Dorf on Law

The Republican Party as Pakistan

noreply@blogger.com (Bob Hockett) — Sat, 07 Nov 2009 22:03:00 +0000

By Bob Hockett

This past Tuesday's off-year election results, followed by Wednesday's RNC decision no longer to endorse primary candidates, followed in turn by Thursday's and Friday’s bemusing, astroturfed "tea party" assaults on the US Capitol, call to mind a disturbing, if less amusing, precedent.

It is often observed that the seeds of the trouble with theocratic insurgents now faced by Pakistan were sewn years ago by elements in the Pakistani government itself. How? Via the fostering, training, organizing and financing of the Taliban and associated theocratic movements as tools in the Pakistani intelligence service's perceived rivalry with India and, somewhat less intensely, neighboring Shiite Iran.

Pursuant to an all too familiar "blowback" dynamic, the "monster" that Pakistan nurtured ultimately grew out of hand to the point not only of consuming Afghanistan, but now of threatening to consume Pakistan itself. Acid attacks upon women and girls who dare attend schools, mass killings of innocents in crowded market places, brazen attacks upon army and police posts within major metropolitan areas, the murder of beloved political leaders such as Benazir Bhutto, and de facto control by theocratic militant groups over entire Pakstani provinces have recently culminated in the government’s having to send tens of thousands of troops into the provinces to oust the extremists from power.

Now consider today's Republican party: Since the 1980s it has sought, by strategically whipping up fears of moral and cultural entropy falsely said to be fomented or orchestrated by “anti-religious” progressives, to capture the votes and the energies of evangelically minded Americans. It has then sought to direct these against progressive Democratic political figures (many of whom happen to be quite religiously committed, as our colleague Steve Shiffrin, on whose new book Mike has been posting this week, can attest).

Now all along, this less affluent, religiously conservative wing of the Republican party has rested in uneasy alliance with the more well to do, fiscally conservative and, as it happens, quite secular wing. (“One cannot serve both God and Mammon,” after all.) First Reagan, then – less convincingly – the first Bush, and finally the second Bush managed just barely to bridge the latent gulf between these groups, largely by talking the Main Street evangelical talk on the one hand, while walking the Wall Street fiscal walk on the other.

The deep fissures inherent in this combustible Republican coalition grew impossible any longer to paper over by the time of the 2008 election, however. This grew quite clear in the course of the primary season, then became almost “dramatic” in the tensions that surfaced in the McCain-Palin ticket. Often McCain was visibly uncomfortable in the face of those manifest fears and hatreds to which his running mate openly appealed. Nevertheless, McCain did his own part in contributing to the degeneration of American politics into a theatre of paranoia.

He did so, for instance, by commencing the now profligate misuse of the “s” word (“socialism”) in describing progressive taxation – a century-old mode of public finance that not only then candidate Obama, but all mainstream political figures since Teddy Roosevelt have supported. He did so, as well, by naming Ms. Palin – a woman with great “sex appeal” to the fearful and ignorant but with no discernible understanding of the principal policy questions facing the American polity – as his running mate. And he did so, of course, by making a strange sort of mascot of a skin-headed “plumber” who didn’t believe in taxes at all and, in the end, left the McCain campaign itself for being insufficiently ideologically pure.

The falling out between Mr. McCain and Ms. Palin within weeks of their liaison, and the repudiation of Mr. McCain by Mr. “Plumber,” it turned out, were harbingers of worse to come. For since the election one year ago, the gap between traditional Republicans and the party’s paranoid culture wars “base” has widened all the further.

It is now genuinely unclear whether the leadership of those who are dissatisfied with Democratic governance resides in the traditional “loyal opposition” that is the party out of power – presently, the GOP – or whether instead it resides in an increasingly disloyal, “Shay’s Rebellion”-reminiscent “base” that is no longer that of the Republican party, but of something much uglier. Bizarre television and talk-radio entertainers, often without formal party affiliation, now seriously look to have nearly as much claim to leadership of the anti-Democratic paranoid chorus as do any Republican party officials or politicians.

Against this backdrop, Tuesday’s off-year elections are particularly noteworthy. Some Republican party officials were heard to crow Wednesday about the “turn of the tide” represented by their party’s taking the Virginia and New Jersey governorships. But the operative “tide” actually looks to be sweeping in a rather different, more ominous direction than Republican resurgence. It is sweeping toward the Republican party’s Pakistanization.

In what sense is that true? Well, first note that the winners in Virginia and New Jersey won by campaigning as traditional, “moderate” Republicans. These Republicans actually spoke of “hope” and “audacity,” of “pragmatism” and “getting things done.” (No kidding.) And yet this is a kind of Republican whose days, if New York’s 23d Congressional District is the indication it seems to be, appear to be numbered.

For those who weren’t following, the 23d District for its part had not sent a non-Republican to the US House of Representatives since Ulysses S. Grant was US President – in 1872. Its seat was open this year because President Obama had named its Republican incumbent, John McHugh, to be his Secretary of the Army. The Republican party selected Dede Scozzafava to run to fill the seat in this week’s special election.

Ms. Scozzafava, however, notwithstanding endorsements by Newt Gingrich, Congressman Peter King, the NRA, and others, was not ideologically pure enough for the increasingly shrill base that the party has cultivated. In consequence, this base defected to support the purer candidate, Doug Hoffman of something called the “Conservative” party. Though Hoffman showed himself in debate to be quite noncognizant of the local issues that concerned actual residents of the 23d District, he did pass ideological muster with national conservative figures like Ms. Palin, who endorsed him.

The ensuing debate among national Republican figures including Mr. Gingrich and Ms. Palin culminated in Ms. Scozzafava’s withdrawing from the race and endorsing Bill Owens, the Democratic candidate, who won. By nationalizing what ought to have been a localized 23d District race, ironically, the far right representatives of the Republican party actually increased the Democratic majority in the US House of Representatives. And it looks as though we can expect more of this sort of thing next year. For, emboldened by their ouster of Scozzafava from the 23d District race, right-wingers this week have now vowed to do the same to all Republican moderates elsewhere. One imagines the Democrats’ mouths are now watering at the prospect, just as they did earlier this year when Rush Limbaugh began to emerge as apparent leader of the Republican Party.

There seems to be a lesson here for Republicans, a lesson much like that which Pakistan’s government is now learning. The tactical fostering of ugly, fearful, bigoted passions is very bad strategy. For these human tendencies often prove ultimately to be uncontainable and unchannelable. They tend, once let out of the bottle, to blow back and devour the very parties who uncork them. Were I a Republican, I’d look at New York’s 23d District as the party’s own Northwest Frontier Province. And I’d look at 2010 as a year to begin making amends with the true American tradition, which has always been much more pragmatic than ideocratic or theocratic.

The Religious Left, Part 2: The Master's Tools

noreply@blogger.com (Michael C. Dorf) — Fri, 06 Nov 2009 08:12:00 +0000

By Mike Dorf

In my post on Monday, I promised to come back to a practical question raised by Steve Shiffrin's book, The Religious Left and Church/State Relations. Shiffrin argues that the religious left is better positioned than the secular left to contend with the religious right over church-state separation issues. Although Shiffrin does not make the argument, one might extend the logic to other issues as well. If the problem with public reason is that it fails to capture all of the sources of value that inform most Americans' judgments about basic issues of political justice, then we might expect public reason to fail not only with respect to church-state issues but also with respect to other issues. Thus, one might think that the best way to meet the arguments of the religious right on abortion and gay rights (to name the two social issues of greatest concern to the religious right) would be to send the religious left, rather than the secular left, into the arena to battle it out on theological grounds.

But whatever the appropriate domain of Shiffrin's argument, I want to question its likely efficacy by drawing an analogy to arguments about original understanding in constitutional law. Various conservative Supreme Court Justices often say that their views on constitutional issues are a product of the original understanding. There are two sorts of responses to these claims. One, which I'll call the "secular left" approach, would be to give reasons why the original understanding should not be determinative of contemporary meaning. A second, which I'll call the "religious left" approach, would be to meet the originalist arguments on their own terms.

Nice examples of the religious left approach to original understanding can be found in Justice O'Connor's dissent in City of Boerne v. Flores, Justice Souter's dissent in Alden v. Maine, and Justice Stevens' dissent in DC v. Heller. Rather than simply decrying the majority's reliance on original understanding in each of these cases, the dissenting Justices attempt to do the majority one better by showing how the majority's originalism is bad originalism. The parallel to Shiffrin's argument that the religious left should engage the religious right by showing how its theology is bad theology is striking.

How effective has the religious left strategy been in constitutional interpretation? I think it has been a complete failure--if the goal was to persuade the conservative originalists that their arguments based in original understanding do not support their politically conservative conclusions. On nearly all the important questions that make it to the Supreme Court's docket, the original understanding is sufficiently unclear or manipulable that it is very hard to say that a decision one way or the other is "correct" as a matter of original understanding. And when the liberals do have a nearly slam-dunk argument--as they do with respect to the constitutionality of race-based affirmative action--the conservatives simply stop talking about original understanding. (The conservatives also say very little about original understanding with respect to most free speech questions, but there is a fairly broad liberal/conservative consensus on the value of free speech, so no one on the Court has an incentive to note this.)

Now, moving back to the domain of public argument, is there any reason to think that the sorts of sources that figure in theological debates are less manipulable than the sources that figure in debates over the original understanding of the Constitution? The religious left can invoke "Thou Shalt Not Kill" to oppose the death penalty, but the religious right can support it with "A Life for a Life." On matters of church-state separation, the religious left can invoke "render unto Caesar that which is Caesars's and unto God that which is God's." The religious right can counter that ancient Israel as portrayed in the Bible was a theocracy, that prior to the Protestant Reformation (and really for quite a long time thereafter), church leaders exercised political power and vice-versa. My point is not that there aren't better and worse arguments based on religious sources but that people in all walks of life suffer from confirmation bias: Believing in the morality or immorality of the death penalty, or the necessity or folly of church-state separation, people will find in their holy books and traditions confirmation for their pre-existing views.

Thus, it seems highly unlikely that the religious left's arguments rooted in theology or Biblical exegesis will actually persuade people on the religious right. But that may not be their point. Perhaps their point is to persuade the religious middle? I want to acknowledge that possibility but also to suggest that there is another possible effect: By crowding out secular arguments for progressive results, the public debate will shift to terms more favorable to the religious right. Yes, one can cite chapter and verse for progressive policies, but the relevant holy texts were written a very long time ago in societies that do not share our values. More often than not, the religious conservatives, like the originalists in constitutional interpretation, will win if the battle is fought on their terms.

Shiffrin, who is not an originalist with respect to constitutional interpretation, quotes Gordon Wood to undermine the constitutional authority of the Founders: "Seeing Washington and Jefferson as slaveholders, men who bought, sold, and flogged slaves, has to change our conception of them. They don't belong to us today; they belong to the 18th century, to that coarse and brutal world that is so remote from our own." What's true of the 18th century is all the more true of the ancient world: The Bible condones slavery (and nothing in the New Testament questions it); it prescribes payment to the father and marriage to the victim as the "penalty" for rape; it commands the death penalty for gay sex; it condones wars of conquest; etc. It is possible to construe one's way around such provisions or to take an evolutionary approach to morality, but the basic texts are considerably more amenable to conservative or reactionary views, which is hardly surprising: they come from a much more coarse and brutal world than our own (one hopes).

The master's tools will never dismantle the master's house.

Moving Targets

noreply@blogger.com (Neil H. Buchanan) — Thu, 05 Nov 2009 11:42:00 +0000

-- Posted by Neil H. Buchanan

In a particularly good example of the value of blogs and comment boards, my latest FindLaw column (available here later today) picks up on comments from two Dorf on Law readers who responded to my post on October 22. In that post, I had discussed how to protect people against abuses by credit card companies, banks, mortgage companies, etc. One reader raised the point that it is possible to use equitable doctrines of contract law (especially unconscionability) to rein in financial actors. Another reader suggested that creating a regulatory agency (the proposed Consumer Financial Protection Agency, which I endorsed) would be arguably better for business because it would reduce the (mythical) tsunami of lawsuits that is bringing down American businesses.

In today's FindLaw column, I analyze the choice between regulation-by-lawsuit and regulation-by-executive-agency. Both are forms of regulation, because both necessarily involve the government in deciding what types of arrangements will be enforced by law. After describing the equitable doctrines that are available under the law -- and how well those doctrines would seem to apply to financial market abuses (sub-prime loans being the modern equivalent of the Williams v. Walker-Thomas Furniture case that is the foundation of the modern unconscionability doctrine), I point out that those doctrines are deliberately underused by courts.

I then point out that even a beefed up regime of equitable relief in court would not be enough to protect consumers, because individual consumers will never be able to play the litigation game in the way that large corporations do. Conclusion: We need to improve financial market regulation, and courts (as important as they are) cannot do what is needed nearly as well -- nor as inexpensively -- as agencies. [Note: The use of the term "beefed up" in this paragraph is not anti-vegan.]

