Is the Most Massive, Illegal Paywall in the World About to Come Down?

By Michael Olenick, a research fellow at INSEAD who writes regularly at Olen on Economics

A groundbreaking lawsuit is poised to decimate what is arguably the most unjust, destructive, and it now sounds like illegal paywall in the world, the Public Access to Court Electronic Records, PACER.

PACER is the federal government court documents repository. Every federal court document, for every case, lives in PACER. It’s essentially a giant FTP document repository with a horrendous search system bolted on, not dissimilar to EDGAR.

PACER was created in 1988 to enable access to court records electronically. Initially available only in courthouses the system was expanded to the web in 2001.

PACER charges $.10 per page to a maximum of $3.00 per “document.” However, when data is open-ended – for example, a list of docket entries – the system breaks it into artificial “pages” to charge more.

I’ve used PACER on and off for ages and most recently used it to explore a series of federal lawsuits detailed in a piece The Nation magazine mangled, where David Dayen wrote a hagiography about a banker named Larry Schneider. In David’s story Larry was a hero; Dayen compared him to FDR. In reality Larry is a skunk who purchased mortgages at a deep discount then oftentimes foreclosed on people to reap steep profits.

How do we know about the deep discounts that Schneider received? They were in a series of filings in federal lawsuits. The only way to get the filings was through PACER, and the only way to do that was to pay. The bill just came in: my research cost $34.10, about $30 over budget. Each search cost $.10. When a search returned a lawsuit, it would cost $3 to view the docket (the full docket was more than ten “pages”). Viewing the same docket, to retrieve a different pleading, cost another $3.00. Downloading PDF’s of pleadings cost different amounts depending on the size of the PDF: $.60, $2.30, but most cost $3.00.

Granted, $34.10 is not that much though I did not download, due to cost, large sections of Schneider’s two lawsuits and one appeal. Trying to download many lawsuits to look for patterns of abuse – something reporters, attorneys, and academics would want to do – is prohibitively expensive. PACER fees can theoretically be waived for academic research; in reality, this seldom happens.

Backing up, to increase access, Congress mandated in the e-Government Act of 2002 that PACER charge fees “onto to the extent necessary” … “to reimburse expenses in providing this service.” As a blatant screw-you to Congress, the Court system increased per-page fees in the following years even as the cost of servers and internet connectivity dramatically decreased.

PACER generated about $145 million per year in 2013 and 2014 each, the last years that data is readily available. The Court system did not even pretend this was necessary to upkeep PACER. Money was used for all manner of things, including court technology, jury information systems, and other errata that should have been paid for by ordinary government appropriations.

There is nothing magical or even impressive about PACER: lawyers and the courts upload documents and audio recordings. The interface is crude, search is abysmal, and most documents are simple PDF’s. Everything, including searches that yield no results, costs money.

In 2016 Theodore D’Apuzzo, of Florida, filed a class action that PACER was improperly billing users, charging for documents that were free under the law. D’Apuzzo also found the government was overcharging in computing the per-page amount of data, counting more “pages” than they should have. His case is progressing and his class has been certified. I’d write more about the case but the pleadings are tied up behind the PACER firewall.

More importantly, superstar lawyer Deepak Gupta filed a class-action, on April 21, 2016, arguing the entire PACER pay scheme was illegal. The court system itself is crooked Gupta argues; the verbiage is more professional but the underlying accusation is there. Gupta presented the history which is that, like a character in the unfortunately prescient movie Idiocracy, the federal courts’ Administrative Office (AO) essentially decided that it likes money. The AO cited no statutory authority for the excessive fees.

There was some initial wrangling; the plaintiff needed to exclude the Department of Justice, despite that the AO had been ripping them off for decades, so that the DOJ was not conflicted and able to argue the case on behalf of the AO (apparently the court system doesn’t have their own lawyers). Further, Judge Ellen S. Huvelle pointed out she may be conflicted, since as a federal judge she interfaces with the AO. Since that affects every worker in the federal judiciary, including all judges and magistrates, both parties waived conflict.

