BULLETIN
#21 Summer 1998

l FORMER TAFOL PRESIDENT VICTORIOUS IN SUPREME COURT or THE TRUE      MEANING OF THE TAKINGS CLAUSE
l NOTES AND COMMENTS
     Panel at Second Renaissance Conference
     TAFOL on the Web
     Cyber Brief
     Free Speech in Public Schools
l ELECTION OF BOARD MEMBERS AND OFFICERS
l REMINDER

#21 Summer 1998 Page 1

FORMER TAFOL PRESIDENT VICTORIOUS IN SUPREME COURT or THE TRUE MEANING OF THE TAKINGS CLAUSE
By Stephen Plafker

Former TAFOL president Michael Mazzone, one of his clients, and the Washington Legal Foundation have prevailed in the United States Supreme Court in the IOLTA case¹ described in the Winter 1998 issue of this Bulletin. The case involves a Texas program which requires that lawyers place certain of their clients' funds in interest-bearing bank accounts, the interest from which is used to provide legal services to low-income persons.

Their opponents were the members of the Texas Supreme Court and the Texas Equal Access to Justice Foundation (TEAJF), the organization which spends the money taken. Supporting their opponents with amicus curiae briefs were the federal government, the attorneys general of thirty-four states, the Conference of (State) Chief Justices, the Conference of State Governments and a conglomeration of other governmental organizations, The American Association of Retired Persons, eighty-four bar associations, foundations, and funds, and the American Bar Association. Michael was supported by seven amicus briefs. His supporters included the Texas Justice Foundation, the National Right To Work Legal Defense Foundation, the Mountain States Legal Foundation, Defenders of Property Rights, certain members of the Texas House of Representatives, the Attorneys' Bar Association of Florida, the Pacific Legal Foundation, and, of course, The Association for Objective Law.

Michael's claim was based on the "Takings Clause" of the Fifth Amendment² which reads: "nor shall private property be taken for public use, without just compensation." This clause presupposes that the government may take private property by force, but only for a public purpose. Property interpreted, the expression "public purpose" would be synonymous with "governmental purpose," and "governmental purpose" would be determined by reference to the principles found in "The Nature of Government" and in the Declaration of Independence. It would take into account Ayn Rand's definition of rights. Since any taking is in derogation of rights, it could only be done if necessary, i.e., if the government had no alternative. Finally, the owner would have to receive the full cash value for the lost property. One consequence of this last component is that the government could never take money, for under the "just

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compensation" requirement, it would have to give the same amount back.

However, no one on the Court now believes in rights (or at least property rights). Under modern theory, the government may take property for any purpose that benefits a large number of people. To prevail on a claim of violation of the Takings Clause, the victim must show three things: that he has an "interest" in the property, that the government has taken the property, and that he has been denied just compensation. In the IOLTA case, The Supreme Court determined only the first: that Michael's client had the required "property interest."

Chief Justice Rehnquist wrote the majority opinion. His reasoning proceeds as follows. No one disputes that the principal belongs to the client. History shows that Texas follows the common law rule that "interest follows principal." Therefore, any interest earned belongs to the owner of the principal: i.e., the client.

There were two dissents. One, written by Justice Breyer, took the position that federal law prevents the clients from realizing interest from the deposits eligible for the IOLTA program. Therefore, there was no property right for the State to take. The other, written by Justice Souter, concentrated on points not raised in the appeal. (This despite the fact that, under the rules, the parties were not permitted to argue these points.) Justice Souter would have decided the two other issues against Michael and his client. His dissent is apparently an attempt to influence the subsequent progress of the case.

The case has been returned to the lower courts for a determination of the other two issues. Michael will now have to convince the courts in Texas that his client's property was taken and that it had some value. This may require him to show that his client could earn interest on the money.

Richard Pena, President-elect of the Texas State Bar, sent a fax
" blast" to Texas Bar members: "The Supreme Court decision is disappointing, but it by no means signals the end of funding legal services to the poor through IOLTA programs . . . . Darrell Jordan of Dallas, who represented the TEAJF and Texas Supreme Court in the appeal, assured me that the Texas IOLTA program is alive and well and that TEAJF will conduct business as usual."

Two TAFOL supporters and Texas State Bar members replied to this "blast." Dee Tagliavia sent an e-maIl to President Pena: "I for one applaud the Supreme Court's decision. I hope that control over the disposition of property belonging to persons who have sought legal counsel in this and other states will ultimately reside with those persons. Legal services to the poor should be funded voluntarily, not by expropriation. It is of absolutely no significance whatsoever that, unaggregated, the property may have little or no value. What is paramount is the rightful owner's control over that property; and he may legitimately object to the use to which it is put by the Bar."

