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Government Responds to Liberty Dollar Lawsuit

Some time ago I reported that the U.S. Mint had issued a warning (scroll down) to the effect that the Liberty Dollar was illegal. The Liberty Dollar organization has filed a lawsuit for declaratory judgment that the Liberty Dollar is legal and an injunction barring the U.S. Mint from claiming that it is illegal. The Mint, the Secretary of the Treasury, and the Attorney General are named as defendants. The government has now responded (with a motion to dismiss), and all the paperwork is now available online. Upon reading the government's motion, I was rather confused, because it makes it sound as though the Liberty Dollar had asked for an injunction prohibiting the Department of Justice from prosecuting them (which doesn't make any sense). Of course, they didn't actually ask for that in their brief, they just asked the court to declare that it was a "private voluntary barter currency" and that it's not illegal provided you don't try to pass it off as U.S. currency.

Consider a roughly equivalent case: suppose that the Department of Commerce issues a warning on its web-site stating that shopping at Wal-Mart was a federal crime. They cite a statute in support and reasonable people (including reasonable people who have been to law school) disagree as to whether shopping at Wal-Mart is a crime under the statute. Commerce further claims (as the Mint did in this case) that "prosecutors with the Department of Justice have determined" that shopping at Wal-Mart "is a Federal crime." Wal-Mart's business goes down the hole. It isn't Wal-Mart that the DoJ is allegedly going to prosecute, but its customers, so what is Wal-Mart to do? Further, suppose that no such prosecution is forthcoming, so Wal-Mart's business continues to drop, but no court ever has a chance to rule on whether the allegation that shopping there might be criminal is true. What's to stop the government from going around doing this to whatever business it likes, on more and more specious grounds? Surely this is the sort of case that declaratory judgments were meant for: Wal-Mart should be able to ask a court to rule on whether shopping at Wal-Mart is in fact a crime. Assuming that the people at Commerce believe in good faith that their statements are true, they probably haven't done anything they can be sued or prosecuted for, until the relevant fact is established by a court.

Such things are done in civil cases from time to time, and the government's brief seems to me to implicitly acknowledge that if a question of civil law was at issue then the court would have to consider the case rather than dismiss it. For instance, if I recall correctly, in SCO's case against Red Hat (where it claimed that Linux violated its alleged Unix copyrights - Novell, incidentally, got involved and claimed that SCO didn't have any such copyrights, as Novell still owned them; I don't think the case is decided) the court issued a preliminary injunction barring SCO from publicly claiming that Linux infringed its copyrights until the case was decided, since such claims damaged Red Hat's business.

The Liberty Dollar is in this sort of position. Matters are complicated by the fact that in 1999 a spokeswoman for the U.S. Treasury said "There's nothing illegal about this" and in 2000 the head of the Seattle field office of the Secret Service (which investigates counterfeitting cases) said "It's not counterfeit money ... [the Secret Service] determined there wasn�t a federal currency violation." The Liberty Dollar setup has not changed significantly since 1999, but for whatever reason the government has changed its mind (I supposes this is not too surprising, considering that this is a different cabinet, and there was that big shakeup with U.S. Attorneys).

At any rate, the Liberty Dollar claims that the U.S. Mint is making false statements that damage the organization, but the U.S. Mint claims that the statements are true and necesary for the protection of consumers. This seems like a case to be decided by a court, but whether the Mint should be making such statements doesn't seem to be able to be determined without first determining whether the statements in question are actually true - and that requires the court to issue a declaratory judgment.

I'm of course not familiar with the legal technicalities, and these are mostly jurisdiction issues at this stage. I just know that the U.S. Mint shouldn't get away with saying such things if they aren't true, and there's no way it should be illegal to engage in barter with pieces of silver.