I briefly touch on the "relief from lawsuits" point in the column, but I will use that as a starting point here to discuss the phenomenon of the political "moving target." The DoL reader made the seemingly simple point that business spokespeople constantly complain about facing lawsuits (supposedly frivolous, often extortionary), which means that they should be excited about a system that would reduce lawsuits. Of course, businesses do not want to deal with a regulatory agency either. Understandably (but not defensibly), they want it all: no lawsuits, no restrictions on their profit-seeking actions.

It is not, therefore, necessarily a matter of having a moving target to be opposed to both alternatives. It is a moving target, however, when the arguments against one alternative invoke the availability of the other. "People don't need regulatory agencies, because the courts will protect them." "People don't need lawsuits, because there are regulatory agencies to protect them."

Another example of this phenomenon is the question of how to fight obesity. A few years ago, when a lawsuit was filed in New York by an obese 14-year-old against McDonald's, the reaction was swift and derisive. Beyond the standard tabloid-driven nonsense, however, one argument that I heard was that the problem of obesity was too pervasive to deal with through lawsuits. It should, instead, be dealt with by the FDA or some other agency. This, of course, ignores the incentive effects that make lawsuits effective for far more than the litigants; but we can set that aside for now. The bigger point was that the courts were the wrong place to regulate, and the agencies were the right place to regulate.

When bills were proposed to expand the FDA's powers to address obesity, it should not be a surprise that the argument changed. We then heard nothing but bad things about the inefficiencies of regulatory agencies. "If there is really a legal abuse, the courts can handle it." In addition, a third possibility arose. Taxation is more efficient than regulation, because it allows businesses to respond to incentives rather than bear the burden of command-and-control rules written by some bureaucrat who knows nothing about the business.

Now, we are in the midst of the debate over taxes on fatty foods, etc. Again, we learn that this is the wrong solution. Either it really is not a problem (a position that a few people cling to), or it is. If it is, however, then we seem to have exhausted the solutions: Lawsuits are out, because it is better to regulate via agencies. Agency regulation is out, because it is better to regulate via taxes. Taxes are out, because taxes are bad.

The remaining alternatives -- educating people to make better choices, changing food manufacturers' distorted incentives to make unhealthy food -- merely return us to a different kind of agency action. Every solution still involves government action, either through changes in food policy or outreach programs to improve people's choices. Moreover, opting for no solution at all does not make the problem go away. It merely turns it into a health care problem. No regulatory issues there!

There are many other examples of this type of deceptive reasoning. I am starting to work on a book that describes how the moving-target phenomenon works in debates over income and wealth inequality. The arguments are fascinating in their perversity.

Easterbrook, Posner, Buffett, Bogle, Behavioral Finance, the Obama Administration, and Scads of Finance and Business Law Profs -- All in One Case at SCOTUS Yesterday

noreply@blogger.com (Bob Hockett) — Wed, 04 Nov 2009 06:33:00 +0000

By Bob Hockett

The Supreme Court heard oral arguments Monday in a fascinating case that DoL readers might find particularly interesting in a time of financial turbulence. The case is Jones v. Harris Associates, LLP, No. 08-586, wherein plaintiff, a mutual fund investor, challenged fees charged by the fund's investment advisor under Section 36(b) of the 1940 Investment Company Act. The case is of interest not only for a number of doctrinal and economic reasons, but also for the two judges it pitted against one another below. For the case finds its way up to SCOTUS after a Seventh Circuit decision not to rehear the case en banc after first finding for the defendant. And that rehearing decision split 5-5 with Chief Judge Easterbrook writing for the winning side in the dispute, and Judge Posner writing for the losing side. (The eleventh judge recused.) Of additional, albeit related interest is the cast of amici who filed briefs with the Court, which constitutes a partial Who's Who of well regarded legal and financial theorists and practitioners, not to mention the SG's office.

Let me first say a brief word about the economic and what I'll call the "structural" significance of the case for the financial services industry, which will be of interest to our nonlawyer readers as well as to lawyers. Then I'll briefly indulge my lawyer's interest in a few of the doctrinal and other legal curios that the case draws out. Then I shall hazard a quick opinion of my own.

Many Americans nowadays invest sizeable portions of their savings in what are known as "investment companies" (ICs). ICs are pooled investment vehicles that enable investors efficiently to diversify investments in broad portfolios of stock- and bond-issuing firms. If you've got $100 spare dollars and Microsoft, Ford, and eight other firms all sell shares at $100 per, alone you will only be able to invest in one. Pool your savings with nine other similarly situated folk and you can each effectively diversify over ten companies, which can be made a good bit safer than putting all of your eggs in only one -- even very good -- basket would be. You might think of ICs as a sort of "upside" counterpart to insurance, inasmuch as they amount to forms of risk-pooling that minimize downside losses that individuals might experience in pursuit of "upside" opportunities.

ICs come in two particularly well-known flavors: so-called "closed end" and "open end" funds. The latter are better known to most Americans as "mutual funds." What distinguishes them -- and the sense in which they are "open" -- is the fact that investors can typically enter and exit at will. As many new shares as might be desired generally are made available to new investors, and these shares are then redeemable at current market value any time the investor wishes to withdraw her investment. The consequent ease of entry and exit renders open end funds attractive even to relatively unsophisticated, small fry investors as higher-yield substitutes for, or complements to, savings and checking accounts held at commercial banks. (Closed end funds, as the name suggests, do not offer this ease of entry and exit. They tend in consequence to cater to wealthier, more sophisticated investors willing to park large sums of money in their funds for the long haul.)

Open end investment companies -- or again, mutual funds, or what I shall now simply call "funds" -- rapidly grew and proliferated commencing in the late 1960s. Several factors accounted for this. One was the combination of a booming stock market, high inflation rates, and mandatorily low bank-offered interest rates of the era, which induced a search by savers for higher-yielding investment that were nonetheless easy to understand and use, and reasonably safe in the way that diversified portfolios often are. Another was the development of financial theory, which increasingly came to afford even non-rocket-scientist investment managers the capacity to diversify away much of the risk of investment while nevertheless realizing respectable returns. Yet another was ERISA and related changes to the tax code commencing in the early 1970s, all of which were meant to encourage more retirement investment on the part of baby-boomers now well ensconced in the work force. The end result was a virtual "explosion" of mutual fund investments, to the point that today it is estimated that over 50 million -- about half of -- American households, numbering to upwards of 90 million adult citizens, directly (in IRAs or related investment categories) or indirectly (through pension funds or similar vehicles) hold upwards of $10 trillion in assets under management in mutual funds.

So much for the broad economic backdrop. Now to the "structural." The Jones case is rooted in the way that mutual funds generally are organized and run. Typically what happens is this: A so-called "Investment Advisor" (IA, or "advisor") organizes a fund either as a trust or as a stripped-down corporation under a particular state's corporate code or business trust statute. The fund is then treated as a simple legal entity that is effectively nothing more than a pot of money -- the pooled funds of investors. The advisor also names a board to oversee this fund, and to decide what fees to pay those who manage the fund's investments. Who does that managing? Easy: in most cases, the advisor her-, him- or itself, or persons retained for the task. So the advisor acts much as the management of any business corporation, while the board acts much as do boards of such corporations. Investment advisors also, quite often, establish multiple distinct funds or "families" of funds, and name board members to each distinct fund or family. In addition to playing this role, many investment advisors engage in another activity more clearly indicated by the term for them -- they advise, in this case even for funds that they have not organized or named the boards for. In light of this dual role, funds with which IAs are affiliated often are categorized in the industry as "captive" and "independent." Captive funds are those organized by, and whose boards are named by, their investment advisors. Independent funds -- often pension funds sponsored by employers -- are those that are simply advised by their investment advisors.

Now to the specifically legal aspects of the Jones case. As the term "captive" suggests, the relation between IAs and their "captive" funds occasions some legal concern. The reason is fairly clear -- and indeed is richer even than the litigants in Jones appear to have emphasized. Advisors to captive funds name the boards of those funds, and it is these boards that in turn vote in favor of or against the fee arrangements that advisors make with the funds. The fact that the board members are in effect indebted to the advisors whose compensation they are to decide is of course thought to render them less than optimally vigilant. That much the litigants in Jones have noted. What has received less attention in Jones is that often the boards of funds are indebted to advisors for more than their positions with particular funds whose shareholders bring suit in particular cases: Often they are indebted to those advisors for naming them to *other* funds as well. Indeed it's quite common that one board member might sit on the boards of ten or more funds managed by the same advisor. The conflict of interest can be very stark in such cases.

The law of course reflects cognizance of this danger, and the forms that this reflection takes give rise to doctrinal puzzles that I believe ought to fascinate lawyers a bit more than they seem in general to do.

The first means by which the law addresses the conflict is via the fiduciary doctrine of the state in which any fund is organized. State law fiduciary doctrine typically divides into discrete duties of care, loyalty, and obedience, and the relations between mutual fund boards and investment advisors ought in theory to implicate some manner of "hybrid" between traditionally relaxed care review and traditionally more exacting loyalty review. (Perhaps something like the apparently middling new "duty of good faith" that some commentators attribute to the Delaware Supreme Court in its recent fiduciary duty jurisprudence.) The reason I say this is that fund directors are in one, formal sense simply making non-conflicted business judgments in deciding what to pay funds' investment advisors, while they are in another, more pragmatic sense at least "vicariously" conflicted in deciding how to pay those to whom they owe their very positions with the funds they direct.

The second means by which the law addresses the conflict is via Section 36(b) of the Investment Company Act of 1940 (ICA, or "the Act"), which is actually the section under which the Jones case has been litigated. Section 36(b), added to the Act in 1970 in response to perceived abuses in the fee arrangements between funds and advisors, is somewhat puzzlingly worded -- so much so that Justices Breyer and Kennedy yesterday wondered aloud about the provision's import, while Justice Scalia predictably labeled the statutory language "utterly meaningless." What the Section does is impose upon investment advisors "a fiduciary duty with respect to the receipt of compensation for services." It also directs courts to give "such consideration as [they] consider[s] due under the circumstances" to the fact that a fund's board has approved a challenged advisory fee.

One puzzle that Section 36(b) introduces, of course, is just what fiduciary duty the Congress had in mind, given the traditional divvying up of fiduciary duty into discrete duties. A second puzzle that it introduces is whether and how this fiduciary duty, what ever it is, should interact with the state fiduciary doctrine in which ever state a particular fund is organized. Does anyone hear the phrase "federal common law" Eriely echoing here? (In one sense, you shouldn't, since we're talking federal question under 36(b), and state law question under state trust and corporate law. But in the absence of a well developed federal common law of fiduciary duties under the ICA or associated Roosevelt-era finance-regulatory statutes, the fiduciary doctrine of the state where a fund is organized is sometimes apt to tempt.) Finally, a third puzzle raised by Section 36(b) -- and the only one, as it happens, that had actually been discussed prior to oral argument yesterday before SCOTUS -- is how, precisely, a court is to determine whether a particular investment advisor's fee arrangement with a fund falls afoul of the fiduciary standard "articulated" in Section 36(b). But though this third puzzle is the only one substantially argued over below, the way the Seventh Circuit went about addressing it has occasioned plenty of procedural interest in its own right!

Until the Seventh Circuit's decision last year, the practical answer, such as it is, to our third puzzle long had been that supplied by the Second Circuit in its 1982 decision, Gartenberg v. Merrill Lynch Asset Management (cert. denied, 1983). Under the Gartenberg standard, an Investment Advisor falls afoul of ICA Section 36(b) only by "charg[ing] a fee that is so disproportionately large that it bears no reasonable relationship to the services rendered and could not have been the product of arm's-length bargaining." The general rule under Gartenberg is that fees are to fall "within the range of what would have been negotiated at arm's length in the light of all of the surrounding circumstances."

Perhaps needless to say, few plaintiffs have tended to prevail under this standard, notwithstanding its broad conferral of discretion upon district courts in considering "surrounding circumstances." The principal reason is that federal courts, rather like state courts in garden variety corporate law fiduciary duty cases, have as a practical matter proved reluctant to impugn the independence of directors even of "captive" funds, at least provided that one or more such directors were not beholden to their funds' advisors for multiple additional directorships. I'm often forced to issue a crooked-smiled apology to my Financial Institutions students when we cover the leading cases here.

The plaintiffs in Jones, however, sought to prevail under Gartenberg by adducing a novel ground for discrediting directorial approval of investment advisory fees: They argued that Harris Associates, as investment advisor for the Oakmark group of funds in which plaintiffs invested, could clearly be seen to have acted in violation of the standard in virtue of having charged much higher fees to its "captive" funds than it did to its independent ones. That disparity, they argued, indicated that the directors of the "captive" Oakmark funds must indeed have been captive, and the fees accordingly not those that would have been negotiated in true arms-length negotiations between bona fide representatives of shareholders on the one hand and an investment advisor on the other hand.

Now, you might have thought that this argument would invite a more or less careful judicial inquiry, of an at least partly empirical character, into whether the disparity in fees charged Harris Associates' captive funds and its independent ones could be innocently explained. But that isn't quite what happened. Indeed oral argument yesterday afforded some indication that the SCOTUS and the litigants alike remain a bit puzzled as to how best to characterize what *did* happen.

