Judge strikes down payday loan initiative

JEFFERSON CITY, Mo. (AP) -- Supporters of a Missouri initiative limiting payday loans vowed to press forward with their petition drive Thursday despite a court ruling striking down the ballot title because it was "likely to deceive" people.

Cole County Circuit Judge Dan Green invalidated the wording that has appeared on the petition sheets, calling into question the legality of thousands of signatures collected from registered voters just one month before the May 6 deadline to submit them to the secretary of state's office.

Without time to start from scratch with new petition sheets, initiative supporters said they planned to press ahead and hope that state officials — and the courts — allow the signatures to be counted and the measure to appear on the November ballot. Supporters said they already have gathered nearly 100,000 signatures, which would be more than needed if all the signatures are determined to be valid.

"We are proceeding at full speed to complete our signature gathering effort to qualify the ballot. We are going to go boldly forward to win this campaign," the sponsoring group, Missourians for Responsible Lending, said in a written statement.

But opponents cheered the court ruling as a potential death knell for the initiative.

Missouri law says that "signatures on petition pages that do not have the official ballot title affixed to the page shall not be counted as valid."

As a result of Green's ruling, "the old signatures can't count, and they're going to have to start again with the new language," said Kansas City attorney Eddie Greim, one of several attorneys who challenged the initiative on behalf of payday loan operators and other short-term lenders. "I just don't think there's time."

Green ruled that the initiative summary prepared by Secretary of State Robin Carnahan's office was "insufficient, unfair and likely to deceive voters" because it said the measure would "limit the annual rate of interest, fees, and finances charges" without specifying the actual limit being proposed. Green rewrote the summary to say it would "allow annual rates up to a limit of 36 percent, including interest, fees and finance charges."

The judge also directed Auditor Tom Schweich's office to prepare a new financial estimate for the measure. The original estimate said state government could lose $2.5 million to $3.5 million, but Green ruled that failed to take into account a certain category of short-term lenders who might also lose business and trigger an even greater reduction in tax revenues.

Schweich said his office could write a new financial estimate fairly quickly.

A Carnahan spokesman defended the original summary and said the office is considering whether to appeal Thursday's ruling.

Payday loans give borrowers money in exchange for a check that is cashed on their next payday. Other types of short-term loans are secured by vehicle titles or other means. The charges can mount, because borrowers can roll the loans over several times.

According to a January 2009 Missouri Division of Finance study, the average payday loan was for $290 and the average annual interest rate was 431 percent.

Those involved in the short-term loan industry say an annual interest rate cap of 36 percent could force them out of business, because the rate would not allow them to make enough money to cover their costs.

"There are times, when people need a short-term loan for very legitimate reasons, and there are highly regulated lenders out there who fill that need," said Jefferson City attorney Chuck Hatfield, who represented some of the plaintiffs challenging the ballot initiative. "The current regulations sufficiently protect the consumers."

Critics contend Missouri has some of the most lenient lending limits among the states that allow payday loans.

"They're preying on people who are in desperate financial situations," said the Rev. James Bryan, of Columbia, a retired Methodist pastor who is the treasurer for Missourians for Responsible Lending. "It's really a scourge on our society that we've allowed it to go this far."

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Allies: Judge upset by Obama remarks not political

NEW ORLEANS (AP) -- A federal judge who called out President Barack Obama for saying it would be "unprecedented" for the Supreme Court to strike down a law like his administration's health care overhaul is a conservative voice on what may be the nation's most conservative appeals court.

But those who know Judge Jerry E. Smith from his years on the 5th U.S. Circuit Court of Appeals in New Orleans and earlier days in Texas politics paint a more complex portrait of someone who isn't bound by conservative ideology or afraid to buck the Republican party line.

"He takes his judicial responsibilities very seriously and is very careful to stay out of any political controversy," said Ilya Somin, a George Mason University law professor who clerked for Smith in 2001 and 2002.

Somin said Smith is so careful to remain impartial that he refused to recommend restaurants worth visiting in Houston and New Orleans during a 2003 interview with a blogger. The blogger, Howard Bashman, quoted Smith as saying "it might be improper for a judge publicly to endorse a particular commercial establishment."

Although Smith was a Republican party activist in Texas before President Ronald Reagan nominated him for a seat on the 5th Circuit in 1987, Somin and other former clerks say they never saw any evidence that politics factored into his work on the appeals court.

Stephen Henderson, a University of Oklahoma law professor who clerked for Smith in 1999 and 2000, described him as a brilliant jurist and warm man who embodies "what every appellate judge should aspire to be."

