ProfessorBainbridge.com

I am Justice Samuel Alito

At least, according to this flowchart. (HT: Olson)

The false attribution fallacy, the Left, and Judge Richard Posner

From his review of Miarcia Coyle's new biography of SCOTUS CJ John Roberts, The Roberts Court: The Struggle for the Constitution, LA Times editor at large John Newton makes a classic liberal commentator's move; to wit, invoking statements by Judge Richard Posner as evidence of what conservatives think:

No area belies Roberts' assertions of judicial modesty more clearly than the court's new approach to guns. Under the leadership of Justice Antonin Scalia, the court in District of Columbia vs. Heller for the first time held that the 2nd Amendment protects an individual's right to bear a weapon rather than hinging that right on its relationship to a militia.

That may have been right as a matter of law — and the ruling has been broadly misinterpreted as prohibiting regulation of guns when, in fact, it specifically countenances restrictions on gun ownership — but it certainly was not an act of restraint. It overturned the District of Columbia government, relied on a shaky reading of history and ignored decades of prior court rulings.

Because of that, Heller has been roundly criticized — by conservatives. As federal judge Richard Posner said, "it is evidence that the Supreme Court, in deciding constitutional cases, exercises a freewheeling discretion strongly flavored with ideology." Posner compared the Heller decision to Roe vs. Wade.

So much for Roberts as umpire.

The great difficulty with this argument, of course, is that it is an example of the false attribution informal fallacy; to wit, an appeal "to an irrelevant, unqualified, unidentified, biased or fabricated source in support of an argument."

Judge Richard Posner has never been a conservative. I therefore once remarked that "Posner never was a conservative, so how can he become less of one?" Having said that, however, it does seem to me that Posner has shifted from his long held stance as a pragmatic classical liberal to a mushier mix that includes a substantial dose of East Coast elite modern liberal thinking.

So much for Posner as an authority on what it means to be a conservative.

Also, did you note the sleight of hand Newton makes elsewhere in the passage?

That may have been right as a matter of law ... but it ... relied on a shaky reading of history and ignored decades of prior court rulings.

I'm no fan of guns, but Heller was clearly correct. It rested on the now widely accepted view that the Second Amendment creates an individual right, a view that is attributable in part "to the work over the last 20 years of several leading liberal law professors." So how can something that was right on the law relt on shaky history?

Finally, it ill becomes Newton, the author of Justice for All: Earl Warren and the Nation He Made, to complain about judicial ruling that ignore "decades of prior court rulings." The Warren Court used to reverse long-settled precedent twice a morning before breakfast. "Under Chief Justice Earl Warren, the Court took an 'activist' role, deviating from precedent ...." 90 Cornell L. Rev. 419, 430. Indeed, even CJ Warren himself acknowledged that "Of course the rule of stare decisis is not and should not be an inexorable one. This is particularly true with reference to constitutional decisions involving determinations beyond the power of Congress to change...." James v. U.S., 366 U.S. 213, 233 (1961). 

So much for Newton as objective journalist.

Supreme Court rules there is a presumption against the extraterritorial applicability of the Alien Tort Statute

Anthony Arend reports that:

The Supreme Court issued its Opinion in Kiobel v. Royal Dutch Petroleum this morning. Chief Justice Roberts writing the Opinion of the Court:

We therefore conclude that the presumption against extraterritoriality applies to claims under the ATS, and that nothing in the statute rebuts that presumption.

.  .  .

On these facts, all the relevant conduct took place outside the United States. And even where the claims touch and concern the territory of the United States, they must do so with sufficient force to displace the presumption against extraterritorial application. See Morrison, 561 U. S. ___ (slip op. at 17–24). Corporations are often present  in many countries, and it would reach too far to say that mere corporate presence suffices. If Congress were to determine otherwise, a statute more specific than the ATS would be required.

The Wall St Journal informs that:

The court unanimously concluded that the allegations, which Shell denies, are too remote from the U.S. to provide federal-court jurisdiction. The only American connections are that the refugees received asylum in the U.S. and that Shell, an Anglo-Dutch company, does business in the U.S.

The justices split 5-4 along their conservative-liberal divide over how high a bar to raise against future lawsuits under the Alien Tort Statute, one of the earliest and most enigmatic federal laws still on the books.