By November 2016, Judge Huvelle rejected the government’s Motion to Dismiss, meaning the plaintiff had proven the law supported their arguments when the facts were read in their best light. There are no facts in dispute – the court system charged much more than was necessary to run PACER – the only question is whether they were legally allowed to.

In January 2017, Judge Huvelle certified the plaintiffs as a class. In regular class action cases this is typically the time to settle, and settlement talks are apparently ongoing, but in the interim the case moves along.

Over the past year many press trade groups have filed friend of the court Amicus briefs, all of them arguing the excessive fees were an impediment to full and accurate reporting. In September 2017, former Sen. Lieberman and Rep. Darrell Issa filed an amicus brief clarifying that as members of Congress at the time it was certainly Congressional intent that PACER fees be set no higher than necessary to run the system.

In December 2017, the plaintiffs filed their own Motion for Summary Judgement which highlighted that, as the case progressed, experts assessed PACER fees were at least 600 times higher than legally allowed. My $34.10 bill should be just under $.06. At that rate, I could have pulled the entire case to see if more filings better exposed Schneider.

Finally, on January 5, after being denied several extensions, the Department of Justice filed their reply to the Motion for Summary Judgment. The DOJ argues everybody has read the e-Government Statute wrong, including legislators who drafted it. Their pleading reads like a school exercise where students are forced to defend an obviously ridiculous proposition.

Hopefully, not long from now, I will receive a refund for most of my $34.10. Others will receive, collectively, billions of dollars improperly collected over years plus interest. It’s unclear how the AO will pay the judgment. Maybe they can auction indulgences: passes to misbehave. I don’t know their fee schedule but Gupta’s firm is likely to have an extremely profitable year. Once the paywall is down, or reduced to a trivial amount, we can start to search for patterns for various defendants, including and especially banks, abusive bill collectors (FDCPA cases), bankruptcies: the list of promising research topics is endless.

One interesting factoid is that whereas there is normally a pile-on in lucrative, or even marginal class actions lawsuits – with many copycat cases – that didn’t happen here. The judicial system flagrantly broke the law to steal a fortune, much of it from law firms small and large, but nobody did anything to stop it. Even as this suit draws to its inevitable conclusion, a crushing loss for the judicial branch, no law firms have filed amicus briefs complaining they overpaid: almost every friend-of-court brief is from press organizations.

Under Democrats and Republicans, in both liberal and conservative law firms, nobody was willing to stand up to the AO. This brings up a feeling that lawyers were afraid complaining would be viewed as an insult to the judges. This failure, to stand up against an obvious wrong, for decades, even with a potentially enormous payout, suggests there is something deeply broken about the judicial system.

 

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31 comments

  1. b-rar

    If it makes you feel any better, I use PACER regularly at my federal job and my agency gets billed the same .10 per “document”.

    Reply
    1. Michael O

      Yes – the DOJ is one of the heaviest users putting them in the odd position of defending being ripped-off themselves. That might explain why the arguments in their pleadings are nonsensical. They’re giving it the old college try — they’re legally obligated to — but their heart, under both Obama and Trump, obviously isn’t into winning this one.

      Reply
  2. Ash

    As a layman, I’ve only used PACER on a couple of occasions, but I did access it through the RECAP project

    Should the case not end the fees, other folks may want to install the RECAP browser extension.

    https://free.law/recap/

    RECAP Project — Turning PACER Around
    RECAP is an online archive and free extension for Firefox and Chrome that improves the experience of using PACER, the electronic public access system for the U.S. Federal District and Bankruptcy Courts.

    The online archive contains millions of searchable PACER documents and can be used to do deep research within a case, a topic, or a jurisdiction. The archive also now includes every free opinion on PACER.

    The RECAP extensions are very simple to use and have no configuration. They:

    Help you give back by contributing to a public archive.
    Save you money by showing you when free documents are available in the archive.
    Keep you organized by providing better file names to the files you download on PACER.
    Thousands of people have used RECAP, and together we have created an archive with millions of documents.

