Ongoing Taxation Disputes Between Amazon and State Governments

By Blair M. Anthony*

I. Introduction

“In the U.S., the Constitution prohibits states from interfering in interstate commerce. And there was a Supreme Court case decades ago that clarified that businesses – it was mail-order at that time because the Internet did not exist – . . . could not be required to collect sales taxes in states where they didn’t have what’s called a ‘nexus.’  And that’s a very clear decision.”

– Amazon.com Founder and C.E.O. Jeff Bezos on why Amazon does not collect a sales tax in some states.[1]

In many instances, online retailers such as Amazon.com (Amazon) have avoided charging customers a sales tax because they do not have a physical presence in some states where their products are sold.  To the dismay of brick-and-mortar retailers, the physical presence sales tax requirement often gives online retailers a significant competitive advantage in terms of pricing.  However, several factors are making it easier for states to induce Amazon and other online retailers to impose a sales tax on consumers.  One such factor is the rise of “affiliate programs” in which third parties place links on their websites leading consumers to the websites of online retailers like Amazon.[2]  Some states have questioned whether the “affiliates” may be categorized as employees and cause the online retailer to have a physical presence in the state.[3]  Amazon founder Jeff Bezos opposes state online sales tax legislation, but supports creating a federal sales tax for online retailers.  In order to avoid taxation issues in the meantime, Amazon and other online retailers have built distribution centers and negotiated tax settlements with some state politicians.  To date, Amazon imposes a sales tax on purchases made in twenty of the states[4] and in the future may impose a sales tax in more states.  However, competing judicial interpretations between the highest courts in New York and Illinois illustrate the ongoing conflict between Amazon and states regarding the physical presence requirement.

II. Affiliate Commerce Programs Spark E-Commerce Taxation and Litigation

Amazon has developed a program, known as “Amazon Associates,” which allows third party websites to advertise Amazon.com in exchange for a commission if their advertisement yields a purchase on Amazon.[5]  Similarly, Overstock.com (Overstock), another online retailer, has an affiliate program through which third party websites are paid for links on their websites that yield sales on Overstock.

A. New York Victorious in Assertion that Affiliate Program Constitutes Physical Presence

Cash-strapped states looking for a way to earn additional tax revenue have asserted that affiliate programs serve as a physical presence within their state.[6]  In Amazon.com, LLC v. New York State Department of Taxation & Finance, Amazon and Overstock sought injunctive relief from a New York statute that imposed a duty on out-of-state retailers to collect sales and use tax when they utilized in-state residents to solicit business through Internet websites.[7]  In reaching its decision, the New York Supreme Court reasoned that “while it must constitute more than a ‘slight presence,’ [the physical presence requirement of Quill Corp.] may be manifested by the presence in the taxing State of the vendor’s property or the conduct of economic activities in the taxing State performed by the vendor’s personnel or on its behalf.”[8]  Consequently, in finding the New York statute constitutional, the court dismissed Amazon’s complaint.  The resulting appeal in the New York Court of Appeals affirmed the lower court’s decision on the constitutionality of the state statute.  The subsequent denial of certiorari by the United States Supreme Court meant that New York had successfully defeated the largest online retailer in the battle to collect state sales tax resulting from presence due to the affiliate programs.

Amazon could potentially follow in the footsteps of Overstock, which withdrew its affiliate program from the state of New York after the decision was first issued.[9]  However, if Amazon did so then it would run the risk of losing additional business generated from the New York affiliate programs.  Still, if every state follows the model of New York, Amazon runs the risk of having to deal with fifty different state bureaucracies’ sales tax statutes.

B. Illinois Tax Statute Deemed Discriminatory Against E-Commerce Companies

Despite New York’s success in using the affiliate program as a mechanism to mandate the imposition of a sales tax, in a similar case the Illinois Department of Revenue was unsuccessful in trying to impose such a tax.  In Performance Mktg. Association v. Hamer, the Illinois Supreme Court struck down a state statute that imposed a tax collection obligation on out-of-state retailers who paid Illinois residents when advertisements on their website led to sales on the online retailer’s website.[10]  Illinois asserted that the use of state residents by out-of-state online retailers created a physical presence and a duty on behalf of the online retailer to collect sales tax.  The plaintiff argued that the Illinois statute constituted a discriminatory tax on electronic commerce because print and broadcasting entities using Illinois residents and compensating them based on sales performance did not mandate a tax collection obligation.  The decision by the Illinois Supreme Court, especially when contrasted with the decision of the New York Court of Appeals, illustrates the competing interpretation of whether affiliate programs may be used to force online retailers to collect sales tax.

III. Proposed Federal Legislation and Tax Agreements to End Disputes

While zealously litigating and lobbying against the tax statutes in New York and Illinois, Amazon founder Jeff Bezos has been an ardent proponent of a federal online sales tax.

