[00:00:00] Speaker 01: Case number 20-5054, Cato Institute of Balance versus Securities and Exchange Commission et al. [00:00:08] Speaker 01: Mr. McNamara for the balance. [00:00:10] Speaker 01: Mr. Berger for the appellee. [00:00:14] Speaker 00: Good morning, Mr. McNamara. [00:00:16] Speaker 00: We'll hear from you. [00:00:18] Speaker 02: Thank you, Your Honor, and may it please the Court, Robert McNamara for the Cato Institute. [00:00:22] Speaker 02: The judgment below should be reversed because the Cato Institute has standing. [00:00:27] Speaker 02: Cato has been injured. [00:00:28] Speaker 02: It wants to host events and publish books and articles featuring firsthand accounts from people who have previously been defendants in SEC enforcement actions. [00:00:37] Speaker 02: And it has identified people who would be willing to speak at these events and have their stories featured in these publications, but for the fact that all of them have entered into gag provisions that the SEC demanded as a condition of settling the initial enforcement action. [00:00:53] Speaker 02: That's an injury and it's an injury that's traceable to the SEC because the amended complaint makes clear that the only reason that these people are unwilling to participate in Cato's speech is that they fear the SEC. [00:01:05] Speaker 04: Why is it just traceable to the SEC? [00:01:10] Speaker 04: Isn't it also traceable to each one of these individuals who entered into this contract or consent decree? [00:01:17] Speaker 02: It's traceable to be individuals, Your Honor, but on the amended complaint, there's no question that if these individuals were not subject to these orders, if they could speak without fear of punishment, they would speak. [00:01:29] Speaker 02: And I think the best case to look at for that is this court's decision in the Woodhull Freedom Foundation case earlier this year, which made clear that the only thing that's necessary for traceability and redressability is a substantial likelihood that the plaintiff will be able to do the thing they want to do. [00:01:49] Speaker 02: In Woodhull, the plaintiff was a licensed masseuse whose complaint was that Craigslist had stopped posting his ads after the passage of a federal statute regulating the internet. [00:01:59] Speaker 02: And Craigslist was not a party, and the only thing he had were some press statements, I believe, that Craigslist had made, suggesting that if they could, they would go back to hosting ads like this. [00:02:09] Speaker 02: And that was enough. [00:02:10] Speaker 02: Here, the amended complaint alleges more. [00:02:13] Speaker 03: The plaintiff in Woodhall couldn't get his ad posted, right? [00:02:19] Speaker 03: Yes, Your Honor. [00:02:20] Speaker 03: No, but here, [00:02:22] Speaker 03: What we have the restraint in front of us, and it's crystal clear that it binds the settling defendant, but it doesn't bind Cato. [00:02:33] Speaker 03: So what's to prevent, and Cato has this information, what's to prevent Cato from simply publishing it? [00:02:40] Speaker 02: Two responses, Your Honor. [00:02:42] Speaker 02: First, as I understand it, Cato doesn't have the legal right to publish this without the permission of the speakers themselves. [00:02:49] Speaker 02: They have a conditional contract, as they understand it, to publish the book. [00:02:53] Speaker 02: But beyond the book, Cato wants to have events featuring these people actually talking, answering questions from a Cato expert. [00:03:00] Speaker 02: The amended complaint says that Cato has found that the most effective way to do this kind of advocacy is actually to put former defendants in front of the audience, have them talk, have them answer questions. [00:03:12] Speaker 02: And they are unwilling to do that solely because they fear they will be punished by the SEC if they participate in a panel discussion like that. [00:03:21] Speaker 02: And so Cato is unable to engage in the most effective speech that it has found in its consistent advocacy in this area. [00:03:30] Speaker 02: And that's an injury, and it's an injury that can be redressed if Cato can obtain a declaratory judgment that says the First Amendment does not allow the SEC to punish people for speaking at Cato's events. [00:03:44] Speaker 02: Not only does Woodhall stand for the proposition that an unregulated party can raise an objection like this, provided they're actually injured, Woodhall is part of a long line of this case press this court's precedence holding exactly that whether it's teeth on historic aviation foundation or Abigail Alliance for better access to developmental drugs. [00:04:05] Speaker 04: where they're the only evidence that the third party would actually give the plaintiff what they wanted if they prevailed, was what this court called the naked capitalistic interests of the- So if, excuse me, if you prevailed, and I know this is, I'm talking a little bit about the merits, and one of the problems I have here is separating the merits from the question of jurisdiction and standing. [00:04:31] Speaker 04: But if you prevailed the redressability [00:04:36] Speaker 04: problem would amount to what? [00:04:40] Speaker 04: Nullification of the bar against criticizing or claiming that the SEC didn't have evidence? [00:04:49] Speaker 04: Is that what? [00:04:50] Speaker 02: Not necessarily nullification, Your Honor. [00:04:52] Speaker 02: I think the only thing Cato would need for the narrowest redress of its injuries is a declaration, and obviously we have to put forth evidence to support the final judgment, but a declaration that says these people say these things at Cato's events. [00:05:08] Speaker 02: They cannot be punished by the government. [00:05:11] Speaker 04: Okay. [00:05:12] Speaker 04: Well, that's what I suspected. [00:05:15] Speaker 04: But there are a lot of SEC consent decrees and a lot of defendants who have absolutely no connection to Cato's. [00:05:21] Speaker 