    To use RECAP, simply install it and then use PACER as you normally would. It’s that simple.

    ECAP is a joint project of the Center for Information Technology Policy at Princeton University and Free Law Project. It is one of several projects that harness the power of the web to increase government transparency.

    RECAP is led by Free Law Project co-founders Brian Carver and Michael Lissner. CITP Director Ed Felten also provides guidance. RECAP was created by Harlan Yu, Steve Schultze, and Timothy B. Lee, based on the principles described in Government Data and the Invisible Hand.

    Reply
    1. Stephen V.

      Appreciate this Ash. I use PACER occasionally to research a bankruptcy client, rather than waiting to hear back from a lawyer/s.

      Reply
  3. The Rev Kev

    This article is a bit beyond my experience. The only thing that I can relate it to in my experience is my genealogical research in buying high-priced birth, death and marriage certificates which are, at the end of the day, public documents after all and thus should be available on a cost basis only. This sounds like the same game at work here.
    When I think about the facts laid out here as to motivation, I am going to go with stupidity over simple greed as to why they did it this way. The reason that I say this is that if they have been ripping off billions over the year, what they should have done was to spend a few million dollars on instituting an efficient search engine and a modern web portal to find, retrieve, order, pay for and to download documents. Doing that would have led to an increase in documents ordered, and thus profits, but as they never did that, I am going to go with simple stupidity.

    Reply
  4. kees_popinga

    PACER is pricy for what it is, and search is horrible, but at least all the court pleadings are posted and the PDFs open and download relatively quickly. Let’s say the lawsuits are successful. Without the fee incentive, the system could become backlogged and plagued by software errors. Eventually someone in the Trump cadre will propose that it needs to be outsourced to the private sector — that is, to a company that has no problem gouging for public information a la JSTOR or Lexis. Right now Bloomberg Law is monetizing docket search by hoovering up PACER documents and putting them behind a more user-friendly interface (for its subscribers). It will earn even more money if it has to dispatch couriers to retrieve filings that a cash-poor, broken PACER is no longer posting. And it would ultimately benefit if it was hired to manage the system more “efficiently.” (File under: be careful what you wish for because you may get it.)

    Reply
    1. Michael O

      The court system is allowed to charge the cost of running PACER but they’ve been charging far, far more. There’s no problem with billing PACER at cost: they just can’t charge 600x cost. There’s still debate whether PACER fees can be used to subsidize ECF’s (probably not) or subsidize creditors in bankruptcy proceedings (exceedingly unlikely). Anything beyond the cost to run the system is considered a tax and only Congress may levy taxes. Since Congress did not authorize PACER to tax (to run at a profit) — and actually mandated exactly the opposite — the charges are illegal.

      Reply
  5. albrt

    I think the reason law firms did not attack PACER is because the costs are so much more reasonable than other sources of legal information such as Westlaw and Lexis, and the system overall is so much better than the systems in most state courts (if any).

    Reply
    1. Robert Hahl

      Also, the clients generally pay for it. If law firms get refunds of the PACER fees they will have the problem of crediting their clients’ accounts where appropriate.

      Reply
  6. Thomas Cox

    The RECAP (which is PACER spelled backwards) shows what can be done to develop useful search tools for the federal court documents. With all of that extra cash sloshing about, the AO did nothing at all to develop truly useful search tools.

    Astonishingly, my home state, Maine, is in the midst finally of developing a PACER like system with a recommendation that open public (and press) access to the documents be denied and that anyone wanting to look at court documents from a case in which he/she is not a party, will have to physically go to a state courthouse. They call this “practical obscurity”–with the intent of preserving the privacy of litigants. When were they every entitled to privacy in the first place?

    Reply
  7. Steve Ruis

    Ha, peanuts! Consider that in scientific publishing, there are few journals for every scientific sub category. Publicly-funded research is typically published in one of these journals. Once published, anyone who wants a copy of an article (typically a few pages) has to pay $35 for a PDF download. Plus, the authors are charged to publish their articles and get none of the $35 fees their work generates. So, the public gets to pay for the research, then often (through government grants) pay to have it published, and then have to pay to be able to read it.