Here is what happened. First, the district court in Jones v. Harris granted Harris's motion for summary judgment under the Gartenberg standard, on grounds of representations by Harris Associates that the services rendered its captive funds, which held many more dollars' worth of assets under management than did its independent funds, simply were more costly to render even on a pro rata basis. And while it is not clear on the basis of prior precedent under Gartenberg that this decision was incorrect, it also is not clear that it is correct. Perhaps seeing this, the Seventh Circuit, per Judge Easterbrook, took a surprising step on appeal: It not only affirmed the district court's decision on the grounds given by that court, but also while at it went out of its way expressly, and it seems unnecessarily, to disavow Gartenberg, in the act introducing a pronounced circuit split. (Two other Circuits additional to the Second follow Gartenberg.) And it is here that things grow particularly interesting, particularly against the backdrop of renewed public discussion about the allocative efficiency of capital markets and the reliable rationality of their participants.

Judge Easterbrook disavowed Gartenberg because, in his words, it relied "too little on markets." Where there is no evidence that an investment advisor "pulls the wool over the eyes" of a fund's shareholders, he argued, and where there are literally thousands of mutual funds among which investors can shop, investment advisory fees are presumptively fair and "judicial price-setting" will be out of place. Any advisory fee is effectively within the law, Easterbrook argued, so long as advisors "make full disclosure and play no tricks." For again, in a market where there are thousands of funds, including low fee index funds, among which investors can shop, there simply is no reason to suspect that competition is insufficient to keep fees down to their socially optimal level. Even less is there reason, Easterbrook opined, to think that courts could do better.

Plaintiffs' appeal for rehearing en banc brought yet another interesting wrinkle to the case. The full court split 5-5, with Judge Posner writing the dissent to what defaulted to being an effective denial of the appeal for rehearing. The clash between Posner and Easterbrook makes for fascinating reading. Posner first noted that Easterbrook's claims that the 7th and other Circuits had earlier found Gartenberg wanting were simply not supported by the prior decisions to which he cited in footnotes, in that those were not excessive fee cases. Posner next noted that an influential 2007 article by John Coates and Glenn Hubbard upon which the court relied actually came down in favor of the Gartenberg standard, even while recommending some "fine tuning." Then Posner observed, notably, that the panel had based its rejection of Gartenberg "mainly on an economic analysis that is ripe for reexamination..." Zounds! Why? Because of "growing indications that executive compensation in large publicly traded firms often is excessive because of the feeble incentives of boards of directors to police compensation." Here Posner cited Bebchuk and Fried's widely cited "Pay without Performance" article of 2004, along with, characteristically, a slew of others. He then went on to point out how abuses were particularly rampant in the financial services industry in particular, and in the mutual fund industry more particularly still, once again citing impressively.

Posner had particularly harsh words for the casual speculations that the panel offered putatively to account for the differential fees Harris Associates charged its captive and its independent funds. "The panel opinion throws out some suggestions on why this difference may be justified, but the suggestions are offered purely as speculation, rather than anything having an evidentiary or empirical basis." Posner also noted that the governance structure that characterizes advisors' relation to their captive funds is industry-wide, meaning that the panel's agreement with defendants that it was better to compare Harris's fees with those charged to other captive mutual funds rather than to independent funds was ill-considered. It would virtually guarantee that what might be exorbitant fees will come to constitute an industry floor, all while too hastily rejecting what might be a better baseline of comparison -- the fees charged independent funds, as proposed by plaintiffs -- on the basis of no more than "airy speculation." Finally, Posner noted that the panel's opinion created a circuit split, and that the panel had not acknowledged this or circulated its opinion to the full court in advance of publication, as the court requires when a circuit split is created by a panel decision.

The procedural oddities attending the Jones case below in the Seventh Circuit made for some fascinating moments of confusion in oral argument before the SCOTUS yesterday. Asked by Justice Sotomayer whether he wished to disavow Judge Easterbrook's ground for ruling in favor of the defendants, John Donovan, counsel for Harris Associates said "I do not defend that." Instead, he argued that the Justices should affirm the district court decision, ignoring the Seventh Circuit panel's decision. Nevertheless, Chief Justice Roberts and Justice Scalia appeared sympathetic to the Easterbrook line of thinking. Roberts observed that one could ascertain the management fees charged mutual fund investors, and pull out of funds whose fees are unattractive, within 30 seconds on Morningstar. Scalia questioned the competence of courts to second-guess boards of directors. Breyer and Sotomayer, by contrast, were openly skeptical about the reliability of the market to police mutual fund fees. Thomas, for his part, was silent as ever. So was Alito. Stevens posed only one question. Breyer was less vocal than usual, with laryngitis. Kennedy, as mentioned, puzzled over what Section 36(b) could mean by "fiduciary." Ginsburg, like Breyer and Sotomayer, appeared to be inclined to remand to the district court for explicit factual findings. There were also some indications that some Justices, as well as counsel for both parties to the litigation, were puzzled over whether Judge Easterbrook's proposed new standard really was incompatible with Gartenberg. Finally, all parties, it is reported, were uncharacteristically subdued throughout yesterday's proceedings, with defendant's counsel, Mr. Donovan, using only 25 of his alloted 30 minutes in argument.

Nearly as interesting as the doctrinal puzzles and procedural idiosyncrasies attending Jones is its array of amicas briefs. Submitting briefs on behalf of plaintiffs were an array of legal and "behavioral finance" luminaries including Ian Ayres, Robert Litan, and a large passel of law professors. Many of the arguments proffered by these parties highlighted the market failures apt to be found in the financial markets owing to behavioral-psychological dispositions figuring large in much empirical legal scholarship these days. (Indeed the briefs read almost as "primers" of the still burgeoning field.) Also submitting briefs for the plaintiffs were John Bogle, renowned financier and founder of the innovative Vanguard group of low fee index funds, and the Solicitor General's office under Solicitor General and recent Harvard Law School Dean Elena Kagan. Warren Buffet, though he did not file an amicus brief, also had spoken out on behalf of the plaintiffs in Jones. Arrayed against these parties in the amicus sweepstakes were a number of investment companies and industry groups, including the most influential in this context, the ICI.

What to make of all of this, and what to recommend? Well, I've got three quick thoughts and a recommendation.

First, as a matter of appellate procedure, one thing that SCOTUS might do is simply affirm the Seventh Circuit under some perhaps fine-tuned or further clarified version of the Gartenberg standard that has come to prevail in other Circuits over the past quater-century, noting that the disctrict court itself had done so and that the Seventh Circuit panel had unnecessarily muddied the waters in going out of its way unnecessarily to slap together a new standard, unteathered in either the language of or Congressional intent prompting Section 36(b), out of whole cloth. And in light of prior precedent under Gartenberg even in the Seventh Circuit itself, there would be no glaring doctrinal error in a decision to this effect. But I'm not going to recommend this, and I'll say why in a moment.

Second, as a "big picture" doctrinal matter, one might imagine SCOTUS acting in some way to clarify that status of federal "fiduciary" law under the ICA and other statutes from the same era, with an eye in particular to how, if at all, it should interact with state fiduciary duty doctrines applicable in the states in which firms subject to both federal and state fiduciary doctrine are organized. There appears to be a large Erie-reminiscent (though as noted above, not Erie-doctrinal) "federal common law" question lurking here that's at bottom of Justice Kennedy's puzzling yesterday, and that at some point might have to be resolved. And there is the related, and still hotly contested, larger backdrop question of the appropriate federal role in traditionally state-determined matters of corporate governance. There are quite a few ways one might imagine the Court embarking upon any such attempt at clarification, but I won't elaborate these here basically because I doubt that the Court is in any mood to address any such "big picture" questions in connection with this case, and am not sure that I'd be in such a mood either. So I won't recommend -- or predict -- this course either for Jones.

Finally third, as a matter both of "judicial minimalism" and of sensible policy prudence, one might imagine -- and I'm going to hope -- that the Court will go the route that Justices Breyer, Ginsburg, and Sotomayer seem to be leaning, and that is effectively entailed by Judge Posner's apt observations in his dissent below. In a word, defendants in Jones *might* very well be right that to compare fees charged captive funds to those charged independent ones is illicitly to compare "apples and oranges," and hence not to go correctly about the task of determining whether the first set of fees can plausibly be characterized as arms-length. But defendants might *also* be *incorrect* in suggesting this, and this is precisely the point. The district court erred, in my judgment, in not subjecting the dispute over appropriate bases of comparison in captive fund fee cases to at least moderately careful empirical scrutiny. And that is the case partly because such inquiry is not difficult to manage, and partly because there is very good reason to be skeptical about (a) captive boards' capacities to act independently even when acting in good faith, (b) captive funds' capacity, therefore, meaningfully to compete with one another on fees, and (c) small fry investors' capacities actually to shop carefully among captive funds. Against this combined low-cost-of-court-inquiry, high-likelihood-of-market-failure backdrop, surely the best course of action for SCOTUS to take is to remand to the district court under some version of the Gartenberg standard, which is capacious enough as it is to take due account of a competitive market if it is found empirically to be there.

The Federalism Objection to the Individual Mandate

noreply@blogger.com (Michael C. Dorf) — Tue, 03 Nov 2009 06:28:00 +0000

By Mike Dorf

Over on FindLaw, I have now posted my second column in my two-part series on objections to the individual mandate. In this one, I tackle the question of whether there is affirmative power in Congress. My conclusion: Yes, under either the commerce clause or the taxation power. I also say that members of Congress should satisfy themselves that this is the sort of thing that is properly within their purview.

I don't have anything to add here about the federalism point, but I do want to say one more thing about the libertarian objection, which I addressed in my prior column and two blog posts (here and here). There is a version of the libertarian objection that I do share: Namely, that the government should not be dictating healthy behavior. Suppose, for example, that Congress included as part of its health reform legislation a provision requiring all Americans to see a doctor and then to exercise according to a customized age/height/weight chart.

The requirement to see a doctor would come close, in my view, to violating the common law right--assumed to be a constitutional right in the Cruzan case--to refuse medical treatment. To be sure, a visit to a doctor is not quite the same thing as an operation, but the core idea of the right to refuse medical integrity is a kind of inviolability of the body. Medical exams are intrusive and so we might at least think that the government needs a good reason to require a competent adult to submit to one. In the litigation context, for example, Federal Rule of Civil Procedure 35 requires that parties seek a court order for a medical exam of another party; that flips the default under the Federal Rules of permitting discovery of relevant material unless a protective order is sought. Rule 35 does not create or recognize an inviolable right against a medical exam but it does, in my view, reflect the notion that such exams are prima facie intrusive.

Even if one thinks that it's okay for the government to order everyone to see the doctor, an order to exercise does appear to go to far. It looks a lot like conscription, which, if justified in wartime, is still extraordinary. Further, it is not clear how a mandatory exercise regime could possibly be enforced absent something like Orwellian surveillance.

All that said, it is still worth noting how much more intrusive these hypothetical examples are than the actual individual mandate. Indeed, we could well imagine something like the individual mandate coming with strong incentives--though not compulsion--to exercise. Suppose that the overall health insurance system allows insurers to "experience rate." Smokers would pay higher premiums, fit people would pay lower premiums, and so on. To be clear I'm NOT proposing this. What I am saying is that a truly private health insurance market would almost certainly go this way, and in an important sense that would be better for society: People would be forced to internalize the health care costs of their behavior. That's not to say that all manner of experience rating would be defensible: E.g., screening people out for genetic predispositions over which they have no control would strike most people as unfair. (It certainly strikes me that way.) And even with respect to costly behaviors like smoking, unhealthy diet, and couch-potato-ism, there is something cruel about increasing the health insurance premiums for people who engage in these behaviors. But perhaps that just goes to show that I'm not that much of a libertarian.

The Religious Left--Part 1--Universal Victimization

noreply@blogger.com (Michael C. Dorf) — Mon, 02 Nov 2009 06:49:00 +0000

By Mike Dorf

On Friday, Cornell Law School celebrated the publication of my colleague Steve Shiffrin's new book, The Religious Left and Church/State Relations. I've discussed much of the underlying work with Steve (whom I greatly admire) but I must confess at the outset that I haven't yet read the book (though I plan to do so), and so these comments are based on the panel. It featured commentary by Kent Greenawalt, Sally Gordon, and Bernadette Meyler.

Shiffrin argues that the religious left is better positioned to respond to the religious right than is the secular left. By the "religious left" he more or less means to refer to people who self-identify as religious and who support separation of church and state at least in part based on their religious convictions. Shiffrin's pragmatic case notes that the great majority of Americans have some religious convictions, and so arguments that banish such convictions from the public sphere--as the Rawlsian notion of "public reason" would--will ring hollow or at best incomplete. If the secular left wants separation of church and state, it would do better to take a back seat to the religious left, which wants the same thing but can argue for it in terms that have broader appeal.

In this post I want to make an observation. In a follow-up post later in the week, I'm going to register a doubt about the likely efficacy of the strategy. Here's the observation: We now seem to have reached a place in our public discourse on religious matters where nearly everyone feels victimized.