A. Amazon Founder Supportive of Federal Legislation to Solve Tax Disputes

In an interview with Consumer Reports Bezos said, “[o]ur point of view on this is that we should simplify the sales tax system, and we’ve been consistent on this for about 10 years . . . Because the right way to fix this is with federal legislation.  That’s where it can be fixed properly.”[11]  Bezos supports the Marketplace Fairness Act of 2013.  The Act, which passed in the U.S. Senate in the spring of 2013, stipulates that online retailers that do not have a physical presence in a state where they make sales must collect sales tax if they have gross annual receipts in the United States exceeding one million dollars.[12]  If passed, this legislation would give large online retailers a streamlined process for imposing state sales tax on customers.  They would not be subject to fifty different state statutes for imposing sales tax.  Despite the upside of this proposed legislation, there is speculation that the bill will not pass in the U.S. House of Representatives due to concerns that its passage would lead to a tax increase for constituents.[13]

B. Amazon Solves Disputes with Some States by Reaching Sales Tax Agreements

Besides supporting efforts for a federal online sales tax, Amazon has reached tax agreements with some states in an effort to preempt state legislation that would force the retailer to impose a sales tax.  One of these states is Florida, where Amazon reached an agreement to build warehouses, and create as many as 3,000 jobs as part of a $300 million investment.[14]  In return, Florida will delay mandating that Amazon impose a sales tax on customers in the state.  A similar deal was reached with the state of South Carolina.[15]  In exchange for building a distribution center and bringing jobs to South Carolina, Amazon will not have to collect tax there until 2016.

The tax agreements with selected states serve as only short-term shields from the long-term collection of sales tax in these states.  For example, Amazon agreed to build two warehouses in exchange for a year-long exemption from collecting sales tax in the state of California.[16]  That year has passed, and now the tremendous advantage that Amazon had against traditional brick-and-mortar retailers is gone for the foreseeable future.  Nevertheless, Amazon might feel that such short-term preclusions of tax collection for the building of warehouses may be more advantageous than costly litigation and renewed state tax legislation.

IV. Impact of State Tax Agreements If Federal Legislation is Unsuccessful

As the short-term tax deals that Amazon has negotiated with states expire, more and more customers will begin to pay sales tax.  However, positive outcomes may result from these short-term arrangements.  Amazon has a greater network of distribution warehouses than it had prior to the tax disputes through settlements they reached with states like South Carolina, California, and Florida.  Amazon has stated that this greater quantity of warehouses has meant that it will be able to save up to a day off its two-day shipping time.[17]  Therefore, in losing what many consider a competitive advantage—no sales tax in these states—Amazon gains another advantage: faster shipping speed than many of its online competitors.

It is also questionable whether collecting states sales tax in these states will lead to a large loss of customers.  If these customers go to brick-and-mortar stores instead, they will have to pay sales tax there as well.  Moreover, imposing state sales tax may prove less restrictive and burdensome on actions that Amazon may undertake going forward.  In states where Amazon does not collect sales tax due to lack of a physical presence, the company has restricted employee travel.[18]  Amazon fears that employees traveling to those states on business would constitute the “nexus” requirement under Quill Corporation v. North Dakota.  Further, by imposing a tax Amazon could reinstate its affiliate programs in states where it chose to abandon the programs due to proposed online tax legislation.  States in which Amazon severed ties with affiliates due to state online tax legislation include Arkansas, Missouri, Minnesota, and Rhode Island.[19]  The reinstating of these affiliate programs along with faster shipping times and a lesser need for litigation and lobbying may make up for the loss of those customers that leave due to the collection of sales tax.

V. Conclusion

The only certainty in regard to the Amazon sales tax situation is that the status quo will not remain.  Amazon may reach agreements with states that it currently does not collect a sales tax in, or a federal law may be passed to govern the imposition of online sales tax.  By doing nothing states are losing out on vast quantities of tax revenue from online purchases.  Brick-and-mortar retailers have lobbied and will continue to lobby state officials over what they view as an unfair competitive advantage enjoyed by online retailers like Amazon.[20]  In spite of the likelihood that the number of states where Amazon must impose a sales tax will increase, all is not lost in terms of Amazon having continued success.  The faster shipping times that result from an increased number of distribution centers, and the ability to reinstate affiliate programs could mean continuing years of prosperity and success for the nation’s largest online retailer.

 


*J.D. Candidate, University of Illinois College of Law, expected 2016.  B.A. International Affairs, University of Georgia, 2012.  First, I would like to thank God for this opportunity.  This column would not have been possible without the guidance of Angie Nizio, the Recent Developments Editor at the Journal of Law, Technology and Policy.  I would also like to thank my friends and family for all of their encouragement and support.

[1] Graeme McMillan, Why Doesn’t Amazon Collect Sales Tax? The Constitution, That’s Why, Time Tech (May 18, 2011), http://techland.time.com/2011/05/18/why-doesnt-amazon-collect-sales-tax-because-of-the-constitution-thats-why/.

[2] Overstock.com, Inc. v. New York State Dep’t of Taxation & Fin., 987 N.E.2d 621, 623 (N.Y. 2013).

[3] Id. at 627.

[4] About Sales Tax on Items Sold by Amazon.com, Amazon, http://www.amazon.com/gp/help/customer/display.html?nodeId=468512 (last visited Mar. 8, 2014).

[5] Amazon.com, LLC v. New York State Dep’t of Taxation & Fin., 913 N.Y.S.2d 129, 134 (N.Y. App. Div. 2010).

[6] Id. at 135.

[7] Id. at 134.

[8] Id. at 137.

[9] Greg Stohr, Amazon Rejected by U.S. Supreme Court on New York Sales Tax, Bloomberg Businessweek (Dec. 2, 2013), http://www.businessweek.com/news/2013-12-02/amazon-rejected-by-u-dot-s-dot-supreme-court-on-new-york-sales-tax.

[10] Performance Mktg. Ass’n, Inc. v. Hamer, 998 N.E.2d 54, 59–60 (Ill. 2013).

[11] McMillan, supra note 1.

[12] The Marketplace Fairness Act of 2013, S. 743 113th Cong. § 2 (2013).