The majority opinion, by Chief Justice John Roberts, presumes that the statute covers only violations of international law occurring within the U.S. Still, the majority opinion left open the theoretical possibility that some acts abroad could so significantly "touch and concern the territory of the United States" to "displace the presumption" against the statute's use. In a concurring opinion, Justice Anthony Kennedy emphasized that future cases could provide "further elaboration and explanation" of that exception.

The court's liberal wing, led by Justice Stephen Breyer, contended the law should remain available for violations that significantly affect U.S. interests, which he said included punishing torturers seeking refuge in the U.S. ...

Shell persuaded a federal appeals court in New York to dismiss the suit, on grounds that international law doesn't permit liability for corporations, as opposed to individuals. The Supreme Court heard the Nigerian refugees' appeal in February 2012, but instead of ruling on the corporate-liability question, ordered reargument over whether the statute applies at all to conduct outside the U.S.

I had retained slim hopes that the cort would address the corporate liability issue, about which I had blogged back when the Second Circuit ruling came down. As far as I can tell, however, the SCOTUS result leaves the Second Circuit ruling on that issue intact for possible adoption at a later date.

Goldstein on the Prop 8 cases and the possibility of dismissal of cert as improvidently granted

Two interesting posts from Tom Goldstein on today's oral argument before the Supreme Court. The first speculates that--based on his reading of the oral argument tea leaves--that there are two likely outcomes, one of which could lead to the court splintering badly:

First, a majority (the Chief Justice plus the liberal members of the Court) could decide that the petitioners lack standing.  That would vacate the Ninth Circuit’s decision but leave in place the district court decision invalidating Proposition 8.  Another case with different petitioners (perhaps a government official who did not want to administer a same-sex marriage) could come to the Supreme Court within two to three years, if the Justices were willing to hear it.

Second, the Court may dismiss the case because of an inability to reach a majority.   Justice Kennedy takes that view, and Justice Sotomayor indicated that she might join him.  Others on the left may agree.  That ruling would leave in place the Ninth Circuit’s decision.

(The puzzle will be what judgment the Court will enter if there are, for example, three votes to dismiss as improvidently granted, two to find no standing, three to reverse, and one to affirm.)

The second puzzles over whether it will be possible for the court to get to a 5-vote majority:

At least insofar as the oral argument is revealing, the puzzle of Hollingsworth is how the Court will “get to five” – how five members of the Court will agree on the judgment.

This is a recurring dilemma when there is a threshold question in the case – here, the petitioners’ standing to defend Proposition 8.  The problem gets even bigger when you add in the possibility that one or more members of the Court do not want to decide the case at all – here, Justice Kennedy’s suggestion that the writ of certiorari should be dismissed.

There is only one question on which it seemed five Justices might agree:  the judgment should be vacated because the petitioners lack standing.  The Chief Justice and the four more liberal members of the Court indicated their sympathy for that position. ...

But assuming that the Court does not vote to vacate the judgment for lack of standing, and therefore reaches the merits, what then?  There seem to be four votes to reverse and uphold Proposition 8 (the Court’s conservatives) and four to affirm (the Court’s more liberal members).  Justice Kennedy is the ninth vote, and he suggested that he would prefer the Court not decide the case. ...

But whether a Justice can decline to decide a case on the ground that it should be dismissed, when no development has occurred since certiorari has been granted, is a difficult and debated question in the Court.  (Ironically, one of the most relevant authorities is an early predecessor to gay rights litigation, New York v. Uplinger.)  If Justices were perfectly free to do so, then in theory the Court’s “rule of four” – that four members of the Court can vote to grant certiorari – would be in jeopardy:  five Justices who did not grant certiorari could simply refuse to decide the case.  On the other hand, a Justice could reserve the power not to decide the merits for extraordinary cases.

It is an interesting question. As Justice Harlan once explained:

