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Bond v. U.S.
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Manhattan Institute Center for Legal Policy intern Meghan Herwig assisted in drafting this post.

Monday's Supreme Court decision in Bond v. United States, which we earlier profiled here, involved a case raising fundamental constitutional questions of federalism and separation of powers. Rather than grappling with these questions, the Court majority ruled on statutory grounds.

Case background
Carol Anne Bond, a Pennsylvania microbiologist, attempted to poison her husband after learning that he had impregnated her best friend. She was convicted of violating a U.S. federal statute enacted to implement the Convention on Chemical Weapons, a 1997 treaty intended to prevent the proliferation of chemical weapons. On appeal, Bond's lawyers argued that the law did not apply to Bond's conduct and second that even if it applied it was unconstitutional.

Key to Bond's constitutional claim was whether a treaty signed by the president and ratified by the Senate can expand Congress's legislative powers beyond those otherwise enumerated in the Constitution. A 1920 Court decision authored by Justice Holmes, Missouri v. Holland, had held that for a valid treaty "there can be no dispute about the validity of the statute under Article I, ยง 8, as a necessary and proper means to execute the powers of the Government" -- without further analysis or authority. A subsequent Court decision, Reid v. Covert, limited this holding such that a treaty obligation could not empower Congress to violate the Bill of Rights. More recent scholarship by Georgetown law professor Nicholas Quinn Rosenkranz has challenged Missouri v. Holland's holding in light of the constitution's text, history, and structure.

While the Supreme Court unanimously overturned Bond's conviction, Chief Justice Roberts's majority opinion, on behalf of six justices, avoided the constitutional question. Roberts reasoned that the Chemical Weapons Convention was not intended to cover minor, local poisoning incidents and determined that Congress could not have intended such a construction of the convention's implementing statute, which would upset the constitutional balance of power between Congress and the states. Roberts thus construed the law narrowly and concluded that the law could not apply to Bond's crime.

Justices Scalia, Thomas, and Alito each filed separate concurring opinions arguing that the case had to be decided on constitutional rather than statutory grounds. In their view the statute on its face clearly applied to any attempted use of a "toxic chemical" not used for a "peaceful purpose related to an industrial, agricultural, research, medical, or pharmaceutical activity." Justice Scalia's concurrence, joined by Justice Thomas, was particularly specific in its inquiry into the limits of the power given to the President and Senate to "make" treaties -- following significantly the line of argument of Professor Rosenkranz's article -- and called for Missouri v. Holland to be overturned.

SCOTUSblog's Amy Howe ably summarizes the decisions in more detail here.

At Volokh, Jonathan Adler suggests that the concurring opinions may signal some discontent on the part of the more conservative justices with the Chief Justice's tendency to embrace strained statutory readings to avoid constitutional questions (the so-called doctrine of "constitutional avoidance"). His co-conspirator Ilya Somin reads the tea leaves and suggests that in a future case where the treaty issue is more explicit, the Court may be disposed to overturn Missouri v. Holland and limit the ability of a treaty to expand Congressional legislative authority, and offers further thoughts on the justices' various positions.

In its embrace of constitutional avoidance, the Court's decision is obviously reminiscent of the Chief Justice's lone opinion in NFIB v. Sebelius, in which he construed the individual mandate of the PPACA (Obamacare) to be an exercise of Congress's taxing power rather than its Commerce Clause power to uphold the law's core provision (though in that opinion, the Chief did observe that the mandate was clearly a penalty, and only reached the "tax" construction as an alternative functional ruling through which Congress could have reached the same end). The Bond decision also brings to mind Justice Ginsburg's opinion in Skilling v. U.S., which effectively rewrote the "honest services fraud" statute (construing the law's vague provision to apply only to bribes and kickbacks) to avoid deciding whether it was unconstitutionally vague.

