Steven Davidoff Solomon has a useful and interesting discussion.
Howard Wasserman blogs:
Many sites are talking about Wednesday's Seventh Circuit arguments in challenges to same-sex marriage bans in Indiana and Wisconsin. Judge Posner was in rare form in shredding the states' arguments in support of the bans, particularly in the Wisconsin case (several of the links have either the full audio or audio clips). As usual, there is the debate about whether this is Posner being a bully (Josh Blackman says yes) or Posner being Posner and attacking bad legal arguments and bad lawyering (in fairness to Josh's viewpoint, Posner does not give the lawyers room to answer in real detail).
But the argument highlights Posner's uniqueness as a conservative-but-iconoclastic judge. And sparks this question: What if Posner had been the nominee for the late Reagan/Bush I openings--Scalia, Kennedy (after Bork and Ginsburg both went down), or Souter (replacing Brennan, a fitting seat, since Posner famously clerked for Brennan)?
Perish the thought. I for one am very glad he didn't make it to the SCOTUS for reasons I've blogged several times over the years:
Josh Blackman tweets a link to a post he wrote on how the debate between positive and negative rights has played out in the debate over Obamacare:
Halbig and Two Conceptions of Liberty: At its core, the debate in NFIB v. Sebelius and the individual mandate ... http://t.co/MZHqQrjUz9— Josh Blackman (@JoshMBlackman) September 2, 2014
Apropos of which, many years ago I wrote a column on Ronald Reagan and the case for a negative conception of liberty:
... positive rights cannot be achieved without limiting the liberty of individuals. During the Cold War, for example, totalitarian regimes justified their (egregiously bad) humans rights records by stressing how they achieved positive rights the West left to the vagaries of the market place. Yet, they did so through totalitarian regimes characterized by central planning that proscribed both freedom of contract and private property.
Kindly go read the whole thing.
I'm reading Leo Strine and Nicholas Walter's new article, Conservative Collision Course?: The Tension between Conservative Corporate Law Theory and Citizens United (August 1, 2014). Harvard Law School John M. Olin Center Discussion Paper No. 788. Available at SSRN: http://ssrn.com/abstract=2481061. Here's the abstract:
One important aspect of Citizens United has been overlooked: the tension between the conservative majority’s view of for-profit corporations, and the theory of for-profit corporations embraced by conservative thinkers. This article explores the tension between these conservative schools of thought and shows that Citizens United may unwittingly strengthen the arguments of conservative corporate theory’s principal rival.
Citizens United posits that stockholders of for-profit corporations can constrain corporate political spending and that corporations can legitimately engage in political spending. Conservative corporate theory is premised on the contrary assumptions that stockholders are poorly-positioned to monitor corporate managers for even their fidelity to a profit maximization principle, and that corporate managers have no legitimate ability to reconcile stockholders’ diverse political views. Because stockholders invest in for-profit corporations for financial gain, and not to express political or moral values, conservative corporate theory argues that corporate managers should focus solely on stockholder wealth maximization and non-stockholder constituencies and society should rely upon government regulation to protect against corporate overreaching. Conservative corporate theory’s recognition that corporations lack legitimacy in this area has been strengthened by market developments that Citizens United slighted: that most humans invest in the equity markets through mutual funds under section 401(k) plans, cannot exit these investments as a practical matter, and lack any rational ability to influence how corporations spend in the political process.
Because Citizens United unleashes corporate wealth to influence who gets elected to regulate corporate conduct and because conservative corporate theory holds that such spending may only be motivated by a desire to increase corporate profits, the result is that corporations are likely to engage in political spending solely to elect or defeat candidates who favor industry-friendly regulatory policies, even though human investors have far broader concerns, including a desire to be protected from externalities generated by corporate profit-seeking. Citizens United thus undercuts conservative corporate theory’s reliance upon regulation as an answer to corporate externality risk, and strengthens the argument of its rival theory that corporate managers must consider the best interests of employees, consumers, communities, the environment, and society — and not just stockholders — when making business decisions.
An initial reaction is that we need to draw a sharp distinction between what Strine calls "conservative corporate law theory" and the Roberts Court's decisions in cases like Citizens United and Hobby Lobby. As I observed of the Supreme Court's decision in Federal Communications Commission v. AT&T, Inc.:
Twelve pages of what purports to be legal and grammatical analysis follows. But Chief Justice Roberts could have summed up his opinion far more succinctly: "Because at least 5 of us say so."