I do not think that ... voting to dismiss a writ after it has been granted can be justified on the basis of an inherent right of dissent. In the case of a petition for certiorari that right, it seems to me-again without the presence of intervening factors-is exhausted once the petition has been granted and the cause set for argument. Otherwise the ‘rule of four’ surely becomes a meaningless thing in more than one respect. First, notwithstanding the ‘rule of four,’ five objecting Justices could undo the grant by voting, after the case has been heard, to dismiss the writ as improvidently granted-a course which would hardly be fair to litigants who have expended time, effort, and money on the assumption that their cases would be heard and decided on the merits. While in the nature of things litigants must assume the risk of ‘improvidently granted’ dismissals because of factors not fully apprehended when the petition for certiorari was under consideration, short of that it seems to me that the Court would stultify its own rule if it were permissible for a writ of certiorari to be annulled by the later vote of five objecting Justices. Indeed, if that were proper, it would be preferable to have the vote of annulment come into play the moment after the petition for certiorari has been granted, since then at least the litigants would be spared useless effort in briefing and preparing for the argument of their cases. Second, permitting the grant of a writ to be thus undone would undermine the whole philosophy of the ‘rule of four,’ which is that any case warranting consideration in the opinion of such a substantial minority of the Court will be taken and disposed of. It appears to me that such a practive would accomplish just the contrary of what representatives of this Court stated to Congress as to the ‘rule of four’ at the time the Court's certiorari jurisdiction was enlarged by the Judiciary Act of 1925. In effect the ‘rule of four’ would, by indirection, become a ‘rule of five.’ Third, such a practice would, in my opinion, be inconsistent with the long-standing and desirable custom of not announcing the Conference vote on petitions for certiorari. For in the absence of the intervening circumstances which may cause a Justice to vote to dismiss a writ as improvidently granted, such a disposition of the case on his part is almost bound to be taken as reflecting his original Conference vote on the petition. And if such a practice is permissible, then by the same token I do not see how those who voted in favor of the petition can reasonably be expected to refrain from announcing their Conference votes at the time the petition is acted on. [Ferguson v. Moore-McCormack Lines, Inc., 352 U.S. 521, 560-62 (1957) (Harlan, J., concurring in part, dissenting in part)]

On the other hand, I am not insensible of the merits of Justice Stevens' argument that dismissal on grounds that cert was improvidently granted can be an appropriate exercise of judicial restraint:

As long as we act prudently in selecting cases for review, there is relatively little to be lost, and a great deal to be gained, by permitting four Justices who are convinced that a case should be heard to have it placed on the calendar for argument. It might be suggested that the case must be decided unless there has been an intervening development that justifies a dismissal. See generally Rice v. Sioux City Cemetery, 349 U.S. 70, 75 S.Ct. 614, 99 L.Ed. 897 (1955). I am now persuaded, however, that there is always an important intervening development that may be decisive. The Members of the Court have always considered a case more carefully after full briefing and argument on the merits than they could at the time of the certiorari conference, when almost 100 petitions must be considered each week. Nevertheless, once a case has been briefed, argued, and studied in chambers, sound principles of judicial economy normally outweigh most reasons advanced for dismissing a case. Indeed, in many cases, the majority may remain convinced that the case does not present a question of general significance warranting this Court's review, but nevertheless proceed to decide the case on the merits because there is no strong countervailing reason to dismiss after the large investment of resources by the parties and the Court.

A decision on the merits does, of course, have serious consequences, particularly when a constitutional issue is raised, and most especially when the constitutional issue presents questions of first impression. The decision to decide a constitutional question may be the most momentous decision that can be made in a case. Fundamental principles of constitutional adjudication counsel against premature consideration of constitutional questions and demand that such questions be presented in a context conducive to the most searching analysis possible. ... The policy of judicial restraint is most salient in this Court, given its role as the ultimate expositor of the meaning of the Constitution, and “perhaps the most effective implement for making the policy effective has been the certiorari jurisdiction conferred upon this Court by Congress.” Rescue Army v. Municipal Court, 331 U.S. 549, 568, 67 S.Ct. 1409, 1419, 91 L.Ed. 1666 (1947). If a majority is convinced after studying the case that its posture, record, or presentation of issues makes it an unwise vehicle for exercising the “gravest and most delicate” function that this Court is called upon to perform, the Rule of Four should not reach so far as to compel the majority to decide the case. [New York v. Uplinger, 467 U.S. 246, 250-51 (1984) (Stevens, J., concurring).]

Perhaps then a presumption that cert should only be dismissed as improvidently granted only if at least one of the justices who voted to grant cert agrees to such a dismissal that can be rebutted if the majority of five concludes that the constitutional issues are not ripe for decision.

God and the Profits: Is There Religious Liberty for Money-Makers?

Mark Rienzi, God and the Profits: Is There Religious Liberty for Money-Makers? (March 7, 2013). Available at SSRN: http://ssrn.com/abstract=2229632:

Abstract: Is there a religious way to pump gas, sell groceries, or advertise for a craft store? 

Litigation over the HHS contraceptive mandate has raised the question whether a for-profit business and its owner can engage in religious exercise under federal law. The federal government has argued, and some courts have found, that the activities of a profit-making business are ineligible for religious freedom protection. 

