A dark Cave. In the middle, a Caldron boiling. Thunder.
Enter the three Witches.
1 WITCH. Thrice the brinded cat hath mew’d.
2 WITCH. Thrice and once, the hedge-pig whin’d.
3 WITCH. Harpier cries:—’tis time! ’tis time!
From The Scottish Play, by William Shakespeare
MTP readers will recall Mississippi Attorney General Jim Hood’s struggle to get answers from Google to Hood’s subpoena of the company regarding their troubling business practices. Although Hood had not criminally prosecuted Google at the time he served his subpoena or even brought a civil claim, Google sued Hood in an aggressive display of lawfare even for Google, which is one of the most lawless corporations in commercial history.
Google was awarded an injunction by U.S. Federal Judge Henry Wingate in Mississippi–essentially an order that prevented Hood from even asking Google a single question about its business. It was this injunction against General Hood that was the subject of Hood’s appeal to the 5th Circuit (which has appellate jurisdiction oversight of Judge Wingate). Not surprisingly, Hood appealed and even less surprisingly the 5th Circuit Court of Appeals vacated Judge Wingate’s injunction (which means the injunction goes away, probably as though it had never been issued.
Why is it not surprising? Because, as the 5th Circuit writes:
“[Google’s injunction covered a] fuzzily defined range of enforcement actions that do not appear imminent [a fundamental requirement for an injunction]. We cannot on the present record predict what conduct Hood might one day try to prosecute under Mississippi law. Hood’s complaints to Google and the public have been wide-ranging, and as Google stresses in its brief, the administrative subpoena is a ‘pre-litigation investigative tool’ seeking information on a broad variety of subject matters— ranging from alleged facilitation of copyright infringement, illegal prescription, drug sales, human trafficking, the sale of false identification documents, and credit card data theft….
The district court’s preliminary injunction is VACATED, and this case is remanded with instructions to DISMISS.”
In answer to the question, can Google–the most politically connected and influential corporation in history–simply refuse to respond to legitimate law enforcement inquiries by chanting “SOPA, PIPA, toil and trouble, CDA burn and DMCA bubble…”, the answer pretty clearly is no. Or at least not yet. Because the 5th Circuit has ruled quite reasonably that simply answering a subpoena does not preclude anyone’s ability to raise defenses that may be available from whatever source in any actual criminal prosecution or civil action if any ever is brought.
Of course, nothing ever happens in a vacuum. Google has managed to drag out Hood’s case–Hood served his subpoena on October 21, 2014, right in the middle of Google’s negotiations to settle a very expensive shareholder case that Hood had questions about in his subpoena. And it’s just possible that the real downside to Google from allowing General Hood to force the production of the many documents he requested in his subpoena was that those documents–like the 4,000,000 documents Google produced in the drugs grand jury that it jealously guarded from being disclosed in the shareholder case–might have sent the shareholder case in a whole new direction for Google had they been produced. A bad direction.
The 5th Circuit’s ruling is obviously well past the settlement of the shareholder suit against Google arising out of the Rhode Island grand jury investigation into Google’s violation of the Controlled Substances Act that–surprise surprise–the federal Government allowed Google to settle by paying a $500,000,000 fine under a non prosecution agreement, then the largest corporate fine in U.S. history. For background on the Google drugs multi-agency sting operation, see the Wall Street Journal. (Google will likely make $500,000,000 by the time you finish reading this post, by the way.)
That’s unfortunate, because the Google shareholders (including Google shareholders in Mississippi) could well have benefited from some of the answers that General Hood was trying to extract from Google about Google’s failures to comply with the NPA. But was Google simply postponing the inevitable?
Don’t forget–Google really doesn’t want to talk about the drugs case under oath. Google Executive Chairman Eric Schmidt took the 5th rather than answer questions about the drugs case from the Senate Antitrust Subcommittee. (Although the billionaire Princeton PhD later said he then “understands better” and said “I apologize for my confusion” about a 19 page agreement under which his company was paying a $500,000,000 fine and avoiding criminal prosecution (perhaps even the criminal prosecution of Larry Page if not Schmidt himself). Because you know how “confusing” all that can be when you’re on national television at a public hearing. Not to worry–nobody reported about a chief executive of a major U.S. corporation taking the 5th at a Senate hearing.)
