for criminal violations, sanctions are punishable with up to 20 years in prison. [00:01:37] Speaker 02: To be clear, this case is not about a claim that attorneys are somehow above the law. [00:01:42] Speaker 02: If an attorney acts as a finder in sales of defense articles controlled by the international traffic and arms regulations, then that attorney is an arms broker subject to part 129 requirements. [00:01:54] Speaker 02: If an attorney receives a contingent fee or a commission for the sale of a defense article, then that attorney is an arms broker subject to part 129. [00:02:04] Speaker 02: But what the State Department cannot do is the State Department may not impose Part 129 registration, disclosure, prior approval, annual reporting requirements in a way that requires an attorney to disclose client names in conjunction with substantive details on the scope of legal advice. [00:02:24] Speaker 02: Nor can the State Department impose Part 129 in a way that requires attorneys to provide law enforcement agents with access to law firm records where confidential and privileged client documents are stored without a warrant or other judicial process subject to review. [00:02:44] Speaker 02: But this is precisely what the State Department has done in the issuance of official agency guidance under a 2013 final rule [00:02:58] Speaker 04: Do you have a First Amendment challenge at all? [00:03:00] Speaker 04: I was a little, it wasn't totally clear from your complaint, but I know there's a vagueness constitutional objection, but like the Holder versus Humanitarian Law Project and other situations where limitations on attorney's speech have sometimes been challenged under the First Amendment as well, but I didn't see that in your complaint, but that could be error on my end. [00:03:26] Speaker 02: No, I haven't asserted such a claim, and I know that, I believe that such a claim does exist. [00:03:30] Speaker 02: I have not asserted it. [00:03:31] Speaker 02: I have asserted a similar chilling effect as it was one of my bases of damages and injury. [00:03:38] Speaker 02: However, I have not asserted, I've made a decision not to assert a first-minute claim. [00:03:42] Speaker 04: Because I'm trying to figure out, the standing area, you know, there's the Navigar test, and then our court has had a sort of different test in the First Amendment area, and you seem to be, [00:03:54] Speaker 04: kind of in between with your chilling arguments, limiting your communications or forcing communications that you wouldn't otherwise have as well, but then not a First Amendment one, so I'm trying to figure out which box you fall in. [00:04:07] Speaker 02: Well, as far as now we are singers, and I might be a little bold here, but I don't think [00:04:11] Speaker 02: that it should apply in this case. [00:04:13] Speaker 02: Frankly, I don't think it should apply to any case involving a constitutional right, regardless of whether it's the Second Amendment or First Amendment. [00:04:19] Speaker 02: But in this case, my feeling to begin with outside, I don't think you even have to get there about whether that requirement for an adverse anger is a detriment to this case, because [00:04:28] Speaker 02: My law firm has been specifically called out for this. [00:04:31] Speaker 02: I'm the only law firm I'm aware of. [00:04:33] Speaker 02: There's very few of us attorneys that do export controls. [00:04:35] Speaker 02: And within that, there's very few of us that do ITAR work. [00:04:39] Speaker 02: And in that position, I'm kind of uniquely positioned to bring this case, because I have a very strong interest, because this affects a lot of the representation. [00:04:45] Speaker 06: Did you participate in the rulemaking process at all? [00:04:49] Speaker 02: Yes, I did. [00:04:50] Speaker 02: I drafted the section that opposed this part of the regulation for the American Bar Association. [00:04:56] Speaker 02: And so the ABA submitted a complaint. [00:04:58] Speaker 06: My law firm did not... Why isn't your best remedy right now to get an advisory opinion from the state? [00:05:05] Speaker 06: That's part of the process, right? [00:05:07] Speaker 02: Right, Your Honor. [00:05:09] Speaker 02: I already submitted an advisory opinion request to them. [00:05:12] Speaker 02: And there's a lot of talk about you submitted under the old process. [00:05:14] Speaker 06: And their response was that you've got to give us more details, right? [00:05:17] Speaker 02: Right. [00:05:18] Speaker 02: And that's the genesis of this complaint. [00:05:20] Speaker 02: And that's one of the core injuries I have, which is I don't have fair notice of what's required. [00:05:24] Speaker 02: And then on top of that, that's my as-applied challenge in the Fifth Amendment underlying claim. [00:05:28] Speaker 02: But there's also a Fifth Amendment, that's my facial challenge, I'm sorry, the facial challenge in Fifth Amendment grounds is [00:05:35] Speaker 02: What type of legal advisements are covered? [00:05:37] Speaker 02: I understand you're telling me that certain legal advisements on the sales of defense articles, where all the foreign parties are not identified by my clients, might be subject to brokering. [00:05:46] Speaker 02: But that's a large part of what I do. [00:05:47] Speaker 02: What within there? [00:05:48] Speaker 02: And what they tell me is this. [00:05:49] Speaker 02: They tell me to submit an advisory opinion request. [00:05:51] Speaker 02: Well, I've done that. [00:05:52] Speaker 02: And they didn't have advisory opinion requests. [00:05:54] Speaker 02: I didn't just do. [00:05:55] Speaker 02: And I want to talk a little bit about, if you have a chance, the Legal Services Corporation versus Legal Services in New York City case. [00:06:03] Speaker 02: But in that case, you had an issue where there was some problem codes, one or two words describing representation. [00:06:09] Speaker 02: In my case, for each topic representation, I gave them two to three lines of description. [00:06:14] Speaker 02: And that was supplemented by additional information in my request. [00:06:17] Speaker 02: That, they responded, was not sufficiently enough detail. [00:06:21] Speaker 02: on the legal vice provider for them to make a decision. [00:06:24] Speaker 02: They want my client's name, and they want more substantive details in the scope of representation. [00:06:29] Speaker 02: I can't give that to them. [00:06:30] Speaker 02: So basically, in addition to not knowing what's required, the process they give me, this advisory group... Well, you can't give that to them because of confidentiality? [00:06:38] Speaker 02: Confidentially, and also my claim is that a large part this is privileged. [00:06:41] Speaker 02: If you want to ask me for my client names, I don't think they have a right for that. [00:06:45] Speaker 02: But it's not privileged. [00:06:47] Speaker 02: My client names aren't privileged. [00:06:48] Speaker 02: If you ask me for my client names and one, two, three words about the problem code of the description of what I do, I probably won't have a problem with that. [00:06:55] Speaker 02: I mean, I'm an ITAR attorney. [00:06:56] Speaker 02: It's pretty obvious if I tell you who my client's names are and what I do for them. [00:07:00] Speaker 02: But if you're saying that a two to four line description of what I'm providing as far as legal advice is not sufficient, [00:07:06] Speaker 02: And if you require me, as Part 129 requires, that I fully describe the brokering activities in my legal advice. [00:07:15] Speaker 02: And as many sections of Part 129 require, that the statement I give you be certified as complete. [00:07:21] Speaker 02: And I always think about 18 USC 1001 at this point. [00:07:26] Speaker 02: What do I do when, how much of my client's representation of legal advice do I have to provide? [00:07:31] Speaker 02: How many factual details of the underlying transaction? [00:07:33] Speaker 02: Now you have to keep in mind that most people don't know how the ITAR operates. [00:07:37] Speaker 02: They don't know how restrictive it is. [00:07:39] Speaker 02: So a lot of times I have clients come to me and they say, we need advice on this transaction, but they've already started working on the transaction because they're not going to pay my legal fees. [00:07:48] Speaker 02: until they have some assurances that they might actually have an underlying transaction. [00:07:52] Speaker 02: And so a lot of times, because of the complexity of these regulations when they come to me, there's already violations by them. [00:07:59] Speaker 02: A perfect example is a client that's looking to procure some offshore foreign defense articles. [00:08:04] Speaker 02: There might be a variety of parties to the transaction they have not identified, freight forwarders, custom brokers, U.S. [00:08:10] Speaker 02: purchasers, and so forth. [00:08:11] Speaker 02: And they might have