The Bond and Skilling decisions may signal how the Court will rule in the upcoming Yates v. United States. Yates involves the prosecution of a commercial fisherman accused of violating the Sarbanes-Oxley financial reform law's prohibition on destroying, manipulating, or concealing any "record, document or tangible object" to hinder federal investigations -- in the context of throwing back fish that may have been smaller than the minimum size allowed by regulations. While a fish is certainly a "tangible object," the Sarbanes-Oxley law, passed in the wake of the Enron-era corporate scandals, was clearly contemplating document-shredding and similar destruction of corporate records such as that conducted by Enron's auditor, Arthur Andersen. It will be interesting to watch whether the justices in the Bond majority will continue the trend of narrowing criminal statutes beyond their clear terms when the government is applying a broad statutory provision in the criminal-law context.

Our latest column from Professor Richard Epstein:

The Improbable Fate of the Durbin Amendment in the Circuit Court of Appeals for the District of Columbia
A Learned Court Makes Intellectual Hash of an Ill-Conceived Statute

The 2010 enactment of the Durbin Amendment as part of the Dodd-Frank Act set into motion an extensive round of administrative rulemaking and litigation that may well have run its course with the recent unanimous opinion of the Circuit Court for the District of Columbia, written by Judge David Tatel for himself and Senior Judges Harry Edwards and Steven Williams in NACS (formerly National Association of Convenience Stores) v. Board of Governors of the Federal Reserve. The outcome of the case was to sustain the decision of the Federal Reserve to allow the banks that issue debit cards to recover $0.21 cent on average in debit card transitions. In so doing, the Court reversed the decision below by Judge Richard Leon, which was openly contemptuous of the arguments of the Fed that carried undue weight in the Court of Appeal. It is a long saga in which no one is covered with glory. To set this in context, it is therefore regrettably necessary to review some of Durbin's tangled history.

The Durbin Amendment The debit card was one of the great commercial innovations in American banking. Starting from a standing start in 1995, it managed by 2009 to become the dominant form of payment in the United States, eclipsing the venerable credit card both in number of transactions and in dollars transferred. One might have thought that this enviable record of success would have won plaudits across the board, for no program can enjoy such success if it does not create net gains to all the parties who contribute to the system.

In this case, those parties numbered five. In the middle of the picture lay the credit card companies, chiefly Visa and MasterCard, which orchestrate transactions between two sides of the market. On the one side lie the credit card holders who received their cards from issuing banks. The key feature of the pre-Durbin arrangement was that the debit card holder paid no monthly or swipe fee for the use of the card. Instead the cost of servicing and recruiting the debit card holders was funded by an interchange fee that was paid to the issuing banks from the retail merchants who accepted the cards. These merchants also paid a fee to the acquiring banks that serviced their accounts, and a smaller fee to the credit card companies that orchestrated the transaction from the middle.

In NACS, Judge Tatel accepted the Durbin fairy tale that this entire arrangement reeked of market failure because of the high level of interchange fee charged for the occasion. But at no point does he explain what the correct fee ought to be, for his only account of market failure is that merchants discovered that they could not do without the card, from which, however, it does not follow that they will pay anything to get it. Rather, what happened was that the credit card companies in discharge of their contractual obligations set the interchange fees at a level that allowed all parties to prosper. The use of that payment in these two-sided markets in effect put the cost of running the system on the parties for whom demand was inelastic (i.e., relatively unresponsive to price changes). The lower prices offered to cardholders thus increased the number of card users, which in turn allowed the fixed costs of running the system to be amortized over a larger customer base. And those interchange dollars funded the special benefit packages that kept debit cardholders coming into the system. In a word, the system was not broken, and the Durbin Amendment did not fix it.

More specifically, the Amendment introduced its own novel inefficiencies by its government command. The relevant text has to be set out in full in order to understand the bizarre nature of the Circuit Court's decision. It reads as follows:

Section 920 (2) Reasonable interchange transaction fees The amount of any interchange transaction fee that an issuer may receive or charge with respect to an electronic debit transaction shall be reasonable and proportional to the cost incurred by the issuer with respect to the transaction.

