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Sixth Circuit: State Cannot Inspect Ohioans’ Business Records without Warrant

Fourth Amendment prohibits state’s mandate making all business records “available at all times” to state agents

January 22, 2018: Columbus, OH – A federal circuit court late yesterday ruled that Ohio’s policies demanding private business records – – without a warrant or any evidence of wrongdoing – – violate the Fourth Amendment’s protection from unreasonable searches and seizures.

The ruling, made by a unanimous panel of the Sixth Circuit and authored by Judge David McKeague, addresses regulations governing those purchasing gold, silver, and other precious metals under the Precious Metals Dealers Act (“PMDA”).

However, its impact is likely to far exceed just the PMDA. Many Ohio businesses, particularly those requiring government licensing, face materially identical mandates. Accordingly, the ruling paves the way for Ohio businesses, even if heavily licensed and regulated, to protect their privacy and property, especially when such demands are made on-the-spot and without a warrant.

In a 23 page decision, the three-judge panel struck down a statute declaring “all books, forms, and records, and all other sources of information with regard to the business shall at all times be available for inspection,” and another demanding “free access to the books and papers and other sources of information with regard to the business.”

The Court explained as follows:

  • “Business owners cannot be forced to choose between being arrested on the spot and standing on their Fourth Amendment rights.”
  • “[The challenged statutes] are both unnecessary to furthering Ohio’s state interest and too broad in scope to withstand facial Fourth
  • Amendment scrutiny . . . both statutes effectively allow searches of dealers’ entire businesses . . . They therefore do not provide any standards to guide inspectors in the exercise of their authority to search.”
  • “The provisions’ seemingly unlimited scope, along with the grant of free access to such information at all times, does not sufficiently constrain the discretion of the inspectors.”

“This ruling essentially affirms that while government may request some basic record-keeping, reporting, and inspection of inventory purchased from the public that has been reported stolen, state officials cannot walk into a business without a warrant or evidence of wrong-doing and demand to review our papers, cell phones, laptops, or other business records,” said Maurice Thompson, Executive Director of the 1851 Center. “No entrepreneur deserves to be arrested for questioning the authority of a state agent to show up at his business unannounced, without any evidence of wrongdoing, and confiscate or filter through these records.”

Thompson added “this precedent will guard warrantless searches of business records in all industries, since the Court of Appeals decision acknowledged that even ‘closely regulated’ industries are entitled to greater protection. Ohioans should feel free to decline invasive and costly government searches without fear of retaliation.”

The 1851 Center for Constitutional Law took up the case in 2012 on behalf of Liberty Coins, a coin dealer of Delaware, Ohio, and Worthington Jewelers, a retail jeweler in Worthington, Ohio. Each balked at the prospect of losing their business licenses and being fined and prosecuted for refusing to turn over cell phones, laptops, and paper records simply “upon demand” of state enforcement agents.

Read the Court’s Order HERE.

Listen to the Oral Argument HERE.

Read the Brief HERE.

Watch our video describing the impact of this case:

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The 1851 Center for Constitutional Law is a non-profit, non-partisan legal center dedicated to protecting the constitutional rights of Ohioans from government abuse. The 1851 Center litigates constitutional issues related to property rights, voting rights, regulation, taxation, and search and seizures.

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1851 to Supreme Court: Forced Funding of Unions Violates Free Speech

1851 Center Amicus Brief argues that government employees who aren’t union members can’t be forced to pay hundreds of dollars per year to unions

Columbus, OH – The 1851 Center for Constitutional Law petitioned the United States Supreme Court to rule in favor of the Petitioner in a case challenging the constitutionality of public sector unions’ power to force public employees to pay union “agency fees.”

In Janus v. AFSCME, the Petitioner argues that government employees who opt not to be union members cannot be forced to pay fees in lieu of membership dues, to the union. Petitioner Mark Janus argues that nonmember employees cannot be forced to pay such fees because unions use the fees to fund their collective bargaining advocacy, union collective bargaining advocacy is inherently political, and the First Amendment prohibits enactments forcing American to subsidize the private political speech of others.

