This morning, the Manhattan Institute released my latest finding in the Proxy Monitor series: 2013 Proxy Season Underway: JPMorgan Chase Chairman vote looms large in busy May proxy season. As of May 3, 175 of America's 250 largest publicly traded companies, tracked in the ProxyMonitor database, had filed proxy documents and 72 of these had held annual meetings. In addition to summarizing proxy submission and voting results to date, I look at JPMorgan Chase's looming --and widely publicized--May 21 annual meeting, in which shareholders will consider a proposal sponsored by the pension fund of the American Federation of State, County, and Municipal Employees (AFSCME) to separate the bank's chairman and CEO positions, which the market may read as a referendum on the leadership of incumbent chairman and CEO Jamie Dimon--and which may, if the board reacts to the vote by stripping him of his chairmanship, prompt Dimon to leave the bank he steered ably through the financial storm.

Key statistics on filings to date include:

In a front-page story in yesterday's New York Times, Nicholas Confessore reports on the pending rulemaking petition at the Securities and Exchange Commission on corporate political spending, which was submitted in August 2011 by a group of professors led by Harvard's Lucian Bebchuk and Columbia's Robert Jackson. There's nothing really new in the report that hasn't been known to those following these issues for months; it could be the case that the SEC acts on this rather soon, now that former U.S. Attorney for the Southern District Mary Jo White has been confirmed as the Commission's Chairman.

A couple of points in Confessore's piece call for clarification/correction:

1. Professor Jackson states, "Shareholders have been demanding this information for some time." Well, some shareholders have, to be sure, but Jackson's statement, without qualification, has a Bizarro-world-type character. Dating back to 2006, not a single shareholder proposal related to political spending has received majority shareholder support among the 250 largest companies in the Manhattan Institute's Proxy Monitor database, excepting a 2006 proposal at Amgen that management backed. As I noted in my winter report, in 2012, such proposals won "on average the support of 18.3 percent of shareholders, down from 24.3 percent in 2011." And "the seven largest such investors--Vanguard, BlackRock, State Street, Fidelity, Capital World Investors, Capital Research Global Investors, and T. Rowe Price--supported only 3.6 percent of all proposals calling for increased disclosure of corporate political spending."
2. The article states that "advocates" for the proposal analogize corporate political spending to executive compensation. While that's true, their analogy is strained. Executive compensation and related-party transactions are both directly pertinent to the classic agency-cost case for management monitoring, whereas Bebchuk and Jackson's political-spending-as-management-misappropriation hypothesis simply lacks the theoretical rigor and empirical foundation underlying management-pay and self-dealing disclosures.
   

The late Sen. Daniel Patrick Moynihan (D-N.Y.) famously remarked, "Everyone is entitled to his own opinion, but not to his own facts." Tell that to the leaders of the social-investing funds Domini Social Investments and Green Century Capital Management, who along with Public Citizen's Lisa Gilbert, made the following claim in Politico: "The five largest U.S. mutual fund families supported [shareholder proposals seeking corporate political transparency] more than 80 percent of the time during the 2012 proxy season."

Whatever one's thoughts about corporate disclosure of political spending--about which I have written elsewhere--this claim is wildly inaccurate. In 2012, the seven largest mutual fund families--Vanguard, BlackRock, State Street, Fidelity, Capital World Investors, Capital Research Global Investors, and T. Rowe Price--supported only 3.6 percent of proposals calling for increased disclosure of corporate political spending, as is evident from a review of Form N-PX proxy filings publicly available from the Securities and Exchange Commission.

How could Public Citizen and the social-investing funds be so far off? Well, I don't know for sure--and Public Citizen has a long track record of playing fast and loose with the facts--but the claim probably originated with a February 3 Financial Times piece by Sarah Murray, which stated, "The five largest US mutual fund families supported corporate political disclosure more than 80 per cent of the time in 2012, according to the Center for Political Accountability (CPA), a Washington-based advocacy organisation."

The problem is, the CPA makes no such claim. To the contrary, in its December 2012 analysis of last year's proxy season, CPA states, "As in previous years, the three largest mutual fund families in the United States failed to support a single political spending disclosure resolution." Figure 2 on page 3 of that report does show five U.S. mutual fund families that supported more than 80 percent of such proposals--MFS, Alliance Bernstein, Morgan Stanley, Wells Fargo, and DWS--but those are hardly the five largest mutual fund families. (In terms of equity assets under management, MFS and Alliance Bernstein aren't in the top 10, Morgan Stanley isn't in the top 20, Wells Fargo isn't in the top 40, and DWS isn't in the top 50.)