already sent them, and this happens in the real world, specifications for the article that they want produced. [00:08:17] Speaker 02: And they might have already agreed to a price. [00:08:19] Speaker 02: And now they've got a contract. [00:08:20] Speaker 02: And they come and they go, Mr. Goldstein, we want you to help us to get a license from the Department of State. [00:08:25] Speaker 02: And my problem now is, well, this involves a defense article sale. [00:08:30] Speaker 02: All the foreign parties have not been identified. [00:08:33] Speaker 02: And I have underlying violations. [00:08:34] Speaker 02: How do I begin to disclose to the Department of State an advisory opinion, my client name, [00:08:40] Speaker 02: legal advice and make a determination subject to 18 U.S.C. [00:08:43] Speaker 02: 1001 whether or not I have to disclose these prior violations and implicate my client in wrongdoing to a compliance enforcement and registration division. [00:08:51] Speaker 02: There's no dispute they want this for enforcement purposes. [00:08:55] Speaker 04: Could you just clarify what you said about how, or just be as specific as you can about how, the nature of what you would have to [00:09:02] Speaker 04: disclosed would be privileged in light of the legal services case. [00:09:09] Speaker 02: Right, the legal services case. [00:09:10] Speaker 02: Well, we have the Emirates sealed case, which is a 1989 case, where this court has recognized that there could be situations where the combination of client names with more substantive legal advice could be privileged. [00:09:23] Speaker 02: As far as the legal services case, what we have is we have a claim that was made to this court for the last link doctrine. [00:09:28] Speaker 02: That's one word for it, or it reveals client motivations. [00:09:31] Speaker 02: Either way, you're revealing client identities in conjunction with substantive scope of legal advice. [00:09:38] Speaker 02: And the claim there, though, was much different than this case for several principal reasons, which are very, very material to this court's consideration. [00:09:45] Speaker 02: The legal services case involved the Office of Inspector General of the Legal Services Corporation following up an investigation pursuant to a congressional request to say, hey, is this money we're giving for these legal services organizations actually being used as they say they are? [00:10:02] Speaker 02: So what they did was they issued a subpoena. [00:10:04] Speaker 02: They have a legal process that they issued upon Legal Services of New York City. [00:10:10] Speaker 02: That subpoena sought information, a data call, [00:10:15] Speaker 02: in two stages. [00:10:17] Speaker 02: The first stage requested problem codes, one to three words about the representation, black lung, education, and a case number. [00:10:29] Speaker 02: On the second data call, they requested the client name and a case number. [00:10:34] Speaker 02: You conceivably can match those up. [00:10:36] Speaker 02: Even if you match them up, what do you have? [00:10:38] Speaker 02: It would be the equivalent of, Matt Goldstein is the attorney, he gives money to our advice. [00:10:41] Speaker 02: A lot different than what we're talking about today. [00:10:43] Speaker 02: But they didn't even go that far. [00:10:44] Speaker 02: What happened in that case is the OIG had, the LSE OIG had an ethical wall where the information from the first stage [00:10:53] Speaker 02: went to a group of individuals in separate facilities. [00:10:56] Speaker 02: And the second stage, other individuals, different facilities. [00:10:59] Speaker 02: So there was an ethical wall between connecting even that information. [00:11:03] Speaker 02: That's a far cry from what we have in the present case, where they want a lot more information, more than just two to three lines of legal advice. [00:11:10] Speaker 02: They want my client names, and it's all going to the same enforcement agents inside a compliance registration enforcement division. [00:11:17] Speaker 04: You didn't have to provide the names, but had to provide more factual specificity. [00:11:22] Speaker 04: Would you have a problem as long as you could leave the names out? [00:11:25] Speaker 02: As long as the factual specificity, the underlying transaction would not identify the request that would subsequently be coming to them. [00:11:31] Speaker 02: I mean, are they asking? [00:11:32] Speaker 02: They're asking me for all the foreign parties involved. [00:11:35] Speaker 02: It's very easy for them to make that together. [00:11:37] Speaker 02: Now, some other key differences to legal services cases, which is very material to your consideration, is that Legal Services Corporation, OIG, was investigating the providers of legal services, not their clients. [00:11:50] Speaker 02: This enforcement division is gathering this information about my clients to see whether a violation has occurred so that they can have ICE agents show up in what they call an outreach visit. [00:11:58] Speaker 02: And these outreach visits are quite common. [00:12:00] Speaker 02: You go to the agency's website, assuming it's not taken down later on today, they have actual guidance talking about how they do these outreach visits to companies. [00:12:08] Speaker 02: And they typically do that when they first learn that a company isn't involved with the defense industry, involved with exports, possibly subject to ITAR. [00:12:16] Speaker 02: And a real big issue that comes up a lot on this, and it comes up with a real large percentage of the people that come to me for the first time, [00:12:22] Speaker 02: is you have to be registered if you are a manufacturer of a defense article in the United States. [00:12:28] Speaker 01: You have to be registered with them as a defense article broker. [00:12:34] Speaker 01: The claim that you brought before us has to do with your role as a lawyer and what you have to disclose in order to make sure that the legal advice you're rendering doesn't bring you within the fold of the brokering regulations. [00:12:47] Speaker 01: But it sounds like part of the argument that you're making today has to do with information that your client would have to submit anyway in order to get cleared for the transactions. [00:12:58] Speaker 01: It doesn't have to do with the legal advice part of it, but then there's a separate part which is [00:13:03] Speaker 01: What does the client have to disclose in order to get authorization to do the brokering activity that's at issue? [00:13:11] Speaker 01: And so when you're talking about giving up potential information that might implicate the client in wrongdoing, that's not an argument that's limited to the legal advice, right? [00:13:22] Speaker 01: It's an argument that goes to the underlying regulation itself. [00:13:26] Speaker 01: Am I misunderstanding? [00:13:27] Speaker 02: Well, I'm understanding the point. [00:13:28] Speaker 02: You are correct that in a lot of instances, the client's going to end up doing a request for approval that's going to disclose this information. [00:13:34] Speaker 01: Right. [00:13:35] Speaker 02: Sometimes they don't have to do a request for approval. [00:13:37] Speaker 02: Sometimes the transaction they have falls under an exemption, or it might be entirely excluded, but generally an exemption that they don't have to do it. [00:13:44] Speaker 02: And the agency has not provided that information. [00:13:45] Speaker 02: That happens quite a bit, too. [00:13:47] Speaker 02: There are times where when I get in there and do the review and do the assessment, [00:13:52] Speaker 02: and I'm comfortable it's not brokering and I do the assessment, I find out there's so many violations, the client goes, texts back and goes, I'm stepping away from this transaction because I don't want to have to disclose this and be subject to these fines. [00:14:02] Speaker 02: So there's a lot of situations where you don't end up providing this information once they have the advice of competent legal counsel on the issue. [00:14:09] Speaker 02: But as far as the challenge to underlying regulations, I mean, and I'm not quite sure I fully understand the question, I mean, I definitely am not saying that attorneys aren't subject to these. [00:14:17] Speaker 02: If we do not, they express a concern that they're worried about, [00:14:22] Speaker 02: attorneys doing something other than giving bonafide legal advice, where we use this as a guise to maybe act as a fine. [00:14:29] Speaker 02: That's not an issue. [00:14:30] Speaker 02: That's not what I'm challenging. [00:14:31] Speaker 02: If attorneys do that, they should be subject to these regulations. [00:14:33] Speaker 02: But if we're providing bonafide legal advice to our clients, why should we have to tell law enforcement agents really even about who we represent, let alone the level of detail they want? [00:14:42] Speaker 02: I