Recent books by prominent atheists such as Richard Dawkins, Christopher Hitchens and Sam Harris all, in one way or another, urge atheists to "come out." And with seemingly good reason: With polls showing that atheists are among the most despised, least trusted minorities, atheists might be borrowing a page from the gay rights movement and trying to show their religious fellow citizens that atheists are their friends, relatives and neighbors. Of course, this round of books is not at all effective for that purpose, because the books tend to treat religious belief as a form of irrational, often immoral, superstition. I don't know whether these authors intended to insult religious people, but it wasn't hard to predict that this would be the effect of their writings. It's therefore probably best to read the recent atheist books as round one. They aim to raise consciousness among atheists themselves, who can then feel the power of their numbers and later argue for acceptance and even changed policies.

Meanwhile, the religious right has for some time been promoting its own narrative of victimization. The supposed "war on Christmas" has now morphed into a "war on Christianity"--a term being used by some on the religious right to describe laws in the U.S., Canada and the U.K. that extend protection against hate crimes for LGBT persons and efforts to respect Muslim traditions. Googling "war on Christianity" produces over half a million hits. You can't make this stuff up.

So, if atheists and the religious right feel persecuted, surely the religious left feels secure, right? Nope. It was striking to me how, during the panel on Shiffrin's book, Professor Gordon (whose work I much admire and whom I like very much) repeatedly spoke for the religious left as though they are a persecuted minority. She reported to having felt lonely, isolated, and even scorned by her progressive friends in the academic world for taking religion seriously. Reading Shiffrin's book was for her empowering. She realized that she was part of a great silent plurality if not majority, that would be silent no longer. And she directed her anger not at the religious right but at the secular left, at one point wishing that the likes of Richard Dawkins would "shut up." I believe Gordon meant the point in jest; she doesn't literally want to censor the atheists; and I suspect that she would not exactly say she is victimized for her religious convictions. But still, I perceived real anger.

It is tempting to take from these competing narratives of persecution the lesson that America has become a nation of over-sensitive whiners, or worse, that our public life is so fractious that we cannot engage each other respectfully despite our diverse views about ultimate value and meaning in life. But I would resist both temptations. Certainly Shiffrin himself has repeatedly shown in my conversations with him that it is possible to understand the strength of views he does not hold. Greenawalt specifically noted how the book is scrupulously fair in its treatment of opposing views.

As for Americans more broadly, it strikes me that competitive victimization is simply an effective political rhetoric. In many contexts, differences about religious matters are simply not salient. Thus, for example, on Thursday night, I had the good fortune to attend Game 2 of the World Series, where strangers of all religious faiths, and no religious faith at all, came together to high-five one another and in unison chant "who's your daddy?" at Pedro Martinez, united by the true American faith: That with enough money, and a Presidential pardon for illegal campaign contributions, you can assemble the best baseball team on the continent. Go Yankees!

The Libertarian Objection Again

noreply@blogger.com (Michael C. Dorf) — Fri, 30 Oct 2009 05:09:00 +0000

By Mike Dorf

In response to my FindLaw column and accompanying blog entry last week on the libertarian objection to the proposed individual mandate in various pending health care bills, I received a number of emails and came across various commentaries on the web taking issue with my view. Here I want to respond to a couple of what I think are clearly misguided objections and then unpack one that, in my view, has more bite.

1) Some critics accused me of ignoring what they regard as the best objection to the individual mandate--that there is no power in Congress to require it. (E.g., here.) Yet I quite clearly say at the beginning of the column that there are two primary objections to the individual mandate, and the second one contends "that the federal government lacks the authority under the Constitution to impose the mandate or to penalize those who do not comply." I then say that I will object this second objection--an objection that constitutional lawyers would routinely call a "federalism objection"--in a followup column. So, stay tuned on that front.

2) Some other critics say that I haven't rebutted the libertarian argument because I take the existing level of government involvement in the economy as my baseline but that baseline is already way too high. Yet I did not claim to be responding to all libertarians who object to anything more than a Nozickian watchman state. I have quite clearly styled my interventions here as a response to the libertarian objections that have been most clearly directed at the individual mandate as such. And those objections--coming from the Cato Institute (the leading American libertarian thinktank) and leading Republican Senators--make the argument that the individual mandate is, in a key respect, unprecedented. In other words, their argument takes the existing level of government as the baseline, and I was responding to that. If libertarians object to the proposed individual mandate on the same grounds that they object to Medicare, Social Security, Medicaid, vaccination, jury duty, and other government activities--including most taxation--they should say so loudly and clearly, rather than muddy the issue by saying that the proposed individual mandate would be unprecedented.

3) But now onto what I find to be the most interesting libertarian objection, which has not been posed specifically as an objection to my defense of the individual mandate but is nonetheless salient. Some libertarians object that what makes the individual mandate different from prior government mandates is that it is a mandate to engage with a private firm. The obligations to serve jury duty, to pay taxes, to register for the draft, and to educate one's children involve bilateral relations between the citizen and the government. By contrast, the individual mandate would require people to buy health insurance from third parties--either for-profit or non-profit organizations. Thus, even some on the left, most notably TruthDig's Robert Scheer (speaking on KCRW's Left, Right & Center), have argued that this is unfair.

The core question I would pose for people like Scheer is why this is any worse than taxing people for other privately provided goods and services they don't use. The federal government uses my tax money to subsidize private animal agriculture, even though I'm not eating any of the resulting animal products. The libertarians have complained that the individual mandate is a tax on "existence," but that's just a formality. The U.S. Constitution expressly approves of head taxes (so long as apportioned according to population) and they were used in the nineteenth century. Moroever, as I explained in my column, the excise tax in the Baucus bill is triggered by income relative to the poverty line, and so this could just as easily be thought of as an income tax.

Scheer's real objection should be that the various proposals floating around in Congress operate as regressive taxes: the only people who will pay them are those who don't have employer-based or other health insurance and can't afford to purchase it privately. But that's an egalitarian objection to the stinginess of the proposed subsidies, not a libertarian objection to the mandate.

Scheer also said (during last week's LRC episode) that he would not object to the individual mandate if it were coupled with a robust public option--presumably because then people would not be told by the government to do business with a third party. That does not appear to be the view of other libertarians on this issue, many of whom would be no happier (and probably less happy) if there were also a public option. But if we take Scheer's view as the starting point, then I think we can connect it to a rather widely shared position: namely that it is wrong for the government to take from A to give to B. That impulse underlies the public opposition to the sort of taking for private redevelopment that the Supreme Court upheld in Kelo.

I would still argue that the libertarian objection to the individual mandate is misguided, but by seeing it as fundamentally about a perceived abuse of government power to serve private ends, we can at least render it coherent.

Der Whopper (Real Title: Stiglitz and the Banks)

noreply@blogger.com (Neil H. Buchanan) — Thu, 29 Oct 2009 09:57:00 +0000

Posted by Neil H. Buchanan

[Note: The first billboard that I saw when I arrived in Austria earlier this week was for Burger King (advertising Der Whopper), which was grimly funny from the standpoint of American cultural imperialism but simply grim for me as a vegan. I am tempted to write this post about being a vegan in a foreign land, but I'll save that for perhaps another day.]

This month's issue of The Progressive (contents apparently unavailable online to non-subscribers) includes an interview with Joseph Stliglitz, the Columbia economist who is perhaps best known for his fierce attacks on the economic orthodoxy known as the IMF-Washington Consensus. Stiglitz, who also won the quasi-Nobel prize for his brilliant work on the shortcomings of markets due to imperfect information, has spent the last few years arguing that the neoliberal prescriptions (deregulating financial markets, radically reducing social safety nets, etc.) that the US and its international arms impose on other countries are both immoral and ineffective.

Perhaps of more current interest, Stiglitz has been an unrelenting critic of the Obama economic team, in particular Larry Summers. Stiglitz recently said of the Obama team that they are "either in the pocket of the banks or they're incompetent." He explains further in the interview that "in the pocket of the banks" need not mean "on the take" but simply describes having adopted a mindset that sees the world the way bankers would like policymakers to see it. That certainly does seem an apt description of Geithner, et al.

Stiglitz makes two further points that I found especially interesting:

(1) "Wall Street banks have used the same tactic that Bush used in the war on terror -- fear -- and they've basically said that if you don't do what we tell you ... it will be the end of capitalism as we know it." The interesting thing about this provocative comparison is that the analogy works not just on the initial level -- two broad policy mistakes that were perpetrated by taking advantage of mass panic -- but it carries through to deeper levels as well. In both the terror situation and the financial crisis, there really is something horrible going on, and it thus makes sense to fear for our continued existence.

That is why, for example, I have defended the TARP and the Fed's actions, because they were (I continue to believe) absolutely necessary to stop the economy from going into freefall. Similarly, many people believe (though I do not, for reasons not pertinent here) that the Afghan war was "the good war" and that things like near-strip-searches at airports are acceptable. The question is not whether doing nothing at all is an option, because it was not in either case.

Stiglitz does not actually disagree that the financial bailouts were necessary. He does argue, however, that the problems were misdiagnosed. For example, the bailout of Citibank pretty much said to the world that Citi was in huge trouble. If, instead, we had forced Citi to restructure, that would not have sent any worse message to the markets or the public, Stiglitz points out. Still, our leaders chose the route that maximized the happiness of the bankers. Stiglitz, in fact, argues generally that the problem is that the government simply did not extract enough concessions from the banking system in exchange for the trillions that we gave them.

(2) Stiglitz endorses the notion of a two-tiered banking system, with a government component. That is, he argues that banks have incentives to prey on the poor, to serve them badly (if at all), and to charge exorbitant fees. He thus suggests that the government could simply set up a banking system to provide basic financial services to the poor (check cashing, etc.), while allowing private banks to deal with people who actually have some ability to protect themselves from predation. Do you think Chuck Grassley and Max Baucus would like that idea? For that matter, what would Chuck Schumer (guardian of New York's financial class, though a progressive on most other issues) spew upon hearing this?

I argued during the Presidential transition in January that Stiglitz would have been a great choice for Obama's chief economist. He keeps proving it.

Auf wiedersehen!

Hate crimes, classification, and motivation

noreply@blogger.com (Sherry F. Colb) — Wed, 28 Oct 2009 16:15:00 +0000

Posted by Sherry F. Colb

My column on FindLaw today focuses on conservative critiques of the hate crime bill that President Obama is scheduled to sign into law today. The law would extend federal hate crime status (subject to federal prosecution) to otherwise criminal acts that involve victims selected on the basis of sex, sexual orientation, and disability. Some critics have suggested that hate crime laws amount to "thought crime" laws because they differentially punish conduct on the basis of what's going on in the perpetrator's mind. My column explains why this critique is ill-founded and would, in any event, prove too much for the critics' own taste.

In this post, I want to raise a distinct question about hate crime laws, which is whether it makes sense to single out classification (e.g., selecting a victim because he is gay) rather than underlying purpose (e.g., harming a person belonging to a group you hate).

Consider an example. A robber might decide to choose a victim on the basis of disability. A victim who is blind, for example, will have a more difficult time identifying the perpetrator than a sighted victim would have. A victim who is in a wheelchair will have a more difficult time pursuing the perpetrator than a victim who is able to run. If a robber chooses the victim in this way, does the fact that he is selecting his victim on the basis of a disability make his crime worse than that of a different robber who does not make this choice? Isn't his choice more opportunistic than it is hateful? And should this matter?

To put these questions into context, consider the murderer who selects his victim because the victim is gay, and the murderer hates gay people. The murder here (of Matthew Shepard, for example) strikes many people as worse than a murder that is not motivated by hatred of gay people (e.g., the murder of an employer in retaliation for his firing of the perpetrator). The crime is truly a "hate" crime, driven by animus, and is not simply opportunistically targeted at a gay person.

In both sorts of cases, the perpetrator is choosing his victim because of the victim's membership in a particular class. What differs is the answer to the second-order question of why the perpetrator is selecting a victim on the basis of a prohibited category. Some reasons for selecting victims on the basis of race, sex, sexual orientation, etc., seem to many to be more reprehensible than other reasons for selecting victims on these bases.

I do not have a definitive answer to this question, but I am inclined to favor the classification approach to hate crimes (to the extent that having hate crimes is a good idea at all, which is a question for another day). Determining why a person chose a particular victim is a challenging enough endeavor, in part because it is difficult to know why people do what they do and in part because even the people in question may not know what ultimately drove them to act as they did. To require an inquiry into what exactly motivated the perpetrator to select the victim for the reason he did adds another layer of complexity and difficulty to the process.

If we want to have laws that specifically penalize hate crimes, the classification-based selection of victims is a useful (if not perfect) proxy for classification-based animus. Requiring greater precision (in the form of "X selected Y because of his gender identity on the basis of X's hatred of people with Y's gender identity) is unlikely to succeed and will commit resources to an inquiry that may ultimately be unanswerable.