In prescribing regulations under paragraph (3)(A), the Board shall--

(4) (B) distinguish between--

(i) the incremental cost incurred by an issuer for the role of the issuer in the authorization, clearance, or settlement of a particular electronic debit transaction, which cost shall be considered under paragraph (2); and

(ii) other costs incurred by an issuer which are not specific to a particular electronic debit transaction, which costs shall not be considered under paragraph (2).

The correct reaction to this sorry provision is that it is both clear and misguided. The initial material in subsection (2) is deeply uninformative because setting fees that are "reasonable and proportional to the cost incurred by the issuer with respect to the transaction" gives no hint of the horror to come. That capacious phrase clearly covers all costs, both variable and fixed, associated with the transaction. On this view, the provision does not put any constraint on the fees that could be charged above and beyond those found in a competitive market, which would lead to that result.

The entire sense of the provision takes on a darker meaning in the light of Section (4)(B), which gives a definition that is far more restrictive than the general statement above. It divides the world into two kinds of costs and makes it clear that only the "authorization, clearance, or settlement" costs for a particular electronic transaction should be considered under paragraph (2) while all other costs are removed.

Judicial Obscurantism in the Court of Appeals It does not take a genius to conclude that the listing of these three transaction-specific costs excludes all the overall costs needed to design, operate and maintain the system. By design, those were to be cast back on the issuing banks to recover from their own debit card customers. Try as one might, it is not possible to see any gaps in the statutory structure. The only way in which this could have been made clearer is to have inserted the word "all" before "other costs" in paragraph (ii). But it is hard to resist the conclusion that Senator Durbin, perverse though he be, knew exactly what he was doing with his own Amendment. The Senator was devoted beyond all measure to Walgreen's and other retailers and equally intransigent with respect to the banks, so it is a virtual certainty that he meant what he said--and said what he meant. The retailers had excellent lawyers to help Senator Durbin along his appointed path. Judge Tatel called the Durbin Amendment a badly drafted statute, but that charge is surely wrong. Incompetently conceived, surely, but accurately drafted, regrettably, is a much better account of Durbin's regulatory calamity.

At this point, the contrast between the learned obscurity of Judge Tatel and the blunt clarity of Judge Leon's opinion below is a sight to behold. The key argument of Judge Tatel is that this text could "easily" be regarded as ambiguous so that it is correct for the Board to allow "issuers to recover, equipment, hardware, software and labor costs since [e]ach transaction uses the equipment, hardware, software and associated labor, and no particular transaction can occur without incurring these costs." Judge Leon rightly dismissed that claim in one word: "Please."

Leon's terse view of statutory interpretation makes infinitely more sense than the tendentious reading Judge Tatel, who relied on this identical passage to incorporate the semiotics of Jacques Derrida or the post-structuralism of Michel Foucault into modern administrative law. Finding, or inventing, ambiguity where none existed, he gave the views of the Federal Reserve undeserved prominence under the regrettable Chevron doctrine that has courts defer to agencies when statutes are found ambiguous.

To conjure up that needed ambiguity, Judge Tatel launches into an extended, prolix, and tedious discussion of restrictive and nonrestrictive clauses, which, he claims, allows the Fed to infer this third class of expenses lurking in the shadows that the Fed by rule recover through debit interchange.

We are in an ethereal world. These unspecified objects might be called "fixed, variable costs". But suppose that these costs, like the Loch Ness monster, do exist. It nonetheless remains true that the impatient Judge Leon offers the only tenable reading of the Durbin Amendment: these fixed costs of running the computer network were excluded along with every other business cost needed to keep the program going, without which any particular transactions would not happen.