[13] Robert Barnes, Supreme Court Declines Case on Making Online Retailers Collect Sales Taxes, Wash. Post (Dec. 2, 2013), http://www.washingtonpost.com/politics/supreme-court-declines-case-on-making-online-retailers-collect-sales-taxes/2013/12/02/e430ec8c-55f5-11e3-835d-e7173847c7cc_story.html.

[14] Greg Bensinger, Amazon, Web Sales Taxes Coming to Florida, Wall St. J. (June 14, 2013), http://blogs.wsj.com/digits/2013/06/14/amazon-web-sales-taxes-coming-to-florida/.

[15] Rob Mandelbaum, Amazon Denies It Has a Small-Business Problem, N.Y. Times (Dec. 12, 2011, 11:00 AM), http://boss.blogs.nytimes.com/2011/12/12/the-backlash-to-amazons-price-check-promotion-builds/?_php=true&_type=blogs&_r=0.

[16] David Streitfeld, Amazon, Forced to Collect a Tax, Is Adding Roots, N.Y. Times (Sept. 11, 2012), http://www.nytimes.com/2012/09/12/technology/amazon-forced-to-collect-sales-tax-aims-to-keep-its-competitive-edge.html.

[17] Id.

[18] Robert W. Wood, Amazon No Longer Tax-Free: 10 Surprising Facts as Giant Loses Ground, Forbes (Aug. 22, 2013, 3:14 AM), http://www.forbes.com/sites/robertwood/2013/08/22/amazon-no-longer-tax-free-10-surprising-facts-as-giant-loses-ground/.

[19] See Updates to the Associates Operating Agreement Effective February 12, 2014, Amazon Associates (Feb. 12, 2014), https://affiliate-program.amazon.com/gp/associates/help/operating/compare.

[20] See Lydia Depillis, Amazon Wants to Send Stuff Before You Order It. Are Other Retailers Doomed?, Wash. Post (Jan. 30, 2014, 3:45 PM), http://www.washingtonpost.com/blogs/wonkblog/wp/2014/01/30/amazon-wants-to-send-stuff-before-you-order-it-are-other-retailers-doomed/.

Issues in Using Free Web Resources in Legal Practice

By Paul Healey* and Paul Gatz**

I.          Introduction

Access to accurate, complete, and timely legal information is an essential component of practicing law.  Unfortunately, such access has historically been expensive.  The growth and integration of the World Wide Web into daily life has led to a popular sentiment that “everything is on the web, and it’s free.”[1]  Although this is not true in most areas of information, there is reason to investigate such a possibility in the case of legal information, particularly in regard to primary resources such as statutes, cases, and regulations.

Traditional legal publishers moved online in the 1970s with the advent of Lexis and Westlaw.  These services, along with other newer competitor services are now accessed through the Web and are certainly accurate, complete, and timely, but they are far from free.  However, there are Web resources that offer a wealth of information that can be accessed free of charge.  In particular, several free Web resources, such as Google Scholar,[2] Cornell University’s Legal Information Institute (LII),[3] and numerous government websites provide an expanding coverage of legal information that attorneys can use to conduct legal research.

Our question is whether these free Web resources have developed the features and level of quality to serve as suitable legal research substitutes for the traditional fee-based electronic resources.  This Column will explore the online legal research habits of attorneys and will consider the types, extent, and depth of legal information available for free on the Web.  The Column will conclude with a discussion of issues related to conducting practice-oriented legal research solely by means of free Web resources.

II.        Trends in Online Legal Research

The use of free Web resources for the purposes of legal research seems to be prevalent among practicing attorneys.  In 2012, the Academic Law Libraries Special Interest Section (ALL-SIS) of the American Association of Law Libraries appointed a Task Force that distributed a survey on the legal research practices of attorneys.[4]  In the survey, 61.4% of responding attorneys reported that they use free Web resources in their legal research frequently or very frequently.[5]  Only 12.6% reported using them rarely or never.[6]

The 2013 annual Legal Technology Survey Report published by the American Bar Association (ABA) found that 92.9% of practicing attorneys use free Web resources for legal research purposes[7] and that 95.9% of attorneys use Web resources in general.[8]  The ABA survey information, unfortunately, offers few details on how attorneys are using free Web resources to conduct legal research.  However, it does say that fifty percent of survey respondents reported starting research projects with free Web resources in 2013.[9]  The percentage of attorneys who reported starting their research with fee-based Web resources was 36.4% in 2013,[10] while the percentage of attorneys who reported starting research with print resources was only 10.7%.[11]  These data indicate a clear preference for using free Web resources in the initial stages of research.

However, when starting a research project conducted solely online, the survey data indicate little difference in attorneys’ preferences for free or fee-based Web resources.  The percentage of attorneys who reported starting online research projects by using fee-based online resources was about 40%,[12] while the percentage of attorneys who reported starting online research projects by using free general search engines was 37%.[13]

The ABA survey reports provide some detail as to what sorts of free Web resources attorneys use for legal research.  In 2013, over a third of respondents, or 35.6%, reported using Google,[14] and about a quarter of respondents, or 24.6%, reported using a state bar association offering, which presumably means Fastcase or Casemaker.[15]  Other responses included government websites (14.3%), FindLaw (9.7%), and Cornell’s LII (9.4%).[16]

The ABA and ALL-SIS surveys present a picture of the legal research habits of practicing attorneys in which the use of free Web resources is widespread.  We know that attorneys are using free resources like Google, government websites, Cornell’s LII site, and state bar association offerings, but we do not know what types of information (primary or secondary, factual or legal, statutes or case law) or how much information attorneys are retrieving from these resources.  It is possible, however, to form some idea of how attorneys could use these resources, based on the types and extent of legal information that they make available.