The Citizens United decision last term attracted much criticism--not least from Con Law Professor-in Chief Obama--for holding that a corporation is a person and as such has certain constitutional rights. While I agreed with the holding, I was disturbed that the Chief Justice's majority opinion for the Supreme Court so obviously lacked a coherent theory of the nature of the corporation and, as such, also lacked a coherent theory of what legal rights the corporation possesses.
The utterly specious word games that drive this opinion simply confirm that Chief Justice Roberts has failed to articulate a plausible analytical framework for this important problem.
In short, nothing the SCOTUS says should be understood as affecting our understanding of corporate law or corporate law theory. They're just making this stuff up as they go along. On a preliminary read, I don't think Strine makes this mistake, but his article provides a useful opportunity for reminding us of this basic point.
Second, I don't agree with Strine that the political spending poses a threat to conservative corporate law theory. For one thing, the so-called flood of money really is a trickle. As a society, we spend much more money advertising toilet paper than we do deciding who should run the most powerful country in the world.
For another, and more pertinent to Strine's point, I don't see any evidence that corporate political spending is significantly chipping away at "regulation as an answer to corporate externality risk." To the contrary, the regulatory burden on US corporations continues to rise despite Citizens United. The Obama administration has used its executive powers to adopt a raft of pro-worker and anti-business regulations. The EPA is protecting the environment without much regard for cost-benefit analysis. We are dealing with massive regulation by prosecution:
The problem is not just that companies are ever more frequently treated as criminals. It is that the crimes they are accused of are often obscure and the reasoning behind their punishments opaque, and that it is far from obvious that justice is being done and the public interest is being served.
In sum, it seems entirely plausible that corporate political spending does not erode labor and environmental protections but simply slows the rate at which new regulations are piled onto the mountain of laws to which corporations are already subject. Indeed, maybe such expenditures provide a pro-social service by creating incentives for regulators to take the costs of their rules into account. By analogy, for example, the US Chamber of Commerce has been able to get a number of SEC regulations overturned because the agency had failed to conduct adequate cost-benefit analyses. If corporate lobbying encourages regulators to consider business' objections to a rule, then maybe agencies will be more likely to be more thorough in ensuring that the benefits of their rules outweigh their costs.
Finally, and most importantly, the case against corporate social responsibility rests on many legs of which the "regulation solves externalities" claim is but one. Speaking only for myself, I would still oppose CSR even if we lived in a night watchman state. (Hey, that's a good article title: Corporate Social Responsibility in the Night Watchman State! Fellow academics: I will track you down and wreak terrible vengeance if you swipe it.)
I'll have more detailed reactions later. But for now I urge you to go read the article and encourage comments.
Usha Rodgrigues chimes in and I just have to quote part, because well, you know:
Georgia Law started classes this week, and I (the rare bird who rotates casebooks because she is easily bored) am happily back teaching from Steve's casebook, co-authored with Klein & Ramseyer, which I highly recommend.
But go read the whole thing because she makes some very good points.
And now for some tweets:
Anne Tucker opines:
Fellow BLPB blogers have shared on and off line their coverage scope and strategies for Business Associations/Corporations. In thinking about how to fit in big corporate constitutional questions into a syllabus that is already jam packed with topics, this 2013 article (Teaching Citizens United v. FEC in the Introductory Business Associations Course) by Michael Guttentag at Loyola Los Angeles, provides some great suggestions. Written in a post-Citizens United and pre-Hobby Lobby era, I think his insights are broadly applicable about how corporate constitutional rights illustrate the "costs that may arise from differences between manager interests and shareholder interests, the costs that may arise from following a shareholder primacy norm, and the distinctive nature of the role of the transactional lawyer." This short (8 pages) article is worth reading to identify some opportunities to discuss these important issues in a way that illustrates difficult concepts within your existing syllabus and hopefully keep students engaged throughout the semester.
I agree that you ought to read Mike's paper. But then again I think you ought to read everything Mike writes (as I do). Having said that, however, I affirmatively avoid teaching Citizens United or anything else remotely resembling constitutional law in my Business Associations course. Why?
1. The law school curriculum already over emphasizes constitutional law, elevating it as the highest and best form of law a lawyer can aspire to practice. It is the most extreme example of how all too many law schools privilege public law over private law (especially business law). So why perpetuate the problem in our own courses?
