Friday, May 22, 2015

Substantive Disagreements versus Paranoid Delusions

by Neil H. Buchanan

After the tragic Amtrak train crash in Philadelphia last week, questions arose about whether the railroad's budget cuts contributed to the deadly accident.  This, sadly, quickly became a partisan issue, and with Republicans in control of both houses of Congress, they quickly passed yet another round of Amtrak cuts.  Asked at a press conference to comment on the possible connection between funding cuts and the crash, House Speaker John Boehner responded: "Are you really going to ask such a stupid question?!"  What made the question stupid, in Boehner's stated view, was that the train had been going too fast, so there could not possibly be a connection between Amtrak funding and the accident.  If the engineer had slowed the train down, that would have been that.  Problem solved.

There are a lot of ways to describe Boehner's comments.  Illogical.  Evasive.  Ignorant of the evidence.  Maybe even deliberately indifferent to human life.  His argument, after all, implies that there is never any reason to spend money on any safety back-ups in any situation, because if there is already a safe way to do something, then failing to plan is not a plan for failure.  It's just good budgeting.

As much as one can fault Boehner for his smug callousness, however, nothing that he did in that press confefence was anything more than trying to argue for his preferred outcome.  It is sad that, given the weakness of his arguments, he digs in his heels rather than adjusting his point of view, but that merely makes him stubborn.  Similarly, conservatives who absolutely insist that the Laffer curve is a logical theory backed by evidence are obviously and completely wrong (and have been for decades), as are the "austerions" who insist on believing that cutting government spending during a recession will improve the economy.

My latest Verdict column is not about any of that.  Instead, I discuss a different kind of wrongness in politics, which was famously captured in a 1964 essay by Richard Hofstadter, "The Paranoid Style in American Politics."  Hofstadter was describing the Birchers and other emergent crazies who had boosted Barry Goldwater's long-shot presidential candidacy, allowing him to beat his mainstream Republican rivals.  Hofstadter noted that the key element of the paranoid style was not extreme policy views (although those are always part of the mix), or even (as above) insistent efforts to ignore evidence and logic in support of political goals.  It is something much more difficult to confront.

People who exhibit the paranoid style of politics are absolutely convinced that their opponents are the minions of evil, and they are also impervious to evidence that their own views might be wrong.  This is not, moreover, mere wishful thinking, or having an unreasonably high threshold for evidence.  The paranoid people whom Hofstadter described dismiss contrary evidence as proof that the other side is so malevolent and powerful that it is manipulating that evidence, which further supports the idea that the evil other must be opposed at all costs.  That enemy is, in Hofstadter's words, "sinister, ubiquitous, powerful, cruel, sensual, luxury-loving."

This paranoid style today infects not just the inevitable fringe groups on the left and the right, but it has unfortunately taken over much of the discourse in the Republican Party.  A party whose leaders happily stoke fears that President Obama is secretly planning to take away people's guns is no longer trafficking in arguments that can be debated and refuted.  The Supreme Court's current (and quite incorrect) interpretation of the Second Amendment finds an "individual right" by reference to citizens' need to defend their homes, yet some nationally prominent Republican officeholders claim that the right to own guns is based on the need to fight an incipient government takeover of the country.

On a less apocalyptic level, yesterday's Verdict column reflects back on my previous three columns (links provided in yesterday's column), all of which had discussed various ways in which Republicans have vilified and deliberately crippled the ability of the IRS to enforce the tax laws, and I explain how this vilification is not merely a disagreement over policy but is a perfect illustration of the paranoid style.  The IRS is personified as an implacable monster, deliberately making decisions to harms its enemies, incapable of mercy or remorse, requiring constant efforts by good Americans everywhere to thwart its evil plans.

The most perversely interesting aspect of writing yesterday's column, from my standpoint, was reading the prepared testimony of a witness at a Senate committee hearing last month.  (I only had access to a pay-walled version when I published my Verdict piece, but a reader soon sent me a free link:    What was astonishing was the degree of unapologetic paranoia on display in that testimony.  In particular, I quoted this peroration:
Oversight hearings would reveal that King v. Burwell is actually not about health care at all, but rather an example of political corruption and abuse of power at the IRS that goes beyond what any of us have seen in our lifetimes. Lacking any statutory basis for its actions, the IRS first pledged and ultimately spent taxpayer dollars on a multi-year, multi-billion-dollar contribution to the re-election campaigns of members of Congress who enacted, and a president who signed, a law that voters and Congress otherwise would have scrapped as unworkable. Instead, the law remains on the books.
The IRS "pledged and ultimately spent taxpayer dollars on a ... contribution to the re-election campaigns of members of Congress" and the President.  Where does such insanity come from?  And once a person believes that insanity, how could one dissuade him of its truth?  Challenge him to find the multi-billion-dollar contributions over multiple years from the IRS to the relevant politicians?  We will never find that evidence, of course -- not because it never happened, but because the conspirators have covered their tracks too well.

Similarly, the vilification of the former IRS manager who became associated with the non-scandal scandal is based on the firm belief among those who attack her that she must surely be hiding something.  As Hofstadter put it, what we see is "heated exaggeration, suspiciousness, and conspiratorial fantasy" on the part of those who believe that the IRS "targeted" conservatives simply because the IRS itself hates conservatives.

The result is the same here as it is in the areas of climate change and evolution.  Evidence can pile up supporting one conclusion, while evidence must be distorted or ignored to reach the opposite conclusion.  But, in the paranoid mind, that itself is evidence that they were right all along.  If a robot can deny being a robot, then surely the freemasons can be conspiring with Queen Elizabeth and the Illuminati to have the IRS ask additional questions of organizations that ask for tax-exempt status under IRC 501(c)(4).  Open your eyes!

