Laws Are Sometimes Not Enforced. That Doesn’t Mean You Should Break Them

Reading the other day about corruption, we were reminded that New York City annually publishes statistics naming and shaming (or trying to shame, at least) the diplomatic missions that disregard municipal laws, most notably in the context of that most fiercely contested of metropolitan skirmishes, street parking.

Like many cities, New York City – and especially Manhattan – does not have enough street parking for all those who would like to park there. And while of course there are parking lots, those can be extremely pricy. The Holy Grail of a trip into “the City” is a free parking spot on the street within an easy walk of one’s destination.

For residents, the challenges are even more severe, as street cleaning regulations mean automobile owners must spend hundreds of hours each year juggling their vehicles from one side of the street to the other. Indeed, New Yorker writer Calvin Trillin wrote an entire novel about Murray Tepper, “an ordinary New Yorker” who likes to sit reading the newspaper in his car (for which he has secured an extremely desirable parking spot), and since you ask, no, he is not “going out”, thank you very much.

In 1977, the editors of The New York Times complained about the behavior of foreign diplomats, who by treaty face no legal consequences for ignoring parking fines, writing, “Our Government requires all members of its missions abroad to obey the laws and regulations of the countries to which they are accredited, recalling them if they abuse their privileges. At the same time, secure from prosecution of suit, members of diplomatic missions sent here are allowed to treat United States laws in a cavalier manner.”

You may think this trivial harrumphing by liberal elites, but in 2011, foreign diplomats owed New York City $17.2 million in unpaid parking fines. Russia is perennially the worst offender (although Kuwait beats them on a per-diplomat basis; one Kuwaiti diplomat managed to accumulate two unpaid parking fines every working day for a year), but even the Vatican sins on occasion.

Diplomatic parking habits in Manhattan provide an opportunity for looking at lawfulness through a cultural lens – the availability of spaces is equally limited for all motorists, but compliance with the legal requirement to pay fines for violations of the law is very different, e.g. you may be unsurprised that diplomats from Denmark, Sweden and Norway consistently pay their tickets.

For decades, New York officials have been outraged by diplomatic scofflaws, but powerless to act. Then, in 2002, with the permission of the U.S. Department of State, Mayor Michael Bloomberg revoked the nearly 200 diplomatic plates and threatened to take further action. Parking violations immediately dropped by 95 percent. The economist Tim Harford wrote, “It is a reminder that while culture matters, rules matter too.”

International lawyers earn their living by reminding our clients that laws can be very different from jurisdiction to jurisdiction, and that especially if you are a “guest” in a foreign country, you will do well to abide by local laws and regulations to the letter.

We have written many times about companies and individuals who approach us to ask if it is “okay” if they ignore this or that foreign law because “our local partner says everyone does it this way”. We always reply that it may be true that “everyone does it this way”, right up until the government decides to start enforcing the law that “everyone” is skirting.

We note also that it is almost always foreign companies and individuals initially targeted by law enforcement officials, in an effort to “kill the [foreign] chicken to scare the [domestic] monkeys”. But it is not always the foreigners who are targeted first. In 2018, we wrote about “China Movie Stars and The Two-Contract Problem”, describing the legal woes of Chinese A-list actress Fan Bingbing and China’s efforts to crack down on film industry tax evasion.

Over the years we have also often been asked if it is “okay” for companies to establish a legal presence in Hong Kong, then manage a de facto China business – with mainland Chinese employees working in mainland China – from there. We say, “No, don’t do that.”

Also, don’t hire a bunch of “independent contractors” to try to dodge employer taxes and benefits.

It’s not only China where you might be fooled into thinking it’s “okay” to ignore laws that are on the books but seldom enforced.

In the United States, we are continually working to help our clients navigate the conflict between federal and state legal regimes governing the cannabis business. As far as the federal government goes, everything’s illegal, but in 2018, U.S. Attorney McGregor Scott said that in California – the world’s largest legal recreational marijuana market – he planned to prioritize enforcement against black market cannabis operations rather than businesses that were legal under state law.

“The reality of the situation is there is so much black market marijuana in California that we could use all of our resources going after just the black market and never get there,” Scott said. “So for right now, our priorities are to focus on what have been historically our federal law enforcement priorities: interstate trafficking, organized crime and the federal public lands.”

In 2019, we noted that the U.S. Food & Drug Administration (FDA) had been “using enforcement discretion” in its treatment of the hemp-derived cannabidiol (CBD) industry. Then-FDA commissioner Scott Gottlieb testified to a Senate subcommittee, “I will take enforcement action against CBD products that are on the market if manufacturers are making what I consider over-the-line claims”; for example, that CBD can “cure cancer or prevent Alzheimer’s disease.”

Gottlieb continued, “But there are products on the market right now that, given our enforcement priorities and our limited resources, we haven’t taken action against. That’s not an invitation for people to continue marketing these products—we’re concerned about it—but we heard Congress loud and clear here.”

Some readers might think the federal government is “okay” with cannabis, or CBD, or whatever activity it is not turning its enforcement spotlight on at the moment. And de facto, that might be true “at the moment”. But as lawyers, we like to view things through a de jure lens.

 

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