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Legal News for Tues 7/9 - Trump Judge Resigns Over Inappropriate Relationship, FTC Report on Pharmacy Benefit Managers, Trump Unlikely Conviction Reversal and a Tax on Cows

Legal News for Tues 7/9 - Trump Judge Resigns Over Inappropriate Relationship, FTC Report on Pharmacy Benefit Managers, Trump Unlikely Conviction Reversal and a Tax on Cows

A federal judge's resignation over an inappropriate relationship with a clerk, the FTC's report on pharmacy benefit managers inflating drug costs, Trump's unlikely conviction reversal and a cow tax.
A cow doing its taxes, pencil sketch

This Day in Legal History: Eight States Ratify Articles of Confederation

On July 9, 1778, eight American states—New Hampshire, Massachusetts Bay, Rhode Island, Connecticut, New York, Pennsylvania, Virginia, and South Carolina—ratified the Articles of Confederation, marking a significant milestone in the establishment of the United States' first constitution. The Articles of Confederation served as the foundational legal framework for the fledgling nation during the Revolutionary War. This initial ratification by eight states paved the way for the Articles to take full effect once Maryland, the last holdout, signed on March 1, 1781.

The Articles of Confederation aimed to unify the thirteen original states under a national government with limited powers, primarily to manage war efforts, conduct foreign diplomacy, and handle territorial disputes. However, the Articles granted most powers to the individual states, reflecting the colonists' fear of a strong central authority reminiscent of British rule.

Despite its significance, the Articles of Confederation had several weaknesses, such as the lack of a strong central government, no executive branch, and the inability to levy taxes or regulate commerce effectively. These limitations eventually led to the drafting of the current U.S. Constitution in 1787, which created a more robust federal structure and addressed the shortcomings of the Articles.

The ratification of the Articles of Confederation on July 9, 1778, remains a critical event in American legal history, symbolizing the early efforts to create a unified nation and laying the groundwork for the Constitution that governs the United States today.

Federal judge Joshua Kindred, who recently resigned, engaged in a sexual relationship with a former law clerk and misled an investigating judicial panel about it, according to a Ninth Circuit judicial council report. Kindred, a Trump appointee, was found to have sexually harassed clerks and created a hostile work environment. The council's report describes his behavior as abusive, pervasive, and unprofessional, noting that his interactions with clerks were inappropriate and oppressive.

Kindred submitted his resignation without explanation on July 5. The Judicial Council of the Ninth Circuit publicly reprimanded him and urged his resignation. The council also referred the matter to the Judicial Conference of the United States for potential impeachment.

The report highlighted an "unusually close relationship" between Kindred and a former clerk, involving inappropriate physical contact and over 278 pages of personal text messages. Kindred's actions included discussing vulgar topics in the workplace and belittling clerks who raised concerns. The council expressed doubts about his ability to conduct himself appropriately in the future.

Kindred initially denied the allegations but later admitted to crossing professional boundaries, attributing his behavior to personal turmoil, including a divorce. The investigation also found he was drinking excessively, sometimes in his chambers.

This case comes amid broader scrutiny of judicial misconduct, particularly concerning judges' treatment of clerks. The judiciary has implemented new measures, such as the Office of Judicial Integrity, to address these issues. 

Jaime Santos, an advocate for judicial reforms, emphasized the importance of transparency and accountability in such cases to encourage clerks to report misconduct. Jeremy Fogel, a retired federal judge, noted the thoroughness and unanimity of the council's order against Kindred, highlighting the serious concern over his lack of honesty during the investigation.

US Judge Resigned After ‘Sexualized Relationship’ With Clerk (2)

The Federal Trade Commission (FTC) released a report highlighting that concentration and vertical integration among the top pharmacy benefit managers (PBMs) are driving up drug costs and financially straining independent pharmacies. The report stems from a study launched in June 2022, investigating the practices of the six largest PBMs. FTC Chair Lina Khan emphasized that these PBMs, which manage 94% of prescription drug claims, significantly influence drug access and pricing.

The report noted that the top three PBMs—CVS Caremark, Cigna’s Express Scripts, and UnitedHealth Group’s OptumRx—control nearly 80% of the market. Their integration with health insurers and pharmacies allows them to exercise considerable power over drug prices and availability. The FTC found that pharmacies affiliated with these PBMs received reimbursement rates for certain cancer drugs that were 20 to 40 times higher than the national average drug acquisition cost, leading to an additional $1.6 billion in revenue over three years.