Timeline of Google’s Resistance to General Hood’s Investigation
Where were we then, back in October 2014? Here’s a brief timeline.
General Hood served Google with a subpoena on October 21, 2014 asking for documents relating to Google’s business practices–what Google itself does–mostly involving how the company handles compliance with the non prosecution agreement (the “NPA”), human trafficking advertising and advertiser fraud. Then there’s also a question about why the Google stockholder settlement over the $500,000,000 drug case forfeiture Google paid the United States has a section that addresses how Google provides golden parachute terminations for employees convicted of felonies under state and federal law. And also a few questions regarding the hundreds of millions of DMCA notices that Google receives for copyright infringement.
Then there was the Sony hack, and thanks to North Korea some stolen documents circulated on the Internet including some confidential emails from the MPAA. You have to live under a rock not to know the rest of those facts. And–shocker–people in the business of producing movies don’t like Google much. According to Google, somehow the stolen documents show that MPAA is involved with helping the state develop a case against Google. Which is neither here nor there as far as answering the question of whether Google is operating outside of the law.
Google then sues Hood in federal court in Mississippi and tries to somehow transform Hood’s investigation from a case about Google’s business practices and compliance (with Google’s non-prosecution agreement with the Criminal Division of the Department of Justice) into a case about infringing materials on Google’s various platforms–all essentially based on the documents stolen courtesy of North Korea. And Google wants you to believe that somehow there’s a SOPA angle about all this–a stretch that didn’t impress many people not on the Google payroll. As Congressman Issa said, if there’s a scandal here at all, it’s that years after SOPA, there’s still the same problem that SOPA was trying to solve however inartfully.
However, a large part of Hood’s subpoena has nothing to do with the safe harbors of the Communications Decency Act or the DMCA and has everything to do with protecting Mississippi shareholders from Google running roughshod over them. A good example is this question:
You may ask yourself, WTF? Where did that clause come from? As well you should. The subpoena question (formally called an “interrogatory”) is based on this section of the then proposed settlement of the lawsuit over the Google drugs case brought by Google shareholders, including pension funds.
Here’s the money–so to speak–line:
“Presumptively, any employee convicted of a felony under a U.S. federal or state criminal statute in connection with his employment by Google shall be terminated for cause and receive no severance payments in connection with the termination.”
So ask yourself: Is it kind of self-evidently true that anyone convicted of a felony shouldn’t get a “severance payment”? Which in the case of a Silicon Valley company is partially paid, if not substantially paid, in stock or stock options? This section comes right out of the blue–why is it there? You don’t have to be a lawyer to think that is pretty weird.
As Mississippi’s chief law enforcement officer, General Hood has every right to ask what the genesis of this question is because it looks like it is a prospective cure of a harm from the past. Such as Employee A is going to get away with both committing a felony AND getting a golden parachute (like, for example, hush money or a junior person who was following orders), but after this settlement, Employee B who commits a felony is on their own. No golden parachute for Employee B says the Google Board (which is totally under the control of Eric Schmidt, Sergey Brin and Larry Page–remembering that Larry Page is personally implicated in the Google drugs case according to the U.S. Attorney for Rhode Island).
But Google still gets to cover up payments to Employee A that could well be hush money. God knows it wouldn’t be the first time.
Of course–the shareholder suit closed on January 21, 2015 without stockholders having an opportunity to see whatever General Hood was able to extract from the Internet giant.
This has nothing to do with free speech and everything to do with Google covering their collective asses. But to hear Google and its “friends of the court” tell it, Google is just protecting your free speech rights. And you know what they say about the greatest trick.
Google tried and succeeded in getting an injunction to stop Hood’s investigation. Hood had brought no case as yet and has only asked Google to respond to his subpoena (this is ultimately why the 5th Circuit vacated the Google injunction and instructed Judge Wingate to dismiss Google’s case). Google probably has dozens of open subpoenas around the world, so this is nothing new. And after all–Google had already produced 4,000,000 documents to a Rhode Island grand jury on many of the same issues. Why shouldn’t General Hood get at least that much?