don't think that my law office should be doing the job of law enforcement for them and taking my client's information from me. [00:14:48] Speaker 02: And one of the biggest things, and this is maybe going a little bit to that about why I'm kind of making a claim that looks like it might be going outside. [00:14:54] Speaker 06: I thought the purpose of the regulation was to flesh out that very fact scenario you're talking about, is to determine whether you're acting as a broker or just giving legal advice, right? [00:15:07] Speaker 06: And if what you're telling us is so, that you're just giving legal advice, the regulation doesn't apply to you. [00:15:15] Speaker 06: You have no injury here. [00:15:16] Speaker 06: It seems to me you're fishing for an advisory opinion from us, because you didn't get the adequate one from them. [00:15:22] Speaker 06: What am I missing here? [00:15:24] Speaker 02: Your Honor, what is not there is the fact that the regulation as written, and the official guidance that they provide on it, says that any legal advice that is provided [00:15:34] Speaker 02: And for the sale of a defense article subject to the ITAR, where the foreign parties are not all identified by the client, which might sound very narrow, but it's actually very large. [00:15:43] Speaker 02: It's a large definition of what I do, may be subject to these regulations. [00:15:47] Speaker 02: The only way I can know for sure is if I do an advisory opinion request like I did before. [00:15:53] Speaker 02: But in order, in return, they're a quick pro-pro for me to give me that confirmation. [00:15:58] Speaker 02: is that I give them my client names and real detailed substitutes. [00:16:01] Speaker 01: How do you know you have to give the client names? [00:16:03] Speaker 01: I mean, the process hasn't happened yet where you seek the official determination of the agency, right? [00:16:13] Speaker 02: No, I already submitted an advisory opinion request. [00:16:16] Speaker 02: I submitted it. [00:16:16] Speaker 02: It took nearly a year for them to respond to it. [00:16:19] Speaker 02: When they responded to it was when I filed the lawsuit. [00:16:22] Speaker 02: And they sent me the response to it three days, about three days before they want to file the motion before the response was made. [00:16:30] Speaker 01: But they've told you that you could submit a request for an official determination if you supply more information. [00:16:37] Speaker 02: Well, what they did was, number one, the response that they gave me was an official termination. [00:16:42] Speaker 02: If you look at the actual response that's in the joint appendix that they provided, they provided it to me on, I think it was May 13th, and there were just three days before that their actual motion to dismiss the response to pleading was due. [00:16:54] Speaker 02: It actually states that it was issued pursuant to the scope of 129.9. [00:16:58] Speaker 02: 129.9 is the advisory opinion section of the ITAR, and that provision states that it's an official determination, official guidance from the agency. [00:17:10] Speaker 02: And so I've already gotten a response to that. [00:17:12] Speaker 02: But my response was, we want more information to submit another response. [00:17:16] Speaker 01: On JA 36, please be advised that your letter of August 29th and our conversation would take place on July 3rd lacks sufficient detail for the department to make an official determination as to whether the activities discussed constitute brokering activities. [00:17:29] Speaker 01: So this is the February 6th letter. [00:17:31] Speaker 01: So at that time, there's been no official determination. [00:17:33] Speaker 02: That's correct, Your Honor. [00:17:34] Speaker 01: OK. [00:17:35] Speaker 01: So then something happened later? [00:17:36] Speaker 02: Yeah, if you turn to JA 39, [00:17:40] Speaker 02: And I apologize, it wasn't May 13th, it was May 12th. [00:17:43] Speaker 02: On May 12th, they sent me another letter responding to the request. [00:17:50] Speaker 02: And if you turn to the last page of that request, at the last full sentence, this is at JA 41. [00:18:02] Speaker 02: It states, the Department of State states, the information in this letter is provided as general guidance to assist you in conducting your day-to-day legal activities and is limited in scope pursuant to ITAR section 129.9b. [00:18:15] Speaker 02: I'd like to follow up with two parts of the regulation. [00:18:20] Speaker 02: One part of the regulation is in one section of Abbott Laboratories that's entirely relevant to interpreting what this means. [00:18:29] Speaker 02: At 129.9 of the ITAR, [00:18:33] Speaker 02: which was issued pursuant to the 2013 final rule. [00:18:52] Speaker 01: Isn't what matters the next sentence, which says, if you require official guidance with respect to any specific proposed activity, please review ITAR 129.98 and submit a request for guidance. [00:19:02] Speaker 01: that is responsive to the requirements set forth therein. [00:19:05] Speaker 05: Yes. [00:19:05] Speaker 01: So there's an opportunity to get further guidance on more specific activity if you supply more specific information. [00:19:12] Speaker 02: Right. [00:19:12] Speaker 02: And actually, Your Honor, and again, Your Honor, this begs the question, this is one of the reasons why I'm bringing the lawsuit, which is the Fifth Amendment procedural due process aspect. [00:19:20] Speaker 02: which is I gave them as much detail as I could in that first request without divulging client competences. [00:19:26] Speaker 02: I don't want to tell them who my client is dealing with. [00:19:29] Speaker 02: I don't want to tell them the specific details of the substantive legal advice and the online transaction because... Is that required? [00:19:38] Speaker 02: That is required under 129.9. [00:19:39] Speaker 06: To the extent that... You need to disclose the name of the client. [00:19:43] Speaker 02: Right. [00:19:44] Speaker 02: So when we look at 129.9, [00:19:47] Speaker 02: This is what I was going to read to. [00:19:48] Speaker 02: It requires that I describe fully the activities that will be undertaken. [00:19:53] Speaker 02: That's a chapeau. [00:19:53] Speaker 02: But when you go down below that, it states, I have to list the name and nationality and geographic location of all US and foreign persons who may participate in the activities. [00:20:02] Speaker 02: My client, all the other parties, known and unknown. [00:20:05] Speaker 02: The specific activities that will be undertaken by me [00:20:08] Speaker 02: Now, at the end, at 129.95, it even asks for a copy of any agreement or documentation between the requester and my clients. [00:20:17] Speaker 02: I think that's fairly read in this context to be my engagement letter. [00:20:20] Speaker 02: I mean, this could be interpreted very broadly, but as written, [00:20:23] Speaker 02: It's enough to say that these are substantive details on my legal advice given to the clients. [00:20:28] Speaker 02: They don't have a right to have as enforcement agents. [00:20:31] Speaker 02: And part of my claim outside of this is that they don't have statutory authority to request this. [00:20:36] Speaker 02: Congress didn't even give them the authority in the Arms Expert Control Act to control bona fide legal advice by attorneys to clients who are looking or paying me to find out how to comply with these laws. [00:20:45] Speaker 04: Well, let me ask you one other thing. [00:20:48] Speaker 04: You started this, I think, in 2013. [00:20:52] Speaker 04: Your letter to them was first in 2013, so it took two years to get to this letter, which still isn't even an official determination. [00:21:00] Speaker 04: And so have you or are you aware of other people who have submitted requests for official positions with the details that are asked for? [00:21:10] Speaker 04: Do you know how long it takes for them to respond? [00:21:13] Speaker 04: I would think that would be pretty critical to whether the whole advising is even going to work. [00:21:17] Speaker 02: The agency generally, in public forums, the agency will say that it takes 30 days to respond to these. [00:21:24] Speaker 02: This particular case took nearly a year. [00:21:27] Speaker 02: I have other clients who submitted advisory requests. [00:21:29] Speaker 02: It can take a year or more. [00:21:30] Speaker 02: Sometimes they're having cases where the agency has never responded to a request. [00:21:34] Speaker 02: Now, this kind of also raises the practical problems in this. [00:21:39] Speaker 02: There is, as defined, it's very broad, and they have sent me a letter, the official, the letter that was written pursuant to the advisory opinion process, the one that we're looking at right now, the May 12th one, where they say that a lot of the activities uncovered, unless the client hasn't identified the foreign parties to the transaction, which