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Michael sent a letter. It began: "Why would anyone want 'access to justice' if, once granted access, the courts did not respect individual rights and in particular the right to property? The State Bar and the Supreme Court of Texas should not be trying to fund 'access' to justice at the expense (and in violation) of individual rights. The two entities in this State that should be most vigilant in the protection of individual rights---the State Bar and the State's highest court---have done everything in their power to dodge the question: why are you funding legal services using other people's money and without their knowledge and consent?" It went on to conclude that, in light of the Supreme Court decision, the State Bar was "on the wrong side of the issue." As a direct representative of the lawyers, and therefore an indirect representative of the clients, it "should have done what I have done---defend and protect the rights of lawyers' clients in Texas . . . [The State Bar] does not do what it is supposed to do, and does what it is not supposed to do."

The fight continues.
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References:
1. Phillips v. Washington Legal Foundation, 118 U.S. 1925 (1998)

2. Originally, this provision (and the rest of the Bill of Rights) applied to the federal government only; it did not restrict the states. In 1897, the Supreme Court held that the
Fourteenth Amendment made it applicable to the states.

NOTES AND COMMENTS

Panel At Second Renaissance Conference

Jim McCrory led a panel at the Second Renaissance Conference this past July. The purpose of the panel was to discuss several groups advancing positions consistent with Objectivism. Steve Plafker stood in for Americans for Free Choice in Medicine, former Board member Tom Bowden represented TAFOL, and Robert Tracinski, editor of The Intellectual Activist, stated the position for a new organization he is organizing as a successor to the Committee for the Moral Defense of Microsoft. After each representative gave a brief description

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of his organization, the meeting was opened to questions from the audience.

TAFOL On The Web

The Association for Objective Law now has a web site at http://www.nationweb.com/tafol. Included at the site are a description of TAFOL, its purpose, principles and program. Also at the site is an e-mail information request form. Articles, op-ed articles and news items will be added to the site from time to time.

Cyber Brief

Reminiscent of Radio Free Europe broadcasts of Georgi Markov's memoirs (a dissemination that provoked the "umbrella murder" of Bulgaria's Solzhenitsyn), a new human rights Web site, the Digital Freedom Network, has published, uncensored, Bao Ge's anti-oppression letter to the Chinese government. The letter, addressed to President Jiang Zemin, espouses a political system in which the Chinese people would be the masters of their country and calls for a free press. Bao Ge, who was recently escorted out of China, was on hand for the debut of the new site. He stated that because opponents of China's communist government are not allowed to be heard, "attempts by the Digital Freedom Network to break through such censorship are extraordinarily significant."

The site (www.dfn.org) currently contains several works from dissidents in China, Kenya, and Cuba, among other countries. According to a New York Times online report, the most poignant of these are a number of prison journals. The journals and other materials, including materials supplied by other on-line sources for republication, are intended to make the Digital Freedom Network a one-stop-shop for banned works. The instigation for the creation of the site and over $1 million in funding comes from Howard Jonas, founder and chief executive of a New Jersey-based Internet telephony company.

Free Speech in Public Schools

Nine students at Killian (Florida) High School distributed a 20-page pamphlet with derogatory comments ridiculing the black principal based on his race. The students were suspended from school and then arrested and charged with a felony under a 1945 Florida criminal libel law (apparently modeled after The Sedition Act of 1798) prohibiting anonymous material that "tends to expose any individual or any religious group to hatred, contempt, ridicule or obloquy." Florida's hate crime law raised this first degree misdemeanor (apparently disrupting the

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school) to a third degree felony carrying a penalty of up to five years in prison. Fortunately for free speech, the state attorney dismissed the charges based on her belief that the statute was unconstitutional because of recent court decisions. However, she said it was a difficult decision due to the highly offensive nature of the material. It should not have been a difficult decision. It is precisely content that the government may not regulate (as discussed by the U. S. Supreme Court in R. A. V v. City of St. Paul, Minnesota (1992) even though the content is reprehensible. It is precisely unpopular speech that the First Amendment to the Constitution is intended to protect, for popular speech needs no protection.

Election of Board Members and Officers

The Association for Objective Law is pleased to announce the election of its Board of Directors and officers for the year, August 1998 through July 1999:

Board members:
James McCrory, an attorney in private practice in New Mexico;
Michael Conger, an attorney specializing in tax and employee benefits law with the firm of [omitted] in Kansas City, Missouri;
Stephen Plafker, a retired deputy district attorney living in Glendale, California.

Officers:
President: James McCrory
Vice-President: Treasurer: Michael Conger
Secretary: Stephen Plafker

Reminder

A copy of the TAFOL amicus brief filed in Phillips v.
Washington Legal Foundation will be sent to any person
making a contribution $50 or more. [no longer available]
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Copyright © 1998 The Association for Objective Law. All rights reserved. The Association for Objective Law is a Missouri non-profit corporation whose purpose is to advance Objectivism, the philosophy of Ayn Rand, as the basis of a proper legal system.