Google could very easily respond to the subpoena and reject the lines of questioning its lawyers think are inappropriate or wrong–essentially the same work that went into asking for an injunction. But they wanted a court–a federal judge–to order a state law enforcement officer to stop the investigation into violations of state law.
Judge Wingate first denied Google’s request but asked the parties to brief their positions, which they did. And here’s where it gets weird.
When the Going Gets Tough, the Tough Get Weird
On January 19 2015, a Mississippi state legislator introduced Mississippi House Bill 1201–legislation that would limit the Mississippi attorney general’s ability to sue on behalf of the state for any reason. Such as a potential lawsuit against or criminal prosecution of Google.
Remember when Cox Communications suddenly had the Electronic Frontier Foundation and Public Knowledge try to file amicus briefs with Judge Liam O’Grady to support Cox’s blatant failures to comply with the DMCA? And remember when Judge O’Grady refused to let them file then excoriated Cox’s lawyer for failing to disclose to the Court that the lawyer served on the EFF’s advisory board?
It won’t surprise you, then, that Google employed a similar tactic in Hood’s case. First, Google filed its response to Hood and a handful of the trade associations and lobby shops the company funds filed “friend of the court” responses as well. This on February 2, 2015.
Vox Indie has a great post describing the various funding relationships between Google and the “amici”. Not only that, but long-time activist Mike Godwin wrote an op-ed in the Clarion-Ledger supporting Google’s position–Godwin not only works for the R Street Institute (funded by Google) but was formerly at Public Knowledge (funded by Google), the Center for Democracy and Technology (funded by Google) and the Electronic Frontier Foundation (funded by Google). He also attended Lamar High School in Houston, go Redskins!)
On February 3, 2015 Hood was in Washington, DC to announce a settlement of claims against Standard & Poors for doing something that sounded a lot like cooking the credit ratings of companies that were involved in the 2008 mortgage scandals (and was a plot point in The Big Short). Hood was a leader in the several states in the suit against S&P.
According to the Associated Press:
Attorney General Jim Hood says in a news release that Mississippi sued S&P in 2011, joining with Connecticut, the first State to sue in 2010. By 2013, the Justice Department and 17 other states filed similar lawsuits against S&P.
Standard & Poor’s is paying about $1.38 billion in the settlement announced Tuesday over ratings issued from 2004 through 2007.
Hood says the credit rating agencies were just as culpable as the investment banks in causing the financial crisis. Hood says the credit rating agencies held themselves out to be objective and independent.
Oh, and how much was the settlement again? That’s $1.38 billion with a B. But now Google and certain Mississippi lawmakers want to limit the state AG’s ability to go after bad guys.
What happened with Mississippi House Bill 1201? It passed out of committee:
A House judiciary committee passed a bill today that would require the state attorney general to gain approval from an oversight committee of the governor, lieutenant governor and secretary of state to file any lawsuit on behalf of the state for more than $250,000.
State Rep. Ed Blackmon Jr., a member of the House Judiciary A Committee, called the measure partisan politics. He voted against it.
House Bill 1201 was filed by the chairman of the committee, state Rep. Mark Baker, R-Brandon, who has been discussed as a potential candidate for attorney general this year. [Mr. Baker was also the Republican Leader of the Mississippi House Republican Conference from 2008 to 2012 according to his official biography.]
State Attorney General Jim Hood, the lone statewide Democratic official, has been criticized by some Republicans for hiring outside attorneys to represent the state in litigation, but at the same time, through litigation, Hood’s office is responsible for bringing hundreds of million dollars into the state treasury.
And then on February 5, 2015, Bill 1201 failed to pass the Mississippi House:
Mississippi House members are rejecting new restrictions against Attorney General Jim Hood’s ability to file lawsuits or hire outside lawyers.