    Some scientists are so disgusted with what this system has become that they are beginning to publish their work online and allow people to access it for free. In retaliation, the “proper” journals are now refusing to publish any work that has been published prior.

    I would gladly buy a great many articles were the charge $0.10 per page.

    Reply
    1. Yves Smith Post author

      This isn’t comparable. The “research” is not the product. The article is the product, and that was produced in private journals. We are taking about public records.

      Reply
    2. albert

      @Steve,
      What’s worse, the jernals ‘contract’ allows the scientist to retain copyright (how generous of them), but demands control of any other type of publication. Your paper is now in a black hole.
      . .. . .. — ….

      Reply
    3. Michael O

      Federal lawsuits can run, with appendices, tens of thousands of pages, much of that duplicative. Given that I was charged when I pressed back, for the same docket report, I don’t feel any sympathy. This is outright theft. Sure some state systems are worse: shame on residents there for putting up with it.

      Reply
    4. Real Scientist

      Steve, your information appears to be largely out of date. At least for Department of Energy funded research, the U.S. government retains rights to accepted manuscripts, and publishes them online (though not with the same polished formatting as journals have).

      See here for more info:
      https://www.osti.gov/pages/

      Reply
  8. XXYY

    Given that the infrastructure for a searchable PDF file repository must be pretty standard, it seems like the feds and every state and county could use the exact same product or software to implement it (marketing people used to call this a “turn-key solution”).

    I’m not saying this should necessarily be developed by the private sector, but it does seem like there is a lot of pointless duplication going on here if every jurisdiction is doing this differently. Allowing every researcher to get used to a single interface when doing research seems like it would be terrific.

    Reply
  9. Martin Finnucane

    I’m interested in just how PACER’s toll boothing is illegal. In my home state, we recently had imposed on us a e-filing system in civil courts, already mandatory in most counties per local court rule and soon to be in all per state law. Of course, this is the fruit of a public-private partnership, complete with a fancy website plastered with glowing testimonials from paralegals at white shoes firms in Capital City. The kicker is that to access a file costs $3, and to file anything subsequent to initial pleadings costs $7.50. In the olden days (about 9 months ago), filing cost $.43 for the stamp, and getting a copy of a filed matter cost a 2 minute phone call to the clerk’s office. I would love to know that this toll boothing trash is illegal, though even if it were I’m sure our legislature would “fix” that in a jiffy.

    Reply
    1. Michael

      This is federal vs state law. In federal law any fee for a government service beyond the cost of the service is considered a tax and must be explicitly authorized by Congress as per the Constitution. Normally Congress enables lots and lots of fees in excess of costs but, in the case of PACER, they did the opposite (or thought they did): even though not necessary they explicitly passed a law prohibiting fees in excess of costs for government records. To make it crystal clear they filed a separate Senate report that this meant PACER. The AO outright ignored it. But in the case of your state it depends on what their own state laws and Constitution say.

      Reply
  10. TimmyB

    Pre-Pacer, the first court I knew of that had electronic court files online was the Southern District of New York Bankruptcy Court. It was free to use.

    The reason it was free was that it is cheaper and easier to have parties upload PDFs to an Internet site that it was to staff multiple clerk windows and then keep and store paper files in a building.

    E-filing didn’t start with the intent to make things easier for litigants or the public. Instead, it started because it was the cheapest way for courts to accept documents for filing. With e-filings, they could close most of the filing windows and reassign the court staff working those windows. They could also reassign the staff who’s job it was to take the filed documents and place them in the right case file. It was a huge cost savings on its own. If it was free before, it can be free again.

    Reply
    1. albert

      @TimmyB,
      The government has other cash cows. For example, the USPTO. Last I checked, they made over $700 million in one year. The USPS make a ‘profit’ every year. The gov’t ‘cooks the books’ by subtracting funds from their income, to make them ‘lose’ money every year.