Academic Freedom, Chicago Style

noreply@blogger.com (Michael C. Dorf) — Tue, 27 Oct 2009 06:53:00 +0000

By Mike Dorf

In a speech last week at a Columbia University conference on academic freedom, University of Chicago President Robert Zimmer made a number of sensible points about the value of academic freedom, including the observation that the general principles of academic freedom shared by modern universities will be implemented differently at different institutions depending on their respective histories and cultures. In particular, he noted that for his own university, the principles articulated in a 1967 report by constitutional law professor Harry Kalven are especially salient. Zimmer pointed to Kalven's statement "that the University, as an institution, should take no political positions and should remain neutral on such matters (except of necessity those in which it is a direct party), in order to ensure that [it has] a maximally open environment." Here I want to suggest that, as applied by the University of Chicago, this principle is problematic.

Zimmer gives the following example as his chief illustration of the neutrality principle in operation at the University of Chicago: "The Kalven report was the basis for the University of Chicago not agreeing with requests that we divest from companies doing business in South Africa or Sudan." Now this hardly follows as an inevitable consequence of the Kalven statement. One could have thought that a university's management of its investment portfolio makes it "a direct party" in disputes about the propriety of those investments

Indeed, once one chooses to see a university's decision whether to divest as inappropriately political, it is hard to see why the University was not taking a political stand by NOT divesting. The position that moral considerations should not affect investment decisions is, after all, a political position. This is not to say that divesting would have obviously been the right choice. In these debates, there is always a question of whether divestment will be counter-productive or harm the people it is supposed to help. But choosing not to divest for that sort of reason would at least acknowledge the political character of the decision. The Kalven/Zimmer/Chicago view attempts to have it both ways: In declining to draw a distinction between what the university is saying versus what it is doing for purposes of using the Kalven exception for direct action, it potentially treats all university actions that touch on politics as the taking of a political position; but then it purports to disclaim any political position by drawing what appears to be a false act/omission distinction.

The false act/omission distinction says that divesting would be a political act, but of course one could as easily reverse matters and say that holding stock in the companies doing business in South Africa or the Sudan (or wherever) is the act, whereas maintaining a portfolio free of the tainted stock is the omission.

To repeat, I'm not taking a position on divestment per se. My point is simply that a great deal of what universities do is "political" in the sense that people can make a political issue of it. Here's another example: Reputable universities do not hire or tenure biologists who espouse crackpot theories about intelligent design (although academic freedom presumably protects a tenured biologist who newly endorses intelligent design in his work). External pressure might nonetheless be brought to bear on a university--especially a state university--to hire an intelligent designist and the university's resistance might well then be characterized as "political" or, more likely, "politically correct."

If I were applying Kalven's principle, I would want to defend the university's resistance to the pressure in this hypothetical case by saying that the application of the biology department's academic standards either makes the decision not to hire the intelligent designist apolitical or that, if it is political, it is political in a matter that directly concerns the university, and thus falls within Kalven's exception. But Zimmer's narrow conception of the Kalven exception, and his correspondingly broad notion of "politics," may make this approach unavailable.

In the end, it's not even clear to me that the core of Kalven's principle--which is justified in the name of not wanting to chill expression--is a principle of academic freedom rather than simply a prudential principle of governance. Consider one last example. Suppose that a private university in a state that does not recognize either same-sex marriage or same-sex civil unions voluntarily extends various benefits to same-sex partners of university officers, employees and students on the same basis that it extends benefits to opposite-sex married couples. Does this policy have any less of a chilling effect on a philosophy or Divinity professor who opposes same-sex marriage and civil unions than would an official university pronouncement unconnected to a benefits policy? Doesn't the actual provision of benefits by the university make the point that the University supports marriage/partnership equality even more strongly than would a policy pronouncement alone?

To my mind, more important than Kalven's principle of neutrality is a principle that even when the university takes a strong position--whether by acting, speaking or both--dissenting faculty and students are free to take contrary positions.

Can Sex Offenders Be Barred From Church?

noreply@blogger.com (Michael C. Dorf) — Mon, 26 Oct 2009 05:17:00 +0000

By Mike Dorf

As widely reported, including in this Time magazine story, sex offenders who are barred by state law from going near children have begun to invoke their free exercises rights when such state laws are used to keep them from attending religious services in houses of worhsip that also supervise children. The Time article focuses on a North Carolina case, but the problem is broader. Unfortunately, the article does not go into the real legal issues in any depth. I'll take a shot at clarifying.

There is pretty clearly no federal free exercise problem here. Back in the day, the formal doctrine from SCOTUS said that whenever the govt substantially burdened somebody's ability to practice his or her religion, the law or policy doing the burdening had to be subject to strict scrutiny: The govt had to prove that the law or policy was narrowly tailored to serve a compelling state interest. Under Sherbert v. Verner, the strict scrutiny test applied not only to laws that specifically targeted religion as such but also to religion-neutral laws that happened to impose incidental (but nonetheless substantial) burdens on particular people.

In Employment Div. v. Smith, the Supreme Court changed its approach. Under Smith, a law of general applicability--i.e., a law that does not single out religion or any particular religion for special burdens--can be validly applied in circumstances in which it limits the ability of someone to practice his religion; free exercise, as interpreted by the SCOTUS, simply does not require religious exemptions. Technically, the Court distinguished rather than overruled the old cases, characterizing them as requiring exemptions only where there was already in place an administrative scheme for granting other sorts of exemptions or where the claimant's free exercise claim was coupled with some other constitutional claim, and thus posed a "hybrid" right. A small number of lower court cases take the hybrid category seriously, but I do not. It was pretty obviously made up in Smith so that the Court could pretend it wasn't overruling prior precedent. There's no principled basis for the hybrid category and the particular outcome it was used to justify, Wisconsin v. Yoder, involved a hybrid of free exercise and the unenumerated right of parents to direct the upbringing of their children. Yet Justice Scalia, the author of the Smith majority, does not even believe in that unenumerated right, so it is hard to see why he would think it adds anything--except as a way of disingenuously distinguishing rather than overruling Yoder. Thus, the best reading of Smith is that it does not require exemptions from laws that do not specifically target religion.

The North Carolina sex offender law, like those of other states, does not single out churches. It applies equally to bar registered sex offenders from other places children congregate, such as day-care centers, public parks, or schools that have adult education classes at the same times that they have programs for children. Thus, under Smith, there is no federal free exercise problem.

Congress tried to overrule the Smith decision in the Religious Freedom Restoration Act (RFRA), which would have reinstated the pre-Smith requirement that even religion-neutral laws must be subject to strict judicial scrutiny when they substantially burden religion. However, as applied to states and their subdivisions, RFRA was struck down as beyond the enumerated powers of Congress in City of Boerne v. Flores. A subsequent federal statute, the Religious Land Use and Institutionalized Persons Act (RLUIPA), applies the RFRA rule to persons who are "residing in or confined to an institution," but registered sex offenders out on parole or probation do not meet that test, so they are stuck with Smith. (A few prisoners have tried to challenge proposed probation conditions during parole hearings, but under the statute's plain meaning they aren't entitled to the protections of RLUIPA once they're released. Indeed, the basis for Congressional power to enact RLUIPA is the receipt of federal funds by state prisons and jails; applying RLUIPA to a parolee/probationer's claim outside a jail or prison would render the Act unconstitutional, per Boerne.)

People like James Nichols (the protagonist in the Time Magazine story) can do much better under state law. Some state high courts interpret their state constitutions to require religious exemptions from generally applicable laws where those laws substantially burden free exercise and do not satisfy strict scrutiny. Other states achieve the same result via state RFRAs.

Nichols, however, appears to be out of luck on this front too, because North Carolina apparently follows the federal rule. I say "appears" and "apparently" because the issue is not entirely free from doubt. North Carolina has no RFRA of its own, and a 1967 North Carolina Supreme Court case, In Re Williams, had this to say about the state's constitutional protection for free exercise:

the term ‘rights of conscience’ as used in Article I, s 26, of the Constitution of North Carolina, must be construed in relation to the right to worship God according to the dictates of one's own conscience. Consequently, the freedom protected by this provision of the State Constitution is no more extensive than the freedom to exercise one's religion, which is protected by the First Amendment to the Constitution of the United States. Clearly, these constitutional provisions do not provide immunity for every act which one's conscience permits him to do, or even for every act which one's conscience classifies as required by ethics, nor do they shield the defendant from a command by the State that he do an act merely because he believes it morally or ethically wrong. It is the right to exercise one's religion, or lack of it, which is protected, not one's sense of ethics.

That language on its face adopts what state con law scholars call the "lockstep" approach, whereby the state's constitutional rights are identical to those protected by the federal Constitution. However, in distinguishing what is required by "ethics" from the exercise of religion, the North Carolina Supreme Court could have been implying that where something truly is a matter of religious exercise--as church attendance undoubtedly is--then it is at least presumptively protected, even against laws of general applicability. Indeed, at the time the Williams case was decided, the operative doctrine in the Supreme Court was given by Sherbert v. Verner, and the Willimans court cited and applied Sherbert's test. So, when in Williams, the North Carolina Supreme Court equated the state constitutional protection for free exercise with the federal First Amendment's Free Exercise Clause, it was equating the former with a substantially broader notion of free exercise--one which requires exemptions if strict scrutiny is not satisfied--than we now have under Smith. It was the Sherbert test, invoked by that name, that Congress sought to restore via RFRA. If Williams is read as adopting that test, then it was never abandoned in North Carolina.

However, at least one lower court in North Carolina has said (in an unpublished 2006 decision I found on Westlaw), that the core holding of Williams is the equation of the North Carolina right of conscience clause with the SCOTUS's First Amendment jurisprudence. This lockstep approach is, to use the language of an article of mine in the 2008 U Penn L Rev, "dynamic" rather than "static," so that when the SCOTUS substituted the stingy Smith test for the more generous Sherbert test, it thereby changed the meaning of the North Carolina right of conscience clause as well.

Finally, let's come to the merits. What about a case from a state that applies the Sherbert test, either as a matter of state con law or a state RFRA? Is there a compelling interest in keeping registered sex offenders away from children? Of course. But it's not at all clear that banning a registered sex offender from a house of worship is narrowly tailored to advance that goal. Certainly one can come up with alternatives: E.g., the registered sex offender must be accompanied by other adults, who assume responsibility for supervising him or her, whenever the offender comes to the house of worship. If and when a state with a Sherbert-style free exercise regime confronts one of these cases, the law will likely be most vulnerable at this second stage of the analysis.

Pay

noreply@blogger.com (Michael C. Dorf) — Fri, 23 Oct 2009 05:37:00 +0000

By Mike Dorf

Herewith, three barely considered thoughts on the news that the govt is slashing pay of some execs at firms that received bailout funds:

1) There is an element of inevitable unfairness here: Execs at firms that received but have since repaid bailout funds do not have their pay slashed even though the bailout may have been instrumental in their firms' continued existence. ("May" because some firms were basically told they were getting bailout funds whether they wanted them or not.) I say this is inevitable because the govt lacks leverage over firms that have returned funds: it is no longer a substantial creditor or equity holder.

2) Perhaps the unfairness was less inevitable for firms that continue to benefit from the bailout because they were counterparties to credit default swaps (and other deals) with bailed out firms. Some such counterparties were at risk of going under and it is hardly clear that the govt paying $100 billion to Firm B, which it then uses to honor its obligation of $100 billion to Firm A is materially different from the govt simply paying firm A the $100 billion. If B would have gone bust absent the govt funds, and if A would have been far enough back in line that it would have lost most or all of the money owed by B, then A has effectively gotten a bailout. It's true, of course, that the govt now lacks the leverage to get pay concessions from A, but that simply means that the govt should have placed greater restrictions on what B could do with the money in the first place. The best that can be said in this respect is that hindsight is 20/20, the economy was on the brink of catastrophe, and so the whole bailout was a rush job that therefore didn't include all the jots and tittles we'd like. The worst that could be said is . . . well, you know, look at Sec'y Geithner's phone log . . . .

3) By worldwide standards, Americans tend not to be egalitarian with respect to compensation. That is, we tend to think that the super-rich are entitled to stay that way, so long as they earned their money more or less according to the rules. Commitments to social welfare programs here have traditionally been less generous than in other developed countries and inequality as such is rarely an issue. Don't believe me? Ask President Edwards. Going forward, it will be interesting to see whether the outrage generated by large bonuses at bailed out firms extends beyond the idea that people shouldn't be lavishly rewarded with public funds for work that is not socially beneficial to support for higher and more progressive taxes in general.

Too Ignorant to Enter into a Contract

noreply@blogger.com (Neil H. Buchanan) — Thu, 22 Oct 2009 07:01:00 +0000

Posted by Neil H. Buchanan

In my new FindLaw column, available here, I continue my recent discussion of the inextricable role of government in making it possible for a country to benefit from a market economy. I focus on the proposed Consumer Financial Protection Agency (CFPA), the brainchild of Harvard Law Professor Elizabeth Warren that would rein in predatory lending and would be designed to allow regular people to engage in responsible borrowing.

My argument in that column is that those who oppose the CFPA on the ground that it inappropriately injects government into private transactions are simply incorrect. Private transactions, and especially loans, are only possible (or appealing) because they are enforceable by government. There is a regulatory system in place that shapes the market for consumer loans, and that system is currently very pro-lender. (I do not even mention the change in the bankruptcy law in 2003 that tilted the playing field even more decidedly in favor of lenders.)