Economic Redemption, of Sorts As a matter of statutory interpretation, Judge Tatel's opinion is an intellectual train wreck. But functionally, it supplies a most welcome result, because of the hopelessly confiscatory nature of the Durbin Amendment, which on its face would have make made it impossible for the banks to recover their extensive invested costs in their operational system through interchange, without supplying them any alternative. To be sure, there was extensive talk of how banks should charge their own customers monthly or swipe fees. But those were never collected, after they were buried in an avalanche of abuse, starring the ubiquitous Senator Durbin who wrote the heads of Bank of America and Well-Fargo gratuitously nasty letters asking that they rescind the fees that only months before were supposed to be their salvation.

The net result was that the banks could not recover their invested capital sunk in these debit card systems. This whole statutory system borders on the farcical because it overlooks its long-term stability and success. In many places I have urged that the entire statute should be struck down as a confiscatory taking. That decision was resisted in the earlier and misguided 2011 decision of the Eighth Circuit in TCF National Bank v. Bernanke (on which I worked as a consultant to TCF through the trial stage) that suggested that the issuing banks could make up their lost revenue somehow by charging their own customers, which never happened.

As an economic matter, it is clear that the higher the allowable debit interchange fees, the less disruptive the Durbin Amendment is to the operation of the debit card interchange market, and in that sense at least the decision in NACS performs a useful public service that was no part of its intention. Indeed, I suspect--or just hope--that Judge Tatel's misguided bit of statutory interpretation will not be challenged down the road.

Remember that the panel decision was unanimous, and it may prove unlikely that either the entire District of Columbia Court of Appeal or the Supreme Court will have any appetite to untangle the tortured arguments that persuaded so distinguished a panel of the Court of Appeals. And if they did look at this statute, they should start by revisiting the constitutional issues from TCF, which were decided on an assumption that has proved false, namely, that the debit card companies can recover their lost fees from their own customers.

That seems highly unlikely at present, so at present the best achievable resolution for this issue is a large dose intellectual bed rest after all the legal twists and turns of the past four years. But who am I to say? I thought that the chances that Judge Leon's decision would be overturned were close to zero. And never in my most fevered moment could I have imagined the grotesque and improbable way in which the Court of Appeals saved the bacon of the Federal Reserve, and yes, of the issuing banks. Wonders never cease.

Another case I'll be watching to see if the Supreme Court decides to take up: Limelight v. Akamai. As noted in The Federalist Society's blog, "Akamai charged Limelight with infringement of its patent on a method for delivering video content to consumers via the Internet." By a one-vote majority, an en banc panel of the Federal Circuit overturned lower court decisions that, under traditional patent principles, Limelight was not infringing on Akamai's business-methods patent by partially but not wholly replicating its competitor's process (Limelight's technology leaves some of the work up to the end-user). An array of businesses (Google, Cisco Systems, Oracle, Red Hat, etc.) and the Solicitor General have filed briefs asking the Court to take up the case (the SG's brief was filed at the Court's request -- and both that fact and the brief's recommendation augur well).

I tend to agree with the companies and the SG's office that the Court should hear this one -- and with the proposition articulated in the SG's brief that the Federal Circuit's broad interpretation of business-methods patent infringement could lead to "a significant expansion of the scope of inducement liability (and a corresponding increase in burdensome litigation)." That's a bad thing, and an increasing problem, as I explained earlier this year in Trial Lawyers, Inc.: Patent Trolls:

[P]atent trolling has emerged as a big and growing business line for what the Manhattan Institute has dubbed Trial Lawyers, Inc., the subset of the plaintiffs' bar that behaves like the biggest of big businesses (with the exception that instead of selling products to willing consumers, the lawyers extract monies from unwilling defendants through their unique access to the courts). . . . The number of patent lawsuits filed by PAEs grew from 466 in 2006 to 2,914 in 2012, an increase of 526 percent in just six years[]. In 2011, 2,150 companies were forced to mount 5,842 defenses against NPE-initiated patent lawsuits--up from only 1,401 defenses in 2005.