This article offers a comprehensive look at the relationship between profit-making and religious liberty, arguing that the act of earning money does not preclude profit-making businesses and their owners from engaging in protected religious exercise. 

Many religions impose, and at least some businesses follow, religious requirements for the conduct of profit-making businesses. Thus businesses can be observed to engage in actions that are obviously motivated by religious beliefs: from preparing food according to ancient Jewish religious laws, to seeking out loans that comply with Islamic legal requirements, to encouraging people to “know Jesus Christ as Lord and Savior.” These actions easily qualify as exercises of religion. 

It is widely accepted that religious freedom laws protect non-profit organizations. The argument for denying religious freedom in the for-profit context rests on a claimed categorical distinction between for-profit and non-profit entities. Yet a broad examination of how the law treats these entities in various contexts severely undermines the claimed categorical distinction. Viewed in this broader context, it is clear that denying religious liberty rights for profit-makers would actually require singling out religion for disfavored treatment in ways forbidden by the Free Exercise Clause and federal law.

If you don't want to read a 40 page law review article, here's a short summary.

GU law prof Seidman libels (IMHO) Justice Scalia as a racist neo-Confederate

Georgetown law professor Louis Michael Seidman has posted to SSRN a so-called Thought Experiment, purporting to be "Justice Antonin Scalia's long lost dissenting opinion in Brown v. Board of Education." 

In my humble and constiutionally protected opinion, it is a piece of libelous shit by a far-left jackass.

As Seidman ought to know, Justice Scalia has in fact stated that "he stands with Justice Harlan, who dissented in Plessy v. Ferguson. He argues that the original meaning of the Fourteenth Amendment prohibits racial discrimination." People who claimed Scalia has said he would have dissented in Brown have been shown to have misquoted him (intentionally?).

Seidman's rant is not an amusing parody. It doesn't even try to be faithful to what Scalia might have said had he written in Brown. Instead, it is simply a thinly disguised way of accusing Scalia of being a racist neo-Confederate, which is a lie.

Using Reverse Veil Piercing to Vindicate the Free Exercise Rights of Incorporated Employers

Bainbridge, Stephen M., Using Reverse Veil Piercing to Vindicate the Free Exercise Rights of Incorporated Employers (March 6, 2013). The Green Bag, Vol. 16, No. 3, Spring 2013; UCLA School of Law, Law-Econ Research Paper No. 13-06. Available at SSRN: http://ssrn.com/abstract=2229414

Abstract: Reverse veil piercing (RVP) is a corporate law doctrine pursuant to which a court disregards the corporation’s separate legal personality, allowing the shareholder to claim benefits otherwise available only to individuals. The thesis of this article is that RVP provides the correct analytical framework for vindicating certain constitutional rights.

Assume that sole proprietors with religious objections to abortion or contraception are protected by the free exercise clause of the First Amendment and the Religious Freedom Restoration Act (RFRA) from being obliged to comply with the government mandate that employers provide employees with health care plans that cover sterilizations, contraceptives and abortion-inducing drugs. Further assume that incorporated employers are not so protected. This article analyzes whether the shareholders of such employers can invoke RVP so as to vindicate their rights.

At least one court has recognized the potential for using RVP in the mandate cases, opining that these cases “pose difficult questions of first impression, including whether it is “possible to ‘pierce the veil’ and disregard the corporate form in this context.” The court further opined that that question, among others, merited “more deliberate investigation.” This article undertakes precisely that investigation.

Invoking RVP in the mandate cases would not be outcome determinative. Instead, it would simply provide a coherent doctrinal framework for determining whether the corporation is so intertwined with the religious beliefs of its shareholders that the corporation should be allowed standing to bring the case. Whatever demerits RVP may have, it provides a better solution than the courts’ current practice of deciding the issue by mere fiat.

Number of Pages in PDF File: 18

Keywords: corporation, limited liability, reverse veil piercing, reverse pierce, veil piercing, free exercise, first amendment, Religious Freedom Restoration Act, RFRA

JEL Classification: K22

Is "fraud on the market" back on the agenda?

Apparently so:

A divided Supreme Court ruled on February 27th that proof of materiality is not a prerequisite to certification of a Rule 10b-5 securities fraud class action.Amgen Inc. v. Connecticut Retirement Plans and Trust Funds, No. 11-1085 (Feb. 27, 2013).