In passing, I mention in the column that it is especially appalling to claim that we can expose the average American to the tender mercies of the consumer loan market when we as a society have failed so abysmally to educate so many of our citizens. If the social Darwinism of our time insists that people must read the contract and protect themselves, then that makes it all the more important that we make sure that they receive the education necessary to be able to understand a contract when one is offered.

This observation might lead us to propose an expansion of the doctrine that provides a defense in contract on the basis of mental deficiency (similar to the doctrine of "infancy," in which anyone under 18 cannot be held to a contract -- even though they can enforce a contract against others). We could essentially say to Congress: "Either give people a decent education, or give them the ability to protect themselves against their own ignorant errors in daily commerce." As initially appealing (or, perhaps, rhetorically delicious) as that idea might be, however, it ultimately misses several key points.

First, as I note in today's FindLaw column, even educated people do not read contracts. Because I am a Contract Law professor, I go out of my way to read as many contracts as I can, but I click through licensing agreements as fast as anyone. The presumption that we could have a system of contract with fewer or no equitable defenses if only everyone had a J.D. is fatuous. Contracts are often inherently complicated and often require more education than could reasonably be provided to the vast majority of citizens. (The consumer loan contract in Williams v. Walker-Thomas Furniture, the famous "unconscionability" case, is a great example of a contract that is impenetrable even after multiple readings by people with years of higher education.)

Second, the classical ideal of face-to-face, issue-by-issue negotiations that underlies contract law is simply inapt for the modern economy. Acting as if we can simply give people better educations and then send them out on their own in a world of basic contract law ignores the change that mass consumerism wrought on the notion of contracting. Contracting is now too expensive to be done the old fashioned way. When the assembly line replaced individual craftsmanship, non-negotiated contracts replaced old-fashioned customized contracts. The law has never really caught up to that change, notwithstanding Llewellyn's best efforts. Pushing the education angle inadvertently pushes us back in the direction of this outmoded way of thinking about contracting.

Finally, third, the "either educate them or protect them from harsh contract outcomes" approach would almost certainly lead to a disastrous conclusion: that it is much cheaper to change the law of contracts (to treat adults as if they were infants or mentally defective) than it would be actually to educate them. In fact, it would not ultimately be cheaper, because the choice to give up on people's education would undermine future economic prosperity. However, in exactly the same way that going cheap on bridge repairs looks financially appealing until it is too late, the high cost of failing to educate people would not be obvious until it is much too late. (The non-economic benefits of education are arguably even more important.)

When I was clerking in Oklahoma (which at the time ranked 45th in the country in overall educational attainment, if I recall correctly), I discovered up close what a truly uneducated populace is like. Commerce simply did not work as smoothly as in other places that I have lived. One consequence of mass ignorance, moreover, is that education is not respected. As one prominent Oklahoman put it to me, with an exaggerated and sardonic twang: "We're just too dumb to educate ourselves." We must always resist any temptation to make it seem acceptable to keep people in ignorance.

Positive Versus Negative Impingements on Liberty

noreply@blogger.com (Michael C. Dorf) — Wed, 21 Oct 2009 02:20:00 +0000

By Mike Dorf

In my latest FindLaw column I consider the libertarian objection to the proposed individual mandate in most of the health care reform proposals now before Congress. Some libertarians say that it is both unprecedented and categorically worse for the government to require people to do something affirmative (such as buying health insurance) than it is for the government either to forbid some action or to require some other action as a condition of engaging in an activity (such as practicing medicine) that the govt could prohibit. I end up concluding that the objection is not sound.

Here I nonetheless want to try to unpack the intuition that there is something worse about affirmative impositions on liberty than prohibitions. Let's begin with a pair of examples that show how an affirmative imposition feels worse. Suppose the govt says that I must be at jury duty from 9 to 5 for a week. That is clearly a greater restriction than a negative imposition that forbids me from, say, going to the movies during that same time. In the first case, I can't do anything other than go to jury duty; I can't even go to the movies. By contrast, in the second case, I can do anything I want--other than go to the movies. So the affirmative imposition seems MUCH more of an imposition than the negative one. And we might think this is typical: Prohibitions take one option off the table (the prohibited conduct) but leave us free to do anything else, whereas affirmative obligations tell us exactly what to do. They leave no freedom of movement.

But the foregoing juxtaposition does not appear to be an inevitable feature of affirmative versus negative impositions. Consider an example suggested to me by Neil Buchanan: Suppose that a parolee is under a form of house arrest. The parole condition could state that the parolee must be in his house at all times--an affirmative obligation to be somewhere--or it could state that the parolee is forbidden from going anywhere outside his house at any time--a negative imposition. Yet obviously these conditions are identical. Indeed, we could frame a much more restrictive negative prohibition--e.g., don't leave your house--than a positive one--e.g., you must be in North America. The key is the scope of the restriction, whether positive or negative, not whether it is positive or negative.

Can every affirmative obligation be turned into an equivalent negative one and vice versa? I don't think so. For example, if I am told that I am forbidden from doing anything other than being at jury duty, that still doesn't get me actually serving on the jury without some sort of affirmative obligation--except in the trivial semantic sense of a prohibition on not serving on the jury. But even if we acknowledge that there are some such cases where an affirmative obligation cannot be turned into a negative one except by double negatives, it still does not follow--for reasons I explore in the column--that affirmative obligations are necessarily or even generally more restrictive than prohibitions.

Won't You Be My Neighbor?

noreply@blogger.com (Michael C. Dorf) — Tue, 20 Oct 2009 04:07:00 +0000

By Mike Dorf

Having arguably called for the abolition of football last week (and that was before the Saints crushed the Giants!), I shall now boldly venture into the rules of baseball, albeit for purposes of making a larger point about the law on the books versus the law in practice: During Saturday's ALCS game 2, umpire Jerry Layne called Yankee Melky Cabrera safe at second base when Angels shortsop Erick Aybar straddled but did not make contact with second base before throwing on to first for what Aybar thought would be a double play. Layne had enforced the rule as written but Aybar and Angels Manager Mike Scioscia said that he had thereby failed to honor the unwritten "neighborhood rule," which says that if a second baseman or shortstop steps in the neighborhood of the bag on a double play, the runner is out. This supposed neighborhood rule is meant to protect infielders against baserunners barreling or sliding spikes up into them.

The particular play is of only academic interest because it did not materially affect the outcome of the game (except perhaps in the unknowable butterfly-beats-its-wings sense): the Angels got out of the inning without allowing the Yankees to score. Further, there has been some debate among baseball fans and writers about whether Layne had respected the neighborhood rule earlier in the game. Fox announcer Tim McCarver first said he had, then later recanted after his staff reviewed earlier double plays, but some bloggers have said that those Fox staffers themselves got it wrong and that McCarver was right in the first place. Whatever.

Here I want to raise the more general question of when an unwritten rule should be permitted to trump a written one. Let's begin by drawing a distinction with a different situation: Often, in baseball and in other rule-governed activities, including law, the rule as written is silent or ambiguous on some point, and an unwritten rule supplements it. For example, there is an unwritten rule that allows managers and players to argue with umpires about most calls but not about balls or strikes. There are also supposedly some "magic words" that will get one thrown out of the game. These unwritten rules supplement but do not contradict the written rules governing ejections.

By contrast, according to the rulebook, the neighborhood play should result in the runner being called safe but (if used by the ump) it results in the runner being called out. (A related neighborhood rule sometimes permits a middle infielder to tag the dirt in the neighborhood of a runner attempting to steal second base and get an out call if the throw beats the runner.) This is quite closely analogous to the situation I used to face when I lived in Manhattan: The official local law forbade dogs off leash in Central Park at any time, but the Park police routinely did not enforce the rule in the morning before 9 A.M. Well-behaved dogs could romp freely in various areas of the park that were known to the local dog owners. Likewise, marijuana possession in the Netherlands is a misdemeanor, but the government has adopted a policy of non-enforcement.

Now the question: In circumstances such as the foregoing--in which the written rule could easily be replaced with a formalized version of the unwritten rule--what are the costs and benefits of leaving the written rule as is but enforcing a contrary unwritten one? The costs are pretty easy to identify: The ever-present possibility that the written rule will be enforced creates anxiety for those subject to it, while opening the way to abuse by officials in the form of arbitrary or discriminatory enforcement; and even if the unwritten rule is uniformly enforced, the very fact that the persons subject to it must come to understand that the law is not what is written down can undermine the core principle of legality and breed disrespect for law more broadly.

Are there compensating benefits? In some contexts, yes. Formalizing an unwritten rule could communicate to the public that the conduct it permits is laudable or at least harmless. The Dutch marijuana example is a case in point. Actually legalizing marijuana would send a signal that there is nothing harmful about it, whereas the policy of non-enforcement of the prohibition is (presumably) premised on the notion that enforcement itself would do more harm than good (as we see from the war on drugs here), even though marijuana use is unhealthy.

It's much harder to make the case that Major League Baseball or the NYC parks authorities are worried about condoning bad behavior, although it is still possible to make out a case for keeping the unwritten rule unwritten even here. In both instances, one might worry about slippage: If you think that no rule will be strictly enforced, then formalizing the unwritten rule will lead to a still looser rule in practice. So long as the rule says the middle infielders must make contact with the bag, the "neighborhood" will be defined narrowly; if the actual formal rule said "neighborhood," we might expect umpires to start calling even more players out. This justification is familiar to drivers. When the speed limit is 55 mph, drivers routinely drive at up to 65 mph without much fear of being ticketed. But actually raising the speed limit to 65 mph will lead to drivers going at 75 mph.

Whether the benefits of keeping the unwritten rule unwritten outweigh the costs identified above is difficult to judge in the abstract.

Stevens Case Redux per Radio

noreply@blogger.com (Michael C. Dorf) — Mon, 19 Oct 2009 05:41:00 +0000

By Mike Dorf

Updated! Podcast is available now, here.

Today from 10 am to 11 am, I'll be on WHYY's Radio Times (which you can stream live from here), in a segment on the Stevens case, discussed earlier on the blog here. (I'll post a link to the podcast in an update to this entry once it's up on the show's website.) In addition to host Marty Moss-Coane, I'll be joined by Temple law professor Craig Green, who recently wrote an op-ed in the Philadelphia Inquirer, arguing that government power to ban some activity (like dog-fighting) does not entail government power to ban pictures or films of that activity. It's a well-reasoned and well-written op-ed, but it almost entirely fails to address the government's main argument in the case--which is that depictions of illegal torture or killing of actual animals form an unprotected category of speech in the same way that obscenity and child pornography do. (One could point to other categories of unprotected speech, such as fighting words, defamation, and incitement, but the analogy is closer for obscenity and child pornography.)

I say that Professor Green "almost" entirely ignores the crucial issue in the case because he does obliquely acknowledge the potential hole in his position when he says: "In this country, we usually punish bad acts, not bad pictures." The key weasel word in that sentence is "usually." What about the UNUSUAL cases? Should animal cruelty, as defined by the statute at issue in Stevens, be deemed one of them?

I suspect that Professor Green, like many free-speech libertarians, believes that the Supreme Court's obscenity and child-pornography cases are wrong. Indeed, even I think there is no sound basis for treating obscenity as unprotected. Obscenity doctrine appears to be based on the judgment that certain forms of titillation are harmful in themselves, quite apart from any harm done to the people involved in their production. By contrast, the permissibility of prohibitions on child pornography is based on the notion that actual children, who lack the capacity to consent to their sexual exploitation, are harmed in the creation and dissemination of child pornography.

Of course, neither Professor Green nor I have the power to eliminate a Supreme Court doctrine, and it is impossible to imagine that the Court would say that obscenity or child pornography is now fully protected speech. Thus, to analyze the Stevens case as it exists in the real world requires some attention to how to reconcile the speech/conduct distinction (which, I agree with Professor Green, is generally important), with the categorical exceptions we already have. We'll see how it goes on the air.

Should Football Be Banned?

noreply@blogger.com (Michael C. Dorf) — Fri, 16 Oct 2009 05:43:00 +0000

By Michael Dorf

A New Yorker article by Malcolm Gladwell is provocatively titled, "Offensive Play: How Different Are Dogfighting and Football?" Gladwell's answer: Not that different. The piece is worth reading in its entirety but for the benefit of those who choose not to, here is a very brief summary of the main points.
1) Medical evidence now shows that a large proportion of professional football players suffer traumatic brain damage that seriously impairs their ability to perform basic life functions, changes their personalities, and may shorten their lives.
2) Although concussive impacts play a role, much or most of the brain damage results from repeat non-concussive blows to the head that are endemic to the game, especially for linemen.
3) Neither better helmets nor any of the sort of rule changes that might be adopted are likely to change these outcomes.
4) Shifting from tackle football to two-hand touch or flag football would change the outcomes, but Gladwell (and I) would consider that tantamount to banning what we know as American football.
5) Like dog-fighting, professional football exploits the "gameness" of the fiercest competitors--i.e., their willingness to keep on going long after the pain and injury should have made them quit.

With respect to the dog-fighting analogy, there is of course an important difference: Human beings consent to become professional football players, whereas dogs trained to fight to the death do not so consent.