III.       The Free Web Legal Information Environment

What is referred to here as the “free Web legal information environment” is nothing less than the totality of legal information available free of charge on the Web.  As a single entity, the Web is unfocused, disorganized, and fragmented, and the full range of its coverage is unknown.  However, consideration of its constituent websites, in particular those identified in the ABA Legal Technology Survey as used by practicing attorneys for legal research, can shed some light on the types, extent, and depth of legal information available in the free Web environment.  Below we describe the resources most often mentioned in the surveys.

A. Google & Google Scholar

Google’s standard search uses “software known as ‘web crawlers’ to discover publicly available webpages” and then creates an index of those websites.[17]  When a user enters search terms into Google’s search box, Google’s algorithms use those terms to determine and retrieve the most relevant websites from its index.[18]  Therefore, a Google search will help the legal researcher find only information available on publicly accessible websites and only information that the Google algorithms deem relevant to the search terms.

For a more focused search, the Google Scholar database of published case opinions covers “US state appellate and supreme court cases since 1950, US federal district, appellate, tax and bankruptcy courts since 1923 and US Supreme Court cases since 1791.”[19]  It also features a rudimentary citator, accessible by clicking “How cited” for a particular case.

B. Fastcase/Casemaker

Fastcase[20] and Casemaker[21] are not free Web resources, but nearly all state bars offer one or the other as a benefit of membership in the state bar association.[22]  Both databases provide online access to state and federal case law, statutes, and regulations.[23]  Fastcase’s Federal Library features a full set of case opinions for the U.S. Supreme Court, all federal appellate courts, all federal district courts, and all federal bankruptcy courts.[24]  Casemaker also features a “negative citator” called CaseCheck+[25] and daily summaries of state and federal appellate cases in its CasemakerDigest.[26]

C. Government Websites

Federal, state, and local government websites all provide information useful to the legal researcher.  Court websites provide recent case opinions, legislative websites provide statutory codes, as well as session laws and bills, and agency websites provide regulations, administrative decisions, and guidance.  In particular, the Government Printing Office’s Federal Digital System provides around fifty collections of information from all three branches of the federal government in the form of “authentic, digitally signed PDF documents.”[27]

D. Cornell University Law School’s Legal Information Institute

Cornell’s LII “publishes electronic versions of core materials in numerous areas of the law,” including U.S. Supreme Court opinions going back to 1992 and the full U.S. Code.[28]  The LII also publishes secondary sources, such as Wex, “a collaboratively-edited legal dictionary and encyclopedia,”[29] and provides links to other federal and state law material.

IV.       Issues in Using Free Web Resources in Legal Practice

Having reviewed a few of the more popular free Web resources for legal research, it is clear that the free Web legal information environment contains a wealth of primary legal information, along with a few citators and secondary sources.  To supplement these resources, the Web offers other free resources such as legal blogs and websites of law firms, law schools, libraries, and non-profit organizations that provide guidance on both the law and legal research.  The question remains whether the free Web legal information environment stands as an adequate legal research alternative for the fee-based electronic resources like Westlaw and LexisNexis.  Primarily, this is a question about whether these resources can offer specific features, like secondary sources, sophisticated citators, and editorial enhancements that match or exceed the level of quality offered by the fee-based resources.

Assuming that these threshold requirements were met, a number of issues and questions would arise.  For one, without the mediation of a trusted legal publisher like Thomson Reuters or Reed Elsevier,[30]   the practicing attorney would need to make determinations about the reliability of particular free Web resources.  Jootaek Lee has suggested that free Web resources should be evaluated on standards of authority, accuracy, currency, coverage, and usability.[31]  These evaluations would either need to be performed by the attorney during the course of legal research or performed and compiled into research guides by legal information experts.

Second, the transition from a legal research environment that is isolated from the public to one that is open to all may have serious effects on attorneys’ standards of professional competence and duty of care.  Lawrence Duncan MacLachlan has argued that public access to legal information on the Web “challenges the traditional assumption that lawyers are more competent researchers than the general public” and may lead to the transformation of “the minimal standard of professional competence in legal research from that of the ordinary lawyer to the higher standard of the ‘intelligent layman.’”[32]  In an environment in which attorneys conduct legal research solely using free Web resources, they will need to be more competent in using those resources than the “intelligent layman” in order to avoid alterations to their professional standards of competence.

Finally, it is worth considering what sort of market impact the free Web legal information environment may have on the traditional, fee-based electronic resources.  If free Web resources can adequately serve as substitutes for Westlaw, Lexis, or Bloomberg, then one might expect the greater degree of competition in the market for legal information to have serious economic effects on the business models and choices of the fee-based resources.  Competition may lead to increased quality of existing products and services, such as citators, finding aids, and editorial enhancements, as well as to new, innovative products and services.  Along with higher-quality and more innovative products and services, the fee-based resources may raise their subscription fees and market themselves solely to larger firms willing to pay their prices, leaving smaller firms and practice environments to rely solely on the free Web legal information environment.

V.        Conclusion

Practicing attorneys are using free Web resources for legal research.  These free Web resources vary in the types, extent, and depth of legal information they offer, and the free Web legal information environment itself remains unfocused, disorganized, and fragmented.  As free Web resources continue to develop, the legal profession should maintain an awareness of the issues and opportunities that may arise when attorneys can competently conduct legal research solely by means of the free Web legal information environment.