"Judge Smith is not about grandstanding. If he asks a question from the bench, it's an honest question," Henderson said. "Judge Smith has no control over whether others turn a court order into a political football. If he asks a question, it's because he wants to know the answer."

During a hearing Tuesday for a case that is separate from the Supreme Court's review of the health care law, Smith ordered the Justice Department to submit a letter affirming the federal court's authority to strike down laws passed by Congress.

In a letter Thursday responding to Smith's order, Attorney General Eric Holder offered assurances that the Obama administration respects the authority of the courts.

"The longstanding, historical position of the United States regarding judicial review of the constitutionality of federal legislation has not changed," Holder wrote.

Smith's office in Houston declined interview requests this week, and said the judge would not be commenting on the ordered letter because the case before his court is pending.

Smith's reference to "Obamacare" during Tuesday's hearing became fodder for the polarizing debate over health-care reform, but a Democratic party activist who crossed paths with Smith before he become a judge remembers him as a someone willing to cross party lines and work outside the mainstream of his own party. David Jones, a Houston lawyer, said Smith's grassroots work and early support for Reagan made him a GOP "outsider" at the time.

"He was never part of the good-old-boy crowd, and neither was I," Jones said.

Smith, a 1969 graduate of Yale University who also got his law degree from Yale Law School, had a private law practice in Houston from 1973 to 1984. He also served as Harris County GOP chairman in the late 1970s.

Smith and Jones once supported the same Democratic candidate, Kathy Whitmire, who was the first woman elected mayor of Houston. Whitmire appointed Smith to be the city's top attorney in 1984.

Some women's groups initially expressed opposition to Smith's nomination to the 5th Circuit because of disparaging comments he reportedly made about women while serving as GOP county chairman. A July 1987 article in the Houston Chronicle says Smith had labeled feminists as a "gaggle of outcasts, misfits and rejects" and referred to the League of Women Voters as the "Plague of Women Voters."

But backing from Whitmire and other supporters helped quell opposition to his confirmation. Jones said he also put in a good word for Smith with the Judiciary Committee and its then-chairman, Sen. Joe Biden, after Smith called him "out of the blue" and invited him to lunch, seeking his help.

"I knew that we weren't on the same side, but I knew he was honest," Jones said.

Jones said lawyers who argue death penalty and abortion cases before the 5th Circuit often give him grief when they find out he spoke out in favor of Smith's nomination.

"They say, 'I really wish you hadn't done that,'" Jones said with a laugh.

Somin, however, said Smith hasn't been shy about taking positions many conservatives wouldn't support.

"You don't need to take my word for it because the decisions are available in the public record," he said. "The record doesn't support a judge who simply votes the way conservatives might like."

Somin cited two of Smith's opinions as examples: a 2003 decision that struck down a San Antonio ordinance restricting the location of adult businesses on First Amendment grounds, and a 2001 ruling in a drug case that held a homeowner has a "reasonable expectation of privacy" when police searched a vehicle owned by somebody else but parked on the homeowner's driveway.

More recently, Smith wrote the March 2 opinion when a three-judge panel upheld a landmark ruling that the Army Corps of Engineers is liable for New Orleans property owners' claims that shoddy work on a shipping channel caused billions of dollars in damage from Hurricane Katrina's storm surge. The panel rejected the federal government's argument that it is entitled to immunity from the plaintiffs' lawsuits.

"Judge Smith was not buying the company line," said Joe Bruno, one of the plaintiffs' lawyers in the case. "They affirmed a decision when the government thought it was a slam dunk for them."

James Garner, who also represented plaintiffs in the same case, described Smith as a "straight, fair, smart judge."

"He zeros in on the issues and asks the right questions," Garner said.

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Judge rules for DuPont on Kevlar antitrust claims

DOVER, Del. (AP) -- A federal judge in Virginia has ruled in favor of DuPont Co. in a dispute with a South Korean company that lost a trade secrets lawsuit last year.

The judge late Thursday granted summary judgment to DuPont on antitrust claims by Kolon Industries alleging that DuPont tried to monopolize the market for high-strength synthetic fibers used in products such as Kevlar body armor.

Earlier this year, the judge refused to overturn a jury's decision in the underlying trade secret lawsuit.

The jury ruled that Kolon had maliciously and willfully misappropriated DuPont's Kevlar technology and awarded DuPont a $919 million damage award.

DuPont says it will begin proceedings shortly to enforce that judgment, and that it has filed a motion requiring Kolon to stop making products using the stolen technology.

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