2. At many law schools, the line to teach constitutional law is huge and students fairly get the impression that the professor teaching [fill in the blank] really wants to be teaching constitutional law and that's why they're spending so much time on US Supreme Court cases. I have zero interest in teaching constitutional law and want to give students an example of at least one professor who finds business law (and Delaware Chancery Court cases) far more interesting than constitutional law. Getting students interested in business law as an intellectual exercise is hard enough without ourselves perpetuating the stereotype that business law is boring and con law is fun.
3. Mike suggests that:
One can ask: How would you feel if the managers of a corporation you owned shares in decided to oppose same-sex marriage, even if a majority of the firm's shareholders supported same-sex marriage?
Perish the thought. As a white male conservative Catholic teaching business law courses at a law school whose faculty and student body are overwhelming secular and liberal, spending class time on issues of race, gender, class, politics, religion, culture and so on would inevitably plunge me into a Kobayashi Maru scenario. Call me a wimp, but I get myself into enough trouble on those issues here on the blog without bringing them into the classroom.
4. I have enough trouble keeping up to date with Delaware corporate law without adding the need to steep myself in constitutional law. Granted, as was the case in Hobby Lobby, sometimes I touch on Supreme Court cases in my scholarship. As was also the case in Hobby Lobby, however, I ignored the constitutional issues to focus on what I saw as a potential corporate law twist to the case.
5. As Anne correctly notes, the basic Business Associations course is jam packed. As it stands, I cover most of Chapter 1, all of Chapters 2 to 5, and part of Chapter 6 of the Klein, Ramseyer, & Bainbridge casebook in the basic course. I don't have time to get to Chapters 7 or 8 at all (for which my dear friend Bill Klein periodically repreimands me, as he thinks Chapter - Debt - is essential). What core business law topics should I ditch? Granted, Mike advocates working Citizens United into the mix in three areas that i suspect most of us teach:
(1) the potential for differences between the interests of those who manage the firm and those who own the firm,(2) the costs and benefits of shareholder primacy, and (3) the role of a transactional lawyer in advising on business decisions that involve legal risks.
But I can teach those issues using plain vanilla business law courses. And prefer to do so for the reasons already set out above.
As always, your mileage may vary, but at the very least I would advise my fellow business law professors to think very carefully before following Anne and Mike's advice.
David Hyman has an answer and a reply to his critics. Constitutional Prognostication: Does Anybody Know Anything? (August 5, 2014). University of Illinois Law Review, Forthcoming. Available at SSRN: http://ssrn.com/abstract=2392042:
Every client knows that his case is a winner, but practicing lawyers know better. Indeed, practicing lawyers are extremely reluctant to make predictions about how a case will come out — and when forced to do so, they will invariably reference the hazards and uncertainties of litigation, and hedge any predictions they make. When it came to the legal challenges against the Patient Protection and Affordable Care Act ("PPACA"), law professors who teach and write about constitutional law were far less circumspect. Indeed, they seemingly competed with one another to demonstrate how confident they were that that the federal courts would reject the legal challenges to PPACA in their entirety.
How did these confident predictions fare when the cases were actually tried? Not all that well – if by "not all that well" we mean "the complete repudiation of everything that law professors believed and espoused." The University of Illinois Law Review has now published five responses to my article, by Professors Blackman, Blumstein, Koppelman, Mazzone, and Ramseyer. In this short essay, I summarize each of the responses, and offer a short reply, organized around two P’s (Predictions and Practical Knowledge), and one M (Merits).
The death penalty is back in the news and the news is not good:
For more than 20 years, the prosecutor who convicted Cameron Todd Willingham of murdering his three young daughters has insisted that the authorities made no deals to secure the testimony of the jailhouse informer who told jurors that Willingham confessed the crime to him.
Since Willingham was executed in 2004, officials have continued to defend the account of the informer, Johnny E. Webb, even as a series of scientific experts have discredited the forensic evidence that Willingham might have deliberately set the house fire in which his toddlers were killed.
But now new evidence has revived questions about Willingham’s guilt: In taped interviews, Webb, who has previously both recanted and affirmed his testimony, gives his first detailed account of how he lied on the witness stand in return for efforts by the former prosecutor, John H. Jackson, to reduce Webb’s prison sentence for robbery and to arrange thousands of dollars in support from a wealthy Corsicana rancher. Newly uncovered letters and court files show that Jackson worked diligently to intercede for Webb after his testimony and to coordinate with the rancher, Charles S. Pearce Jr., to keep the mercurial informer in line.