 


*Senior Instructional Services Librarian, Associate Professor of Library Service, University of Illinois College of Law

**Graduate Assistant, University of Illinois College of Law

[1] The True Value/Cost of Web-Based Information, CIT Infobits, May 2002, at 3, 3, available at https://cdr.lib.unc.edu/indexablecontent?id=uuid:43df4571-41b8-44ab-b73f-90df0e8b8457&ds=DATA_FILE (last visited Feb. 9, 2014).

[2] Google Scholar, http://scholar.google.com/ (last visited Feb. 8, 2014).

[3] Legal Info. Inst., http://www.law.cornell.edu (last visited Feb. 8, 2014).

[4] ALL-SIS Task Force on Identifying Skills & Knowledge for Legal Practice, A Study of Attorneys’ Legal Research Practices and Opinions of New Associates’ Research Skills 2 (2013), available at http://www.aallnet.org/sections/all/storage/committees/practicetf/final-report-07102013.pdf.

[5] Id.

[6] Id.

[7] Am. Bar Ass’n, 2013 Legal Technology Survey Report, Vol. V: Online Research 35 (Joshua Poge ed., 2013).

[8] Id. at 33.

[9] Id. at 22.

[10] Id.

[11] Id.

[12] Id. at 34.

[13] Id.

[14] Id. at 38.

[15] Id.

[16] Id.

[17] Crawling & Indexing, Google Inside Search, https://www.google.com/intl/en/insidesearch/howsearchworks/crawling-indexing.html (last visited Feb. 8, 2014).

[18] Algorithms, Google Inside Search, https://www.google.com/intl/en/insidesearch/howsearchworks/algorithms.html (last visited Feb. 8, 2014).

[19] Google Makes Free Caselaw Search Available in Scholar, Internet for Law., http://www.netforlawyers.com/content/google-makes-free-caselaw-search-available-scholar (last visited Feb. 8, 2014).

[20] Fastcase, http://www.fastcase.com/ (last visited Feb. 8, 2014).

[21] Casemaker, http://www.casemaker.us/Main.aspx (last visited Feb. 8, 2014).

[22] Shawn G. Nevers, Becoming a Cost-Effective Researcher, 14 Student Law. 18, 18–19 (2012), available at http://www.americanbar.org/publications/student_lawyer/2012-13/dec/cost_effective_researcher.html (last visited Feb. 8, 2014).

[23] Products, Casemaker, http://www.casemaker.us/Products.aspx (last visited Feb. 8, 2014); Scope of Coverage, Fastcase, http://www.fastcase.com/whatisfastcase/coverage/ (last visited Feb. 8, 2014).

[24] Scope of Coverage, supra note 23.

[25] CaseCheck+, Casemaker, http://www.casemaker.us/Productscasecheck.aspx (last visited Feb. 8, 2014).

[26] CasemakerDigest, Casemaker, http://www.casemaker.us/ProductsCMDigest.aspx (last visited Feb. 8, 2014).

[27] About FDSys, U.S. Gov’t Printing Office, http://www.gpo.gov/fdsysinfo/aboutfdsys.htm (last visited Feb. 8, 2014).

[28] Who We Are, Legal Info. Inst., http://www.law.cornell.edu/lii/about/who_we_are (last visited Feb. 8, 2014).

[29] FAQ, Legal Info. Inst., http://www.law.cornell.edu/wex/FAQ (last visited Feb. 8, 2014).

[30] These are the owners of Westlaw and LexisNexis, respectively.

[31] Jootaek Lee, Gatekeepers of Legal Information: Evaluating and Integrating Free Internet Legal Resources into the Classroom, 17 Barry L. Rev. 221, 228 (2012).

[32] Lawrence Duncan MacLachlan, Gandy Dancers on the Web: How the Internet Has Raised the Bar on Lawyers’ Professional Responsibility to Research and Know the Law, 13 Geo. J. Legal Ethics 607, 609–10 (2000).

Surrendering Your Smartphone at the Courthouse Door: Addressing the Rise of Technology-Related Juror Misconduct

Surrendering Your Smartphone at the Courthouse Door: Addressing the Rise of Technology-Related Juror Misconduct

By Rebecca Myhr Szajna*

 

I.  INTRODUCTION

“[S]o Johnathan, what did you do today?  Oh nothing really, I just gave away TWELVE MILLION DOLLARS of somebody else’s money.”

-Tweet sent by an Arkansas juror regarding his jury’s verdict in a 2009 civil lawsuit.[1]

 

Technology and juries just do not mix.  At least in the way that the current American legal system is structured.  The advent of new technologies that have created instant access to information and communication pose a serious threat to the current jury system.  One of the foundations of the American legal system is the right to a jury trial: “a jury composed of competent, fair, and impartial individuals, unbiased and free from outside influence.”[2]

A fundamental tenet of this system is that the evidence presented by the parties at trial is the only evidence allowed to be considered by the jury.  As Justice Oliver Wendell Holmes stated at the turn of the last century: “The theory of our system is that the conclusions to be reached in a case will be induced only by evidence and argument in open court, and not by any outside influence, whether of private talk or public print.”[3]  Before modern technologies, this rule was relatively easy to follow; however, with the invention of smartphones, iPads, and Facebook, this rule is facing serious challenges from today’s jurors.  Jurors can now access information about litigants, case facts, legal terms, and solicit feedback from “friends” with the touch of a button.

