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.