is a large part of what I do, where do I go from there? [00:21:56] Speaker 02: I get one of these cases in. [00:21:58] Speaker 02: The issues of informed consent raise particular problems, which I discussed in the Catch-22, but even if I get informed consent, [00:22:04] Speaker 02: And even if I, as an attorney, I can advise the client on informed consent, which I don't think I can because it's not really in the client's interest to have me comply with my obligations. [00:22:12] Speaker 02: It's my issue. [00:22:13] Speaker 02: I think I would have to refer them out on the ethical rules to another attorney to see whether or not they should give me informed consent. [00:22:17] Speaker 02: But let's just assume that I can get informed consent. [00:22:19] Speaker 02: Forget about the Catch-22. [00:22:20] Speaker 02: Then I have to submit an advisory opinion request for this. [00:22:25] Speaker 02: By the time in a lot of these cases when I get the response back, the time has already passed when he needed the legal advice. [00:22:30] Speaker 02: Practically, this is an undue burden on my representation and my ability to represent them. [00:22:34] Speaker 02: There's also an undue burden where if a client comes in the door asking for advice of how to comply with laws, [00:22:40] Speaker 02: that's subject to a million dollars per violation and they want to know how do I deal with this agency and I tell them well first off I need to get a waiver from you because all the information you're about to tell me I've got to give to them and request to determine if I need to get approval to give you this advice. [00:22:53] Speaker 02: Is the client really going to freely give me that information at that point? [00:22:56] Speaker 02: No. [00:22:56] Speaker 02: It's going to have a major showing effect and that's another undue burden on my representation. [00:23:04] Speaker 06: Okay, we'll give you back a couple minutes. [00:23:06] Speaker 06: Let's hear from the government now. [00:23:24] Speaker 03: Thank you, Judge Griffith, and may it please the court. [00:23:26] Speaker 03: The State Department has long regulated international arms and munitions brokering. [00:23:31] Speaker 03: In 2013, the department issued a regulation that clarified that activities by an attorney that do not extend beyond the provision of legal advice to clients do not constitute brokering. [00:23:42] Speaker 04: The plaintiff claims at a very... Can you tell us a little bit about how this works? [00:23:48] Speaker 04: So I take it under the 2013 version of the regulations, the reason you created the exemption is that otherwise the general language on soliciting, promoting, negotiating, contracting, arranging, or otherwise assisting would seem to encompass legal advice. [00:24:07] Speaker 04: And so that's why the attorney advice exception was added at this stage. [00:24:18] Speaker 04: seem to see that you didn't have the exception. [00:24:27] Speaker 04: During the rulemaking proceeding in 2013 there's a request. [00:24:34] Speaker 04: He does right. [00:24:40] Speaker 03: Well, Your Honor, I don't think that the 2013 rule was a change in the substance of the rule. [00:24:48] Speaker 03: It was a clarification that the prior rule and now the current rule that he's challenging does not cover [00:24:58] Speaker 03: does not cover an attorney's legal advice that doesn't extend beyond giving legal advice to clients. [00:25:03] Speaker 04: What I'm trying to ask is, if you didn't have that attorney exception, I assume this is why the whole exchange happened and the rulemaking, I think the concern was that language that I read to you, soliciting, promoting, negotiating, contracting for, arranging, or otherwise assisting in these sales. [00:25:19] Speaker 04: The concern was that otherwise that language would have caught this attorney. [00:25:24] Speaker 03: Yes, I think that was the concern. [00:25:26] Speaker 04: Okay, so that's why the... Who has a burden of proving that something falls that falls naturally within the contracting or otherwise assisting language so it's covered? [00:25:38] Speaker 04: They want to say, oh, it was attorney-client services. [00:25:41] Speaker 04: Who has the burden of proving? [00:25:47] Speaker 04: It falls within this exception. [00:25:52] Speaker 03: In an enforcement action? [00:25:53] Speaker 04: Normally it would be their burden. [00:25:57] Speaker 04: Normally it's the target's burden to show that they fall within an exception. [00:26:01] Speaker 04: I assume that applies here too? [00:26:03] Speaker 03: Your Honor, I'm not sure, the agency, there's never been an enforcement action involving any circumstances going after an attorney for giving legal advice. [00:26:14] Speaker 03: And that's one of the reasons that the plaintiff here hasn't shown a credible threat of enforcement. [00:26:18] Speaker 03: Really, what's going on here is that the... I'm back to my question a little bit. [00:26:23] Speaker 04: You could bring an enforcement action. [00:26:24] Speaker 04: He would say it was contracting for, arranging, or otherwise assisting. [00:26:28] Speaker 04: He didn't know all the foreign parties, so we're in that exception that the letter flagged. [00:26:34] Speaker 04: He does not know who all the third parties are. [00:26:36] Speaker 04: At the time, Attorney Axe does the otherwise assisting and negotiating contracting for something. [00:26:43] Speaker 04: And so it's charged with brokering. [00:26:45] Speaker 04: And if that person wanted to say, no, no, I think it still qualifies as legal advice, notwithstanding that I didn't know who all the foreign parties [00:26:53] Speaker 04: were going to be at the time, I take it you all would show your case and it would be the burden on that person to show that they fell within the attorney client exception? [00:27:04] Speaker 03: Your Honor, I'm just not familiar with an enforcement action involving that exception, so I don't want to get out in front of the agency as to how that would play out. [00:27:15] Speaker 03: But really, in this case, what's important is that what he's challenging is a regulation that says attorney advice is not covered. [00:27:21] Speaker 03: And all he's done is state in very general terms [00:27:24] Speaker 03: that he engages in legal advice relating to ITAR transactions and there's no indication that he does anything that would go beyond traditional legal advice. [00:27:32] Speaker 04: I think what he says is that I do things that fall within this category that you have defined as brokering and [00:27:42] Speaker 04: When I asked you about the attorney exception, you said, well, we're not going to tell you you're out if you don't know all the parties, foreign parties to the transaction. [00:27:52] Speaker 04: Why isn't that he's regulated by this regulation? [00:27:56] Speaker 04: He's having to go through all these hoops. [00:27:59] Speaker 04: He's having to debate whether he's within this exception or not. [00:28:01] Speaker 04: He's having to turn over all kinds of information to the government. [00:28:04] Speaker 04: Why isn't that just plain old falling within the regulatory scope and challenge a regulation? [00:28:09] Speaker 03: Well, Your Honor, just to be clear, so the regulation, as you just read it, it does not apply to activities by an attorney that do not extend beyond the provision of legal advice to clients. [00:28:19] Speaker 03: I think what he's focused on here is the letter. [00:28:21] Speaker 04: Hang on, Your Honor, let's be crystal clear, because that latest letter from 2015 would append to that language, does not provide legal advice to clients when all parties to the transaction are known. [00:28:33] Speaker 04: That's what your 2015 letter says. [00:28:36] Speaker 04: Because after that, all bets are off. [00:28:38] Speaker 04: We don't know which one you'll be in. [00:28:39] Speaker 04: You might be in one or the other. [00:28:42] Speaker 03: No, Your Honor, I think the substantive standard is whether the activities extend beyond the provision of legal advice to clients. [00:28:49] Speaker 03: And the 2015 letter was trying to give the plaintiff even more guidance. [00:28:53] Speaker 03: He requested [00:28:54] Speaker 03: he requested a non-binding opinion as to whether six very general categories of activities by lawyers would constitute brokering. [00:29:03] Speaker 03: And so what the agency did is it tried to give him even more information than was already in the regulation and frequently asked questions and explained that, first of all, that the agency started out by saying that it does not intend the categories of activities that he described to constitute brokering. [00:29:18] Speaker 03: And then it created a number of safe harbors by saying that- [00:29:23] Speaker 04: page two of the letter, as long as the client has already identified the foreign party or parties, those four activities, all right, would constitute