II.  HOW NEW TECHNOLOGIES THREATEN JUROR IMPARTIALITY

Over half of all Americans own a smartphone.[4]  As of 2010, seventy-four percent of American adults used the Internet.[5]  The number of Facebook users is over 1.1 billion per month.[6]  Apple sold three million iPads in the first eighty days of release, the fastest-selling electronic in history.[7]  Cities across the country provide free wireless Internet access to their communities.[8]  Everywhere we turn, people are talking, texting, or reading from a smartphone or tablet.  This proliferation of new technology has changed the fundamental ways by which we communicate and access information.

Our current adversary system is structured to provide two opposing sides the opportunity to argue that its side should win the case based on the evidence presented at trial; jurors are expected to decide a case based on: (1) what they learn from the two opposing arguments and (2) the deliberations of the group of jurors.  With the advent of new technologies, however, jurors can now do their own research, find their own evidence, and solicit feedback from others outside of the jury box.  Before these technologies, there were instances of misconduct where jurors visited crime scenes or went home and looked up the definition of a legal term in the dictionary.[9]  However, new technologies have made it easier than ever to access information that undermines what happens inside the courtroom with information from outside the courtroom.

Moreover, in conjunction with the rise of new technologies, which has created greater access to information and communication, is our reliance on the instant access they provide.  When we want to know the answer to something, we google it.  We expect to be able to find the answer to a question or post a Facebook status update at our whim.  For many, leaving home without their phone is unimaginable.  Internet addiction has even become a treated psychological disorder.[10]  Therefore, it is not surprising that the instances of jurors going beyond the courtroom to engage in Internet-related misconduct are on the rise.

Since 1999, at least ninety verdicts have been challenged because of alleged Internet-related juror misconduct, and more than half of them were between 2008 and 2010.[11]  Since this information was published in late 2010, one can only imagine how the numbers have grown in the last three years.

III.  EXAMPLES OF INTERNET-RELATED JUROR MISCONDUCT

There are many examples of Internet-related juror misconduct, where jurors have conducted factual and legal Internet research, blogged or tweeted about the juror experience, or engaged in improper contact with people involved in the case.

A.  Factual Research

As just one of many examples, jurors have attempted to look up a defendant’s prior criminal history.[12]  Whether such evidence is presented at trial is typically determined after the parties have filed motions in limine, argued over the merits, and the judge has decided the issue based on the law.  If jurors choose to look up a defendant’s prior convictions, then this important legal process has been subverted by the independent research conducted by the juror, which is outside of the controls established by the system.

B.  Legal Research

When jurors choose to conduct their own research into the legal issues disputed in a case, there can be severe consequences when the jurors either misunderstand the legal research, find erroneous information, or use the information in an improper way.  A particularly problematic example is when  jurors look up sentencing ranges, where the knowledge of the sentence then impacts the jury’s decision on guilt.[13]

C.  Sharing the Juror Experience

At first blush, sharing one’s experience as a juror seems the least harmful Internet-related juror behavior.  However, the fact that jury deliberations take place in secret is one of the fundamental aspects of the jury system.  If juror deliberations were made public, then they could be subject to undue external influence.  The secrecy of the jury room protects the sanctity of the decision-making process.  By blogging or tweeting about one’s experience, it opens up the jury room to outside influences and makes the decision-making vulnerable to public pressure.[14]

D.  Improper Contact with Case-Related Individuals

People v. Rios is a recent and prime example of how a simple Facebook “friend request” can possibly influence the outcome of a trial and, at the very least, call into question the validity of a criminal jury verdict.[15]  In that case, a juror “friend requested” through Facebook one of the witnesses who appeared in a wrongful death criminal case.  When the witness realized that it may be improper, he alerted the court to the friend request.  The court was then forced to engage in an investigation as to whether the actions of the juror caused unfairness to the defendant and whether a mistrial should be declared.  The time, effort, and cost associated with such an investigation harms not only the litigants in that case, but also the system as a whole.

IV.  WHY JURORS ENGAGE IN MISCONDUCT

In many instances of internet-related “misconduct,” the jurors are actually well-intentioned.  Most jurors who conduct factual or legal research do so because they feel that they need better or more information than was provided to them at trial.  Additionally, the drive and, some may argue, compulsion to be connected to others through social media has become natural.  When people update their Facebook status more than once a day, it is hardly surprising that they would want to share a rather atypical experience in their life, like jury duty.  The desire to engage in this kind of behavior, which has the impact of undermining the entire trial process, is not ill-intentioned, but rather misplaced.  Therefore, it is imperative that the proposed solutions to technology-related behavior by jurors take into account the “why” of Internet juror misconduct as much as the “how.”

V.  PROPOSED SOLUTIONS

So how do modern-day courts handle the problem of modern-day juror misconduct?  There have been many proposed solutions to the rise of Internet-related juror misconduct; one thing is clear, however: a holistic, multi-faceted approach is required in order to combat the potential of juror misconduct in this modern technological era.  A one-step approach will not suffice, where each proposed solution will not fix the problem alone.  Only a variety of solutions used in conjunction with one another will combat the effects of technology on juror behavior.  Because investigating juror misconduct after the verdict is so difficult, the focus needs to be on preventing the harm before it occurs.[16]

A.  Voir Dire

Many attorneys have begun to question potential jurors about their Internet activity before they become jurors.[17]  While this makes sense and seems to be good lawyering, it begs the questions: Is digging into a potential juror’s online presence a violation of privacy rights, and, moreover, once it has been established that a potential juror is someone who has a high online presence, what do the litigants do with that information?  Given the unease and uncertainty of conducting extensive voir dire on jurors’ Internet presence and usage, this may be a somewhat helpful, but rather limited solution to the problem.