My views on the death penalty have evolved a lot over the years, but I've finally come to a full abolitionist position. Given that there is no humane way to execute someone and a high probability of error (not to mention prosecutorial misconduct), I see no moral justification for the death penalty absent incredibly unusual circumstances (somebody like a Hitler or Bin Laden against whom imprisonment alone may not be enough to protect society). In short, I stand with the Blessed John Paul II:
... the nature and extent of the punishment must be carefully evaluated and decided upon, and ought not go to the extreme of executing the offender except in cases of absolute necessity: in other words, when it would not be possible otherwise to defend society. Today however, as a result of steady improvements in the organization of the penal system, such cases are very rare, if not practically non-existent.
There is a very interesting debate going on at The Conglomerate on the Hobby Lobby decision. I was invited to participate, but I think I have literally run out of things to say about the case.
Usha Rodrigues has announced that the Conglomerate Blog is hosting a Hobby Lobby symposium next week. I've been invited to sit in and doubtless will. I understand my friend Wharton Professor Eric Orts will also be commenting. As I mentioned in an earlier post, I have been reading Eric's new book, Business Persons: A Legal Theory of the Firm, with great interest. Towards the end of the book Eric has an excellent analysis of Citizens United, in which he makes several key points:
Orts concludes with an extended argument that the appropriate compromise is one of "full disclosure about business participation in politics." (250).
Although I might quibble with minor points here and there, the gist of Eric's argument strikes me as being exactly right and I'm in full agreement with his conclusion.
Hence, I'll be very interested to see what Eric makes of the Hobby Lobby case. Will he support a disclosure-based compromise on the free exercise claim? (Note that Joan Heminway thinks disclosure is the solution.) if so, how would a dislcosure regime work given that most (all?) of the companies that will be able to and likely to claim exemptions under Hobby Lobby likely will be non-reporting companies. To whom and how would they disclose?
In a post prompted by Hobby Lobby, Judge Richard George Kopf comments:
In the Hobby Lobby cases, five male Justices of the Supreme Court, who are all members of the Catholic faith and who each were appointed by a President who hailed from the Republican party, decided that a huge corporation, with thousands of employees and gargantuan revenues, was a “person” entitled to assert a religious objection to the Affordable Care Act’s contraception mandate because that corporation was “closely held” by family members. To the average person, the result looks stupid and smells worse.
There you have. Proof once again that (thinly veiled) anti-Catholicism is the last acceptable prejudice among the elites.
What would have happened if the Supreme Court simply decided not to take the Hobby Lobby cases? What harm would have befallen the nation? What harm would have befallen Hobby Lobby family members who would have been free to express their religious beliefs as real persons? Had the Court sat on the sidelines, I don’t think any significant harm would have occurred.
What harm, the dummKopf asks? Forcing the owners of a family-owned business to act against their beliefs is no harm?
Back to Kopf:
Next term is the time for the Supreme Court to go quiescent–this term and several past terms has proven that the Court is now causing more harm (division) to our democracy than good by deciding hot button cases that the Court has the power to avoid. As the kids say, it is time for the Court to stfu.
Which brings me to my question. Would Judge Kopf have told the Supreme Court to shut up after Lawrence v. Texas? Roe v. Wade? Windsor v. US? Engel v. Vitale? Employment Division v. Smith? Why is it to people like this dummKopf that cases in which liberals win turn out to what Kopf calls "those rare 'fate of the nation' cases"?
I've got a suggestion for Judge Kopf: Why don't you STFU?
Update: I just learned that Judge Kopf is the same dummKopf who blogged about what one lawyer called the judge's "fondness for looking up the skirts and down the blouses of female attorneys who appear before him."
Here's what Judge Kopf wrote on that subject:
I have been a dirty old man ever since I was a very young man. Except, that is, when it comes to my daughters (and other young women that I care deeply about). And that brings me to the amusing debate about how (mostly) young female lawyers dress these days.
Editorial comment: Perhaps his proclivities as a dirty old man explain the intensity of his desire that Hooby Lobby provide its employees with all forms of contraceptives? After all, if there's a Hobby Lobby in his town, the Supreme Court decision narrows his targets.
Back to the dummKopf:
Around these parts there is a wonderfully talented and very pretty female lawyer who is in her late twenties. She is brilliant, she writes well, she speaks eloquently, she is zealous but not overly so, she is always prepared, she treats others, including her opponents, with civility and respect, she wears very short skirts and shows lots of her ample chest. I especially appreciate the last two attributes.
He goes on to offer some unsolicited advice as to how to avoid being deemed an "ignorant slut."
Dude, you really need to STFU.