the provision of legal advice. [00:29:37] Speaker 04: And I'm not talking about the merits of your rule. [00:29:39] Speaker 04: I'm not talking about whether you're right or they're wrong on the merits. [00:29:42] Speaker 04: I'm just saying how is he not, in the most ordinary sense, [00:29:47] Speaker 04: regulated by these regulations and now he's between trying to figure out when apparently in a significant portion of his practice he doesn't [00:29:59] Speaker 04: Exactly what you said would make him safe. [00:30:02] Speaker 04: And as to that, all bets are off. [00:30:04] Speaker 04: He doesn't know. [00:30:05] Speaker 03: So that's a safe harbor. [00:30:06] Speaker 03: And it says that if he's engaging in those four categories of activities and the parties have been identified, then he's definitely not engaging in brokering. [00:30:15] Speaker 03: If the parties haven't been identified, then there may be some circumstances in which an attorney would be engaging in brokering. [00:30:20] Speaker 03: And the principal concern that that limitation was focused on is that an attorney would use legal advice to act as a finder. [00:30:27] Speaker 03: And he has explicitly disclaimed many times that he would act as a finder. [00:30:32] Speaker 03: And just to give an example of what conceivably could [00:30:37] Speaker 03: you know, could constitute an attorney giving legal advice that would steer a client towards a particular buyer. [00:30:45] Speaker 03: For example, if someone comes to an attorney and they want to sell controlled explosives and they ask the attorney to draft a general sales contract, that would be legal advice. [00:30:55] Speaker 03: It would not constitute brokering. [00:30:57] Speaker 03: But if the same person came to the attorney, asked them to draft [00:31:01] Speaker 03: a general sales contract, and the attorney happens to also represent a buyer in Pakistan and knows that that buyer would want to buy these controlled explosives. [00:31:12] Speaker 03: And so the attorney recommends that the contract be translated into Urdu, knowing that this is going to be the only likely buyer in that area [00:31:21] Speaker 03: then the attorney might have used non-legal knowledge and tried to steer the seller towards that particular buyer, even though he was engaging in legal advice. [00:31:32] Speaker 03: Well, Your Honor, it's just a hypothetical, trying to illustrate that this is going to be a really rare circumstance in which an attorney is going beyond providing traditional legal advice. [00:31:41] Speaker 03: And here, he's already disclaimed that he doesn't act as a finder. [00:31:45] Speaker 04: Well, I guess my question is that we're just not standing. [00:31:48] Speaker 04: We're not here on the merits of this rule. [00:31:53] Speaker 04: the other. [00:31:55] Speaker 04: Because then he says, look, I read the regulations, I fall, where I do fall is right within that contracting floor otherwise assisting these sales. [00:32:06] Speaker 04: I look down and I see there's this attorney exception, but then through your letters I'm told there's qualifications and limitations of the safe harbor. [00:32:14] Speaker 04: was narrower than that, because other things, I might think I'm doing it for legal advice, but I don't know that you won't think that it's cross the line. [00:32:25] Speaker 04: For some factual reason, you'll think it wasn't proper legal advice. [00:32:28] Speaker 04: And again, I'm not saying whether you're right or he'd be right, but whether the fact that he's in the situation, that he's in the bullseye of the language, and then has to prove himself into a safe harbor, [00:32:42] Speaker 04: doesn't mean he's regulated for purposes of plain old Article III injure. [00:32:46] Speaker 03: Well, Your Honor, he hasn't shown that he engages in any conduct that would be regulated. [00:32:49] Speaker 03: And the key here is that to be regulated, he would have to engage in, he would have to do something that extends beyond the provision of legal advice to client. [00:32:58] Speaker 03: He's given no indication that he does that. [00:33:00] Speaker 03: He has not even described in the most general terms something that he does that he fears would go beyond traditional legal advice. [00:33:06] Speaker 04: So maybe his legal advice, even when all the foreign parties are not known, [00:33:10] Speaker 04: which is what your 2015 letter said, waved a yellow flag about. [00:33:15] Speaker 04: But if he gives legal advice when all the parties aren't known, and he says it was legal advice, is he in a safe harbor or not? [00:33:25] Speaker 04: If in his view it was legal advice, but all the foreign parties were not known, is he in the safe harbor or not? [00:33:31] Speaker 03: He's not within the safe harbor described in the letter, but the concern- In the regulation. [00:33:35] Speaker 04: Is he in either safe harbor, the regulations text or the letter, or is it unknown? [00:33:40] Speaker 03: So, Your Honor, it's unknown. [00:33:42] Speaker 03: That's precisely the problem with this case, is that he has described his activities at such a high level of generality that it's impossible to know what exactly he plans to do in the future. [00:33:50] Speaker 06: What would he need to do under that situation to make it more specific? [00:33:54] Speaker 03: He would have to give some more information about what his role in the transaction would be, just any indication as to why he thinks what he's doing goes beyond providing legal advice. [00:34:06] Speaker 06: Could he do that without disclosing his clients? [00:34:10] Speaker 03: he certainly could give more information than he's given at this point. [00:34:14] Speaker 03: And while it's true that the regulations for binding guidance as an initial matter would require him to give the client name, the regulations also specifically state that if such information isn't available, you can still make a request for binding guidance and the agency will take into account what information it has in making that determination. [00:34:32] Speaker 04: The regulation actually says not yet available. [00:34:36] Speaker 04: So is it your position [00:34:38] Speaker 04: When it says not yet available, which sounds like a temporal problem, but it actually includes things that will never be available because they're privileged? [00:34:46] Speaker 04: Well, Your Honor, it's an iterative process between the agency and someone... I'm sorry, but does not yet available include privileged information, or is that really, is that yet doing some temporal work? [00:34:56] Speaker 03: The word yet seems to be doing temporal work, but the agency engages in these advisory opinions through an iterative process. [00:35:04] Speaker 03: And so if he came to the agency and said, this is all the information I believe that I can give you because the additional information, the client name is privileged, then the agency could go back and forth with him about what additional information it thought it would need if there was a particular concern. [00:35:20] Speaker 03: But here, there's just no indication. [00:35:21] Speaker 04: In fact, he's got to engage in this process alone. [00:35:24] Speaker 04: Doesn't that mean he's within the regulatory scheme for purposes of having an article-free injury? [00:35:30] Speaker 03: No, Your Honor, I don't think his request for an advisory opinion shows that he's been injured by the regulations. [00:35:36] Speaker 04: To do that, he would need to show... Does he have to be injured by the regulations or does he have to be regulated by the regulations? [00:35:41] Speaker 03: Well, he has to be regulated by the regulations in order to establish an injury. [00:35:44] Speaker 03: And here, he hasn't shown that he's regulated by the regulations. [00:35:47] Speaker 03: There's no indication that he does. [00:35:48] Speaker 01: Well, he doesn't have to prove. [00:35:49] Speaker 01: I don't think he would have to prove that he's regulated by the regulations. [00:35:52] Speaker 01: I think there has to be a substantial risk that he comes within the regulations, right? [00:35:55] Speaker 01: Because that would still be enough to constitute injury. [00:35:58] Speaker 03: We would have to show that there's a credible threat of enforcement, and that there at least is a substantial risk that he falls within the regulations. [00:36:09] Speaker 03: And he hasn't done that because all he said he does is provide general, traditional legal advice. [00:36:14] Speaker 01: There's no reason to think that... The question is, you have to be right that if someone just simply files a letter that says, I'm worried that my conduct brings me within the fold of the regulations, [00:36:26] Speaker 01: and gives one sentence and says, I engage generally in activities in this area and I'm therefore worried. [00:36:32] Speaker 01: Well, that can't be enough because nobody has any idea what's going