One would think such an obvious error--in which FT's attributed fact is contradicted by a published account from its own purported source--would warrant a quick and clear correction. But when I brought the matter to the attention of Politico's editor-at-large, Bill Nichols, he replied, "The writers of the response have provided documentation which, while I'm sure arguable in your view, does not allow me to put my thumb on the scale one way or the other."

As Moynihan notes, opinions are arguable, but facts are facts. Given the inability of press "fact checkers" to tell the difference between the two, I understand Nichols' decision not to "put his thumb on the scale," but this is really cut and dried, and his choice is disappointing.

(The Financial Times has yet to respond to my request for a correction.)

The Manhattan Institute's Margaret M. O'Keefe, manager of the ProxyMonitor.org database, contributed to the above discussion.

James Copland

In my estimation, the most significant part of yesterday's Obamacare ruling was not its handling of the individual mandate but its limitation on Congress's power to coerce states through federal funding--a holding that will become critical as the health-care law is implemented and in many other cases in the future.

To uphold the ACA's "individual mandate" and its private-insurance reforms, the Chief Justice somewhat brazenly rewrote a regulatory penalty as a tax - a reading his opinion itself admitted was not the most common-sense reading of the statutory language. The Chief's reading was hardly a model of statutory construction, but it was motivated by the conservative doctrine of "constitutional avoidance": the principle, first embraced by Chief Justice Marshall in the 1833 case Ex parte Randolph, that given the "delicacy" of the courts overturning the acts of coordinate branches (and the difficulty of amending the constitution), "a just respect for the legislature requires, that the obligation of its laws should not be unnecessarily and wantonly assailed" through the judiciary's application of the constitutional power of judicial review.

The Chief Justice was very likely motivated by institutional concerns, as outlined persuasively by Charles Krauthammer. As Krauthammer notes, as Chief Justice, Roberts wears "dual hats," and in his role as "custodian of the court" he is "acutely aware that the judiciary's arrogation of power has eroded the esteem in which it was once held." Krauthammer is right that most of this arrogation occurred during the liberal era of Earl Warren and William Brennan, but also that the Court's decision in Bush v. Gore to halt the recount in Florida in a presidential election--however necessary to avoid a constitutional crisis being engendered by an irresponsible Florida judiciary--substantially eroded the Court's public perception, particularly given that case's 5-4 ideological split. The president had already shown an unhealthy willingness to demagogue the Court over its Citizens United decision and had signaled an intention to do the same should the Court overturn his administration's signature legislative accomplishment on constitutional grounds. Roberts was almost certainly haunted by the specter of Schechter Poultry, in which the Court in 1935 overturned the National Industrial Recovery Act (a signature of Roosevelt's New Deal, however misguided), and proceeded to provoke a showdown with the president that culminated in FDR's threat to "pack the Court" with new appointees.

On last Thursday and Friday, I was in Charlotte for the spring meeting of the Civil Justice Task Force of the American Legislative Exchange Council, to which I presented my thoughts on how today’s securities litigation affected states. Uptown Charlotte was visited by various protesters affiliated with labor unions, the Occupy movement, and other left-leaning causes who were objecting to ALEC’s meeting and at the earlier-in-the-week annual shareholder meeting for Bank of America.

The protests against ALEC have been led by Van Jones’s Color of Change organization, which has attacked the free-market organization for drafting “stand your ground” model legislation arguably (though not really) at issue in the Trayvon Martin shooting. (Note: Florida’s stand-your-ground law pre-dates ALEC’s model bill, and the group has now disbanded the task force responsible for advancing that model legislation.) Like Ted, I’ve found the left’s attacks on ALEC to be profoundly disingenuous. First, it’s clearly the case that those opposed to ALEC’s reform work—in the case of the Civil Justice Task Force, for instance, the American Association for Justice, formerly known as the Association of Trial Lawyers of America—offer up legislation and legislative amendments to further their own interests. Second, if ALEC didn’t exist, corporations would still offer draft legislation and legislative amendments to further their own interests; it just wouldn’t be vetted by a broad group including legislators across several states and thinkers like myself, my former colleague and Point of Law founding editor Walter Olson (now at the Cato Institute), our editor Ted Frank and others at his Center for Class Action Fairness, and ALEC Civil Justice Task Force co-chair Victor Schwartz, who edits the most-used law school casebook on torts. Exactly how is ALEC supposed to be an unusually nefarious force, apart from the fact that its critics disagree with its agenda?