These high reimbursement rates contribute to increased out-of-pocket costs for patients, including those on Medicare Part D. The FTC also pointed out that PBMs may engage in anticompetitive practices by negotiating rebates with drug manufacturers to exclude cheaper competitor drugs from their formularies.

The FTC’s study faced challenges due to some companies' failure to provide required data and documents. The agency is prepared to take legal action against non-compliant companies. Despite the findings, PBMs argue that they help reduce prescription drug costs and blame high manufacturer list prices and patents for the rising costs.

The FTC voted 4-1 to issue the interim report, with one Republican commissioner opposing it. The Pharmaceutical Care Management Association, the leading PBM trade group, remains confident that the FTC’s examination will ultimately show that PBMs reduce drug costs for patients and employers.

FTC Blames Pharmacy Benefit Managers for Inflating Drug Costs

Legal experts believe Donald Trump faces slim chances of overturning his conviction on charges related to hush money paid to a porn star, despite a recent U.S. Supreme Court ruling that broadly recognizes presidential immunity from prosecution. Trump's lawyers have argued for setting aside the May 30 guilty verdict, citing the Supreme Court's decision that former presidents cannot be criminally prosecuted for official acts under their "core constitutional powers."

However, experts point out that much of Trump's conduct in question occurred before his presidency and involved personal matters, not official acts. Cheryl Bader, a law professor at Fordham University, noted that falsifying business records to pay off a porn star does not fall within presidential duties. Trump was convicted of 34 counts of falsifying business records to conceal reimbursement to his former lawyer, Michael Cohen, for paying $130,000 to Stormy Daniels before the 2016 election. Trump has denied the encounter and claims the case is politically motivated.

Prosecutors argue the payment was part of a scheme to influence the election by avoiding a sex scandal. Trump's legal team contends that evidence related to his presidency, such as social media posts and an ethics form, should not be considered official acts. Legal experts like Steven Cohen from New York Law School believe these activities are unofficial and unlikely to lead to a reversal.

While Trump's lawyers declined to comment, a spokesperson for the Manhattan District Attorney's office did not respond. There are precedents for overturning convictions following new Supreme Court decisions, but Cardozo Law School professor Gary Galperin notes that even if some evidence should not have been presented, the judge may still uphold the conviction if it did not deprive Trump of a fair trial, known as a "harmless error."

Trump's defense is expected to fully present their arguments in a court filing by Wednesday, with prosecutors responding by July 24. Judge Juan Merchan will decide by September 6, and if the conviction stands, Trump will be sentenced on September 18. 

Trump hush money conviction reversal is unlikely, experts say | Reuters

Taxing carbon emissions from livestock in the US could significantly reduce greenhouse gas emissions, as cattle contribute 10% of the nation's agricultural emissions. Implementing a livestock tax would not only promote sustainable agricultural practices but also generate revenue for reforestation and responsible land use. This measure could provide a more comprehensive approach to addressing greenhouse gases compared to the gradual phase-out required for the fossil fuel industry.

Currently, the US government spends about $30 billion annually on agricultural subsidies, a practice that effectively supports both carbonization and decarbonization of the economy. Agriculture's contribution to greenhouse gases, especially from methane emitted by cattle, is substantial yet often overlooked. Methane has a higher global warming potential than carbon dioxide, accounting for around 30% of the observed global temperature rise since the 18th century.

Denmark's successful implementation of a livestock carbon tax demonstrates the feasibility of such policies. Starting in 2030, Denmark will tax livestock emissions, with rates increasing by 2035. This policy includes subsidies for carbon capture and reforestation, balancing environmental goals with farming realities. However, Denmark's policy focuses mainly on carbon dioxide, missing the full impact of methane emissions.

The US could enhance this model by including both carbon dioxide and methane emissions in a per-head livestock tax. This would more accurately reflect the environmental cost of raising livestock, though it would likely increase meat and dairy prices. To make this tax more politically acceptable, the US could adopt a system similar to Austria’s Klimabonus, which compensates residents for the costs imposed by a general carbon tax.

In summary, a well-calibrated livestock tax in the US, incorporating the cost of both carbon dioxide and methane emissions, could drive sustainable agricultural practices, balance environmental and economic interests, and potentially gain public support through consumer compensation mechanisms. 

Taxing Cows a Pragmatic Step Toward Mitigating Climate Change

Minimum Competence - Daily Legal News Podcast
Minimum Competence
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