Thursday, May 21, 2015

Congressional Power to Authorize Dormant Commerce Clause Violations

by Michael Dorf

My most recent Verdict column discusses the dissents of Justices Scalia and Thomas in Monday's SCOTUS decision in Comptroller of the Treasury of Maryland v. Wynne. They argue there that the Dormant Commerce Clause (DCC) "is a judicial fraud." As I explain in the column, this claim is quite overstated. One might reasonably think that the DCC is on balance a bad idea or has taken a wrong turn or something of that sort, but the notion that it is a "fraud" rests on the further supposition that textual extrapolation and structural inference are an illegitimate, indeed fraudulent, means of constitutional interpretation or construction. But Justices Scalia and Thomas do not make that further supposition in other contexts--e.g., with respect to federal commandeering of the states and state sovereign immunity--so it is hard to take seriously their invocation of it in this context.

Here I want to address another argument made by Justice Scalia in his Wynne dissent. He says: "The clearest sign that the negative Commerce Clause is a judicial fraud is the utterly illogical holding
that congressional consent enables States to enact laws that would otherwise constitute impermissible burdens upon interstate commerce. [Citation]. How could congressional consent lift a constitutional prohibition?" This is another example of Justice Scalia substituting adamant rhetoric for analysis.

To begin, Justice Scalia is right that as a matter of doctrine, Congress may authorize states to enact regulations that, absent such authorization, would violate the Dormant (or negative) Commerce Clause. But that is not "utterly illogical." Quite the contrary, it follows very logically from the core purpose of the DCC.

As I explain in the column, in modern times the DCC is understood as a judicial presumption that if Congress had the capacity to superintend the laws and regulations enacted by all 50 states and thousands of local governments, it would preempt those laws and regs that discriminate against or unduly burden interstate commerce. It is, in other words, a presumption in favor of free trade within the U.S. But it is only a presumption because, as Justice Scalia insists and no one denies, the ultimate choice whether to treat the United States as a national free trade zone is for Congress. Thus, Congress can authorize state or local regulation that would otherwise violate the DCC when acting pursuant to the affirmative Commerce Clause.

Accordingly, Justice Scalia is just wrong in declaring Congress's authorization power to be illogical. Perhaps he should have said that such an authorization power is unique and thus suspect. Ordinarily, if the Constitution requires some rule, then legislation cannot overcome that rule. Yet even the more modest claim of uniqueness is wrong.

State sovereign immunity is a useful counter-example here. The Court (in opinions in which Justices Scalia and Thomas have joined) has held that the Constitution forbids the courts from entertaining private lawsuits seeking retrospective damages from unconsenting states but that Congress, acting pursuant to its power to enforce the Fourteenth Amendment, may abrogate state sovereign immunity. Here we have what Justice Scalia regards as a constitutional rule that may be violated if the violation is authorized by congressional statute.

More broadly, as Professor Gillian Metzger argued in an insightful article in the 2007 Harvard Law Review, there are good structural reasons to read just about all of Article IV of the Constitution--which concerns state obligations to other states and their respective citizens--as permitting Congress to authorize state laws that would otherwise violate provisions of Article IV. Professor Metzger's argument is complex and subtle but in a nutshell she sees the role of Congress in superintending Article IV's presumptive rules of interstate relations as basically the same as its role with respect to the DCC's rules. Her reading, which is at least consistent with existing Article IV doctrine, further undercuts any claim that the DCC is unique and thus suspect.

None of this is to say that one cannot criticize any particular DCC rule or even the DCC doctrine as a whole. It is to say that Justice Scalia's hyperbole is unwarranted.

Wednesday, May 20, 2015

Glossip v. Gross and a Strained Definition of "Necessity"

by Sherry F. Colb

In my Verdict column for this week, I examine the case of Glossip v. Gross, in which the Supreme Court is considering the Eighth Amendment validity of Oklahoma's three-drug lethal injection protocol, given that midazolam, the drug intended to prevent consciousness during the otherewise-excruciating part of the process, may not be able reliably to maintain  the inmate's unconsciousness throughout the entirety of the execution process.  In the column, I focus on Justice Alito's apparent view that the protocol--which might yield pain comparable to that associated with being burned alive--is fine (in part because the unavailability of a more reliable unconsciousness-maintaining drug is a result of pressure on drug companies by death penalty opponents), but actually burning a prisoner alive would not be fine, even if a drug were administered to the prisoner beforehand that would guarantee unconsciousness and the absence of pain throughout the process.

In this post, I want to focus on the third question presented by the petition, which is whether the inmate who complains about the unreliability of the drug being used to induce and maintain unconsciousness is obligated to establish the availability of an alternative drug formula as a condition of succeeding in his Eighth Amendment complaint.  Michael Dorf in a blog post here very ably explored the oddity of penalizing a prisoner for something over which he has no control, the unavailability of more humane alternatives (a state of affairs that several Justices attribute to pressure by opponents of the death penalty brought to bear on drug companies).  In this post, I want to explore the unspoken premise of the Justices' frustration with the unavailability of acceptable alternatives, if they were to invalidate the use of midazolam: that executing prisoners who have been sentenced to death is necessary.