See also Gary Shapiro's op-ed on the case at the Washington Examiner.

Postscript: The Supreme Court on Friday granted cert on Limelight. We'll have more to say on the case as it comes before the Court on the merits.

As I discussed in yesterday's Washington Examiner, at tomorrow's conference, the Supreme Court will decide whether to grant certiorari on a pair of companion cases -- Sears v. Butler and Whirlpool v. Glazer, which Ted has previously discussed (here, here, and here).

Both cases involve 21 varieties of energy- and water-efficient "front-load" washing machines manufactured by Whirlpool.

In 2001, Whirlpool released the first of this diverse group of washers that reduced water and energy use by more than two-thirds (cutting $120 from the average family's annual water and power bills).

Whirlpool's washers have been ranked among the best in their class by Consumer Reports and helped the company win multiple "sustainable excellence" awards from the federal Environmental Protection Agency.

Class-action attorneys have pounced on the fact that a small percentage of these washers, like all washing machines, can (if improperly maintained) emit "musty odors" from leftover laundry residues.

Such odors may be marginally more likely in these newer machines than in traditional, less water- and energy-efficient washers.

A decade of call center data from Whirlpool and Sears place the percentage of consumers facing such odors at two to three percent, and a more recent February 2010 examination by the Consumers Union estimates the problem rate at less than one percent.

I agree with Ted and others (e.g., ATRA's Tiger Joyce, Tim Bishop & Joshua Yount, the bulk of the business community filing amicus briefs asking for cert) that these cases have broad-ranging potential implications and that the Supreme Court should take them up to clarify the reach of Wal-Mart v. Dukes and Comcast v. Behrend:

The Supreme Court has taken significant interest of late in limiting the use of class-action remedies. In its 2011 decision in Walmart v. Dukes (involving a gender discrimination claim) and last year's decision in Comcast v. Behrend (involving an antitrust claim), the court has emphasized that for a class of plaintiffs to be approved, the facts have to show a common and specific cause of harm that "predominates."

The washing machine cases certainly fail the Supreme Court's predominance test for class-action litigation.

Let's hope that the Supreme Court decides to step in yet again, because the legal theory underlying these cases is worse than musty -- it stinks.

Update: The Supreme Court neither granted nor denied the cert petitions here -- we'll watch for it at the next conference.

Today, the Supreme Court decided American Express v. Italian Colors (PDF) (holding, 5-3, that the fact that necessary expert-witness costs exceed the expected return on low-value individual claims, premised on federal law, does not, under the judicially created "effective vindication" doctrine, mean that arbitration clause class-action waivers are unenforceable). (The justices here lined up in the "usual" way -- with Justice Scalia writing for the majority and Justice Kagan for the dissent; Justice Sotomayor, who considered the case below on the Second Circuit, recused.)

See Ted's earlier posts on the case here (at cert stage) and here (after filings of merits briefs). We also hosted a featured discussion on the case between Ted and Cardozo law professor Myriam Gilles here. And see Ted's Manhattan Institute paper on arbitration-clause waivers of class-action remedies here, and reaction here (Greve) and here (Wood).

Because, as Ted has noted, "the litigation lobby has already beat the bushes to create unfair animus against arbitration clauses," it's important to emphasize what the decision says and what it doesn't. Justice Kagan's very well-written dissent to the contrary, the majority opinion does not suggest that companies can invoke any and every arbitration provision to preclude the vindication of federal rights.

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.

In sum, the SEC rulemaking petition simply amounts to a certain group of political activists attempting to get an election-regulation regime they can't achieve through normal legislative, legal, or regulatory channels by going to an already-overtaxed agency statutorily charged with "promot[ing] efficiency, competition, and capital formation." Were the SEC to act in this area, they'd be not only outside their statutory mandate but acting against the revealed preferences of most shareholders themselves.

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?



Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.