04: Suppose they just wanted to go to a family gathering and tell people, with whatever redressability problem you are talking about, would that mean that they could not be held to the consent decree either? [00:05:38] Speaker 02: Not necessarily, Your Honor. [00:05:39] Speaker 02: And I think this question really goes to whether we'd be able to obtain facial relief or as applied relief. [00:05:45] Speaker 02: And I'm certainly prepared to argue for our right to obtain the broadest possible facial relief. [00:05:50] Speaker 02: But I think for standing purposes, it's enough to say that Cato could obtain the narrow declaration that would actually redress its injury and allow it to have, as for example, a panel discussion featuring these particular people. [00:06:03] Speaker 04: So are you claiming that Cato has a First Amendment right here? [00:06:07] Speaker 02: Yes, Your Honor, Cato is a First Amendment speaker. [00:06:09] Speaker 02: And I think the clearest place to see that in the court's precedence is the Supreme Court's discussion in Simon and Schuster, where it says it doesn't really matter for First Amendment purposes whether we think of the First Amendment speaker as an author who is subject to a regulation's burdens or whether we think of the First Amendment speaker as the publisher who is limited to only publishing with authors who are willing to shoulder the burdens of that regulation. [00:06:36] Speaker 02: Cato here is the publisher, among other things. [00:06:38] Speaker 02: And I think Simon & Schuster teaches that the publisher is a speaker just as much as an author is a speaker. [00:06:47] Speaker 04: Yeah, go ahead. [00:06:48] Speaker 00: Simon & Schuster was not a standing case. [00:06:51] Speaker 00: The Supreme Court was not purporting to make any sort of a holding on standing. [00:06:56] Speaker 00: And we know from Steele Co. [00:06:58] Speaker 00: that we're not supposed to rely upon drive-by jurisdictional rulings or holdings. [00:07:06] Speaker 00: So, I mean, isn't this really more akin to a third party standing case here where you're saying, you know, we have a right to hear information from another speaker and that speaker is impeded from speaking to us and participating in our forums and allowing us to publish their books [00:07:32] Speaker 00: Isn't this really more akin to that line of cases where you are really in effect standing in the shoes of a third party asserting their rights? [00:07:43] Speaker 02: I don't think so, Your Honor. [00:07:45] Speaker 02: And we don't rely on Simon and Schuster for the jurisdictional point so much as for the point that as a publisher, Cato is just as much a First Amendment speaker as the author is. [00:07:54] Speaker 02: I think that answered that part of the question. [00:07:57] Speaker 02: But Cato doesn't just want to receive information. [00:08:00] Speaker 02: It's not just raising the rights of third parties. [00:08:04] Speaker 02: The amended complaint specifically alleges in paragraph 45 that Cato has found that the most effective way to convey its own message [00:08:11] Speaker 02: is to be able to present these sort of testimonials from defendants, from people who participated in the criminal justice system. [00:08:19] Speaker 02: And it wants to engage in that speech, not just to hear it for itself, but to broadcast it, to host events, to speak in its own right, telling these stories. [00:08:29] Speaker 00: Well, one of the cases that you cite in support is the Pitt News cases from the Third Circuit. [00:08:37] Speaker 00: in what the Pitt News does and what we have done in cases like American Library Association v. Odom, which is not a case that either party cited. [00:08:51] Speaker 00: But those cases say you have to also look at prudential standing because you're having someone in effect standing in the shoes [00:09:06] Speaker 00: of the real party in interest, so to speak. [00:09:10] Speaker 00: And so you have to look at things like whether that other person is really hindered in bringing their own suit. [00:09:21] Speaker 00: And I don't see any allegations in your complaint that say that. [00:09:26] Speaker 00: And also you have to ensure that there's a complete alignment of interests [00:09:32] Speaker 00: of the plaintiff with this other absent party. [00:09:37] Speaker 00: And that also concerns me because you say in your reply brief that you can prevail even if the settlement agreements get blown up, so to speak, and invalidated, you'll still get relief. [00:09:55] Speaker 00: But if that happens, if that were to be the result of this lawsuit, [00:10:00] Speaker 00: these third parties will be worse off than they are now, and so your interests aren't aligned. [00:10:07] Speaker 00: So why shouldn't I be concerned that granting standing for you is not consistent with the Pitt News line of precedent or the third party standing precedent in the Supreme Court in our court? [00:10:27] Speaker 02: So two responses, Your Honor. [00:10:29] Speaker 02: One, I think the question of whether a ruling in our favor would blow up all of these settlement agreements across the board, again, goes to the question of whether we could receive a facial or an as applied remedy when we get to the merits. [00:10:42] Speaker 02: I continue to disagree that under the Kuntz case, the result of any First Amendment ruling would be to blow up these agreements, as opposed to just restraining the SEC from enforcing its unconstitutional condition. [00:10:53] Speaker 02: But I also disagree, Your Honor, that the Pitt News cases are solely third-party standing cases. [00:10:59] Speaker 02: In Pitt News, the Third Circuit said the newspapers didn't have third-party standing, that the alcohol retailers could perfectly well have litigated under their own rights. [00:11:09] Speaker 02: But because the newspaper was a publisher that wanted to publish these advertisements, it had standing in its own