Here are Justice Alito's words on the subject of the unavailability of sodium thiopental, the more reliable drug (when administered properly):

Yes. I mean, let's be honest about what's going on here. Executions could be carried out         painlessly. There are many jurisdictions there are jurisdictions in this country, there are jurisdictions abroad that allow assisted suicide, and I assume that those are carried out with little, if any, pain. Oklahoma and other States could carry out executions painlessly.  Now, this Court has held that the death penalty is constitutional. It's controversial as a constitutional matter. It certainly is controversial as a policy matter. Those who oppose the death penalty are free to try to persuade legislatures to abolish the death penalty. Some of those efforts have been successful. They're free to ask this Court to overrule the death penalty.  But until that occurs, is it appropriate for the judiciary to countenance what amounts to a guerilla war against the death penalty which consists of efforts to make it impossible for the States to obtain drugs that could be used to carry out capital punishment with little, if any, pain? And so the States are reduced to using drugs like this one which give rise to disputes about whether, in fact, every possibility of pain is eliminated.  Now, what is your response to that?
In addition to the unclean hands argument that Professor Dorf highlights in his post, there is also the implicit assertion that so long as the death penalty is constitutionally valid (according to the very Justices considering the question), the states are entitled to carry out that penalty as best they can, even if it turns out that truly humane methods are unavailable for various reasons.  If I am understanding this implication correctly (subtracting, for the moment, the "you broke it, you buy it" feature of the argument), then it follows that the obligation of each state that executes prisoners is not so much to avoid subjecting prisoners to excruciating pain (which the midazolam protocol appears unlikely to reliably allow) as it is to avoid subjecting prisoners to "unnecessarily" excruciating pain. That is, if there is a feasible way of executing prisoners more humanely, then the cruelty of a method that a state uses may qualify as an Eighth Amendment violation.  However, if, given the current realities, a particular "cruel" method is the "least cruel" method available, then the method is, almost by definition, not unnecessarily cruel.

This reasoning may sound logical.  If one is going to execute people, after all, one ought to do so as humanely as one can, but what one "can" do is going to depend on what is actually available rather than on some theoretical painless method that is not in reality an option.  In the days before anesthesia, for example, a life-saving surgery on a patient would likely have caused unbearable and deeply traumatic pain, but the pain was necessary because--at the time--there was no way to do the surgery without inflicting the pain.

The difference, of course, is that we are using the word "unnecessarily" a bit differently in the two contexts, and there is a risk of slippage if we do not notice that.  In the case of the surgery, a person who was to undergo surgery was likely suffering from a condition that could end his life if not addressed surgically.  (In the days before anesthesia, I suspect few people would go in for purely elective operations).  The surgery itself, in other words, was necessary, and once we understand that to be true, then whatever pain is necessarily associated with that surgery is correspondingly necessary as well.  Absent the excruciating surgery, in the days before anesthesia, one would likely die of gangrene or whatever other serious ailment was motivating the surgery in the first place.

In the death penalty context, by contrast, it is harder to argue that the people sentenced to death simply must be executed, that their execution is "necessary" in the same way that surgery for a life-threatening ailment is necessary.  If the only way to execute someone at a given time is by administering drugs that will substantially risk causing excruciating pain (comparable to that of a prisoner being burned alive), then one can choose instead not to execute the prisoner at all (or not to execute him until a truly humane method becomes available).  Given the option of not executing him at all (which is a plausible option, relative to the corresponding option of not surgically removing a deadly growth from a patient in the years before anesthesia), it seems logical to conclude that the pain accompanying his execution with the available drugs does in fact amount to unnecessary pain, precisely because the entire execution is unnecessary.  To say this differently, pain that is a necessary or unavoidable part of performing an unnecessary act is best characterized as unnecessary pain.

The way in which some of the Justices seem to think about necessity is familiar from another context: the context of animals' suffering in the course of their preparation for use as food and clothing.  The law commonly prohibits the infliction of "unnecessary" suffering on animals (at least in narrow contexts), and by "unnecessary," it typically means that whatever method is being used to "raise" and slaughter the animals is necessary to the business of raising and slaughtering animals.  The suffering must be inherent in the process of utilizing living beings to create food or clothing rather than being completely pointless or gratuitous cruelty.

Few would deny that much of what happens to the animal beings who populate farms, whether "organic" or "factory," is painful to an extent that would qualify as "torture" if committed against a companion animal (at least outside of a laboratory setting, where they too may be subjected to excruciating pain).  Yet if one cannot create dairy, for example, without forcibly inseminating female cattle and then taking their babies away after birth as the mothers bellow in distress, then such practices are "necessary" because they are necessary to the production of dairy, despite the fact that the production of dairy is not itself necessary (and in fact carries with it numerous harmful effects on both human health and the environment).  And the same is true, for example, of the mass killing (by suffocation or grinding alive) of rooster chicks in the the egg industry:  this is an unavoidable and thus necessary part of creating chickens' eggs for people to consume, but it is not necessary for people to consume chickens' eggs.

Similarly, the slaughter process is far from painless (even for the narrow category of animals covered by the "Humane Methods of Slaughter Act") but instead is quite terrifying and torturous for the animals.  Yet, given the amount of demand for animal products, businesses can plausibly say that the amount of pain that the animals suffer is "necessary" to the production of animal foods and fiber. Yet again, though, since it is virtually never necessary for us to consume animal products, it is unclear why anyone should be satisfied with a state of affairs in which there is "no more torture than is necessary to the business of producing animal products."

That is simply another way of acknowledging that animal product production is inherently ("necessarily") extremely violent and cruel.  But since production of such products is itself unnecessary, then it follows that any pain and suffering experienced by the innocent, sentient beings held captive in such industries is unnecessary pain and suffering.  As a close friend of mine said it so well at a dinner we shared the other night, the reason we are vegan is that if we do not have to commit violence against animals--if violence against animals is itself unnecessary,--then why would we?