B.  Jury Instructions

Jury instructions need to be better-written, easier to understand, more explicit, and provide explanation for the prohibition against case-related Internet usage.  Instructions alone will never be able to quench jurors’ curiousity or eliminate the desire of some jurors to disregard them, but they are certainly another piece of the puzzle.[18]  The key is that the instructions must not only explain in layperson terms what is prohibited, but also must educate the jurors and explain why the prohibition is necessary.  Providing an explanation as to how external research or improper Internet use can damage the entire trial process will be more effective in combatting the misconduct.

C.  Penalties for Violating Jury Instructions (As Well as Alerting Jurors to the Penalties)

Many argue that a stronger approach is necessary to combat the serious threat of improper Internet usage by jurors in the form of stronger enforcement processes, such as penalties or fines for jurors who violate their oaths by improperly using new technology while serving as jurors.  Holding jurors in contempt and punishing them or fining them for misconduct can act as a deterrent to jurors and decrease the likelihood that jurors may risk such punishments by engaging in misconduct.  One scholar suggests using sequestration as a stick, threatening jurors with the possibility of sequestration if they cannot be trusted on their own to abide by the rules.[19]  While providing stiff penalties and enforcement tools to combat Internet-related misconduct is important, it is most useful to make those punishments known and understood in the context of explaining why Internet misconduct can be so harmful.  Jury instructions should make clear both the reasons why Internet usage is prohibited and then the subsquent punishments if those rules are violated.

D.  Limit Internet Access of Jurors

Many courts have begun prohibiting use or possession of cell phones in the courtroom or even the courthouse.[20]  While sequestration, where jurors are monitored 24/7, would be the best way to prohibit improper Internet use, the cost and burden of sequestration makes this a viable option in only the most extreme of cases, such as the trials of O. J. Simpson, George Zimmerman, and Casey Anthony.  Taking away the use of smartphones, iPads, and laptops while jurors are in the courthouse makes sense and can eliminate the temptation to use technology inappropriately during proceedings.  However, it will not work alone, as jurors can certainly look up anything on the Internet after they leave the courthouse.  Additionally, the anxiety created by such a measure could leave many technology-addicted jurors in shambles and have negative consequences on the juror decision-making process.[21]

E.  Implement Jury Reforms

Many of the reasons jurors engage in misconduct can be reduced or eliminated by implementing some of the reforms that have long been suggested to improve the jury system.[22]  While these reforms were not recommended as a solution to technology-related juror misconduct, new technologies may be the impetus to push forward some of the jury reforms that have long been suggested.  These reforms include: allowing jurors to ask questions, take notes, and deliberate with each other throughout trial.[23]  New technologies have created more active jurors; thus, allowing jurors to become more involved in the trial process can address the juror activity that has emerged through Internet misconduct.[24]  If jurors have other options to fill the needs that they are currently using the Internet to fill (i.e. to educate themselves about the case and connect with others), then these reforms could decrease the desire of jurors to go outside of the jury box.

F.  Better Lawyering

As with many problems related to juries and the work they do in deciding cases, many of these problems can be addressed through better lawyering.  Yes, improved jury instructions and court-implemented juror reforms are necessary, but rather than leaving it up to the court to fix the problem, lawyers should take it upon themselves to make it less tempting for jurors to go beyond the walls of the courtroom to engage in improper behavior.  If lawyers do their job in anticipating and answering juror questions, then jurors may not feel as compelled to seek outside information or input.[25]

G.  An Additional Consideration: Juror Stress

The stressful impact of jury service on jurors is an emerging area of concern for the legal system.[26]  One unanticipated effect of new technologies on jurors can be seen in the form of juror stress.  Even if the previously discussed reforms are implemented, none of the proposed solutions address the negative impact of restricting juror access to the Internet.  Even if jurors are better instructed and educated about the need to refrain from engaging in improper Internet-related behavior, it does not necessarily make it easier to obey.  The need to be plugged-in and connected 24/7 can be an overpowering need for many.[27]  How will restricting Internet behavior affect jurors’ psyches and abilities to focus on the case at hand?[28]  In fashioning a response to the increase in juror misconduct resulting from new technologies, the response will be incomplete without addressing the anxiety caused by reducing technology use in jurors, if even for a day.  The system cannot ignore the notion of juror stress and how the restriction of Internet activities can impact juror well-being and, ultimately, their decision-making abilities.

VI.  CONCLUSION

A few things are clear when it comes to Internet-related juror misconduct.  One is that this is a multi-faceted problem that requires a multi-faceted solution.  And, two, the impact of restricting the natural, normal, and compelling Internet behavior of jurors may threaten not only the impartiality of jurors, but also their well-being and decision-making capabilities.  Given the ever-increasing use of new technology, this is an area that is in desperate need of empirical study.[29] And, with newer technologies on the horizon, the only way for the American legal system to continue to function as intended is by confronting these challenges head-on and by adapting the jury system to meet these technologies as they develop.

 


* Adjunct Professor, University of Illinois College of Law. Stanford Law School, J.D. 2002; The Illinois School of Professional Psychology, M.A. 2008; Arizona State University, B.S. 1999. Much thanks to Angelica Nizio and the rest of the editors of the the Journal of Law, Technology & Policy.