The elements of a Rule 10b-5 claim include proof of a material misrepresentation or omission and reliance upon such misrepresentation or omission. Plaintiffs in securities fraud class actions typically seek to invoke the “fraud-on-the-market” presumption set out in Basic Inc. v. Levinson, 485 U.S. 224 (1988) to establish reliance. In Basic, a case in which only a bare quorum of six Justices participated, a bare majority of four Justices permitted plaintiffs who trade in an impersonal and efficient market to invoke a rebuttable presumption of reliance on public, material misrepresentations, and thus proceed with a class action even absent proof of individual reliance. ...

Notably, four Justices expressed a willingness to revisit Basic’s fraud-on-the-market presumption. Justice Thomas’ dissent (in which Justices Kennedy and Scalia joined all or in part) stated that the Basic decision is “questionable”. Justice Thomas noted that only four Justices had joined the portion of the Basic opinion adopting the fraud-on-the-market theory and that two other Justices had dissented from that portion of Basic and had expressed concern that the Court had replaced “traditional legal analysis” “with economic theorization”. Indeed, one law professor (whose article Justice Thomas referenced) has described the line-up of Justices that decided Basic as “remarkably skewed”. Justice Alito concurred in the majority opinion, but on the understanding that whether the Court should revisit Basic’s fraud-on-the-market presumption was not before the Court in Amgen and, he too, stated that “reconsideration of the Basic presumption may be appropriate”.

I did not see that one coming. But I direct your attention to William W. Bratton & Michael L. Wachter, The Political Economy of Fraud on the Market, available at SSRN: http://ssrn.com/abstract=1824324, which argues that:

The fraud on the market class action no longer enjoys substantive academic support. The justifications traditionally advanced by its defenders - compensation for out-of-pocket loss and deterrence of fraud - are thought to have failed due to the action’s real world dependence on enterprise liability and issuer funding of settlements. The compensation justification collapses when considered from the point of view of different types of shareholders. Well-diversified shareholders’ receipts and payments of damages even out over time and amount to a wash before payment of litigation costs. The shareholders arguably in need of compensation, fundamental value investors who rely on published reports, are undercompensated due to pro rata distribution of settlement proceeds to all class members. The deterrence justification fails when enterprise liability is compared to alternative modes of enforcement. Actions against individual perpetrators would deter fraud more effectively than does enterprise liability. If, as the consensus view now has it, fraud on the market makes no policy sense, then its abolition would seem to be the next logical step. Yet most observers continue to accept it on the same ground cited by the Supreme Court in 1964 when it first implied a private right of action under the 1934 Act in J.I. Case v. Borak - a private enforcement supplement is needed in view of inadequate SEC resources. Restating, even a private enforcement supplement that makes no sense is better than no private enforcement supplement at all. 

But then again, maybe not. Contrary to their argument that there are "sticking points retarding movement toward fraud on the market's abolition" by the courts, that door now appears to be wide open.

The Fourth Amendment versus Wine Fraud

It is said that it is better that a hundred guilty men go free than one innocent man be punished (feel free to substitute whatever number you think the adage specifies). On the other hand, as Justice Benjamin Cardozo famously asked, "should the criminal go free because the constable has blundered?"

I was reminded of this famous dichotomy when I was catching up on some back issues of the Wine Spectator that had somehow slipped through the cracks. In the November 30, 2012 issue, I read that:

Accused wine counterfeiter Rudy Kurniawan [was contesting] the legality of FBI agents' search of his home, which occurred after his arrest in a Los Angeles suburb last March. ...

In that search, according to a grand jury indictment, agents found an elaborate setup for wine counterfeiting, including thousands of fake labels for wines with vintages as far back as 1899, and labels for all the first-growths of Bordeaux and several highly sought-after Burgundies.The operation also housed a cork inserter, hundreds of used corks, bags of new corks and foil capsules.

According to a source close to the defense, FBI agents had an arrest warrant but no search warrant when they entered the house Kurniawan shared with his mother. The agents arrested Kurniawan and also "looked around," according to the source. Only later did the agents return to Kurniawan's house with a search warrant to execute a "protective sweep" of the home.

On criminal procedure issues, I tend to come down hard on the civil libertarian side. But wine fraud on this scale put that tendency to the test ... big time.

