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TAUCHER v. RAINER
December 18, 2002
FRANK TAUCHER, ET AL., PLAINTIFFS,
WILLIAM J. RAINER, ET AL., DEFENDANTS.
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
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
Earlier, the court had explained the derivation of the "searching
scrutiny" it was obliged to conduct as a result of controlling Supreme
A prior restraint "arises in those situations where
the government limitation, expressed in statute,
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
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 ...
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