[1] Amanda McGee, Juror Misconduct in the Twenty-First Century: The Prevalence of the Internet and Its Effect on American Courtrooms, 30 Loy. L.A. Ent. L. Rev. 301, 308 (2010).

[2] Kate L. Dysart & Camalia M. Kimbrough, #Justice? Social Media’s Impact on the Jury System, A.B.A. (Aug. 22, 2013), http://apps.americanbar.org/litigation/committees/trialevidence/articles/summer2013-0813-justice-social-media-impact-us-jury-system.html.

[3] Patterson v. Colorado, 205 U.S. 454, 462 (1907).

[4] Dara Kerr, Over Half of American Adults Own Smartphones, CNET (June 6, 2013, 1:01 PM), http://www.cbsnews.com/8301-205_162-57588043/.

[5] Lee Rainie, Pew Research Ctr., Internet, Broadband, and Cell Phone Statistics 1 (2010), available at http://www.pewinternet.org/~/media//Files/Reports/2010/PIP_December09_update.pdf.

[6] Associated Press, Number of Active Users at Facebook over the Years, Yahoo News (May 1, 2013, 7:27 PM), http://news.yahoo.com/number-active-users-facebook-over-230449748.html.

[7] John Paczkowski, Who’s Your Daddy? IPad Rewriting Adoption Records, All Things Digital (Oct. 5, 2010, 4:50 AM), http://allthingsd.com/20101005/whos-your-daddy-ipad-rewriting-adoption-records/.

[8] Michael Springer, 57 Cities Now Have Free Wi-Fi, but They’re Not Thinking Big Enough, PolicyMic (Oct. 9, 2013), http://www.policymic.com/articles/66891/57-cities-now-have-free-wi-fi-but-they-re-not-thinking-big-enough.

[9] Caren Myers Morrison, Can the Jury Trial Survive Google?, Crim. Just., Winter 2011, at 5.

[10] McGee, supra note 1, at 309.

[11] Brian Grow, As Jurors Go Online, U.S. Trials Go Off Track, Reuters (Dec. 8, 2010, 3:23 PM), http://www.reuters.com/article/2010/12/08/us-internet-jurors-idUSTRE6B74Z820101208.

[12] People v. Garcia, No. C049205, 2007 WL 29949, at *5 (Cal. Ct. App. Jan. 5, 2007); see also Nick Madigan, Juror’s Misconduct Leads to New Trial in Gang Killing, Balt. Sun (Sept. 12, 2010), http://articles.baltimoresun.com/2010-09-12/news/bs-md-marshall-newtrial-20100911_1_rival-gang-member-pasadena-denver-lanes-three-jurors (vacating a Baltimore gang member’s conviction after juror performed an Internet search on the defendant’s prior criminal record).

[13] Morrison, supra note 9, at 7.

[14] Timothy J. Fallon, Mistrial in 140 Characters or Less? How the Internet and Social Networking Are Undermining the American Jury System and What Can Be Done to Fix It, 38 Hofstra L. Rev. 935, 938–39 (2010); J. Paul Zimmerman, A Practical Guide to the Development of Jury Charges Regarding Social Media, 36 Am. J. Trial Advoc. 641, 645–49 (2013).

[15] People v. Rios, No. 1200/06, 2010 WL 625221, at *2 (N.Y. Sup. Ct. Feb. 23, 2010).  The case arose out of the deaths of two New York firefighters.

[16] Fallon, supra note 14, at 945–53.

[17] McGee, supra note 1, at 317–18.

[18] Fallon, supra note 14, at 954–67.

[19] Id. at 965–67.

[20] Ralph Artigliere, Sequestration for the Twenty-First Century: Disconnecting Jurors from the Internet During Trial, 59 Drake L. Rev. 621, 638 (2011).

[21] Id. at 639–40; see also Matt Richtel, Attached to Technology and Paying the Price, N.Y. Times (June 6, 2010), http://www.nytimes.com/2010/06/07/technology/07brain.html?pagewanted=all&_r=0.

[22] See, e.g., Akil Amar, Reinventing Juries: Ten Suggested Reforms, 28 U.C. Davis L. Rev. 1169 (1995) (providing various suggestions for jury reform).

[23] Artigliere, supra note 20, at 632; Morrison, supra note 9, at 13.

[24] Nicole L. Waters & Paula Hannaford-Agor, Jurors 24/7: The Impact of New Media on Jurors, Public Perceptions of the Jury System, and the American Criminal Justice System 2–3 (2012), available at http://www.ncsc-jurystudies.org/What-We-Do/~/media/Microsites/Files/CJS/What%20We%20Do/Jurors_%2024-7_REV011512.ashx.

[25] Artigliere, supra note 20, at 633–634.

[26] See, e.g., J. Chris Nordgren & Matthew W. Thelen, Helping Jurors Manage Stress: A Multilevel Approach, 82 Judicature 256, 259–62 (1999) (explaining ways for jurors to manage stress during the trial).

[27] See Richtel, supra note 21; Henry Wallop, People ‘Anxious’ When Cut Off from Internet, Telegraph (Oct. 13, 2009, 7:00 AM) http://www.telegraph.co.uk/technology/news/6307460/People-anxious-when-cut-off-from-internet.html (detailing the anxiety many people feel when cut off from technology).

[28] See Artigliere, supra note 20, at 627 (stating that taking away technology from people evokes unexpected reactions and concerns).

[29] Id. at 624–25.