on. [00:36:35] Speaker 01: That's not a substantial risk because we don't know what the conduct is at issue. [00:36:40] Speaker 01: But on the other hand, his claim is that if you take the regulation literally on what I need to supply, what information I need to supply in order to get the kind of official stamp of approval that I want, I just can't do that. [00:36:55] Speaker 01: And then it sounds like your response is, well, we don't know yet whether something short of that would be enough because it's an iterative process. [00:37:04] Speaker 01: So it could be that he doesn't have to disclose all the things that are itemized in the regulation. [00:37:09] Speaker 01: He might be able to start off by saying, I don't want to do all that. [00:37:12] Speaker 01: I want to do something short of that because of the circumstances of the work in which I engage. [00:37:16] Speaker 01: And it seems like you're saying, well, that might be enough for the agency to give an official determination. [00:37:21] Speaker 03: Yes, Your Honor. [00:37:22] Speaker 01: And how do we know that? [00:37:23] Speaker 03: Well, Your Honor, there's two separate issues. [00:37:25] Speaker 03: I mean, one is whether he could get a binding opinion from the agency. [00:37:30] Speaker 03: But the separate issue is whether in his complaint, he's alleged facts that show that he's imminently going to be injured by this regulation to create a case or controversy for this court to adjudicate. [00:37:40] Speaker 03: But instead, what he's doing is he wants, in the abstract, this court to tell him when an attorney will engage in some sort of activity that goes beyond legal advice and becomes brokering. [00:37:53] Speaker 03: And the agency has already tried to explain that in as much detail as it could in the letters to him. [00:37:59] Speaker 03: And he's now asking this court for an advisory opinion and for this court to go farther and explain in abstract. [00:38:04] Speaker 04: I think he's just asking us to find standing. [00:38:07] Speaker 03: Well, but ultimately, he's asking the court through his lawsuit to issue a declaratory judgment that says when the broad categories of activities he's listed constitute legal advice or constitute brokering. [00:38:19] Speaker 03: But since they're stated at such a high level of generality, it's not clear what they would. [00:38:26] Speaker 04: Well, there might be problems with formulating a remedy if a remedy were ever to be warranted in this case. [00:38:31] Speaker 04: But at this point, at least as I read it, his allegations were that I engage in this business. [00:38:37] Speaker 04: that's got me right in the crosshairs of that language. [00:38:40] Speaker 04: And I recognize that you have this legal advice exception. [00:38:45] Speaker 04: But when I sent in my request, you sent back the two letters, took a couple rounds here, and at the end you said, well, it's a safe harbor as long as you know all the foreign parties. [00:38:57] Speaker 04: But I allege that a substantial amount of my business is in situations where I don't know all the foreign parties. [00:39:06] Speaker 04: and that in order to obtain this more safe harbor or this advice, I'm going to have to go get disclosing information that I'm worried is either privileged or is going to imperil my relationship with clients or my ability to even get their business. [00:39:22] Speaker 04: Once I start saying it upfront, I'm going to have to disclose all this stuff just to make sure we can even [00:39:27] Speaker 04: do it, why is that not a substantial risk of injury just at this pleading stage? [00:39:34] Speaker 03: Because, Your Honor, what he's alleged in the complaint that he does is engage in legal advice in this area. [00:39:39] Speaker 03: And the regulation says that if what he's doing does not extend beyond engaging in legal advice in this area, he's not regulated. [00:39:47] Speaker 03: The only thing he points to to say that he is regulated is the letter. [00:39:51] Speaker 03: And the fact that the safe harbor described in the letter states that... It's nearer than the regulatory tax. [00:39:57] Speaker 03: I don't believe it's narrowed in the regulatory text. [00:39:59] Speaker 03: It's trying to give more flesh onto the idea of when an attorney would be doing something that would extend beyond legal advice. [00:40:07] Speaker 03: And what the Safe Harbor was getting at, and the reason it has the limitation that the foreign parties be identified, is because it's conceivable to the agency that an attorney might use legal advice to act as a finder. [00:40:19] Speaker 03: And they could do that. [00:40:20] Speaker 03: Another example would be when a seller comes to an attorney and asks for advice how to structure a transaction. [00:40:28] Speaker 03: And the attorney knows of a particular buyer in, for example, Guatemala that wants to buy the explosives that the seller is selling. [00:40:36] Speaker 03: And so the attorney recommends that the seller structure the transaction by incorporating in Guatemala or having an in-country partner in Guatemala. [00:40:48] Speaker 03: And in that circumstance, what the attorney would have been doing would come much closer to finding a buyer for the seller. [00:40:56] Speaker 03: And so through the legal advice, the attorney would be steering the seller towards a buyer. [00:41:05] Speaker 03: This highlights exactly why the plaintiff doesn't have standing, because here we don't have any facts that come even close to this scenario. [00:41:13] Speaker 03: All he says is that he generally offers legal advice relating to ITAR transactions, but there's no reason to believe that he comes even close to going beyond. [00:41:20] Speaker 04: To be clear, he says he frequently engages in providing advice and assistance in these types of transactions when all the foreign parties are not known. [00:41:30] Speaker 03: Yes, Your Honor, but he specifically disclaims over and over again acting as a finder. [00:41:34] Speaker 03: And that's what the limitation was worried about. [00:41:36] Speaker 04: But your 2015 letter didn't say this is a safe harbor. [00:41:41] Speaker 04: whether or not all the foreign parties are known, the only thing that you can't do is if the foreign parties aren't known, you can't help find that party. [00:41:50] Speaker 03: We didn't say that. [00:41:51] Speaker 03: It doesn't say that, but that's the purpose of the limitation. [00:41:54] Speaker 03: And that's the only example in the abstract that the agency has been able to identify, is that an attorney might [00:42:02] Speaker 03: might use legal advice to steer a client towards a particular buyer or particular seller. [00:42:07] Speaker 03: And here, the plaintiff has explicitly disclaimed doing that, and so that risk doesn't give him standing. [00:42:13] Speaker 01: Can I ask this question? [00:42:14] Speaker 01: So suppose that we play out the facts a little bit, and he follows up with a type of request that the May letter hypothesizes that he should undertake if he wants to get further guidance. [00:42:28] Speaker 01: And instead of giving all the information that's set forth in the regulation, he makes it more generic because he's concerned about, A, giving up confidences, B, being able to do business in the area. [00:42:41] Speaker 01: And then the response comes back and says, well, that's just not enough. [00:42:44] Speaker 01: We can't give you any more because you didn't give the information that's applied in the regulation, that's called for in the regulation. [00:42:50] Speaker 01: Does he have injury at that point? [00:42:53] Speaker 03: Well, Your Honor, first of all, if he had submitted a request for, well, I'm sorry. [00:43:01] Speaker 01: Am I not being clear? [00:43:02] Speaker 03: No, you are being clear. [00:43:04] Speaker 03: I'm just trying to think before I speak. [00:43:06] Speaker 01: I'm being honest. [00:43:07] Speaker 01: I don't know if I'm being clear. [00:43:08] Speaker 03: You're being clear. [00:43:09] Speaker 03: I think that would be a harder case because he would have given more information and there would be somewhat more concrete of a scenario that the agency had examined and for this court [00:43:20] Speaker 01: Why would it only be a harder case? [00:43:23] Speaker 01: Why wouldn't there be injury in that situation? [00:43:24] Speaker 01: Because what he would say is, look, I've given all the information that I feel comfortable giving. [00:43:29] Speaker 01: If I give any more information, I'm either going to be in breach of my ethical obligations, or I'm not going to be able to get business. [00:43:35] Speaker 01: One or the other, both of those seem like injury to me. [00:43:38] Speaker 01: And you're telling me that you need more information from me. [00:43:41] Speaker 01: We're at an impasse. [00:43:43] Speaker 01: Therefore, I get to challenge the application of the regulations to me at this