Indeed, I must confess to being pleased to learn that Kurniawan's Fourth Amendment arguments were rejected:

When news that Federal Judge Richard Berman ruled the FBI had probable cause to search the home of Rudy Kurniawan broke, wine lovers all of the world rejoiced! Now that Judge Berman ruled that the search warrant had a sound basis for probable cause, the trial of Rudy Kurniawan could take to place shortly!  

Had the case come out the other way, I admit I would be sorely tempted to advocate a wine fraud exception to the Fourth Amendment!

Calling a constitutional convention to repeal Citizens United

Keith Bishop notes that:

[California] Assemblymember Mike Gatto has even more ambitious plans.  He has introduced AJR 1 which requests Congress to call a constitutional convention pursuant to Article V of the United States Constitution “for the sole purpose of proposing an amendment to the United States Constitution that would limit corporate personhood for purposes of campaign finance and political speech and would  further declare that money does not constitute speech and may be democratically limited . . . .”

I sort of vaguely recall from Constitutional Law I in law school that it's not at all clear whether a convention called pursuant to Arivle V of the Constitution can be limited to a single issue. A quick look at Westlaw confirms that Walter Dellinger argues, for example, that constitutional conventions under Article V cannot constitutionally be limited to single issues or be controlled by Congress or prior mandates of state legislatures once convened. See Walter E. Dellinger, The Recurring Question of the “Limited” Constitutional Convention, 88 Yale L.J. 1623, 1624 (1979). But, it seems, other commentators disagree.

Suffice it to say that, IMHO, the left's hatred of Citizens United is no excuse for opening a Constitutional Pandora's box. See generally, Thomas Gais & Gerald Benjamin, Public Discontent and the Decline of Deliberation: A Dilemna in State Constitutional Reform, 68 Temple L. Rev. 1291, 1304 (1995) (“Citizens may fear that constitutional conventions would open up a ‘Pandora's box”’ and noting that “William Brennan, then Associate Justice of the United States Supreme Court, declared it ‘the most awful thing in the world”’).

Are for-profit corporations "persons" who "exercise religion"?

Kevin Walsh has a great post on whether corporations can exercise religion for purposes of the Religious Freedom Restoration Act.

A split panel of the Third Circuit recently joined the minority of federal courts that have denied preliminary injunctive relief to for-profit corporations and their owners in RFRA and Free Exercise challenges to the HHS Mandate. Both judges in the majority (Judge Rendell and Judge Garth) endorse the district court’s conclusions that “a secular, for-profit corporation . . . has no free exercise rights under the First Amendment, and is not a “person” under RFRA.” Writing in dissent, Judge Jordan contends (powerfully) that these conclusions rest on erroneous premises and merit further consideration by the court. If anything, Judge Jordan’s dissent understates the problems with the majority’s adoption of these conclusions because the standard of review did not require him to reach definitive conclusions. There is no legal basis for a judicial carve-out of “secular, for profit corporations” from RFRA’s protections.

RFRA provides that “[g]overnment shall not substantially burden a person’s exercise of religion” unless the government satisfies strict scrutiny. 42 U.S.C. § 2000bb-1(a) (emphasis added). In the U.S. Code, “person” ordinarily encompasses “corporations, companies, associations, firms, partnerships, societies, and joint stock companies, as well as individuals.” 1 U.S.C. § 1. Nothing in RFRA excludes corporations generally. To the contrary, it is plain that corporations can assert claims under RFRA. The only Supreme Court case applying RFRA against the federal government involved a claim asserted by a corporation, O Centro Espírita Beneficente União do Vegetal.

Rather than adopt the obviously incorrect interpretation of “person” to exclude corporations, courts have carved up the category of corporations into “religious corporations” and “secular, for-profit corporations.” But there is no textual basis for this distinction in the statutory term “person.”

Walsh concludes:

... some courts are incorrectly carving out certain corporations from RFRA’s blanket coverage. These judicial carve-outs are based on mistaken statutory interpretation, a mistaken understanding of the meaning of “exercise of religion,” and a mistaken understanding of corporate action.

It's an interesting and persuasive analysis of the issue, which is likely to end up before the Supreme Court.

Does Chevron mandate deference to the SEC on Rule 10b5-2?

Just read two different articles on the titular topic. A student note by Joseph Pahl (106 Nw. U. L. Rev. 1849) says no:

Rule 10b5-2(b)(1) overreaches the statutory authority of the SEC by creating liability under § 10(b) without the existence of deception or manipulation. It is unreasonable to interpret a promise not to disclose confidential information as a simultaneous agreement not to use that information (while keeping it confidential) for an individual's personal benefit. The acts of disclosure and use are temporally separate acts, and it would be perverse to believe that, when an individual agrees not to disclose a piece of information, it is inherently deceitful to use that information for his personal benefit while maintaining confidentiality. ...