In the context of the death penalty, although I myself oppose capital punishment, I have discussed elsewhere that it is possible to distinguish the execution of guilty prisoners from animal slaughter on a number of grounds that would favor the former over the latter, including the fact that we strive to execute only guilty individuals (while we slaughter innocent animals en mass without even acknowledging their individuality) and the fact that we avoid executing prisoners with diminished capacities (while we rationalize the slaughter of animals in part on the very ground that they lack our special sophisticated "human" intellectual capacities).  I happen nonetheless to oppose the death penalty, but--unlike in the context of animal consumption--I think it relevant to attend to whether a particular method of execution is or is not humane.  And when a method is inhumane, when it causes a prisoner a great deal of suffering--an amount of suffering comparable to being burned alive from the inside, for instance--then that method should, in my view, be deemed a straightforward violation of the Eighth Amendment.  Because executing the prisoner is itself unnecessary, doing so in a manner that causes excruciating pain must ipso facto be unnecessary as well, even if it is the "best available method" at the moment.

Tuesday, May 19, 2015

Pulling the Rug Out From Under People Is Unfair, Except When It Isn't

by Neil H. Buchanan

Early last month, I wrote a post here on Dorf on Law critiquing the misnamed "sharing economy" concept, in particular the business model behind the taxi-substitute company Uber.  My bottom line in that post was that Uber and companies like it are not at all examples of a new way of doing business, but are instead rather blunt methods of evading the law and shifting costs onto workers.

If we continue to allow Uber and similar firms to evade laws regarding insurance, consumer protection, employee protection, and so on, then the companies that try to compete under the laws that actually exist will, of course, be at a severe disadvantage, and could be destroyed.  That will not, however, be a triumph of the internet-based economy, any more than bringing a gun to a knife fight proves that one is a superior fighter.

That post elicited two especially interesting ideas on the comments board.  One commenter noted a further way in which the Uber business model does what I said it does, except more insidiously and dangerously.  That is, Uber is telling its potential new employees -- Oh wait, they're not employees at all, they're independent operators who just happen to benefit from Uber's ride-sharing app technology!! -- that they can make a bunch of money by providing Uber rides during the down time when their cars would not otherwise be used (and when the driver would, if the stereotypes are true, otherwise be hanging out in a hipster coffeehouse, writing a terrible movie script).

As the commenter noted, however, this is one of the biggest hidden costs of being an Uber driver, because the normal lifespan of a personal car, and the normal maintenance requirements of such a car, are in fact based on the car being driven rarely.  If the average car is driven 10,000 - 15,000 miles per year (as car warranties usually specify), with a combination of city and long-distance driving, then signing up for Uber is a pretty rude surprise.  Taxis need to be maintained continuously, and inspected much more frequently than personal cars do, but in the words of the commenter: "Ask any taxi fleet operator about maintenance cycles for its vehicles... and then ask if Uber has disclosed any of that to its drivers."

To which I can only say, "Thank you."  This is yet another example of how costs can be well hidden, and why it is important to be skeptical of knee-jerk complaints about "needless regulations."  As bad as regulated transportation can be, unregulated transportation is worse.  As I noted above, allowing a faux-innovative business to operate outside the law has the potential to kill the regulated businesses, yet we might end up allowing this to happen simply because the hyper-aggressive owners of Uber have convinced people that the internet magically erases the laws of business.

I want to devote the rest of my comments, however, to the other interesting idea that was batted about on the comments board.  Professor Dorf noted that cities generally limit the number of taxi medallions (which are essentially operating licenses), to the point where the medallions become highly prized pieces of property.  The city sells medallions to taxi companies that meet certain requirements, and the owner of an existing medallion can (with the city's approval) sell the medallion to a new operator.  As Professor Dorf then noted: "But of course, if the city is artificially constraining the number of taxis below the equlibrium level, then the answer should be to create more medallions or eliminate the need for a medallion entirely ..."

One of our regular commenters agreed with Professor Dorf, but added that "he ignores the horrific economic penalty that existing holders of quasi-monopoly positions have when that quasi-monopoly is eliminated and free competition is introduced. In the situation with medallions, as he points out, some individuals (and investors) have paid $1million or more."  This argument led me to think about the nature of reliance interests, especially in the realm of proposals to change public policy.

Note that the taxi medallion is a particularly vivid example of something that can change in value due to government policy.  As the commenter noted, "The value of these medallions is created solely by government policy."  That is true, but recall that the presence or absence of a premium on taxi medallions depends on the interaction between government policy and the market for rides in the city.  But that is going to be true of every piece of property, the value of all of which is "created solely by government policy" in the same sense.  For example, my ability to buy and sell zoned residential property with a house on it is predicated on all of the rules that make such ownership beneficial.  Change those rules, and the value of the property changes.  (This all but begs for a discussion of "regulatory takings," but that will have to wait for another day.)

This, in turn, is merely a useful example to show that every law ever passed both creates and destroys economic value, and that the person who owns a particular piece of property under any set of laws is always at risk of losing his shirt, if the laws change.  I will return to the "equilibrium" aspect of this in a moment, but first, consider another example, which will allow us to ask who gains and loses when the government changes policies.