point. [00:43:47] Speaker 01: I may lose on the substantive challenge, but in terms of whether I'm injured at this stage, I'm alleging that I'm injured because I'm not comfortable giving up any more information than I've given. [00:43:57] Speaker 03: Well, I think in the scenario that you posed, he would have started binding determination by the agency, which he has not done so far. [00:44:04] Speaker 03: So this case is an easier case, because all he's done is ask the agency for non-binding advisory advice. [00:44:10] Speaker 01: I guess where I'm going, though, is that if we think that there would be injury in that situation, because he would have done what your letter itself calls for him to do, but yet it still wouldn't have been enough, [00:44:22] Speaker 01: because the regulations applied literally and he doesn't have this kind of half measure where he can give more specific information than he's given now, but not as specific as the regulation seems to call for, then if we already know ex ante that he's gonna have to give up all that information anyway, then it doesn't even seem like it's worth going to the intermediate measure because his point is, [00:44:48] Speaker 01: I'm reading this thing literally. [00:44:50] Speaker 01: It requires me to give up a bunch of stuff that I just can't give up. [00:44:54] Speaker 01: And it seems like your response is, well, we don't know that yet, because it could be that you can style a request by making it a little generic, a little more specific than we have right now, but more generic than what the administrative materials call for, and that still might be enough. [00:45:14] Speaker 01: And his response would be, well, why do I think that that's enough? [00:45:16] Speaker 01: Because what I don't want to do and what I feel disabled from doing is giving exactly the information that the agency materials call for me to give. [00:45:26] Speaker 01: to get a binding determination? [00:45:29] Speaker 03: Again, there's a separate issue of whether he has standing in this court and whether he can seek a binding determination by the agency. [00:45:36] Speaker 03: And to have standing in court, he has to show that he's going to be eminently injured by the regulations. [00:45:43] Speaker 03: And as we talked about, he hasn't shown that there's a substantial risk that he will, because all he has stated in his complaint that he does is generally advise clients on matters [00:45:54] Speaker 03: relating to defense articles and defense services. [00:45:56] Speaker 03: And the regulation specifically says that when an attorney is giving advice that does not extend beyond the provision of legal advice, it's not covered by the regulation. [00:46:05] Speaker 03: So there's just no indication in the complaint that he's doing anything that would be subject to the regulation. [00:46:11] Speaker 06: In your view, what would need to happen for him to have standing then? [00:46:15] Speaker 06: If he doesn't have standing now, what would be the scenario under which he might have standing? [00:46:20] Speaker 03: Well, I can only speculate because we don't have that in front of us, but he would have to give some information that would suggest why he's even concerned that he might be doing something that would rise to the level of brokering. [00:46:36] Speaker 03: Because the whole point of the regulation and the frequently asked questions and the letter to him is that legal advice generally is not covered. [00:46:43] Speaker 03: And so there would have to be some indication that he thinks he's doing something that goes beyond legal advice. [00:46:48] Speaker 03: And he could describe that to a court in very categorical terms without mentioning the names of parties. [00:46:55] Speaker 03: But he hasn't done that. [00:46:56] Speaker 03: Instead, all he said he does is provide legal advice relating to transactions involving defense articles and different services. [00:47:03] Speaker 04: So why isn't it enough? [00:47:05] Speaker 04: When you all said, it's not fair just to look at the complaint, because you all lobbed in this letter a few days in the middle of the motion to dismiss briefing. [00:47:13] Speaker 04: So when you all said, well, here's the safe harbor where all foreign parties are known, after that, he said, well, look, a lot of what I do is when all the foreign parties aren't known. [00:47:27] Speaker 04: And then, I'm worried, I tried to get the specialist guidance, and that left me confused, and I'm telling you, as a matter of practice, clients don't like it. [00:47:36] Speaker 04: If you come up and say, well, before I can do anything, you're going to have to disclose all these things, so I can disclose all these things to the government. [00:47:42] Speaker 04: all those allegations about the difficulties of disclosing more information as required by the regulations and that he's in at least a more murky area because he does a fair amount of practice when all the parties aren't known, which your own letter acknowledges is a more murky [00:47:59] Speaker 04: area. [00:47:59] Speaker 04: I don't understand why that's not the next iteration that gets us to the injury state. [00:48:04] Speaker 04: It's regulated, and it's injured. [00:48:06] Speaker 04: It's injured. [00:48:07] Speaker 03: Well, Your Honor, I have two responses. [00:48:09] Speaker 03: First is after the department sent the letter, he filed the affidavit in this case. [00:48:14] Speaker 03: And in the affidavit, it's merely a two-sentence statement [00:48:17] Speaker 03: that he advises on transactions subject to the ITAR and that often the parties are not identified. [00:48:25] Speaker 03: Even though he claims, as the district court noted, even though he claims to have been giving that sort of advice for a long period of time before he filed his affidavit, he didn't describe, even in generic terms, any particular transactions that he was worried about from the past or anything he was planning to engage in in the future. [00:48:47] Speaker 03: I had a second response, but I think, again, it just boils down to that he hasn't given any indication. [00:48:59] Speaker 06: So you're saying his allegation would have to say, I'm planning on engaging in activity [00:49:07] Speaker 06: that is being a broker, and so I'm challenging the legality of that? [00:49:12] Speaker 03: Is that the... Well, he would have to give some more information than just saying, I provide legal advice. [00:49:17] Speaker 03: There would have to be some reason that he's concerned that what he's doing... Well, he has. [00:49:21] Speaker 06: He said, I provide legal advice. [00:49:25] Speaker 06: I provide legal advice on transactions. [00:49:28] Speaker 06: And my concern is that the way the regulations are written now, I have to either abstain from engaging in those transactions or I have to disclose confidential information, which I won't do. [00:49:41] Speaker 06: He's targeted these regulations and has alleged that they're hurting him in his business right now. [00:49:51] Speaker 03: That's what he alleges, Your Honor, but he's given no reason to think that that's true. [00:49:57] Speaker 03: He hasn't alleged any facts showing that there's a substantial risk that he falls within the regulations. [00:50:02] Speaker 03: The regulations themselves, the frequently asked questions, and the letter all state that legal advice generally is not covered as brokering. [00:50:09] Speaker 03: And if he's concerned that there is a particular activity, a particular way [00:50:14] Speaker 03: he advises clients or a particular role that he takes in transactions that he thinks might go beyond legal advice and might constitute brokering, then he could come to this court or he could come to the agency and explain, even in generic or categorical terms, why that particular activity would rise to the level. [00:50:30] Speaker 03: The other thing I just remembered my other response to Judge Millett quickly was that attorney-client privilege is something that's litigated all the time. [00:50:38] Speaker 03: And it doesn't mean that you don't [00:50:41] Speaker 03: discuss anything having to do with any, that you can just say attorney-client privilege and then just not talk about it at all. [00:50:48] Speaker 03: I mean, he, you know, still in a regular case, if we got to a point where there was a particular communication between him and a client that he thought was privileged, and so that's why he couldn't put that information in his complaint to a court, at that point, it could be litigated or he could file something under seal with a court in order to establish standing, but it's not enough just to sort of [00:51:08] Speaker 03: make a blanket claim of privilege and confidentiality and say that I can't give any facts relating to what I do at all because it's all confidential. [00:51:17] Speaker 04: Can I just ask a quick timing question? [00:51:21] Speaker 04: He said that obviously