      The objective is to ‘privatize’ everything, at any cost. PACER is a ripoff to be sure, but imagine a private contractor in its place. How about a private contractor replacing the USPS.

      What could possibly go wrong?
      . .. . .. — ….

      Reply
      1. John Zelnicker

        @albert
        January 23, 2018 at 2:07 pm
        —–
        The USPS “loses” money every year because a law was passed some years ago requiring them to fully fund the next 75 years of pension and health and welfare benefits, and to do it within about 10 years.

        No other firm or institution in the world has had to do this. It was a rather transparent attempt to make the post office look like a failing enterprise so privatizing it could be justified. In the meantime, due to the cash squeeze there have been a lot of branches closed and Nancy Pelosi’s husband has been selling off the properties to his friends at lowball prices.

        The corruption is vast and deep.

        Reply
        1. albert

          @John,

          I didn’t want to get into that, but thanks for pointing it out.

          Vast and deep, indeed…

          . .. . .. — ….

          Reply
  11. steelhead23

    Away knave, only the high priests are privileged to view the relics under the altar.

    It seems a might ironic. One arm of our freedom-respecting, democratic government has seen fit to store my every pizza order in its Borg cube in Deseret (Utah), while another reduces access to important judicial cases, and decisions. The greater the public’s access to such information, the faster injustice will be found.

    Reply
  12. FreeBeer

    Quoting the main article: “Under Democrats and Republicans, in both liberal and conservative law firms, nobody was willing to stand up to the AO. This brings up a feeling that lawyers were afraid complaining would be viewed as an insult to the judges.”

    This applies also to the morass of local rules, all of which would seem to violate the intent of the 1937 drafting of the “Federal Rules of Civil Procedure,” which state at Rule 61 – Harmless Error – “At every stage of the proceeding, the court must disregard all errors and defects that do not affect any party’s substantial rights.” Having to repeatedly submit a document to comply with various court procedural manuals is costly. In dialog with a presiding judge regarding a style manual that in my view is not even authorized by the Federal Rules of Civil Procedure, I was told that I could “appeal.” No lawyer in his/her right mind would “appeal” rather than resubmit the document with the court’s address on the right side of the paper instead of the left side of the paper. (Especially as I had been submitting the exact same format of documents for 30 years without prior comment or rejection.) But, such nonsense affects the business model of providing [or attempting to provide] legal services to people of modest means.

    In an era of massive deficit spending, there is no correlation between government fees (or taxes) and the “services” the government chooses to fund. Therefore, government fees and time-consuming red tape are about gatekeeping and not about the costs involved in providing the services. The wealthy have unlimited access, the rest of us are extremely limited by our [client’s] pocket book. The entire Pacer system, for instance, substantially increases the difficulty and cost of filing court documents, shifting costs and burdens of scanning and indexing documents from the clerk’s office to the litigant’s lawyers. It also insulates clerks from practitioners, so “rejections” that could formerly be cured by a quick discussion at the filing counter now result in repeated document rejections that raise stylistic issues piecemeal. All of this comes at a substantial cost to the client and practitioner.

    To expand the discussion — why are we forced to use Microsoft Word when free suites such as LibreOffice are readily available? Why are we forced to use Adobe Acrobat when adequate free alternatives exist? Even if free alternatives did not already exist, wouldn’t the economics of scale and general fairness make it more sensible for the government(s) to develop government-provided software, in the same way the courts provide blank court forms, governments provide court systems, freeway systems, etc.?

    The real question is whether ordinary citizens should have equal (or any) access to justice. In a slow “death by 1000 cuts”, the consistent answer of our elected and appointed officials is “not unless you are a billionaire.” Ever increasing wealth inequity makes these costs trivial for the wealthy and a complete bar to access for the average person. Moreover, many well-meaning people in the “system” don’t even seem to be conscious of the burdens their rules and fees create.