Rent control laws are very unpopular among orthodox economists.  In fact, in Introductory Economics textbooks, including those written by even the most liberal orthodox economists, rent control is frequently used (sometimes in the first chapter) as a prime example of an ill-advised government policy.  After showing that the law will surely create a shortage (quantity demanded will exceed quantity supplied), the analysis turns to the effect on landlords.  The basic idea is that the government's imposition of rent control laws reduces the value of the property, and the landlords have thus been robbed.  (Sometimes, there is an attempt to show that the next step is for landlords to become slumlords, because the property has lost value and supposedly is not worth maintaining.)  Surely, the reader learns, the right policy is to eliminate the rent control law.  Surely.

What happens, however, when the law has been on the books for decades, and the ownership of the affected properties has changed hands a number of times?  Each time a rent-controlled property is sold, its price reflects the current legal reality that the units are subject to rent controls.  (A pricing model based on "rational actors" would take into account the probability that the law will be changed, but we can set that aside for now.)  That means that the repeal of the law would be a pure windfall for the current owners, who bought the properties encumbered by rent control laws, and thus at a steep discount.  Repealing the laws does increase the value of the affected properties, but the people who reap those gains have no claim that they are the rightful beneficiaries of the policy change.

This problem of transitional windfalls and penalties comes up all the time.  For example, in a series of posts a few years ago, in which I decried the policy regime in the U.S. whereby people are encouraged to buy homes (via policies such as the mortgage interest deduction, property tax deductions, government-guaranteed mortgages, subsidies for suburban development, and on and on), the most difficult question that I confronted was what to do about reliance interests.  That is, for people (like me) who bought their homes in the existing policy regime, a change in government policy to discourage individual home ownership is almost certainly going to radically reduce the value of their most valuable asset.

Reliance interests are central to many areas of law, not just in property law but in contract law as well.  Indeed, some scholars have suggested that "expectation damages" are the wrong default in breach of contract cases, and that "reliance damages" should be promoted from the fall-back rule to the default rule.  The idea is simple: If a person did something in reliance on certain facts, and another party changes the facts of the world on which the person relies, then that other party should make the person whole.  Pulling the rug out from under someone is presumptively unacceptable, requiring compensation.

In the case of taxi medallions, both of the comments on my Uber post that addressed this issue presumed that cities are setting the number of medallions below "equilibrium," by which we usually mean that the very existence of a price for the medallions is proof that the government created an artificial shortage.  But the second comment identified the correct inquiry, which is whether the policies that create the property value in the first place are "ill adivised, economically inefficient and not in the public interest."  Although both that commenter and Professor Dorf apparently consider it obvious that this is the case in terms of taxi medallions in NYC, it is important to think through the alternatives.

To go back to the rent control example for a moment, however, the problem with the standard textbook analysis is that it severely limits what it takes into account as the costs and benefits of rent control.  In one of my posts about home ownership, I pointed out that the supposed benefit of "neighborhood stability," which is often invoked by those who favor policies to encourage people to buy houses, is actually tied not to owning versus renting, but instead to how long people live in their neighborhoods.  A reader then commented that rent control laws, even if they are problematic in all of the ways that the textbooks say, at least make it possible for people to stay put, and to know in advance that they will continue to be able to stay put.  This has the advantage of connecting them to their neighborhoods, which further allows them to put time and effort into their local schools, parks, and so on.

Where does this leave us?  If we want to get rid of an existing rent control law, we know that some property owners will receive a windfall, while other property owners (if they still exist) will see their previous loss restored.  In the meantime, we will eliminate housing shortages, but only by forcing some people out of their homes (relocating who knows where), and we will break up the social cohesion of neighborhoods.  In some cases, that is a good thing, if the neighborhoods are dysfunctional, but we have seen how that excuse has been used by urban "visionaries" as an excuse to displace poor people.

Similarly, NYC in particular has completely defensible reasons for limiting taxi traffic in the city.  Unfortunately, although it succeeds in doing that, it is simultaneously prevented by the New York state government from doing other things that would improve life in the city (like limiting all traffic flow in high-density areas).  Whether one thinks that it would be acceptable to change the underlying laws that indirectly support the price of taxi medallions -- and thus whether one thinks that it would be OK to pull the rug out from under current taxi medallion owners -- depends on whether one thinks that the current mix of all related laws is reasonably achieving some desirable set of public policy goals.  If it is, then suddenly opening the taxi market to new entrants is a bad idea.  If one believes that it is not, then presumably one also believes that the extra benefits of deregulation are greater than the losses from pulling the rug out from under some people.

On taxi medallions, I remain unconvinced that there are too few of them, mostly because I do not see why the "free-market equilibrium" number of taxis is immune from the over-grazing problem of public goods (aka, the tragedy of the commons).  But beyond that particular example, I do think that it is important to re-emphasize that transition costs are an inevitable part of any policy change.  Nearly all standard economic approaches to analyzing public policy changes ignore reliance interests, so much so that it becomes necessary to remind oneself to take them into account.  Unless we do that, however, we are ignoring potentially dispositive facts about the balance of costs and benefits of policy changes.

Monday, May 18, 2015

The (Un)Importance of the Supreme Court

By Michael Dorf

As Professor Buchanan noted in his post on Thursday, there is a lot of agreement among the DoL bloggers. But not 100% agreement. Although the blog bears my name, I give my bloggers the freedom to disagree with me, and sometimes they do. For example, Professor Segall is more of a legal realist about the SCOTUS than I am. This is admittedly a difference of degree rather than kind. I agree with his basic characterization of the Court in his weekend post as mostly driven by values rather than law. I might quibble with the characterization of values and law as separate modalities but that would indeed be quibbling. I understand that when he says law he means formal legal materials that would lead all competent professionals to the same result.