it took a long time for him to get answers in his request for guidance. [00:51:26] Speaker 04: Do you have a sense, either someone seeking guidance or a binding decision from the state, how long that is taking in practice? [00:51:34] Speaker 03: Unfortunately, I don't, Your Honor, but I could follow up with a letter to the court if you would like. [00:51:41] Speaker 03: I think, though, again, he didn't seek the binding guidance, and he did send his letter. [00:51:48] Speaker 04: I'm not sure. [00:51:51] Speaker 03: I'm not sure, Your Honor, but that wasn't the type of guidance that was at issue in this case. [00:52:02] Speaker 06: Okay, thank you very much. [00:52:04] Speaker 06: We'll give you back four minutes, Mr. Wolfson. [00:52:11] Speaker 02: A statement just now that the type of guidance that was issued was not dividing guidance is entirely incorrect. [00:52:16] Speaker 02: If you look at the actual May 12th letter, now keep in mind when I wrote my original advisory opinion request, it took a year before I had any response. [00:52:29] Speaker 02: In that time, you have a 2013 final rule, and they amended the advisory opinion process, where before they said it was a non-binding agency decision, whereas as amended, and if you look, it's actually listed in the appendix of my opening brief, I can cite you the actual statute as it exists today, it's 129.9B, states, [00:52:57] Speaker 02: that the director of defense trade controls will take the completeness of information into account in providing guidance on whether the activities constitute profiting activities. [00:53:06] Speaker 02: Period. [00:53:07] Speaker 02: the guidance will constitute an official determination of the Department of State. [00:53:11] Speaker 02: So they amended the advisory opinion process during this whole period to make it so that it was binding. [00:53:18] Speaker 02: And if you look now back at JA page 41, which is the last page of the May 12 advisory opinion determination they gave me, it states at the very last sentence, the information in this letter [00:53:32] Speaker 02: is provided as general guidance to assist you in conducting your day-to-day legal activities, and is limited scope pursuant to 129.9b. [00:53:41] Speaker 02: 129.9b is the section I just read you that says that one of these responses is a binding determination. [00:53:49] Speaker 02: There's no dispute that this is a binding determination. [00:53:51] Speaker 02: The statute says it is. [00:53:52] Speaker 02: The fact that I can submit another request and get another binding termination doesn't defeat my standing. [00:53:59] Speaker 02: If anything, I don't need to submit to the process I'm challenging. [00:54:02] Speaker 02: That was part of the decision in Babbitt. [00:54:05] Speaker 02: They didn't submit to the election procedures, and they still had standing. [00:54:08] Speaker 02: And the court noted that the reason why they didn't do it was because it would be futile. [00:54:12] Speaker 02: You asked them, you asked her, what additional information do they need? [00:54:16] Speaker 02: They don't know. [00:54:18] Speaker 02: They want to see it. [00:54:19] Speaker 02: They say it's an iterative process. [00:54:22] Speaker 02: Well, an editor process, how am I supposed to take on representations during this? [00:54:25] Speaker 02: So far, the editor process has been more than a year. [00:54:28] Speaker 02: Because before I even submit this advisory opinion, I was trying to work with the agency, trying to get information on this. [00:54:35] Speaker 02: They submitted agency guidance. [00:54:38] Speaker 06: If you hadn't used the advisory opinion process, what would be the nature of your claim? [00:54:43] Speaker 06: How would you have stand? [00:54:44] Speaker 02: If I didn't submit the advisory? [00:54:46] Speaker 06: Let's put the advisory opinion process to one side. [00:54:48] Speaker 06: What's the nature of your claim? [00:54:50] Speaker 02: Well, I think I'd self-stand. [00:54:51] Speaker 02: There's no exhaustion of administrative remedies at issue here. [00:54:54] Speaker 02: I have a constitutional claim. [00:54:56] Speaker 02: And my constitutional claim is as applied and on its face. [00:54:59] Speaker 02: And on its face, these regulations capture what I do. [00:55:02] Speaker 02: I mean, when I leave here today, I am going to advise clients on putting together an export control clause on an estimate. [00:55:10] Speaker 02: The clause is going to go back on an estimate. [00:55:11] Speaker 02: They're going to be using this in sales and defense articles. [00:55:13] Speaker 02: They don't know who all the parties are. [00:55:15] Speaker 02: That's clearly within the scope of what they told me in this letter might be covered. [00:55:19] Speaker 02: So the onus is on me now to figure out, how do I determine further whether or not this is covered? [00:55:24] Speaker 02: I can try to submit another advisory opinion process, but again, it's an iterative process. [00:55:28] Speaker 02: Who knows how long it will take for a decision? [00:55:31] Speaker 02: Most of my clients don't want to wait a week for my advice, let alone a year. [00:55:35] Speaker 02: And who's to know if I get a response in a year saying, well, we need more information? [00:55:39] Speaker 02: And that's the problem I'm facing. [00:55:41] Speaker 02: And that's really a primary part of my injury and damages right now. [00:55:44] Speaker 02: But again, even if I can get [00:55:50] Speaker 02: over the confidentiality or the privilege. [00:55:52] Speaker 02: And again, the privilege issue, the requirement by law doesn't help me. [00:55:56] Speaker 02: That's the issue of this action. [00:55:58] Speaker 02: I'm challenging their authority to have this requirement. [00:56:00] Speaker 02: If you look at the regulations, it doesn't state it. [00:56:02] Speaker 02: It's the official letter they sent me that now expands it. [00:56:06] Speaker 02: And so let's just assume that there is some, it is required by law. [00:56:11] Speaker 02: Or let's assume that I can get a waiver for the privileged part, because that required by law part doesn't apply to the privileged stuff. [00:56:16] Speaker 02: On that decision process, how do I determine what's controlled? [00:56:20] Speaker 02: And that's the core of my claim. [00:56:21] Speaker 02: And they're using that part of my claim, my Fifth Amendment fair notice part, [00:56:26] Speaker 02: actually against me in standing to say, well, it's not right, because even though we see this broad scope of activities, if you advise clients on sales of defense articles where all the foreign parties are not involved, it might be covered. [00:56:41] Speaker 02: They define it that way. [00:56:43] Speaker 02: But how do I determine within there whether it's controlled? [00:56:48] Speaker 02: One other aspect, which I think the court has already picked up on, is the advisory opinion that they gave me. [00:56:57] Speaker 02: It's really more an official agency guidance and advisory opinion, the way it's defined in the regulations. [00:57:00] Speaker 02: And I do call the court's attention to Abbott. [00:57:06] Speaker 02: at page 149, so 387, 149 states. [00:57:12] Speaker 02: It actually cites the APA, which is one of my claims in the underlying action. [00:57:15] Speaker 02: An agency action includes any rule defined by the act as an agency statement of general or particular applicability and future effect designed to implement, interpret, and prescribe a law of policy. [00:57:27] Speaker 02: General or particular, they gave me general guidance, official guidance pursuant to regulations under the final rule. [00:57:35] Speaker 02: So I'm stuck between a rock and a hard place. [00:57:38] Speaker 02: Do I take on the representations? [00:57:39] Speaker 02: Do I go ahead and give that person the estimate today? [00:57:42] Speaker 02: Do I try to get clients, get a waiver, and form consent to the extent that's even possible? [00:57:47] Speaker 02: And I do explain, and I'm more than happy to discuss at length, the Catch-22 that I encounter in trying to get Catch-22, trying to get informed consent, where I basically have to advise the client on whether the underlying transaction they're proposing is legal. [00:58:00] Speaker 06: Before I can... I think we... Unless there are further questions from my colleagues, I think... Oh, I apologize. [00:58:05] Speaker 06: Do we have your argument? [00:58:06] Speaker 02: I apologize. [00:58:06] Speaker 02: So, yeah, in closing, Your Honor. [00:58:08] Speaker 02: I mean, there's injury for any variety of... There's multiple reasons to find injury. [00:58:14] Speaker 02: The requirement, not knowing, the lack of notice is one injury. [00:58:19] Speaker 06: I don't know what... I think we have your argument. [00:58:21] Speaker 02: Okay, thanks. [00:58:22] Speaker 06: Thank you, Your Honor. [00:58:23] Speaker 06: Thank you very much.