right. [00:11:16] Speaker 02: And I think Cato's in exactly the same position. [00:11:19] Speaker 02: In Pitt News, there was no evidence in the record that I saw in the opinion that the regulation had even been enforced against these retailers. [00:11:26] Speaker 02: The retailers, out of an abundance of caution, were complying with the regulation. [00:11:31] Speaker 02: As a result of complying with the regulation, the newspapers could no longer run their act. [00:11:35] Speaker 00: But I guess to me, the bigger point with Pitt News is that the court did feel that it was duty bound to undertake the prudential standing analysis. [00:11:45] Speaker 00: And if we also believe that we are duty bound to undertake that analysis. [00:11:52] Speaker 00: And what we said in Odom was that if the plaintiff may have a conflict of interest with the absent party, we held, and that was a basis for the holding, that there was no standing. [00:12:15] Speaker 02: Oh, again, two responses, your honor. [00:12:17] Speaker 02: One, I'm not sure the extent to which prudential standing continues to be operative after the Supreme Court's Lexmark decision. [00:12:24] Speaker 02: But again, I don't think there is a conflict. [00:12:26] Speaker 04: Also, it's paycheck decision to Yes, your honor. [00:12:30] Speaker 02: But setting setting aside actual standing, which I don't understand the SEC to a graze. [00:12:36] Speaker 02: I [00:12:37] Speaker 02: don't know that there is a conflict, at least as to the people who have specifically told the Cato Institute that they want to speak at its events. [00:12:45] Speaker 02: And again, I just think this goes to the question of whether we'd be entitled to a facial remedy as to all of these agreements or an as applied remedy as to Cato's events and the people who want to speak at Cato's events. [00:12:57] Speaker 03: And just- Why does that solve Judge Wilkin's problem? [00:13:03] Speaker 03: even if there's a narrow targeted as applied remedy, Cato is helped only if there is some speaker who comes to Cato's events and publicizes the alleged SEC overreach. [00:13:24] Speaker 03: And when that happens, [00:13:27] Speaker 03: as to that defendant, the SEC would seem to be well within its rights to go back to the court and say this defendant has breached our agreement and we now want to proceed with enforcement. [00:13:41] Speaker 02: Well, I think that's where the declaratory judgment would come into play, Your Honor, that I don't understand the SEC's position to be that if we obtain a declaratory judgment in this case, they will nonetheless punish people for speaking at Cato's events. [00:13:56] Speaker 02: I understand their position to be that if they're unable to enforce these, they will assert a broader right to reopen for whatever reason, any settlement agreement that they want to, not that they can say, [00:14:08] Speaker 02: this person has said bad things about our prosecution, and therefore, despite the declaratory judgment says it would violate the First Amendment for punishing them for speaking at Cato's event, they can still be punished for speaking at Cato's event. [00:14:22] Speaker 04: What seems to me lost in this whole discussion, including in the briefs, is the fact that we're not dealing with simply an agreement between the SEC [00:14:33] Speaker 04: and a private individual. [00:14:35] Speaker 04: A consent decree is a judgment that a court enters. [00:14:41] Speaker 04: And there's a rule that says when a court enters a judgment and you violate it, you're in contempt of court. [00:14:48] Speaker 04: And it seems to me that a looming question here is how can one court order another court's decree [00:15:00] Speaker 04: to not be followed. [00:15:03] Speaker 04: Wouldn't you have to go back to the judge of the district court that issued the consent decree and get them to modify it? [00:15:12] Speaker 04: Isn't that the only way that that can be changed? [00:15:15] Speaker 02: No, Your Honor. [00:15:16] Speaker 02: And I just want to be clear at the outset that this is actually a factual dispute between the parties that hasn't been resolved. [00:15:22] Speaker 02: The SEC contends, and I say I'm over my time, [00:15:25] Speaker 02: The SEC contends that all of these gag provisions have been incorporated into consent judgments. [00:15:30] Speaker 02: They've been incorporated by reference. [00:15:32] Speaker 02: That is not correct. [00:15:33] Speaker 02: And we collect a number of examples in our opening brief at footnote two. [00:15:37] Speaker 02: So there are at minimum a large number of these that are not actually part of a consent decree. [00:15:43] Speaker 02: They're just an agreement the SEC has entered into that has not been incorporated into the final judgment of any court. [00:15:49] Speaker 00: But there is one that's attached from the District of New Jersey. [00:15:56] Speaker 00: in which it's at JA 59, in which it is incorporated into the judgment. [00:16:07] Speaker 00: And so, or at least there's, I guess there's a consent, there's a consent, [00:16:22] Speaker 00: I guess it's a consent document, I'm not sure exactly how to characterize it, that's filed. [00:16:30] Speaker 00: But I think to Judge Randolph's point, isn't there at least a possibility that our declaration is going to conflict with an order that has been entered [00:16:50] Speaker 00: by another court that's not even in our circuit? [00:16:54] Speaker 02: I don't think so, Your Honor, and that's because final relief in this action would have to be entered based upon a record. [00:17:00] Speaker 02: And I don't think even the judgments that incorporate the consent order amount to a continuing judgment of another court. [00:17:09] Speaker 02: But even if I'm wrong about that, we've established that there are a number of these that are not incorporated in any kind of consent decree actually entered by an Article III judge. [00:17:19] Speaker 02: And our