I also agree with Professor Segall's explanation for why the ratio of values to law is higher in the SCOTUS than in lower courts: the SCOTUS controls its own docket, selecting cases that have divided the lower courts or are otherwise controversial; and no higher court sits above the SCOTUS, making precedent a substantially less important factor for it than for lower courts. Yet despite my basic agreement with Professor Segall's characterization of the Court's work, I do not share his general pessimism regarding its role in American law and society. I'll highlight four points.

(1) Critics of judicial supremacy sometimes urge that, in Professor Tushnet's phrasing, the Constitution ought to be taken away from the Court. As I noted in an article co-authored with Professor Matt Adler, that may not be entirely possible. But I think we all have a practical sense of what Professor Tushnet and other judicial supremacy skeptics have in mind: The courts would give essentially complete deference to Congress and, in some proposals, state and local legislative bodies, treating legislative enactment as conclusive validation of constitutionality.

Yet Professor Segall's leading example of a current-Term case in which we can expect values or ideology rather than law to drive the result is King v. Burwell. As he acknowledges, that is a statutory case. How, one wants to know, could statutory interpretation be taken away from the courts? If Congress writes a law that is unclear, some person or institution must be given responsibility for clarifying what it means when close cases arise. If not the courts, then what institution should be given this responsibility? The answer cannot be Congress itself, because we have justifiable norms against retroactive lawmaking and in any event, the national legislative process is often gridlocked, as it is now. Given the current makeup of Congress, a Democratic-led effort to clarify that subsidies are available on federally established exchanges would be defeated in both the House and the Senate. Meanwhile, a Republican-led effort to "clarify" that subsidies are not available would be filibustered in the Senate and even if approved, would be vetoed by the President, whose veto would not be overridden.

That leaves the executive branch, if not the courts or Congress, as the place to lodge responsibility for clarifying the meaning of statutes. Under the Chevron doctrine, the executive already has this power but subject to important limits set by the courts. I don't think Professor Segall suggesting that Chevron deference ought to be expanded to the point that any executive construction of statutory text is permissible, even if it is plainly inconsistent with the language of the statute. And if he would retain a judicial role for the courts in saying when the executive construction exceeds the plain language of a statute, then he would leave the Court exactly where it is in King v. Burwell, perhaps with an admonition to be serious about deferring to the executive. More generally, what about the statutory ambiguities that arise in cases between private parties outside of any agency context? Or how about criminal cases, in which the agency is the government prosecuting an individual. Should courts turn to the prosecutorial branch itself to resolve statutory ambiguities?

Professor Segall concludes his post by asking "under what theory do we allow unelected, life-tenured governmental officials to exercise such great power over all of us?".  The answer, at least with respect to the statutory cases that appear to concern him as much as constitutional ones is the theory that says there's no better alternative.

(2) To be sure, the alternative is clearer in constitutional cases, but here it is worth looking over our history. Doing so leads to the conclusion that the critics have it pretty much backwards. As Barry Friedman demonstrates in The Will of the People, throughout American history, the Court has rarely been a strongly counter-majoritarian institution. Although the Court has sometimes erred by striking down laws it ought to have upheld, it has also failed by being insufficiently resistant to mob justice--as during the nearly six decades from Plessy to Brown and in Korematsu. Whether the "type 1" errors are worse and/or more numerous than the "type 2" errors is a complex question that is partly empiricl and partly normative, but I tend to think that Friedman is correct. He says at the end of the book that the right question is not How can We the People grant the Court so much power? but something more like How can we get the Court to take seriously its responsibility to protect minority rights? or Why bother having a Supreme Court that largely follows public opinion? (My modest attempt to answer that question can be found here.)

(3) It also strikes me that judicial review critics (including but hardly limited to Professor Segall) overstate the importance of court decisions, not to mention law itself. As I have said before, I don't agree with the view that judicial decisions have no impact. They are part of a legal dynamic that in turn interacts with the social and political worlds. But even so, it is a wild overstatement to think that by accepting the power of judicial review we have given over a very large chunk of our decision making power. Courts have either no role or a very minor role in deciding such matters as what to tax and at what rates, how to spend the government's revenue, whether and when the nation goes to war, foreign relations more generally, and numerous other vital matters. Even issues the Court does decide--such as whether there is a constitutional right to same-sex marriage, to abortion, to own guns, against affirmative action--are decided in ways that don't deviate that much from public opinion. (See 2 above.)

(4) I do not mean to sound Polyannaish about the SCOTUS. It makes plenty of bad decisions that are important to the people immediately affected. And if its actions make little difference over the long run, I am nonetheless mindful of what Keynes said about the long run. That said, my goal here is to push back mostly against the tone of Professor Segall's post. All in all, it is not clear to me that we could do much better than the system we have--as evidenced by a global trend adopting more or less the same system.

Professor Segall correctly notes that the Court has long had the power that worries him. What has changed in the last half century is that nearly every other democracy in the world has chosen to give similar powers to national constitutional courts or international human rights courts or both. Academics in other countries have somtimes voiced similar concerns about the counter-majoritarian character of these bodies but for the most part, these powers have been accepted with a yawn.

To be sure, there are features of the U.S. system that give our SCOTUS Justices somewhat more power than their foreign counterparts. In particular, our Justices have life tenure rather than serving for fixed terms. In addition, the difficulty of amending the U.S. Constitution makes SCOTUS decisions harder to overrule than comparable decisions in other countries. However, decisions of constitutional courts tend to be quite sticky even in regimes of "soft" judicial review susceptible to relatively easy override (as in Canada and the UK). As I have noted before, that stickiness suggests to me that judicial review tends to have popular legitimacy.

Saturday, May 16, 2015

Values or Law at the United States Supreme Court?

