Marijuana and small businesses

November 29, 2016:- In the general election the voters of Massachusetts approved a law to legalize, tax, and regulate marijuana. It was a convincing eight-point win for the legalization campaign: 54% to 46%. In my home town, Amherst, the margin was dramatically larger: 75% to 25%.

How the new law will affect Amherst and the surrounding communities was the focus of a forum I moderated recently for BLAAST (Business Leadership for Amherst Area Strategies) a joint program of the Amherst Area Chamber of Commerce and the Amherst Business Improvement District. To watch the video, click here. To read the related article in Business West, click here.

Given the nature of my practice, a few people have asked me about the effect of legalization  on trademarks, e.g. will marijuana sellers be able to register their trademarks?  Two facts are relevant.

The first is that there trademark owners can protect their marks via state law and federal law. Registering a mark with the state only protects it within that state, of course. For example, I have registered my mark (the flying-V logo) in Massachusetts, the state where I am admitted to practice law. If some lawyer started using the same mark in California and I sued for trademark infringement, my Massachusetts certificate of registration would not be sufficient evidence to afford me an automatic courtroom victory. To have the presumptive exclusive right to use my mark nationwide I would need to register it federally with the United States Patent & Trademark Office (USPTO).

The second important fact is that on the subject of marijuana there is now a clear tension between federal law and state law. In 1970 Congress passed the Controlled Substances Act, which prohibits the cultivation, possession, and distribution of marijuana. The Supreme Court of the United States upheld the statute in 2005, ruling that Congress had the necessary constitutional authority under the Commerce Clause. And although the People of Massachusetts have enacted the Regulation and Taxation of Marijuana Act, Congress has not repealed the Controlled Substances Act.

Nor has Congress amended the federal trademark statute, the Lanham Act. This matters because the Lanham Act only allows the registration of trademarks that are used in connection with lawful activities, which excludes the sale of marijuana (a federal crime). For so long as the Controlled Substances Act and the unamended Lanham Act remain the law of the land, it seems highly likely that the USPTO will carry on refusing to register marks used in connection with the sale of marijuana.

As a result of this federal-state tension, a few constitutional questions come to mind. For example, doesn’t the Supremacy Clause mean that the Controlled Substances Act preempts state law in this field? No. Why not? Because the statute itself expressly says so (section 903, if you’re interested). Nevertheless, couldn’t the federal government compel Massachusetts to enforce the Controlled Substances Act? No. Why not? Because of the Tenth Amendment.

So could the trademark section in the Corporations Division of the Massachusetts Secretary of the Commonwealth allow marijuana sellers to register their marks at the state level? My answer to this question is forthright and unequivocal: it depends.

On the one hand, the applicable state statute prohibits the registration of marks that consist of or comprise “immoral… or scandalous matter.” In view of the voters’ decision to legalize marijuana it seems unlikely that a judge would find that the drug qualifies as immoral or scandalous any more. Under Massachusetts trademark law, therefore, marijuana trademarks are beginning to look registrable.

On the other hand, there is a big difference between not enforcing the federal Controlled Substances Act and positively aiding and abetting its violation, a criminal offense under Section 846. This means that state trademark officials in Boston who register a mark that the applicant expressly uses in connection with the sale of marijuana could face federal criminal charges.

Would that happen? I doubt it? Could it happen? Yes. Some future U.S. District Attorney for the District of Massachusetts prosecuting Secretary of the Commonwealth William F. Galvin for issuing a certificate of trademark registration to owners of, say, BUDS-U-LIKE is not beyond the realm of possibility. At the very least, the idea could serve as the basis for a book, albeit one with very limited appeal destined for rapid remaindered status.

But, more realistically, what if an applicant uses the mark in connection with other products, not just marijuana, and makes no mention of marijuana in the state trademark application? Now that is a much more practical area of inquiry. Stay tuned.

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Peter Vickery, Esq.

SJC: unintentional housing discrimination unlawful

April 13, 2016:- From now on, developers can be sued for housing discrimination in Massachusetts even if they did not intend to discriminate and complied with all applicable laws.