relief could simply be limited to saying that to the extent that that matters, [00:17:24] Speaker 02: The relief is limited to these people that the plaintiff has identified whose gag provision is not incorporated. [00:17:30] Speaker 04: If it's not incorporated, then what's the consequence of an individual not following it? [00:17:37] Speaker 04: It's just a breach of contract and the SEC is entitled to what? [00:17:41] Speaker 04: Damages? [00:17:42] Speaker 02: I believe the SEC would take the position that even if they have not been formally incorporated, that they're still going to retain their full panoply of rights to defend them. [00:17:52] Speaker 02: The SEC could certainly say that that's not the case and they don't have the right to enforce them, but I don't understand the SEC who have ever taken a position that they have fewer rights to punish people for their speech, depending on whether it's been formally incorporated into a judgment. [00:18:08] Speaker 03: There's no judgment. [00:18:13] Speaker 03: make no law restricting freedom of speech. [00:18:19] Speaker 03: What is a contract? [00:18:23] Speaker 03: Can a contract be a law restricting freedom of speech for First Amendment purposes? [00:18:29] Speaker 03: The party has a right to speak and contract it away. [00:18:33] Speaker 03: That doesn't seem like a First Amendment violation. [00:18:37] Speaker 02: Again, Your Honor, I think we're racing ahead to the merits, but I do think it can be if the executive is using the full panoply of its powers to coerce people into surrendering their First Amendment rights. [00:18:48] Speaker 02: And the case to look at here is really the Fourth Circuit's decision from last year in the Overbeat case, which is on all fours with this case. [00:18:55] Speaker 02: It was a challenge to a very similar city of Baltimore policy of demanding gag orders as a condition of settlement. [00:19:02] Speaker 02: And really, the only difference is here we have substantial allegations that [00:19:06] Speaker 02: specific people would speak at our events and be quoted in our publications. [00:19:11] Speaker 02: And Overby, the Fourth Circuit, found standing based on a single allegation that was one sentence long about the difficulty of affect the policy impeded the newspaper's ability to carry out the important role the press plays. [00:19:26] Speaker 02: We have more here than Overby did. [00:19:27] Speaker 02: Overby recognized that demanding settlements like this, that demanding gag orders like this can violate the First Amendment. [00:19:34] Speaker 02: and that third party newspapers have standing to see forward looking for relief to challenge them. [00:19:39] Speaker 00: But in Overbee, you also had the person who had signed the settlement agreement as a co-plaintiff. [00:19:49] Speaker 00: And the court clearly had jurisdiction over the Baltimore Police Department as the District of Maryland and the Fourth Circuit. [00:20:01] Speaker 00: So, [00:20:03] Speaker 00: You didn't have a problem where the speaker who was directly regulated wasn't before the court. [00:20:11] Speaker 00: There wasn't a potential for conflict of interest and there wasn't a potential for getting crosswise with another court's order. [00:20:19] Speaker 02: Respectfully your honor. [00:20:20] Speaker 02: I disagree the there was a person in that case who was subject to one of these orders but in considering the Baltimore Brews standing for forward-looking declaratory relief as to other people the Fourth Circuit had to specifically find it head-standing to seek that forward-looking relief and it was very specific that that forward-looking relief was based on this one one-sentence allegation and it was the right to Challenge these orders more broadly than just the one plaintiff who was before them [00:20:51] Speaker 00: Any other questions from the panel? [00:20:54] Speaker 00: No. [00:20:54] Speaker 00: All right. [00:20:55] Speaker 00: Thank you, Mr. McNamara. [00:20:56] Speaker 00: We'll give you some time on rebuttal. [00:20:59] Speaker 00: We'll hear from Mr. Berger. [00:21:01] Speaker 01: Good morning, and may it please the court, Jeff Berger for the Securities and Exchange Commission. [00:21:06] Speaker 01: The district court correctly ruled that the Cato Institute lacks Article III standing to launch a broad programmatic challenge to the commission's use of contractual no-deny provisions and consent judgments. [00:21:20] Speaker 01: And to be clear, Cato Institute, the plaintiff, has not entered into a consent judgment with the commission that binds it or creates any legal consequences for its speech. [00:21:31] Speaker 01: There is no legal obstacle to Cato publishing a book or hosting seminars or hosting conferences. [00:21:38] Speaker 01: Rather, to Judge Wilkins' point, this is a third-party standing case, because Cato premises standing on a derivative injury. [00:21:46] Speaker 01: namely that unnamed defendants who previously entered into consent judgments and who are not before the court are declining to speak. [00:21:55] Speaker 01: This theory of standing fails because it is based on the subjective chill of non-parties who have not even been identified. [00:22:04] Speaker 01: To Kato's challenge the way the commission settles cases, there's no legally cognizable injury that's concrete, particularized, in actual or imminent. [00:22:12] Speaker 01: And under this care, this courts and Supreme Court precedent in cases like United Presbyterian and layered an American Library Association and I'm referring to American Library Association fee bar, not the case Judge Wilkins was referring to [00:22:26] Speaker 01: Cato is stating, and I have emphasis on what it states in its reply, it says that Cato's injury is that people are refusing to speak because the commission could move to vacate the consent judgments, emphasis on could move, if there's a public denial of allegations. [00:22:43] Speaker 