Assuming arguendo that 10b5-2(b)(1) is not contrary to the courts' interpretation of the meaning of the statute, the rule does not pass the second prong of the Chevron test: Rule 10b5-2(b)(1) is “arbitrary, capricious, or manifestly contrary to the statute.” ... A confidentiality agreement alone fails to create a situation where a deceptive act is possible by trading without some further fiduciary or fiduciary-like relationship. 

I am highly sympathetic to that line of argument, but Professor Steven Cleveland argues that (65 Fla. L. Rev. 73):

To date, commentators [including yours truly, as Cleveland notes] have argued against the rule's validity by applying the Supreme Court's securities law jurisprudence without considering the role of administrative law-despite the Court's comments that the pertinent statute is ambiguous, despite express delegation of rulemaking authority by Congress to the Commission, and despite developments in administrative law subsequent to the Court's relevant securities law decisions. By not considering the role of administrative law, commentators have approached the rule with undue skepticism. Administrative law principles dictate judicial deference to the Commission's rule. The Commission once commanded deference from courts. The time has come to resurrect that deference.

Cleveland makes a thoughtful and reasoned argument. But in my judgment, however, the time for deference has not yet come.

I will once again quote Michael Greve:

I’m teaching something called, fraudulently, administrative “law.” Believe you me: nothing in that corpus juris poses any meaningful constraint on government. E.g., I’m supposed to teach and therefore do teach that judges must bow to any bureaucrat’s take on the law (unless it’s completely nuts) because otherwise the D.C. Circuit might end up running the country and good sense and lawful government might break out.

I will also note that deference ought to be earned rather than given by Supreme Court fiat. To wit, consider Business Roundtable v. SEC, 647 F.3d 1144 (DC Cir. 2011):

Under the APA, we will set aside agency action that is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” ...

We agree with the petitioners and hold the Commission acted arbitrarily and capriciously for having failed once again—as it did most recently in American Equity Investment Life Insurance Company v. SEC, 613 F.3d 166, 167–68 (D.C.Cir.2010), and before that in Chamber of Commerce, 412 F.3d at 136—adequately to assess the economic effects of a new rule. Here the Commission inconsistently and opportunistically framed the costs and benefits of the rule; failed adequately to quantify the certain costs or to explain why those costs could not be quantified; neglected to support its predictive judgments; contradicted itself; and failed to respond to substantial problems raised by commenters.

I believe close examination of the relevant history fo the SEC's adoption of Rule 10b5-2 will reveal precisely the same shortcomings that mandated striking down the proxy access rule. Compare, e.g., both the majority and Judge Winter's separate opinions in the old Chestman case to the proposing and adopting releases for Rule 10b5-2. The first pair is thoughtful, analytical, reasoned. The second one isn't. 

Something sensible on the constitutionality of gun control

My colleague Adam Winkler has co-authored a letter signed by a slew of prominent law professors in which they address the constitutionality of gun control legislation:

In 2008, the U.S. Supreme Court held that the Second Amendment, which provides, "A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed," guarantees an individual's right to have a functional firearm in the home for self-defense. The Court's decision in that case, District of Columbia v. Heller, struck down a D.C. law that effectively barred the use of any firearm for self-defense. The law is now clear that the government may not completely disarm law-abiding, responsible citizens. The Court also made clear, however, that many gun regulations remain constitutionally permissible. "Like most rights," the Court explained, "the right secured by the Second Amendment is not unlimited." Writing for the Court, Justice Antonin Scalia explained that restrictions on "dangerous and unusual" weapons are constitutional and that "nothing in our opinion should be taken to cast doubt" on laws that prohibit "the possession of firearms by felons or the mentally ill" or laws that impose "conditions and qualifications on the commercial sale of arms."

In this sense, Justice Scalia recognized in Heller that, like other constitutional rights, the Second Amendment is not an absolute. The First Amendment, for example, provides that "Congress shall make no law... abridging the freedom of speech," but the Supreme Court has long and consistently held that some types of speech -- for example, defamation, obscenity and threats -- can be regulated; that some people -- for example, public employees, members of the military, students and prisoners -- are subject to greater restrictions on their speech than others; and that the government can reasonably regulate the time, place and manner of speech. As Justice Scalia explained in Heller, the rights guaranteed by the Second Amendment are likewise subject to appropriate regulation in order to enhance public safety.

