Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.


December 18, 2002


The opinion of the court was delivered by: John M. Facciola, United States Magistrate Judge


This matter is before me upon the application of the plaintiffs for attorney fees.


Plaintiffs are ten small commodity advisory publishers and their subscribers. Defendants are the Commodity Futures Trading Commission ("CFTC") and its commissioners. The District Court held for plaintiffs and plaintiffs then sought attorneys fees under the Equal Access to Justice Act ("EAJA"). After reviewing plaintiffs' first application for attorneys fees, I held that plaintiffs, not plaintiffs' pro bono counsel were the real parties in interest.*fn1 I then denied plaintiffs' application without prejudice pending supplemental briefing on the issue of plaintiffs' eligibility for attorneys fees under EAJA.


District Court's Decision

Under 7 U.S.C.A. § 6 m(10) (1999), commodity trading advisors ("CTAs") are required to register with the CFTC if they intend to make use of any means of interstate commerce in order to provide their services.

The district court (Urbina, J.,) first determined that the publishers were CTA's. Taucher v. Born, 53 F. Supp.2d 464, 475 (D.D.C. 19998). Having then concluded that the CFTC was engaged in the regulation of the publishers' speech rather than the regulation of their profession, the court then considered whether the speech being regulated was commercial speech, subject to being regulated so long as the regulations were narrowly tailored to advance legitimate government interests. The court concluded that the publications at issue were not commercial speech since they did not propose a commercial transaction between the publishers and their subscribers and since they were not solely concerned with the economic interests of the publishers and their subscribers.*fn2 Id. at 480-81. Thus, the court concluded that the speech at issue was subject to the greatest protection afforded under the Constitution. Id. at 481.
Finally, the court considered whether the imposition of the Commodity Exchange Act's ("CEA") registration requirement was an impermissible prior restraint on speech. The court determined that it was:
[T]he defendants in this case have imposed a drastic prohibition on speech based on the mere possibility that the prohibited speech will be fraudulent. As applied by the CFTC, the CEA imposes a ban on the plaintiffs' publishing of impersonal commodity futures trading advice unless they register with the CFTC. Moreover, the CFTC may, within its discretion, refuse to register any applicant for various reasons enumerated at 7 U.S.C. § 12a, including that the Commission believes the applicant has the "potential" to disregard the requirements of the CEA or has demonstrated "moral turpitude, or lack of honesty or financial responsibility." See 7 U.S.C. § 12a(2), 12a(3); 7 C.F.R. Part 3, App. A. This is no different than the regulation in Lowe [v. SEC, 472 U.S. 181 (1985)] in that it seeks to prevent individuals from publishing information based solely on a fear that someone may publish advice that is fraudulent or misleading, regardless or whether or not the information published actually is fraudulent or misleading. Such a prior restraint on fully protected speech cannot withstand the searching scrutiny of the First Amendment.

Id. at 482.

Earlier, the court had explained the derivation of the "searching scrutiny" it was obliged to conduct as a result of controlling Supreme Court opinions:

A prior restraint "arises in those situations where the government limitation, expressed in statute, regulation, or otherwise, undertakes to prevent future publication or other communication without advance approval of an executive official." Times Film Corp. v. Chicago, 365 U.S. 43, 56, 5 L.Ed.2d 403, 81 S.Ct. 391 (1961) (Warren, C.J., dissenting) (quoting Thomas I. Emerson, The Doctrine of Prior Restraint, 20 Law & Contemp. Prob. 648, [**51] 655). While not all restrictions on speech are impermissible, a restriction that imposes a prior restraint on speech "comes to the Court bearing a heavy presumption against its constitutional validity." New York Times Co. v. United States, 403 U.S. 713, 714, 29 L.Ed.2d 822, 91 S.Ct. 2140 (1971). Indeed, courts allow this "`most extraordinary remedy' only where the evil that would result from the [speech] is both great and certain and cannot be militated by less intrusive measures." CBS, Inc. v. Davis, 510 U.S. 1315, 1317, 127 L.Ed.2d 358, 114 S.Ct. 912 (1994) (quoting Nebraska Press Association v. Stuart, 427 U.S. 539, 562, 49 L.Ed.2d 683, 96 S.Ct. 2791 (1976)). In the instant case, the court concludes that the CEA's registration requirement, as applied to the plaintiffs by the CFTC, is an unconstitutional prior restraint on speech.

Id. at 481.

On June 21, 1999, the court, therefore, entered judgment in favor of plaintiffs, finding that the CFTC's application of the CEA's registration requirement to individuals who publish and sell information about the futures market was unconstitutional.

Award of Attorneys Fees under EAJA

An award of attorneys fees under the Equal Access to Justice Act ("EAJA") is allowed in the following circumstances:

Except as otherwise specifically provided by statute, a court shall award to a prevailing party other than the United States fees and other expenses, in addition to any costs awarded pursuant to subsection (a), incurred by that party in any civil action . . . including proceedings for judicial review of agency action . . . unless the court finds that the position of the United States was substantially justified or that special circumstances make an award unjust.

28 U.S.C.A. § 2412(d)(1)(A) (1994).

A "party" is defined in pertinent part ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.