01: There is no other consequence that could result from a breach under these contracts. [00:22:48] Speaker 03: Are you saying there's no reasonable likelihood that if, [00:22:54] Speaker 03: settling defendants start broadcasting their stories to the world that the commission won't exercise its right to continue with enforcement against them? [00:23:06] Speaker 01: I think it depends on a large number of facts and circumstances. [00:23:10] Speaker 01: And we both us and the SEC and this court have been deprived of any information [00:23:16] Speaker 01: regarding those facts and circumstances. [00:23:18] Speaker 01: Let me walk through some of them. [00:23:20] Speaker 01: One is, what is the nature of the case? [00:23:22] Speaker 01: Two is a very practical matter and something that really is something that could drive the train is how old is the case? [00:23:28] Speaker 01: What court entered the case? [00:23:30] Speaker 01: What were the remedies in the case? [00:23:34] Speaker 01: We don't know for certain. [00:23:37] Speaker 03: There's no doubt. [00:23:38] Speaker 03: But usually, [00:23:42] Speaker 03: usually we assume people will or governments will enforce laws or in this case consent decrees, right? [00:23:54] Speaker 03: It's the unusual case, the Poe versus Allman kind of case where there's a law on the books, but [00:24:01] Speaker 03: the possibility of enforcement is shown to be very remote and that has consequences for standing or rightness purposes. [00:24:09] Speaker 03: No reason to think that the SEC is insisting on these provisions in its settlement contracts just with indifference to whether defendants broadcast. [00:24:26] Speaker 01: It's not with indifference, but it is with a recognition of reality that depends on circumstances. [00:24:31] Speaker 01: For instance, a case where the defendant publicly denies the allegation six weeks after the settlement is entered is going to be a different calculus for the commission about relitigating the case, or I should say attempting to relitigate the case, than something that happens 16 years later. [00:24:47] Speaker 01: The commission has to make a decision, again, if there's a public denial. [00:24:52] Speaker 01: Does it want to dedicate its current resources to re litigating a past case? [00:24:57] Speaker 01: Does it think, for instance, that the evidence is still attainable, memories are still there? [00:25:02] Speaker 01: Are the attorneys who litigated the case, do they still even work at the commission? [00:25:05] Speaker 01: As well as the fact is, what is a district court going to respond to a commission attempt [00:25:10] Speaker 01: To reopen a relitigate an old case and my point here is not that this won't occur Is that we don't know anything about these particular cases and this gets to the problem with the subjective chill nature of this case It's one thing if the plaintiff who is bringing the case has a subjective chill issue That's where cases like Laird and United Presbyterians say that there's no standing but here it's even more complicated [00:25:35] Speaker 01: It's even more complicated because we haven't been given any information about the unnamed defendants who are not the plaintiffs. [00:25:42] Speaker 04: I don't understand what you mean by subjective chill. [00:25:46] Speaker 04: If an individual is under a consent decree or has signed a contract, a settlement contract, there's nothing subjective about that if there's a clause in there that says you can't criticize the SEC. [00:26:00] Speaker 04: What's subjective about that? [00:26:02] Speaker 01: I mean, I think it's subjective because it's a refusal to speak based upon a guess or a view about what could occur in the future in terms of whether the commission would actually seek its contractual agreements as well as whether a court would grant it. [00:26:19] Speaker 04: But that's talking about what the commission's going to do, not what the individual's reaction to a clause restraining them from talking. [00:26:28] Speaker 01: I'm sorry, I didn't mean to cut you off. [00:26:31] Speaker 04: Yeah, go ahead. [00:26:31] Speaker 01: No, no, I mean, and this gets to the question that is at the core of cases like Laird and United Presbyterian is, is there immediate threat of concrete action? [00:26:39] Speaker 01: And this gets to the problem with the allegations in the complaint. [00:26:43] Speaker 01: There is no allegation of an immediate threat of concrete action with regard to these particular defendants that Cato is saying are refusing to speak to it. [00:26:54] Speaker 01: All you have in Cato, particularly its reply brief, places an enormous amount of emphasis on a single allegation. [00:26:59] Speaker 01: It's a JA-12, it's paragraph 30. [00:27:01] Speaker 01: And all they say is upon information and belief, and let's just assume the court accepts an information and belief allegation of this sort, is that the commission has demanded that other former defendants, former defendants with whom Cato has no relationship, that the commission has issued retractions. [00:27:18] Speaker 01: Now, I'm not quite sure what issue retractions mean, but that is a far step from the commission having taken any concrete immediate present action [00:27:27] Speaker 01: with regard to the particular unnamed defendants that Cato has talked about. [00:27:32] Speaker 04: It is a fundamental part of free speech law that if an individual was subjected to a law, in this case, a consent decree that restrains their speech, they don't have to violate it first before they can challenge it. [00:27:48] Speaker 04: And that's unlike other areas of the law, but with respect to First Amendment free speech, that is a standard boiler or a standard, you know, black letter rule that you don't have to violate it before you can challenge it. [00:28:04] Speaker 04: So why should Cato be under any kind of difference constraint? [00:28:07] Speaker 01: Because