This case is of particular importance in Ohio, where 1,062 separate public employers maintain collective bargaining agreements requiring public employees who are not union members to pay agency fees to unions or be fired. These agreements affect 312,506 Ohio public employees who are forced to pay fees that average $700 per year.

The 1851 Center Brief explains and argues as follows:

  • Just as the First Amendment prevents government from prohibiting speech, it prevents government from compelling individuals to express certain views or pay subsidies for speech to which they object.
  • Forcing public employees to subsidize unions’ collective bargaining advocacy is no different than forcing such employees to fund the lobbying of public officials, since unions advocate for highly ideological outcomes through collective bargaining that raise taxes and spending while protecting poor performance and blocking reforms.
  • Collective bargaining advocacy can often be injurious to nonmembers’ self interests whether through raising their taxes, ensuring their own layoffs, or supporting political views they oppose.
  • The exception to the freedom from forced political speech the Supreme Court previously created for unions overlooked the highly political, ideological, and controversial nature of the policies public sector unions advocate for through collective bargaining.

“Just as no public employee may be forced to fund a political party, no public employee should be forced to fund objectionable union advocacy that has an even greater impact on our everyday lives,” explained 1851 Center Executive Director Maurice Thompson. “A complete victory in Janus will protect dissenting employees’ freedom of speech. Equally important, it will end forced funding of government unions in Ohio and restore to its proper place the artificially-inflated political power unions have used to raise government spending and taxes while blocking important reforms.”

“Government unions’ legal fight to deny employees the right to choose displays that their acknowledgment that they offer too little value at too high of a price,” continued Thompson, “Other non-profit organizations operate on voluntary contributions, and so should unions.”

Janus v. AFSCME only affects the rights of public sector workers as against public sector unions. It does not address private sector agency fees, which would remain intact. Nor would a victory in Janus prevent labor unions from collecting voluntary contributions.

The 1851 Center’s amicus brief in Janus v. AFSCME was coauthored by labor policy analysis Jason A. Hart.

Read the 1851 Center’s Amicus Brief HERE

Read the 1851 Center’s Columbus Dispatch editorial supporting Right to Work HERE

Victory: “1851 Center Amendment” added to Senate Bill 5

Government employees would no longer have to “opt out” of making political contributions to unions, state government will no longer transfer political contributions to unions.

The Ohio House of Representatives yesterday amended Senate Bill 5 to include the “1851 Center Amendment,” a provision that would prevent state and local government from facilitating transfer of political contributions from government employees to their unions.

House Republicans added the amendment in response to the 1851 Center’s publication of “The Path Remains Clear for Ohio’s New Legislators to Separate Government Employment from Public Employee Union Politics ” released in late February.

In The Path Remains Clear, the 1851 Center shows that government unions are amongst the Top 20 contributors to political candidates, trailing only traditional political organizations such as the Ohio Democratic and Republican Parties. The 1851 Center argues that state and local governments should level the political playing field in Ohio by discontinuing this taxpayer-provided service to union politics.

Ohio previously prohibited such automatic payroll deductions. In 1998, a state court of appeals struck the prohibition on First Amendment grounds. However, in 2009, the U.S. Supreme Court explained that such scrutiny is not appropriate: “while in some contexts the government must accommodate expression, it is not required to assist others in funding the expression of particular ideas, including political ones.”

In other states, similar laws have led to dramatic reductions in political contributions to unions from government employees. In Utah, after eliminating payroll deductions for government employees in 2001, the number of teachers contributing to their unions for political purposes fell from 68 percent to 6.8 percent of all teachers and PAC contributions plummeted.

Such laws also relieve workers of burdens associated with the political atmosphere often found in the unionized workplace. The history of unionism is replete with examples of threats, coercion, and intimidation directed at workers who do not agree with union goals, policies, or tactics. Between 2000 and 2007, the National Labor Relations Board received 1325 complaints of union-sponsored threats and 546 reports of harassment.

The Amendment to Senate Bill 5 reads:

No public employer shall agree to a provision that provides for the payroll deduction for any contributions to a political action committee using any other method than the method prescribed in sections 3517.082, 3517.09, and 3599.031 of the Revised Code.