The House voted 66-49 Wednesday to reject a House Bill 1201, which would require the governor, lieutenant governor and secretary of state to approve the attorney general’s filing of any lawsuit in which the state could win more than $250,000. House Judiciary A Committee Chairman Mark Baker, R-Brandon, could bring the bill back up for more debate….Baker said Hood’s unfettered ability to bring lawsuits is improperly setting state policy, negatively affecting Mississippi, and robbing those who are sued.
Hood and supporters say House Bill 1201 would put unconstitutional restrictions on the attorney general’s power….
“This may be the most rancid, politically motivated bill I’ve seen before this Legislature,” said Rep. Steve Holland, D-Plantersville.
Lawsuits by attorneys general have been a long-festering issue in Mississippi politics, running back to when Hood’s predecessor, Democratic Attorney General Mike Moore, sued the tobacco industry in the mid-1990s, arousing the ire of Republican Gov. Kirk Fordice even as Moore won millions for the state. [$4.1 billion, actually.]
Republican Gov. Haley Barbour — who was a tobacco lobbyist in Washington during Mississippi’s lawsuit against the industry — used the tobacco money to help prop up the state budget during the recession. The payments from the tobacco lawsuit settlement are still being spent under the current Republican governor, Phil Bryant.
So all in all, a pretty good week for Jim Hood. Oh–did I forget to tell you that General Hood is the only Democrat holding state-wide elected office in Mississippi? Not that it would explain anything, of course.
Bizarre, but good in the end. This is particularly true when you consider that there are potentially dozens of additional state attorneys general who are also investigating Google and also that former Mississippi Attorney General Mike Moore is evidently advising Hood. This would make sense if, like the tobacco litigation and the S&P litigation, Mississippi is joining with other states to pursue Google. Moore was the first state attorney general to sue the tobacco companies, resulting in a $236 billion settlement, of which $4.1 billion went to Mississippi. (Google is no stranger to multistate litigation–it settled a privacy case with 37 states in 2013.) Oh, and Mike Moore got a part in a Hollywood movie.
Don’t watch The Insider on a dark and stormy night. Let’s just say it’s not The Internship.
As Andrew Orlowski wrote in The Register:
Google’s success in “assassinating” [Jim Hood,] a democratically-elected legal opponent last week raises troubling questions about corporate power and accountability. The feisty attorney for the USA’s poorest state is now trying to make peace, after being on the receiving end of a highly unusual lawsuit from Google.
Even if you will have no truck with the Hollywood lobbying machine, you should know the facts. A global corporation which is expected to bank $60bn in revenue this year and which is worth $382bn, has silenced an elected prosecutor.
Google’s income is 30 times that of the General Fund in Mississippi; its market valuation is four times the entire state’s GDP. What did Jim Hood do to make himself Google’s enemy?
Other States Rally Around General Hood on Appeal
Remember–Hood’s concern was that Google not only violated the terms of the nonprosecution agreement but also may have violated a variety of Mississippi consumer protection laws for advertising illegal drugs in Mississippi.
Let’s be clear–people die from buying illegal drugs online. That’s why we have the Ryan Haight Act carried by Senator Diane Feinstein–a senator from California.
The overwhelming majority of the questions in Hood’s request concerned Google’s compliance. Google promptly sued Hood to stop the investigation. As luck would have it, the case was heard in federal court before a judge who is apparently Hood’s long time political opponent. Google was able to delay Hood’s investigation while Hood appealed to the Fifth Circuit, where the case is now.
The AGs summarize the fundamental flaw with Google’s case:
This is a case about the authority of state Attorneys General to exercise one of their fundamental powers: the ability to investigate potential violations of state law. What should be a routine discovery dispute in Mississippi state courts, resolved under established state procedures, has instead evolved into a contrivance for a company doing business in the state of Mississippi to invoke federal jurisdiction by asserting potential affirmative defenses to claims that have never been filed.
And that is essentially what the 5th Circuit just supported.
Based on Hood’s response to Google’s attempt to stop his investigation, I’m not so sure that he’s giving into “rancid” tactics and I would expect the scrappy populist to pick right up where he left off.
But ask yourself this: If this were Big Tobacco going after former Mississippi Attorney General Mike Moore, how would you feel about Google’s tactic?
Or Drexel Burnham Lambert?
So why should Google be special?