I think this has everything to do with the difference between a statute and the contractual remedy. [00:28:11] Speaker 01: I absolutely accept your point, Judge Randolph. [00:28:14] Speaker 01: about a statute. [00:28:15] Speaker 01: And if this was simply a, you cannot say X, I agree that in cases there's a presumption that if there is a violation of X, if you've said X, that the agency charged the authority to enforce is going to bring an enforcement action. [00:28:30] Speaker 01: You can assume that. [00:28:31] Speaker 01: But here in a contractual provision where the commission may not exercise its rights and a court has to basically approve it to bring a case back, it's a different circumstance. [00:28:40] Speaker 01: And I do think this brings up both the prudential- [00:28:43] Speaker 03: On the specific question of likelihood of enforcement, why does it matter that the obligation arises by contract rather than by statute? [00:28:53] Speaker 01: I think it makes a huge difference in terms of whether the commission, in terms of what Cato has alleged the commission has done, whether the commission will actually seek the remedy, particularly when we don't know anything. [00:29:05] Speaker 01: Again, the court is being given a broad programmatic challenge without any facts with regard to a particular consent [00:29:12] Speaker 01: that there are circumstances where the commission may simply let the speech go and may not do anything. [00:29:17] Speaker 01: I think when a statute says you can't do X, the commission does not have that liberty to sort of say, well, we're just not going to enforce the law. [00:29:24] Speaker 01: And I grant you prosecutorial discretion. [00:29:26] Speaker 01: I grant all that. [00:29:27] Speaker 01: But it is still different that there are circumstances where the commission may simply decide it is not worth either its time or the court's time to attempt to relitigate a very old case. [00:29:37] Speaker 01: But I do think the prudential considerations that Judge Wilkins raised, as well as the sort of comedy invasion of another court's jurisdiction issue, that does factor in here. [00:29:48] Speaker 01: And it factors in the following way, which is if the commission does decide, meaning if these unnamed defendants were to speak and the commission were to actually determine that it wants to seek its contractual remedies, one is the commission, again, would have to bring a motion pursuant to the terms of the consent judgements. [00:30:08] Speaker 01: It would be, at that time, the plaintiffs, the individuals who signed the consent judge, I don't need to say plaintiffs, the unnamed defendants who signed the consent judge, would have an opportunity before that court to make any arguments they want, including the types of First Amendment arguments you'd have here. [00:30:24] Speaker 01: That would be in a more specific way. [00:30:27] Speaker 01: The issues would be more clearly presented. [00:30:30] Speaker 01: But also it's not asking this court, which is what Cato is doing, is to basically invade the jurisdiction of every single court that has entered a consent judge. [00:30:39] Speaker 01: And I do think it's important to talk about the fundamental mismatch between what Cato is asking for here and the injury it claims. [00:30:47] Speaker 01: So Cato, for instance, is asking for an injunction against all future no-deny provisions, but it's not claiming an injury related to future consent judgments or future no-deny provisions. [00:30:57] Speaker 01: nor does it claim any injury from past consent judgments signed by other defendants who may not actually wish to deny. [00:31:04] Speaker 01: They may not wish to have their settlements changed. [00:31:06] Speaker 01: They like their settlements. [00:31:07] Speaker 01: They like to keep it in the rear view mirror. [00:31:10] Speaker 03: As to the prudential arguments you're making that really what's going on here is we have a plaintiff asserting the rights of third parties. [00:31:22] Speaker 03: Yes. [00:31:24] Speaker 03: That may be a good argument, but it's a prudential standing argument. [00:31:29] Speaker 03: And pretty clear after June medical that prudential standing arguments are forfeitable. [00:31:35] Speaker 03: And you've argued this issue solely in Article III terms. [00:31:42] Speaker 01: I disagree with that, Your Honor. [00:31:43] Speaker 01: On our motion to dismiss, we certainly raised prudential arguments. [00:31:47] Speaker 01: We talked about it not only in terms we're talking about now in terms of the ability [00:31:52] Speaker 01: of the unnamed defendants to have a day in court, but also in terms... Not in the red brief. [00:31:59] Speaker 01: No, we did talk about prudential standing in the red brief as well. [00:32:02] Speaker 01: In particular, we talked about in terms of... On page 19 of our brief, we talked about the skepticism courts have in a prudential jurisdiction context about allowing plaintiffs to advance claims based on contracts to which they're not parties or intended beneficiary. [00:32:21] Speaker 01: The Prudential Standing issue also, you know, comes into play as part of the sort of comedy analysis that comes, you know, more granted in terms of our rightness argument. [00:32:32] Speaker 01: I mean, I do take your point. [00:32:33] Speaker 01: Look, Prudential Standing has obviously changed in the past few years. [00:32:37] Speaker 04: Is Prudential Standing constitutional? [00:32:41] Speaker 01: No, it is not. [00:32:43] Speaker 04: In my view, I don't view... What I meant by that is that where does the Supreme Court get the authority to deny jurisdiction over a matter that Congress said is within the jurisdiction of the federal courts? [00:32:58] Speaker 04: Is that constitutional for the Supreme Court to do that? [00:33:02] Speaker 04: That's what's driving these cases. [00:33:06] Speaker 04: The Indian casino case that I mentioned is a perfect