Read The Path Remains Clear for Ohio’s New Legislators to Separate Government Employment from Public Employee Union Politics in its entirety

March 30, 2011: WSPD AM 1370 Brian Wilson Show here

A challenge to Ohio’s Mortgage Modification Bill

In March 2009, the 1851 Center submitted written and oral testimony to the Ohio General Assembly on House Bill 3, a bill that would allow Ohio’s trial judges to rewrite the terms of mortgage contracts.  The Center’s testimony made it clear that HB 3 was an unconstitutional abridgment of written contracts, and that, if passed in its then-current form, the 1851 Center would immediately pursue legal action. After the 1851 Center’s testimony and threat of litigation, the Housing Subcommittee removed the provision.

House Bill 3 Testimony

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Victory: Ohio Estate Tax Repealed

The legislature has passed a state budget that includes the repeal of Ohio’s Estate Tax.  Special thanks to the team at http://www.endohioestatetax.com/ for their leadership in accomplishing a feat that no liberty group before them had accomplished:  the elimination of a statewide tax.  In drafting the initiative and representing the effort, the 1851 Center was simply the professional scaffolding around this inspiring all-volunteer effort.

Despite openly hostile opposition (see below) from city and township government bureaucrats, who used public funds to oppose the repeal, and behind-closed-doors dismissal from elected and even conservative policy organizations, Ohio’s worst-in-the-nation Estate Tax, kicking in at just $338,000, will no longer be tearing Ohio families apart, destroying family farms, and driving business from the state.

April 4, 2011 – Use of Public Funds to Oppose Estate Tax Repeal is Unconstitutional

The 1851 Center for Constitutional Law today notified the cities of Loveland, and Oakwood, Ohio that their use of public funds applied to the Council/Coalition to Protect Ohio’s Communities (CPOC) is unlawful and, if continued, will result in legal action on behalf of each city’s taxpayers.

CPOC, comprised of local governments seeking to maintain the Ohio Estate Tax, formed in response to the introduction of House Bill 3, legislation that will end the tax.

Ohio’s Estate Tax is rated the worst in the nation, and kicks in at the lowest threshold, taxing all assets above $338,000. Although it is opposed by many Ohioans, local governments formed CPOC to lobby and propagandize against estate tax repeal. Loveland and Oakwood used local taxpayer dollars to fund their participation in CPOC.

Using public funds to support CPOC’s efforts:

  • Abuses “Home Rule” authority, which only lends municipalities authority to exercise powers of local self-government
  • Abuses “Police Power” authority by supplying public funds to that are biased, unreasonable, and arbitrary
  • Violates competitive bidding requirements due to no-bid contracts; and
  • Violates the First Amendment rights of citizens by forcing taxpayers to speak in a manner with which they disagree

In letters sent to Loveland and Oakwood, 1851 Center Executive Director Maurice Thompson highlights the lack of regard for taxpayers in the cities’ actions:

“You have dedicated revenue derived from all of your residents towards taking a side in a hot-button political debate on which the two sides fervently disagree. Indeed, many of your own taxpayers, whose dollars you use to fund CPOC, have worked tirelessly to ensure the introduction of House Bill 3 into the Ohio General Assembly, and other Ohio cities and townships oppose your efforts.”

The 1851 Center requested that the cities of Loveland and Oakwood recover any public funds that have been directed to CPOC, abstain from transmitting further public funds to the group, and withdraw from the council entirely. Otherwise, the Center will bring legal action against each municipality on behalf of local taxpayers.

August, 2009 – Ballot Language Drafted

The 1851 Center drafted ballot language that was adopted by Citizens United to Eliminate Ohio’s Estate Tax for an Initiated Statute effort. If successful, the measure will eliminate the Ohio Estate Tax as of 2012. The Ohio Attorney General has approved the language and the group is now collecting the needed signatures to place the issue before the general assembly.

April 4, 20111851 Center’s Letter to City of Loveland

April 4, 20111851 Center’s Letter to City of Oakwood 

April 5, 2011 – Dayton Daily News: Estate Tax Lobbying Called Illegal; Cities Disagree

700 WLW: Doc Thompson http://6b8.11f.myftpupload.com/radio/110411_3_DOC_EstateTax.mp3

www.endohioestatetax.com