In a major decision, the Supreme Judicial Court (SJC) held that “a disparate impact claim is cognizable even if a defendant who is a private owner adheres to statutory, regulatory, and contractual obligations.”  The case is Burbank Apartments Tenants Association v. Kargman and it is consistent with Justice Kennedy’s majority opinion in Texas Department of Housing and Community Affairs v. The Inclusive Communities Project, Inc.  Like SCOTUS, the SJC rationalized its decision by analogizing to employment law: “[W]e conclude from our employment discrimination precedent that… [the disparate impact] theory of liability is cognizable under G.L. c. 151B, §§ 4(6), (7), and (11).”

For my earlier post on the subject, click here.

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Peter Vickery, Esq.

Court strikes down racial segregation ordinance

February 2016:– It was 100 years ago that the Supreme Court of the United States heard oral argument in Buchanan v. Warley, in which it struck down a Louisville, Kentucky, city ordinance that prohibited Black people from moving to city blocks where the majority of residents were White, and vice versa. The decision, written by Justice William R. Day, was unanimous. There was no dissent, not even from Chief Justice — and former Confederate officer — Edward Douglas White, who had voted with the majority in Plessy v. Ferguson. In observance of Black History Month, and in view of present-day calls for segregation on campus (strange but true), I offer a conspectus of Buchanan v. Warley, an important victory in the struggle for liberty and equality.

The case arose when Post Office employee and part-time newspaper publisher William Warley, who was Black and a leading member of the Louisville NAACP, entered a contract to buy a plot of land from real-estate agent Charles H. Buchanan, who was White. Both men opposed the city ordinance and went to court in order to test its constitutionality. To that end, their contract contained a clause that said the buyer (Warley) would only close the deal if he had the right under the laws of Kentucky and Louisville “to occupy said premises as a resident.” This condition, of course, was one that could not be met, and it provided Buchanan with a basis for asking the circuit court for specific performance, i.e. an order compelling Warley to pay for the property.

Neither the circuit court nor the Kentucky Court of Appeals would order Warley to pay for a property he could not lawfully occupy, reasoning that the ordinance gave Warley a complete defense. So the case went up to the Supreme Court of the United States, with Buchanan arguing that the ordinance could not provide Warley with a defense because it was unconstitutional. This was a situation the ordinance’s drafters had foreseen, and they had designed it with a constitutional challenge in mind.

The ordinance started out as a policy proposal from a Louisville resident by the name of W.D. Binford, who  worked as a manager at a local newspaper. He and his allies knew about the constitutional infirmities that had undone segregation ordinances in Baltimore and elsewhere, and planned a workaround.  For a detailed account of the campaign see Life Behind a Veil: Blacks in Louisville, Kentucky, 1865-1930, by George C. Wright; As Long as They Don’t Move Next Door: Segregation and Racial Conflict in American Neighborhoods, by Stephen Grant Meyer; and Race, Place, and the Law, 1836-1948, by David Delaney.

Binford pitched the enforced-segregation idea to a luncheon gathering of the city’s real-estate agents, a group called the Real Estate Exchange. He suggested a measure free of the flaws that had stymied other segregation ordinances. Perhaps because of the failure in Baltimore, Binford’s speech met with little enthusiasm. But he started organizing, and soon had enough White neighborhood associations on his side to make property-owners and politicians take notice.

So, although initially tepid, many real-estate agents came around to Binford’s suggestion. Not J.D. Wright, however, an officer of the Real Estate Exchange, who appeared alongside William Stewart of the NAACP to argue against the proposed ordinance at the city council hearing. But Wright and Stewart did not prevail. The force that they and other opponents of segregation were battling against was the political equivalent of rampant climate change.

Segregation was on the rise across much of the country, and one of its most ardent advocates, Woodrow Wilson, occupied the White House. In Louisville, Binford and his fellow activists were threatening to throw out any councilors who failed to back their proposal; they were well organized, vocal, and enjoyed the support of the local Democratic newspaper, the Times. Not surprisingly, in view of the grassroots activism, the city council voted 21:0 in favor, and on May 11, 1914, the mayor, a Democrat named John H. Bushemeyer, signed into law a measure titled,

“An ordinance to prevent conflict and ill-feeling between the white and colored races in the City of Louisville, and to preserve the public peace and promote the general welfare by making reasonable provisions requiring, as far as practicable, the use of separate blocks for residences, places of abode and places of assembly by white and colored people respectively.”