example of that. [00:33:11] Speaker 01: I mean, look, it's a great question. [00:33:15] Speaker 01: It's an interesting question. [00:33:16] Speaker 01: Ultimately, I think this court can decide this case on Article III grounds without dealing with that difficult question, which probably goes back to what the Supreme Court's authority is. [00:33:25] Speaker 04: Let me ask you a broader question here because we're arguing back and forth and I said earlier that it's hard to separate the merits out from the question of standing but is this case really analogous to something like Bellevue Hood where the Supreme Court held that you just you don't throw a case out on jurisdictional grounds simply because it appears that the individual will not be able to recover and Bellevue Hood was what 20 years before [00:33:54] Speaker 04: Bivens. [00:33:56] Speaker 04: You know, the claim was that you can get dirt damages under the Fourth Amendment and the court threw it out on jurisdictional grounds. [00:34:03] Speaker 04: Isn't that really what we have here? [00:34:06] Speaker 04: I mean, Cato has an injury, it claims redressability, and it claims causation. [00:34:14] Speaker 01: I mean, we... Sorry, Judger. [00:34:16] Speaker 04: Yeah, go ahead. [00:34:17] Speaker 01: No, I mean, we sharply disagree with all three of those. [00:34:19] Speaker 01: Cato doesn't have an injury here. [00:34:21] Speaker 01: Cato has a derivative injury that's based on [00:34:25] Speaker 01: basically the chill of third parties about whom we know nothing without any allegations of where there would be a claim of specific present objective harm other than the chill or any specific action that's threatened or even contemplated against them. [00:34:40] Speaker 01: Obviously nothing can be threatened or contemplated against them. [00:34:42] Speaker 01: We don't even know who the people are. [00:34:45] Speaker 01: And that's Cato's litigation tactic that they chose, which is to bring a broad programmatic challenge without giving the court the ability to ferret out what's really going on in the sense of what are the consensual? [00:34:55] Speaker 01: When were they? [00:34:56] Speaker 04: If that's your problem, you can have jurisdictional discovery. [00:35:01] Speaker 01: I mean, that is one of several problems that we don't know the identity of people, which is required by cases like Friends of Earth and Summers. [00:35:11] Speaker 01: But even if that were to be provided, you still have the problem that there's absolutely no allegation in a complaint, which we take as it is, [00:35:18] Speaker 01: that the commission has contemplated or threatened any action, and that is what the Supreme Court requires in Laird. [00:35:27] Speaker 01: But if we're talking about the sort of, you know, fundamental sort of take a step back issues, I mean, I think the Supreme Court has also been real wary of accepting programmatic level challenges where the injury is not direct to the plaintiff, which is what we have here, because Cato is not subject to a consent judgment, but instead is advocating the views [00:35:48] Speaker 01: in essence, someone else without having done their work. [00:35:52] Speaker 01: I'm almost out of time. [00:35:54] Speaker 01: I did want to talk about Woodhall and Pitt News, but. [00:35:58] Speaker 03: Well, let's assume we disagree with you on the reasonable likelihood of enforcement as against the one speaker they have. [00:36:15] Speaker 03: I thought, so then you make a different argument, which is that the only restraint at issue runs against the third party defendant who's not before us and Cato is free to publish. [00:36:35] Speaker 03: So I was wondering about that. [00:36:37] Speaker 03: I mean, isn't a fair reading of the complaint that [00:36:44] Speaker 03: Cato is bound not to publish because the third party can't speak. [00:36:52] Speaker 03: They're not really clear about this, but it seems like a reasonable reading of the complaint is that the third parties are going to Cato and saying, here's information. [00:37:08] Speaker 03: You can know about it, you can get legal advice about whether this is a lawful restraint, but we are not authorizing you to publish it to the world. [00:37:19] Speaker 03: I mean, it's an interesting facet of the complaint, right, which is that Cato only... Sorry, just your response to that is to say that Cato faces no exposure [00:37:37] Speaker 03: vis-a-vis the commission, which is clearly true, but they might face exposure vis-a-vis the third party if the third party has told Cato, we're giving you this information, but we're not authorizing you to publish it. [00:37:51] Speaker 01: I mean, if the argument that Cato's injury is that their contract with the author could somehow be disrupted, I mean, they entered into that contract, according to their own allegations, knowing full well about the near-denial provision, [00:38:04] Speaker 01: But if this is more asking a question sort of about the Overbay case, and the idea of sort of the ability to receive information, I mean, Cato is fully obviously alleged that they were able to receive the information, and that distinguishes Cato from the newspaper or the magazine that was involved in Overbay, where the whole outage- It's the ability to publish information. [00:38:28] Speaker 01: That's not how the Fourth Circuit articulated the injury, and that's not how the Baltimore Brew articulated it. [00:38:34] Speaker 03: Why isn't that the right way of thinking about it? [00:38:38] Speaker 03: They have information, they want to publish it, and they can't because of the restraint you all have imposed on the third party who gave them the information. [00:38:52] Speaker 01: But if you think about it that then again it moves the injury [00:38:55] Speaker 01: from Cato's injury back to the derivative injury of the third person, of the third party. [00:39:00] Speaker 01: So we're back to the whole line of chill