But putting aside the comparative question, it is not clear that consent should count for much in the football context anyway. We forbid dueling with pistols, even if the duelists have given fully informed consent. Only the most radical libertarians would suggest that informed consent is a sufficient basis for any voluntarily undertaken activity.

So, should football be banned? As Gladwell notes, correctly, it won't be, so there is not much practical point to answering the question. But practical or not, it is worth asking why football won't be banned. At least part of the answer, I think, is its cultural pervasiveness. People who grew up loving football (as I did and as most American males and many American females did) take the fact that it is simply part of the landscape as a kind of reassurance that it's okay. Sure, there are occasional tragedies. The event that sticks out for me was Jack Tatum's paralyzing 1978 hit on Darryl Stingley. But that was encoded as a reminder that football is a violent game with risks, not as evidence that football is a form of Russian roulette. By comparison, the lethal knockout of Duk Koo Kim in 1982 probably turned more people off to boxing, because injury seems to be the point of boxing in a way that it is only a side effect of football.

Gladwell's point, I think, is that we need to start thinking of brain damage as part of the point of football. If players started exploding on the field, say, then the unthinkable might become thinkable, and we would consider banning football.

Finally, speaking of dog-fighting, I'll be on WHYY (the NPR station) in Philadelphia on Monday at 10 am talking about the Stevens case in the Supreme Court.

The Bank of Sweden and You

noreply@blogger.com (Neil H. Buchanan) — Thu, 15 Oct 2009 11:08:00 +0000

Posted by Neil H. Buchanan

Earlier this week, news outlets (e.g. the New York Times, here) announced that this year's "Nobel in Economics" was awarded to two Americans: Elinor Ostrom and Oliver Williamson. A few thoughts:

(1) "While commonly used, this term [Nobel Prize in Economics] is not strictly correct. The Nobel Prizes are separate and distinct from the economics award. The Nobel Prizes were first awarded in 1901 and are called 'The Nobel Peace Prize' and 'The Nobel Prize in _____' (Physics, Chemistry, Medicine, or Literature). See, e.g., The Nobel Prize in Physics, http://nobelprize.org/physics. The economics award, on the other hand, was first awarded in 1969 and carries the somewhat ungainly name [the Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel]. For a critique of the economics prize and an argument that the award should be abolished, see Barbara Bergmann, Abolish the Nobel Prize for Economics — How Fair Is the Nobel?, CHALLENGE, Mar.–Apr. 1999, at 52."

I wrote those words in 26 Va. Tax Rev. 1151, 1158 (2006). (Actually, it's the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel.) Why does the distinction matter? Because the award is all about prestige, and the winners of the award are held in high esteem by the general public only because it is a "Nobel Prize." In a year in which I am personally happy with the winner (most obviously 2008, when Paul Krugman won), that is all to the good. Frankly, however, there is no good reason to have a lifetime achievement award in Economics, and the winners whose work has had seriously negative effects on the world (the guys who brought us Long-Term Capital Management, the other guys who brought us Rational Expectations, and the rest) have also had their negative impact enhanced by winning the award.

Those who disagree with me on substantive grounds can simply reverse the list. Hate on Krugman, Stiglitz, Solow, Myrdal. Big love to Friedman, Becker, et al. It is not, however, a wash. Having one's happy years does not guarantee that the damage in bad years is offset. Moreover, the merits on which the award is based are typically wholly separate from famous (and infamous) recipients' policy views. Krugman, for example, won for his technically impressive work on international trade theory. I doubt that any of his fans or detractors know or care about that.

(2) Even though it is wonderful that a woman has finally been a winner of the award, it is painful to remember that Joan Violet Robinson never won the award. Because the award cannot be won posthumously (thus ruling out years of catching up with the greats: Smith, Ricardo, Marx, Keynes), Robinson's death more than 20 years ago meant that she can never be honored with the award. The widely-accepted theory is that she did not win because she was an avowed Socialist, and the committee of bankers simply could not bring itself to give her the award, even though she was one of the greatest economists of her generation (and certainly greater than some who had already won, e.g., Hicks).

There is thus a permanent taint on the award. It should not be a greater taint merely because a different woman will finally share the award. (A woman has still not won it outright, it should be remembered.) Professor Ostrom certainly deserves to share the spotlight and the money and not to apologize for not being Joan Robinson. If she did, every male recipient should similarly apologize, but there can be no shame in not being one of the greatest of the greats.

(3) I doubt that I am the only economist who read the news and said, "Ollie Williamson and who?" Again, this is not to detract from Professor Ostrom. Her work, now that I am somewhat familiar with it, certainly is worthy of recognition. The point is that she is a political scientist, and she is thus unfamiliar to many if not most economists. The newsworthy aspect of this year's award, in fact, is that the committee again had to reach outside of economics departments when it honored work in "economic science." (Although Williamson is an economist, much of his career has been spent in other academic schools and departments.) As in 2002, when the award went to an untraditional economist (Vernon Smith) and a non-economist (Daniel Kahnemann), the committee seemed to be saying that it has become difficult to find worthy economists for the award.

(4) According to the New York Times article by Louis Uchitelle: "[I]n honoring [Ostrom], the judges seemed to suggest that economics should be thought of as an interdisciplinary field rather than a pure science governed by mathematics. ... The Nobel judges, in their description of Mr. Williamson’s and Ms. Ostrom’s achievement, said that 'economic science' should extend beyond market theory and into actual behavior." To quote the movie Buffy the Vampire Slayer: "Does the word 'duh' mean anything to you?" It is amazing that what should be a truism to the point of cliche is the basis for conferring an award that carries such prestige among serious thinkers.

Yet there we have it. It is a breakthrough to say that economics is not a pure science and it should be concerned with actual behavior. Early in my career, my colleagues in the economics department of a small liberal arts college wanted to petition the dean to move our department from the Social Sciences division to Natural Sciences. I protested and said that this was not a good idea. "Why?" they asked. "Because economics is a social science." "Oh, right."

By the way, I now teach in a law school.

When Messenger and Message Collide

noreply@blogger.com (Sherry F. Colb) — Wed, 14 Oct 2009 05:52:00 +0000

By Sherry F. Colb

In today's column on FindLaw, I discuss a pending case before the Supreme Court raising the question whether a suspect who neither explicitly waives nor explicitly asserts his rights after receiving Miranda warnings may be interrogated. An important part of my analysis turns on a major purpose behind the Miranda warnings -- mitigating the coerciveness of custody by reversing the presumption that answers to police questions are voluntary if a suspect does not assert his rights. Among other things, I conclude that having a police officer announce rights that she hopes you will not assert may not be an especially effective mechanism for transmitting information. In this post, I want to apply this lesson about conflicted messengers to the practice of fertility medicine.

The New York Times this past weekend ran a few articles about the great cost -- both financial and human -- associated with aggressive fertility treatments. In brief, when couples go to a fertility clinic for either intrauterine insemination (or "IUI", a fancy name for artificial insemination in which sperm are introduced directly into a woman's uterus) or in vitro fertilization ("IVF"), they are typically so desperate to maximize the odds of a pregnancy that they undervalue the risks associated with carrying twins and other multiples. As a result, couples request the transfer of several embryos rather than just one, a move that substantially increases both the odds of a pregnancy and, unfortunately, the odds that if there is a pregnancy, it will include more than one fetus. With multiple pregnancies comes increased chances of complications for both mother and babies, including but not limited to prematurity (and associated ailments and disabilities).

The Times articles tell of tragic situations in which families found themselves, in which they (or their insurers) had to spend hundreds of thousands of dollars in treating premature infants and in providing special education to the resulting special needs children. Other families faced pregnancies in which a doctor recommended reduction (another word for termination of some of the embryos or fetuses), but they chose not to follow the advice (and ultimately had to bury several of their babies).

Experts evidently attribute about a billion dollars a year in medical expenses each year to the collateral damage caused by fertility medicine. If doctors transferred one embryo at a time, the figure would not be nearly this high.

One alternative, of course, would be to take the decision out of the hands of patients. As I discussed in an earlier post in connection with organ donation, we could decide as a society that people should not be allowed to take steps (such as insisting on their own intact burial) that deprive others of what is rightly theirs. But many people would find this approach offensive to their libertarian instincts -- if X wants to implant four embryos and has the money to pay for it, the argument goes, X should be able to make that choice. Doctors, however, have said that patients seem unable to hear the real risks associated with multiple pregnancy and instead hear "Wow! I could have 2 kids at once and have an immediate pair of children after waiting all these years for one!"

Why do parents not hear the part of the message that focuses on the risks? Perhaps the problem is with the messenger. The doctor who tells a patient that multiple embryo transfer carries risks is the same doctor who gets more business for his fertility practice if he can advertise that IVF or IUI success rates are very high (e.g., 50% per trial) than if he advertises that they are lower (e.g., 20% per trial). Given competition for fertility business -- an extremely lucrative branch of medicine -- it pays for the doctor to convey the risk message in the way that television commercials quietly convey the risks of drugs that they advertise. If the patient decides to go ahead with multiple transfer, then the patient is more likely to become pregnant than she is to suffer the untoward consequences of multiple embryo transfer (though the odds are nonetheless significant and the consequences potentially catastrophic).

This is a bit like the police officer delivering Miranda warnings. On the one hand, the officer has a duty to convey to the suspect the fact that she may remain silent and that if she decides to answer questions, there may be serious consequences at her later trial. On the other hand, the officer is naturally hoping that the suspect will take her chances and answer questions, and even the most ethical police officer cannot help but subtly undermine his own message. In the case of police, the solution may be a third party giving the warnings, although the Supreme Court will not require this any time soon. For medical doctors, whose financial interests side strongly with multiple embryo transfer, it may be easier -- in the interests of health care reform -- to require a neutral third party to tell patients precisely what tragedies they could face if they transfer more than one embryo at a time. A Miranda warning for patients may be just what the doctor ordered (or would have, if she were not conflicted).

Spork Puts New Twist on Old Rules/Standards Question

noreply@blogger.com (Michael C. Dorf) — Tue, 13 Oct 2009 05:28:00 +0000

By Mike Dorf

A story in yesterday's NY Times highlights a new battleground for a subject that is familiar to students of jurisprudence: When should the law use rules that leave little room for discretion (and thus risk being both under- and over-inclusive relative to their background justifications) versus standards that confer discretion (which can be abused or used in a discriminatory fashion)? The Times story concerns school policies that mandate suspensions (or expulsions) for students bringing weapons to school, including items (such as a camping tool that I am inaccurately calling a "spork" in the title of this post) that are not intended to be used as weapons. It raises many of the relative advantages and disadvantages of rules and standards with which students of jurisprudence are familiar.

Here I'll use the controversy to illustrate a point that is in no way original but that I think is sometimes overlooked by those who generally favor rules: The fact that many norms have rule-like and standard-like features at the same time. But first a caveat: It is easy to read the Times article and come away thinking that the zero-tolerance policies fail even as rules. The advantage of a rule is that even though it can misfire in particular cases it nonetheless does better overall than does case-by-case discretion. But to get an optimal rule is obviously not so easy. Plenty of rules fail not so much because they are rules but because they are the wrong rules. A speed limit (rather than a standard of the form "drive carefully") can be too high or too low, for example. The Times story strongly suggests that the particular rule that resulted in a 6-year-old being sent to reform school for 45 days for bringing a camping tool for show-and-tell is just such a sub-optimal rule.

However--and this is my main point for today--the Times story also should serve as a reminder that judgment is often needed for applying a rule that is clear in some respects. There seems to be agreement that the zero-tolerance policy makes a student's intent irrelevant. But then there is the example of a student being sent to reform school for having a knife dropped into his lap. Even if the rule forbids bringing a knife for show-and-tell along with bringing one to use to back up a threat of force in a lunch-money heist, it is hard to imagine that the rule does not at least require a volitional act. Moreover, one might think that a rule that forbids knives brought for show-and-tell along with knives brought for mayhem would allow for different punishments. Think about (what I take to be) the policy of the TSA at airport terminals: If you have a bottle of water in your backpack, it will be confiscated; if you have C-4 explosive, you will be arrested and prosecuted (I hope).

Or consider the timeless question, what is a knife? A rule banning weapons from school might include an illustrative list--guns, knives, nunchucks, crossbows, etc.--as well as a sub-list of, e.g., types of knives: switchblades, cleavers, machetes, etc. But still hard cases will arise. How about a toy plastic knife? What about a sword in its case for a member of the school fencing team? Etc. As we know from the most famous example in jurisprudence--posing the question of what is a "vehicle"?--the possibility of ambiguity is always latent, even with rules that are clear in many respects.

Bad Apples

noreply@blogger.com (Michael C. Dorf) — Mon, 12 Oct 2009 05:12:00 +0000

By Mike Dorf

With President Obama having been awarded a Nobel Prize mostly for not being President Bush, this is an awkward time for me to promote a new paper of mine that argues, among other things, that President Obama is, in an important respect, similar to President Bush. The paper, Iqbal and Bad Apples (which will be published in a symposium issue of the Lewis & Clark Law Review), expands upon a point I made in passing in an earlier FindLaw column: that, in addition to its difficulties as a civil procedure case, the Supreme Court's decision in Ashcroft v. Iqbal lends the Supreme Court's imprimatur to what I call the "few-bad-apples narrative" of mistreatment of prisoners by the Bush Administration.