Banning Black people from living on the same block as White people was the way to “prevent ill-feeling,” the ordinance declared, so certain provisions were necessary. What sort of provisions? “Reasonable” ones. They did not appear all that reasonable to the members of the NAACP, who set in motion the test case.

When the case reached the Supreme Court, the plaintiff, Buchanan, was represented by three NAACP lawyers, including the organization’s president, Moorfield Storey. This article provides a concise description of Storey’s line of argument and the significance of the Court’s decision (scroll down to the section headed “civil rights and property rights”).

In addition to Storey’s, the NAACP filed an amicus brief written by William Ashbie Hawkins, a Black attorney with a practice in Maryland who “participated in almost every major civil rights case in Maryland during the first quarter of the Twentieth Century… [and] ran unsuccessfully as an independent candidate for the United States Senate [in 1920], a first for a black citizen of Maryland,” according to J. Clay Smith in Emancipation: The Making of the Black Lawyer, 1844-1944. It is worth remembering that Hawkins was born in 1862 in Lynchburg, Virginia — which at the time housed a prison camp for Union POWs — so, although the record is not clear, it is likely that he was born into slavery. Property rights and liberty of contract must have had a powerful import to someone the law had until recently considered to be property with no right to enter into contracts of his own.

The NAACP argued that the ordinance violated the Fourteenth Amendment’s guarantee of equal protection including “the right to acquire and possess property of every kind [and] to dispose of it and to live upon one’s own land.” In a phrase that the Court found persuasive, Storey argued that the ordinance “destroys, without due process of law, fundamental rights attached by law to the ownership of property.”

In response, the attorneys advocating for the validity of the ordinance (ironically, representing Warley) claimed that “the use of property and liberty of contract are subject to reasonable police regulations, and their enforcement does not deprive a person of property without due process of law.” Property rights are not absolute, they contended. After all, cities are free to limit the height of buildings and prohibit billboards in residential neighborhoods: The segregation ordinance was analogous to regulations of that sort, they claimed.

The Court came down on the side of the NAACP.  It acknowledged the government’s police power, noting that “legitimate business may… be regulated in the interest of the public.” But it concluded:

We think this attempt to prevent alienation of the property in question to a person of color was not a legitimate exercise of the police power of the State, and is in direct violation of the fundamental law enacted in the Fourteenth Amendment of the Constitution preventing state interference with property rights except by due process of law. That being the case the ordinance cannot stand.

This Black History Month, I tip my hat to the lawyers and litigants of the NAACP who brought about the decision in Buchanan v Warley.  In particular, I honor the memory of Attorney William Ashbie Hawkins, and William Warley, whose service to justice the Wilson administration saluted by firing from him from his job in the Post Office. May they rest in peace.

Peter Vickery July 2012

 

I can’t believe he didn’t say that!

January 20, 2016: — Yesterday the Supreme Court of the United States denied certiorari in the matter of Sissel v. US Department of Health & Human Services, which means the Court will not hear arguments in the latest challenge to the Patient Protection & Affordable Care Act, also known as Obamacare. When this decision came to my attention I thought, naturally, of Otto von Bismarck.

Recently, I confess, I have been thinking too much about Otto von Bismarck, the statesman who unified Germany, invented the welfare state, and sported a walrus mustache of impressive proportions. This year we mark the 150th anniversary of the first attempt on Bismarck’s life, when a would-be assassin fired five shots into him at point-blank range. Bismarck grabbed the fellow, turned him over to some nearby soldiers, then strolled on home. No wonder they called him the Iron Chancellor. But that Chuck Norris-eque feat is not why I have been thinking about him.