cases and Laird and United Presbyterian. [00:39:05] Speaker 01: It moves away from what the issue was in Overday. [00:39:07] Speaker 03: I mean, I guess I'm just trying to figure out if you have a level of defense besides [00:39:15] Speaker 03: Number one, third party standing and number two, unlikely hood of enforcement of the SEC enforcing against the third party or are those your two? [00:39:25] Speaker 01: No, no, no. [00:39:26] Speaker 01: I mean, I think there's issues with actual or eminence, but then those also bleed over into traceability and redressability. [00:39:32] Speaker 01: Traceability is because of the large number of events that have to occur. [00:39:35] Speaker 01: And part of redressability is, let's just talk hypothetically, if the court were to grant the broad relief that's being sought here, in essence, the line iteming, the consent judgments of the individual unnamed defendants, the commission may not want those settlements anymore. [00:39:48] Speaker 01: It may seek to vacate them, which leaves those unnamed defendants in the exact same position, which is that the commission has the option, not the obligation, but the option to ask a court to undo what has come before. [00:40:00] Speaker 01: an option that a court may very well say, nope, sorry, you're out of luck, commission. [00:40:04] Speaker 01: We're not going to let you re-litigate the case. [00:40:07] Speaker 01: I'm well over my time, so. [00:40:12] Speaker 00: All right, are there further questions from the panel? [00:40:15] Speaker 00: All right. [00:40:16] Speaker 00: Mr. McNamara, you are out of time. [00:40:19] Speaker 00: We'll give you two minutes for rebuttal. [00:40:22] Speaker 00: I have a question that I forgot to ask during your opening. [00:40:26] Speaker 00: So let me begin by just asking that. [00:40:30] Speaker 00: What are the limits to the principle you want to establish here? [00:40:36] Speaker 00: So suppose Cato or some other [00:40:39] Speaker 00: entity were interested in waste, fraud, and abuse in the government, whether it's the courts, Congress, executive branch. [00:40:47] Speaker 00: And they say, we'd like to hear from law clerks, congressional aides, government officials about waste, fraud, and abuse. [00:40:57] Speaker 00: But there are all these rules and regulations that prevent them from speaking to us. [00:41:04] Speaker 00: And they could get fired, or there could be [00:41:08] Speaker 00: you know, there could be ramifications. [00:41:12] Speaker 00: So, you know, we want to be able to challenge each and every one of those regulations as, you know, because it's impeding our First Amendment rights to kind of be able to effectively advocate against waste, fraud and abuse, etc. [00:41:32] Speaker 00: My problem is, is that [00:41:34] Speaker 00: If we accept standing for Cato here, don't we just open the floodgates for anyone who wants to publish speech of someone affected by a government regulation to be able to indirectly challenge each and every regulation like that? [00:41:58] Speaker 02: I think we'd have two problems bringing in that lawsuit, Your Honor. [00:42:02] Speaker 02: One, a factual problem. [00:42:04] Speaker 02: We'd have to be able to identify the particular speaker who has written a book and come to us and said, you can publish this book full of confidential information, which is going to be a difficult factual thing to find, because at that point, the law clerk or other government employee has already breached his duty. [00:42:20] Speaker 02: And so I don't think we'd be able to find and plead that we had the actual speaker [00:42:24] Speaker 02: And we'd have a merits problem where I think there's a very different First Amendment calculus between the government saying in exchange for us giving you access to this confidential information, you have to promise not to disclose the confidential information and saying in exchange for us letting you plead to count one, you have to promise never to question the accuracy of count two. [00:42:42] Speaker 02: I just think that the First Amendment calculus would be different. [00:42:45] Speaker 02: But the standing problem I see there would be a factual problem much more than it would be a legal problem. [00:42:50] Speaker 02: I can't imagine a plaintiff having the sort of concrete speakers that we have here. [00:42:55] Speaker 02: If I could make just two quick points on rebuttal, I think this is not a subjective chill case. [00:43:00] Speaker 02: The subjective chill cases like Laird and American Library Association, VBAR, all involve plaintiffs who it wasn't clear they were even going to engage in activity that would be illegal under the law. [00:43:11] Speaker 02: Here we have people who have specific agreements that say they specifically may not say these specific things. [00:43:17] Speaker 02: And the only way to say them is to risk expensive litigation, which I think the Supreme Court and SBA list made clear, we can't expect people to choose between engaging in protected speech and retaining attorneys for potentially extremely expensive litigation. [00:43:33] Speaker 02: And second, your honor, my friend complained several times that the record before us doesn't identify each speaker. [00:43:39] Speaker 02: And I just want to stress again that this is a remedy problem. [00:43:42] Speaker 02: We're up here on the pleadings. [00:43:44] Speaker 02: And of course, before a court enters a declaratory judgment, it will have a full record before it of who has contacted Cato and exactly what they're willing to say. [00:43:51] Speaker 02: And at that point, I think we can wrestle with any of these problems. [00:43:55] Speaker 02: And I'm happy to do that there. [00:43:56] Speaker 02: I don't think it's a 12B ground for dismissal. [00:43:59] Speaker 02: Thank you. [00:44:01] Speaker 00: All right, thank you. [00:44:04] Speaker 00: We have your argument and we'll take the case under submission.