    Reply
  13. JBird

    …The court system itself is crooked Gupta argues; the verbiage is more professional but the underlying accusation is there. Gupta presented the history which is that, like a character in the unfortunately prescient movie Idiocracy, the federal courts’ Administrative Office (AO) essentially decided that it likes money. The AO cited no statutory authority for the excessive fees.

    Granted, $34.10 is not that much though I did not download, due to cost, large sections of Schneider’s two lawsuits and one appeal. Trying to download many lawsuits to look for patterns of abuse – something reporters, attorneys, and academics would want to do – is prohibitively expensive. PACER fees can theoretically be waived for academic research; in reality, this seldom happens.

    It is true that stupidity, incompetence, and ordinary greed are the obvious answers, blocking access to information might be real reason. I am sure there are many many wealthy people, corporations, and organizations that do not want their dirt easily found. Just as doctors, legislators, and whole government agencies have been captured by them either by free gifts like meals, and nice vacations, or just by placing their own into the targeted group, why not the Administrative Office? Has anyone checked who makes the decisions and who they are associated with?

    Also, $34.10 can be real money if you are a college student or a broke advocacy group, especially if you are trying to do extensive research on more than one skunk.

    Reply
  14. knowbuddhau

    Under Democrats and Republicans, in both liberal and conservative law firms, nobody was willing to stand up to the AO. This brings up a feeling that lawyers were afraid complaining would be viewed as an insult to the judges. This failure, to stand up against an obvious wrong, for decades, even with a potentially enormous payout, suggests there is something deeply broken about the judicial system.

    If there is, maybe it’s something like the fear that cast a pall over science after 1633 with the condemnation of Galileo. At that time, Decartes was working on a book he thought would revolutionize physics. In an exquisite double entendre, it says here, “After Galileo’s house arrest, Descartes voluntarily suppressed The World, fearing the wrath of the Catholic Church.”

    He wasn’t the only one. And plenty of other legends of science did likewise, and still do. These days we call it “self-censorship,” only I like to render it “cellf-censorship,” in keeping with selves as cellves of our own mistaken making.

    Doesn’t science itself proceed “one funeral at a time”? Are we really surprised that the DOJ isn’t comprised entirely of juridical monks?

    When a carpenter misunderstands the wood she’s working with,it isn’t the wood that’s “broken,” although boards may be. When a sculptor misunderstands his medium, it isn’t the clay that’s “broken,” although pots may be.

    Maybe that’s human nature. How you gonna fix that?

    There are plenty of things wrong with the DOJ, that’s indisputable. If this were the first and only time this had ever happened, or if it only happened to the court system, yeah, broken. But the umpteenth time, across settings, across centuries (if not millenia, just don’t have the time to dig that deep)?

    No, not broken: human. Mistake/learning >> crime/punishment >> sin/damnation.

    Reply
    1. knowbuddhau

      How you gonna fix human nature? The answer is obvious: robot judges administered by robot bureaucrats, all programmed by robot programmers. Why not, it’s robots all the way down, isn’t it? /s

      Reply
  15. Real Scientist

    FTA,

    This failure, to stand up against an obvious wrong, for decades, even with a potentially enormous payout, suggests there is something deeply broken about the judicial system.

    It would not be the only egregious example of such failures.

    The rocket-docket railroading of foreclosures, despite blatant evidence of fraud in the mortgage paperwork, is another.

    Blatant failure to enforce antitrust law is another. We now even have government-enabled monopolies, such as Microsoft Office as mentioned above.

    Then there are the companies that use profits from unrelated lines of business to subsidize below-cost pricing (also known as “dumping” in manufacturing) in order to destroy competition. Amazon as a whole makes almost no money. Overall, their Web Services profits are larger than their overall profits, which means the rest of the company operates at a loss. So those Web Services profits are de facto subsidizing the online retail sales business. In most parts of the economy that would be illegal. Everyone who is being driven out of business by Amazon is fighting illegal competition, but Amazon apparently is Too Big To Jail.

    Reply

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