By Eric Segall

Since 1803 when the Supreme Court first exercised the power to overturn a federal law, there has been a running debate among legal scholars and Court commentators over the blend of personal values and law that drives Supreme Court decisions. That question has never been timelier or more important.

The Supreme Court is going to hand down ten blockbuster decisions between now and the last day of June. In addition to cases on same-sex marriage and Obamacare, the Court has before it three First Amendment cases, a separation of powers battle between the President and Congress over the legal status of Jerusalem, a death penalty case challenging the validity of a standard method of execution, cases involving housing and employment discrimination, and an Arizona case raising a fundamental issue of American politics: whether the people themselves are allowed to create a non-partisan committee to perform the nakedly partisan, and crucial task, of redistricting. The answers to these cases will further define who we are as a people and what our country stands for across broad areas of domestic politics, foreign policy, and criminal and civil rights law.

Although these cases raise different issues, all ten have one thing in common: the Justices can decide them in either direction and in virtually any manner they choose.  Although most judges have some discretion when deciding legal issues, those who sit on the Supreme Court have by far the most because they are not bound by the decisions of any other court, the Justices themselves choose the cases (and normally pick the ones that are hardest in a policy sense), and when interpreting the Constitution and federal statutes they must give meaning to vague text and contestable history.

In these ten cases, the Justices will talk the talk of “the law made me do it,” but that description simply is not true. Each of these cases will be resolved by men and women making difficult political (not necessarily partisan) value-laden choices. Law and legal reasoning are not irrelevant to those choices, but, contrary to what the Justices would have you believe, they play at most a minimal role.

The starkest example of the Court’s enormous discretion is the one case out of the ten where the law and facts are crystal clear (a rarity at the Court). In King v. Burwell, the Competitive Enterprise Institute, a right-wing think tank, is funding the plaintiffs who are trying to bring down Obamacare through a complete distortion of facts and law. Although virtually everyone knows that the Affordable Care Act was designed and written to implement the iconic three-legged stool of health insurance (community rating so people with pre-existing conditions must be covered at affordable rates, a mandate that everyone must purchase health insurance, and federal subsidies to help those who can’t afford the premiums), the plaintiffs are arguing that the third leg of the stool (federal subsidies) are not available on federal health insurance exchanges. I have written at length about the folly of this argument and how as a matter of law and fact the plaintiffs’ argument borders on the frivolous once one reads the entire law, not just one isolated provision. The legal canon that single phrases in a law must be read by judges in conjunction with the entire statute is universally accepted. Nevertheless, at the oral argument, four of the conservative Justices seemed to accept without question the plaintiffs’ counter-textual and counter-factual arguments relying on one single sentence in a 1000 page law. Like in professional wrestling (and Fox News) anything can happen in this case and probably will.

Jeffrey Toobin of CNN and Linda Greenhouse of the New York Times, two of this country’s most prominent Supreme Court commentators (but neither necessarily a die-hard critic) have also noted how frivolous the legal arguments are in this case. Greenhouse even predicted that the prior “law” in King is so clear that a ruling for the plaintiffs could do lasting damage to the Court and titled her column, “The Supreme Court at Stake.”

I agree with them that the law is clear, but I don’t think Greenhouse’s prediction is correct. Although many Americans will shrug their shoulders and lament the decision if the Court rules against the government, while others will feel much pain from the likely loss of their health insurance, my guess is that people’s views about the Court will not change. Why? Because either the day before or the day after the decision, the Court will likely overturn same-sex marriage bans giving the left and right in this country a split decision which will mute charges of party loyalty and partisanship. What it should not mute, however, are charges of value-laden, not legal, decision-making.

For those of us who study the Justices for a living, it is tough to communicate that the problem with the Court is not that it is too political or too partisan. The real issue is that the Justices make decisions in accord with a complex set of personal values that have little to do with the traditional methods of legal interpretation such as reliance on text, prior case law, and history (and this has always been the case). Although the Justices communicate their decisions through the language of the law, most second year law students could explain how the cited legal reasons in the Court’s cases do not logically support the results.

Thus, the question becomes, under what theory do we allow unelected, life-tenured governmental officials to exercise such great power over all of us. In other words, since law does not drive Court decisions, what is the basis of the Court’s legitimacy? Come the last day of June, and after weeks of important Supreme Court decisions affecting the very fabric of our society, that question should be on the minds of all Americans.

[Correction: The original version of this post mistakenly referred to the Competitive Enterprise Institute as the American Enterprise Institute.]

Friday, May 15, 2015

Comparing Next-Best Policies in the Patent-Troll Debate

by Neil H. Buchanan

In two recent Dorf on Law posts (here and here), I offered some thoughts on the supposed problem of "patent trolls," which are companies that buy inventors' patents and then sue (or threaten to sue) purported violators of those patents.  Supporters of proposals to change the system claim that trolls are extracting illegitimate gains from innocent parties, mostly (but not entirely) by negotiating nuisance settlements with companies that would rather not take the risk of losing big in court.

Echoing comments by Professor Dorf, who wrote about this subject here two years ago, my initial conclusion was that the problems with the patent system seem to have nothing to do with the trolls.  In particular, it appears that the U.S. Patent and Trademark Office (PTO) grants patents that are too broad, and that the courts have done little or nothing to narrow the reach of patents, such that it has become almost inevitable that firms will have violated some patent at some point, even if they had no intent to do so.  Or, at least, I am willing to take those assertions as fact for the purposes of this post.  And if all of that is true, then fixing those problems would make the trolls go away.