As Brian Leiter observes:

It's a pretty sober and straightforward analysis, and it doesn't even question the decision in Heller ....

The signatories include the usual suspects but also include folks like  libertarian legal giant Richard Epstein and ex-conservative Charles Fried (who, granted, is well on his way to becoming one of the usual suspects).

Second Amendment absolutists will have their usual conniption, as will the gun confiscation crowd, but reasonable people will find the argument persuasive.

SEC versus Citizens United

JW Verret has a great column in today's WSJ on why the SEC shouldn't try circumventing Citizens United via disclosure rules.

Louis Michael Seidman's constitutional disobedience theory is the least principled argument of 2012

Georgetown law professor Louis Michael Seideman argues that:

Our obsession with the Constitution has saddled us with a dysfunctional political system, kept us from debating the merits of divisive issues and inflamed our public discourse....

... Imagine that after careful study a government official — say, the president or one of the party leaders in Congress — reaches a considered judgment that a particular course of action is best for the country. Suddenly, someone bursts into the room with new information: a group of white propertied men who have been dead for two centuries, knew nothing of our present situation, acted illegally under existing law and thought it was fine to own slaves might have disagreed with this course of action. Is it even remotely rational that the official should change his or her mind because of this divination?

Constitutional disobedience may seem radical, but it is as old as the Republic. 

So what about out basic freedoms? Seidman answers that:

This is not to say that we should disobey all constitutional commands. Freedom of speech and religion, equal protection of the laws and protections against governmental deprivation of life, liberty or property are important, whether or not they are in the Constitution. We should continue to follow those requirements out of respect, not obligation.

One wonders whether Seidman would include the unenumerated rights like "privacy" and the corollary "right" to kill unborn babies, BTW.

As Jonathan Adler notes, this is an unprincipled argument:

... the Constitution itself provides for its own revision to cure deficiencies: Article V. This amendment process has allowed for dramatic changes to the document, from the Bill of Rights and the Civil War Amendments to women’s suffrage and changes to election procedures.

...

Seidman suggests that liberal constitutional values such as the freedom of speech and religion, equal protection, and due process “are important, whether or not they are in the Constitution” and that “we should continue to follow those requirements out of respect, not obligation.” But our political history shows quite clearly that the political process is more than willing to trample such principles, often with substantial popular support even with a constitutional obligation to respect. Yet the whole point of a constitution is to prevent such abuses and constrain popular majorities.

Seidman writes that if we followed his advice: “The Supreme Court could stop pretending that its decisions protecting same-sex intimacy or limiting affirmative action were rooted in constitutional text.” So supreme court opinions would be nothing more than policy briefs and appeals to moral principle? It seems to me that is a recipe for undermining the legitimacy of judicial review and ultimately relegating all such questions to the political process — and producing quite a few results I doubt Seidman would much like (e.g. greater limits on expression, lesser protection of criminal defendants, and more expansive national security authority). There are reasonable arguments for constraining (or even eliminating) judicial review — I don’t agree with them, but I think they are reasonable — but I don’t take that to be Seidman’s argument. To the contrary, he seems to want to keep judicial review, but just for those constitutional provisions he likes, but that’s hardly the basis for a principled argument for “constitutional disobedience,” as such.

BTW, if we can ignore constitutional provisions, does that mean we just ignore the entire Warren Court era? Or, if I could pick just one case to ignore, how about Wickard v. Filburn, which is the root of all evil.

See the problem?

See also John Vecchione:

In what reads like a parody of liberal thinking from Jonah Goldberg’s Liberal Fascism, Professor Louis Seidman of Georgetown Law School posits that we should ignore some parts of the Constitution while keeping the parts he likes. He risibly blames the crisis of spending and entitlements — brought on by men who think like him — on an over-punctilious adherence to the Constitution.'

Glenn Reynolds:

I dunno. Does this mean we should ignore Roe? Or Miranda? And Baker v. Carr? And if the Constitution is this obsolete and “evil,” then maybe secession isn’t off the table after all? . . . .

William Jacobson:

I find myself agreeing more frequently than ever before with Glenn Greenwald, at least on the issue of the willingness and desire of “progressives” to go where even the demonized George W. Bush was not willing to go, and the willingness with which the progressive intelligentsia embraces such ideas in the service of Obama.

Been then and done that.