The paper makes two further points that I would highlight here. First, I discuss the Obama Administration's decision to investigate and potentially prosecute low-ranking interrogators who committed unauthorized abuses but not the high-ranking officials who created and implemented a policy of equally bad or worse abuses. I say that this approach ends up confirming the few-bad-apples narrative.

Second, I ask how the few-bad-apples narrative can possibly succeed given the fact that the public record is full of evidence that detainee abuse was ordered from above and that leading Bush Administration officials--especially former VP Cheney--have been publicly touting just that. My provocative answer is that the few-bad-apples narrative is actually a normative view disguised as a factual view. In that regard (though certainly not in others), I compare it to Holocaust denial. (I have a footnote making clear that I'm not comparing Bush, Obama or the Supreme Court to Nazis; I'm just using the best analogy I know to a false factual assertion that functions as a normative claim.)

The Tribute that Vice Pays

noreply@blogger.com (Michael C. Dorf) — Fri, 09 Oct 2009 05:14:00 +0000

By Mike Dorf

In preparation for a Cornell Law School panel yesterday on U.S. v. Stevens, I had occasion to reflect again on obscenity law as set out in Miller v. California. Here I'll draw a parallel between the two cases.

No, not the obvious one. Stevens is the case posing a First Amendment challenge to a federal statute that forbids the commercial distribution of films depicting illegal acts of cruelty to animals, with important exceptions modeled on the S Ct's account of permissible obscenity regulation. The govt defends the law on the ground that the Ct should recognize a category of proscribable speech along the lines of obscenity or child pornography. Based on the oral argument, that argument appears likely to fail.

I don't have much to add to Sherry's excellent analysis of the stakes in the case, except perhaps to expand on a point she makes. Under Miller, for material to be obscene, it is not sufficient that it appeal to an interest in sex. It must appeal to a prurient interest in sex (and satisfy other criteria). Obscenity law thus works to patrol -- and in an important sense, to define -- the border between normal interests in sex and deviant ones. That line, interestingly enough, is not about harm. A person (typically a woman) who is coerced into the production of non-obscene pornography is harmed to a much greater extent than a person who freely agrees to produce obscenity. The line the law draws here is about the appetites of the people who are interested in obscene versus non-obscene sexual material.

And likewise in Stevens. The number of animals harmed by dogfighting, cockfighting, crush videos and the other (admittedly repulsive) practices targeted by the law at issue in Stevens is tiny compared to the billions of pigs, chickens, cows, and other animals harmed by animal agriculture, and it is not at all clear that the illegal cruelty in the former cases is experienced as worse by the animals at issue there than is the legal cruelty experienced by the farmed animals. Yet the same society that permits farming practices such as debeaking, castration without anaesthesia, and of course, wholesale slaughter, of farm animals, condemns the cruelty of animal fights and crush videos.

The difference, as with obscenity is in the appetite. Just as obscenity law affirms the normalcy of non-deviant sexual interests, so the law in Stevens affirms the normalcy of animal agriculture. But of course, given the government's (and society's) enormous investment in the latter, that parallel to obscenity doctrine will not be any help in Stevens.

Big, Bad, Financial Institutions

noreply@blogger.com (Neil H. Buchanan) — Thu, 08 Oct 2009 10:56:00 +0000

Posted by Neil H. Buchanan

In my new FindLaw column, "Financial Market Reform: Two Goals, No Frills" (available later today), I offer a few preliminary thoughts on the big upcoming legislative battle over how to change this country's system of regulating financial markets. I argue against nuance, suggesting that we need to simply say that enough is enough, that there really are such things as financial institutions that are too big and salaries that are too high. I further argue that the new regulatory system should not try to be cute by saying, in essence: "Well, we're not saying too big is really too big, just that big is OK only if the following checklist of safety measures is met." Instead, we should simply choose a plausible way to measure "big" and then set an arbitrary maximum size, forbidding financial institutions from exceeding that size. The same approach should apply to the salaries of those institutions' employees (with the additional issue of possibly limiting the forms in which such compensation may be paid -- stock options, etc.).

In this column, I will offer two further thoughts. First, I will suggest an additional reason that the new financial regulatory law should eschew nuance. Second, I will describe why it is legitimate for the government to "meddle" in the financial markets in the first place.

In the FindLaw piece, my basic argument against a complicated, standards-based approach to determining the maximum size of financial institutions is that size really is the problem. Because we now know that big is too big, we should just say so and be done with it. In addition, however, it is worth noting that the current experience with medical care legislation strongly suggests that the U.S. political system has reached a state where it cannot handle anything that is even slightly complicated.

In my argument this past summer against the so-called Public Option, for example, I argued that Congress could provide better outcomes in both the short run and the long run by carefully and aggressively regulating private insurers than by trying to set up a non-profit insurance company to offer coverage to anyone who might prefer publicly-provided health insurance. The subsequent months have shown that my suggestion, whatever its other merits, assumed incorrectly that it is currently possible to put together a coherent bill that covers a large sector of the economy in a way that handles subtle issues.

This suggests that we might not be able to accomplish anything more than a crude law that says "Big is Bad" -- and even that might be beyond our current legislative capacity. Passing something truly ambitious -- like the Tax Reform Act of 1986, or the Clean Air and Water Acts -- might simply be currently impossible. Fortunately, as I argue in my column, there might well be some advantage in this case to being as crude as the political culture currently requires.

More fundamentally, it is important to think about why it is acceptable to have the government do something so seemingly aggressive as to tell private financial institutions how big they can be and how much they can pay their employees. The answer is simple, and it ties back into my most recent FindLaw column and related Dorf on Law post regarding the "Murphy/Nagel point." Specifically, a government is the necessary predicate to even having an economy, because it creates and enforces the laws of property, contract, etc. that make a modern economy possible.

This means that it is not only meaningless to describe before-tax income as "my money," as Murphy and Nagel demonstrate so well; but it means that any attempt to pass a new law to "regulate" a business is in fact always a matter of changing the existing regulatory scheme that makes it possible to operate that business in the first place, not an exercise in creating regulation where none existed before.

In the case of financial institutions, the role of contract law is especially important, because the fundamental product for sale in financial markets is promises. I have extra money, so I deposit it in a bank in return for the promise that it will pay me interest and return the principal under a certain set of agreed conditions. A bank lends money to a manufacturer, believing that it will be able to collect that money if the manufacturer does not live up to its promise to repay. A stock trader shorts a company by engaging in a series of agreements that must be enforced in the future. Unlike a transaction where, say, I give a kid fifty cents now in exchange for a cup of lemonade now, financial transactions almost by definition involve not current exchanges but promises by at least one party to make future payments.

This means that financial institutions are the least well-situated businesses in the country to say that they merely need the government to get out of their way. Moreover, the extra benefit of limited liability -- essentially, a rule that grants businesses an extremely valuable exception to the rule that they must honor their contracts -- means that businesses are benefiting uniquely from government's rules of the game. (Bankruptcy law is another part of this.) Finally, we now know (as if we shouldn't have known it before) that large financial institutions, and the financial system in general, are so fundamental to economic prosperity that they cannot be allowed to fail. This government-provided insurance puts financial institutions in an even more dependent position vis-a-vis government -- not because the government has induced their dependence, but because the government's rules and guarantees are part of the very foundation of a modern financial system.

That does not mean that any form of regulation is a good as any other. Far from it. It does mean, however, that the way to evaluate proposed changes in the laws governing financial markets is not to say that one approach is "regulation" and the other is "deregulation" or "less regulation." We should weigh each form of regulation on the merits, understanding that the exercise of reconsidering financial market regulation is fundamentally legitimate and appropriate.

Incorporation's Penumbra

noreply@blogger.com (Michael C. Dorf) — Wed, 07 Oct 2009 05:55:00 +0000

By Mike Dorf

In my latest FindLaw column, I discuss the Supreme Court's cert grant in McDonald v. Chicago, which poses the question whether the Second Amendment right to bear arms--interpreted as an individual right in DC v. Heller--is incorporated against the states via the Fourteenth Amendment. After explaining the history of the incorporation doctrine, I argue that for self-professed textualists like Justice Scalia, the doctrine should be problematic: It is hard to argue on textual grounds that the right to possess firearms is incorporated while the right to a civil jury trial is not; and it is equally hard to argue on textual grounds that the enumerated rights of the first eight amendments are (mostly) incorporated but that the unenumerated rights referenced in the Ninth Amendment are not.

Here I want to make another historical observation about the road to and from incorporation. Judicial conservatives love to mock Justice William O. Douglas's opinion in Griswold v. Connecticut for its rather exotic suggestion that the right to contraception is constructed from the "penumbras" and "emanations" of the Bill of Rights. These conservatives are right that this language sounds like the sort of thing that a 1960s stoner might say. E.g., "Dude, the right to sex is like a penumbra or an emanation from the right to remain silent. Far out." What the critics of the Douglas opinion in Griswold typically fail to mention is the course of events that caused Douglas to write it that way.

In the years leading up to Griswold, Douglas formed an alliance with Hugo Black, who was, on the leading issues of the day, liberal. But Black was a liberal whose experience of the pre-1937 Supreme Court led him to believe that judicial review should be cabined by clear texts. For him, the notion of jot-for-jot incorporation of the Bill of Rights was attractive because, as I say in the FindLaw column, it appeared to constrain judicial discretion. Black said that the 14th Amendment incorporated the first 8 amendments, nothing more and nothing less. Douglas, who was, to say the least, not the most highly principled jurist, was happy to join Black's opinions favoring incorporation because they produced liberal results.

But when it came to decide Griswold, Douglas was boxed in. Having joined the Black decisions saying the first eight amendments were the full measure of the 14th Amendment, he could not now say that the 14th Amendment also included unenumerated rights. And thus he fudged: He recognized an unenumerated right to contraception, all the while pretending that he was simply reading the enumerated rights. Hence, he located the right in penumbras and emanations rather than taking the much more straightforward route of saying that the Constitution recognizes unenumerated as well as enumerated rights.

Douglas does cite the 9th Amendment but only after beginning with the claim that "that specific guarantees in the Bill of Rights have penumbras, formed by emanations from those guarantees that help give them life and substance." In substance the Douglas approach does not significantly differ from that of Justice Harlan, who concurred in the judgment but not the opinion. Both Douglas and Harlan use the enumerated rights as a starting point for extrapolating the unenumerated ones. But, as Harlan protests in his separate opinion, Douglas seems to say that "the Due Process Clause of the Fourteenth Amendment does not touch th[e] Connecticut statute unless the enactment is found to violate some right assured by the letter or penumbra of the Bill of Rights." In the ensuing years, Harlan's opinion has generally been treated as much more persuasive than Douglas's.

Thus, when conservatives (and even some liberals) ridicule the penumbras and emanations, they are not actually offering a criticism of a view that many self-respecting believers in unenumerated rights hold. There may well be reasons why, despite the clear command of the 9th Amendment, judges should not recognize unenumerated rights, or should do so with great caution. But the silliness of the terms penumbras and emanations does not count as such a reason.

When Is a Cert Denial News?

noreply@blogger.com (Michael C. Dorf) — Tue, 06 Oct 2009 07:33:00 +0000

By Mike Dorf

Many lawyers familiar with the work of the Supreme Court (including yours truly) share at least one pet peeve: Annoyance at news outlets that report a certiorari denial as though it were a decision on the merits. It's bad enough when the reportage correctly says the Court "let stand" some lower court ruling, for even then there is a risk that lay readers will be left with the impression that the Justices made a decision on the merits to let the lower court ruling stand. But sometimes the headline will be plainly inaccurate.

With a new Supreme Court Term just underway, we have a frontrunner for the most misleading/false reports of cert denials. Consider the following from FoxNews: "Supreme Court Strikes Down Case From Man Claiming to Be Elvis Presley's Son." The story itself is better than the headline. It makes clear that the Court denied review of lower court rulings against the putative Elvis, Jr. But this still raises the question of why this particular cert denial was singled out for any coverage. Surely it cannot be because the case presents any issue of importance.

If I were inclined to give FoxNews the benefit of the doubt, I would say that this is simply a weird-pop-culture-meets-law story. But I think it's no accident that the story is listed on the "Politics" section of the FoxNews website. The political salience of Elvis is not immediately obvious, notwithstanding his well-known meeting with President Nixon. However, the political message FoxNews conveys by highlighting the Presley cert denial is unmistakable: Frivolous lawsuits are choking the courts, even to the point where the Supreme Court must waste its time on loopy Elvis cases.

Seen in this light, the highly misleading FoxNews coverage of the Elvis cert denial is of a piece with the broader conservative campaign for restricting access to the courts based on a largely nonexistent litigation explosion. It is extremely doubtful that any Justice spent more than a few seconds thinking about the Elvis petition, and I would be surprised if the cert pool memo took the law clerk more than 15 minutes --at most a 1/2-hour, given that it was probably written over the summer by a new clerk still learning the ropes.