My mind has been turning to Bismarck for two reasons. The first, although it has a constitutional aspect, is more suited to my political blog, VOX VICKERY, so I will not go into it here. The other reason has to do with legislative drafting, a subject on which I teach a course every other semester.

A little while ago, as I set about updating my syllabus, I thought of the old saying, “Laws are like sausages: nobody should see them being made.” If you have heard that expression, you may also have heard that its progenitor was Bismarck. That was my understanding, anyway.

But it was not Bismarck who gave the world the laws-are-like-sausages aphorism, at least not according to Wikipedia, which cites Fred R. Schapiro, editor of the Yale Book of Quotations.  He attributes the statement to one John Godfrey Saxe, a lawyer, poet, and failed candidate for the governorship of Vermont.

What is Mr. Schapiro’s basis for claiming that we owe the phrase not to Otto von Bismarck but, instead, to John Godfrey Saxe?  In his 2008 New York Times Magazine article titled “Quote… Misquote” Mr. Schapiro points to the March 29, 1869, edition of the Daily Cleveland Herald and the March 27, 1869 edition of the University of Michigan’s University Chronicle, both of which credited the phrase to Saxe, who also happened to boast a walrus mustache, albeit not one to rival Bismarck’s (see below, and judge for yourself).

bismarck and saxe

Only Saxe did not say “laws are likes sausages: nobody should see them being made.”  Rather, he said “laws, like sausages, cease to inspire respect in proportion as we know how they are made,” which is similar, but not the same.

The difference between what Bismarck is supposed to have said and what Saxe is supposed to have said is subtle but real.  To say that the more you know about lawmaking the less you respect the law is different from saying that the lawmaking process is something you should not see. The statements are not contradictory, just distinct. Each conveys a meaning separate from the other.

So here is the lesson for legislative drafters. Regardless of whether laws are, in fact, like sausages, they certainly have something in common with quotations: Disputes can arise over their authorship and meaning.

Authorship matters in legislative drafting because not just anybody can enact statutes.  I can’t, for example, and nor can you. The authority to legislate vests in the legislature, although the executive has a role at the end of the process, i.e. signing/vetoing.  Our federal and state constitutions make clear that the executive must not legislate, and nor may the judges. This is what we mean by the separation of powers.

Sometimes it matters which branch of the legislature authors a bill. And that was the issue in Sissel v. US Department of Health & Human Services, the case the Supreme Court declined to decide yesterday. The petitioner, Sissel, alleged that the Affordable Care Act is unconstitutional because it originated in the Senate. Why would that matter? Because all money bills must originate in the House. And how do we know Obamacare was a money bill? Because in NFIB v. Sebelius the Supreme Court ruled that the charge the law imposes on people who do not buy health insurance is a tax.

If a bill creates or varies a tax it is a money bill. QED. Devoted readers may remember that I wrote an amicus brief on this subject last year when the Supreme Judicial Court was resolving a disagreement between the two chambers of the Massachusetts Legislature over the state budget. For a quick refresher, click here.

So authorship is important. Like authorship, meaning is a factor that matters a great deal in legislative drafting. Take, for example, another Obamacare case, King v. Burwell, about whether subsidies are only available to people who bought their health insurance through state exchanges as opposed to federally-established exchanges. The Supreme Court had to decide whether the statutory phrase “established by the state” simply meant what it says or meant “established by the state or the federal government.” The latter, held the Court, even though the relevant part of the statute, section 36B, clearly says “established by the state” not “established by the state or the federal government.”

The Court held that “in context” (two little words that, when placed side-by-side in a judicial opinion, can stop an attorney’s heart) the phrase “exchanges established by the state” could mean all exchanges, not merely those established by the state but also those established by the federal government. Meaning matters, in statutes and quotations alike. As the Court demonstrated in Burwell, a statute’s meaning can undergo a significant shift between Point A when the legislature creates it, Point B when it enters the maw of the judiciary, and post-digestion Point C when it emerges.

Which brings us back to Otto von Bismarck who famously did not say “laws are like sausages: nobody should see them being made.” Seeing laws being made may not be all that appetizing, but seeing them being digested can make you positively green around the gills. You can quote me on that.