Next week, the Supreme Court will be holding extended oral arguments on the constitutionality of the landmark 2010 health-care reform law, the Patient Protection and Affordable Care Act, known popularly--at least among the law's critics--as Obamacare. Beginning on Tuesday, Point of Law will be hosting an exceptional panel of legal scholars and analysts, across the political spectrum, to discuss the oral arguments and the rationales for and against the law's constitutionality:

• Erwin Chemerinsky, University of California, Irvine School of Law


• Richard Epstein, New York University Law School


• Orin Kerr, George Washington Law School


• Gillian Metzger, Columbia University Law School


• Michael Rosman, General Counsel of the Center for Individual Rights


• Nadine Strossen, New York Law School, formerly president of the American Civil Liberties Union

On October 20, our friends at the Cato Institute published a study by Cato adjunct scholar Shirley Svorny claiming that existing empirical evidence suggests that "medical malpractice awards do track actual damages" and that noneconomic damage caps and other "policies that reduce liability or shield physicians from oversight by carriers may harm consumers." An economics professor at California State University, Northridge, Svorny has since publicized her findings in outlets such as the Huffington Post, in which she not only argued against the medical-malpractice reform provision of the Jobs Through Growth Act but also suggested that "[r]educing liability, as caps do, is rarely a good idea in any situation."

Needless to say, Svorny's position is at odds with that we've generally taken here at Point of Law (see back posts here), including our former editor, Svorny's Cato colleague Walter Olson (see, e.g., here, here, here, here). (See also this seminal contribution by MI visiting scholar Richard Epstein and this Manhattan Institute study by libertarian economist Alex Tabarrok.)

This week, Professor Svorny has graciously agreed to come to Point of Law to discuss her paper with MI adjunct fellow and PoL editor Ted Frank. The featured discussion will be available here; please check back throughout the week as the discussion continues.

Join the debate! Please send your questions and commentary via Twitter, #PoLdiscussion.

My colleague Paul Howard, who heads the Manhattan Institute's Center for Medical Progress, discusses the constitutional challenge to the Patient Protection and Affordable Care Act with a focus on the policy problems with the new legislation. See his thoughts here at our sister blog, Medical Progress Today.

As the Supreme Court has now granted cert to hear the constitutional challenges to the Patient Protection and Affordable Care Act, a/k/a "Obamacare," our readers might be interested in watching this video of a September 15 event we hosted at the Manhattan Institute in which professors Richard Epstein and Larry Tribe debated the subject, moderated by yours truly:

In two major decisions today that will interest the readers of this site, the Supreme Court held that the class alleging gender discrimination against Wal-Mart was improperly certified in Wal-Mart v. Dukes and that the EPA's governance of carbon-dioxide regulation under the Clean Air Act displaced the federal common law public nuisance suit brought by various states and municipalities in AEP v. Connecticut. The holding in both cases was unanimous, though not without underlying disagreement. In Dukes, the justices split 5-4 over whether to dismiss the suit outright (the majority decision) or whether to remand for further consideration as a 23(b)(3) class action (Justice Ginsburg's position, joined by Justices Breyer, Kagan, and Sotomayor). In AEP, the justices split 4-4 on whether the plaintiffs had standing to sue (presumably the same split as in Massachusetts v. EPA), and Justice Alito wrote separately, joined by Justice Thomas, to emphasize that his decision rested on the assumption that the Clean Air Act applied to carbon dioxide emissions (the position he rejected in Massachusetts v. EPA) (Justice Sotomayor, who was involved in the suit below, recused).

Those who didn't see our earlier discussion on Dukes, which pulled in various thinkers and practitioners, should check it out now and compare with the actual decision. The Manhattan Institute also wrote a fair amount on the AEP global-warming-as-public-nuisance case in last fall's Trial Lawyers, Inc.: Environment.

Josh Blackman summarizes Dukes here and AEP here. Walter Olson assesses Dukes here. And as Blackman notes, the Dukes decisions, both majority and dissent, are replete with citations to our dear departed friend Richard Nagareda's published writings, both The Preexistence Principle and the Structure of the Class Action, 103 Colum. L. Rev. 149, 176, n. 110 (2003) and Class Certification in the Age of Aggregate Proof, 84 N. Y. U. L. Rev. 97, 131-132 (2009).