In part of my post yesterday, I pursued a line of thought suggested by Professor Dorf's earlier post, and by a comment on my May 1 post, both of which noted that a key problem is the absence of a searchable database of patents, making the lack-of-fair-notice problem especially severe.  I observed that this could possibly point to a partial solution: If a searchable database could be created, then people would be on notice that certain patents exist.  Even if such a database could be created, however, I nonetheless observed that this would be at best a deeply flawed approach, because it "cannot reasonably become one of the standard operating procedures for non-tech companies" to have to consult the database.  Providing notice, in other words, would still imply a legally onerous burden on innocent parties.

In the comments on yesterday's post, readers pointed out that public (PTO) and private (Google) databases already exist.  This is not the point, however, because the question is whether the databases are useful in solving the problem at hand.  Everyone appears to agree that the current versions are not useful in that regard, and some readers suggested that it would be simply impossible to create a truly complete patent database that could provide the kind of notice to potential violators (or, more optimistically, potential licensees) that would be needed to address the problem.

All of that is fine by me, because I had already questioned whether such a database, even if it could exist, would actually do much (if any) good.  I then noted that, in any event, "the court system is there -- in all of its imperfect glory -- to sort it out, and to assess proper penalties."  The transaction costs and imperfections in the legal system are always troubling, but it was difficult to see how one could continue to have a system of patents without some judicial or quasi-judicial method of resolving possible violations.

Of course, some people might simply argue that we really should not have patents at all.  If the problem is that people are innocently stepping on overly broad patents, and the system cannot bring itself to issue only narrow patents, then maybe the solution is to eliminate patents.  That way, there would be no court cases at all, because there would be no legal property to protect.  This could be done as a formal matter (via constitutional amendment) or as a functional reality (via legislative, administrative, and judicial action).

Let me be clear: I am not endorsing (or rejecting) an end-all-patents solution.  I am simply describing it as a possible response to a situation in which a more nuanced solution continually eludes us.  But let us think about some less extreme solutions as well.

In yesterday's comments, some readers argued that a system in which people can litigate patent violations creates a severe ex ante vs. ex post problem.  If a potential violator had known what trouble would come, she might (if she were not inclined to license the technology) have been able to come up with a very cheap alternative to using that technology.  Once the process is underway, however, starting all over again can be prohibitively expensive, which provides room for patent holders (or the trolls to whom they sold their patent rights) to demand punishingly high damages, to which the innocent violator must agree.

This is certainly a problem, but it arises again from lack of notice, which effectively assumes that the violation is innocent.  Again, this screams out that the real problem is that patents are being granted for "obvious" ideas (else we would not have so many people accidentally reinventing all of these wheels).  But if the more extreme options of actually fixing or eliminating patents are off the table, what are the second-best options?

One such option is, indeed, the legislation to which I referred in my May 1 post, and which was described in the NYT article to which I was responding:
"The Senate bill, written mainly by Charles E. Schumer, a New York Democrat, and John Cornyn, a Texas Republican, would place restraints on demand letters, essentially threats to settle or be sued; require information on who actually owns a patent, making it more difficult to hide behind 'shell' companies; and require losing parties to pay legal fees if the court decides the suit was not 'objectively reasonable,' a deterrent to frivolous suits."
This second-best option, then, essentially says this: "We cannot fix the patent system, so we will try to reduce the number of lawsuits by making the net payoff from such lawsuits probabilistically lower."  And the way to make the payoffs lower is to threaten a patent holder with a financial penalty for bringing losing suits, when those suits were objectively unreasonable.  (That last requirement is a change from the House version of the bill, which had a simple loser-pays provision.)

Note that, because this is a second-best option, it still leaves plenty of innocent violators bloodied.  If it is true that people can accidentally end up violating patents, then it will still be objectively reasonable for a patent holder to assert in court that her patent has been violated -- unless the court is effectively being asked to treat the "objectively reasonable" inquiry as an invitation to impose a judicial solution on all of the underlying problems in the patent system (overbreadth, etc.).  And if that latter possibility is what is going on here, then this is a truly dangerous way to legislate, because it would essentially turn all of patent law into whatever the judges say it is, ex post, with virtually no guidance or limitation.

Assuming that the legislation is not a stealth rewriting of all of patent law, then, the most that we can say from a utilitarian standpoint is that it might be a worthwhile tradeoff, if the value (monetary and otherwise) of the frivolous suits that it would deter is greater than the value (monetary and otherwise) of the meritorious suits that the loser-pays possibility will deter (plus any concomitant loss in incentive to innovate, due to adopting a system that protects patentable ideas less vigorously).  Because even slam-dunk suits can go sideways, after all, it is not only bad actors who are deterred by loser-pays provisions.  It is not, in other words, just "the lawyers" who will lose from fee-shifting provisions, but some people with valid claims who nonetheless would no longer find it prudent to risk an adverse court ruling.

Are there other next-best options?  Although, as I made abundantly clear earlier in this post, I actually did not endorse the "mandate a truly searchable database" policy choice in my post yesterday, let us consider what role such a database (as necessarily imperfect as it surely would be) could serve as a second-best solution.  As I noted, "The ability to set up such a database, moreover, would create an impetus to fix the other big issue ... .  Making the ability to sue violators contingent on a patent's having been properly registered on a public database would all but force the players in the system to confront and fix the overbreadth problem."

In other words, an advantage of this second-best solution is that the very process of posting information on a database could make it easier to identify similar patents, and to begin to narrow what one can claim as a violation of one's patent.  But again, let us assume that I am wrong, and that such an imperfect database would not force anyone to confront the deeper problems with overly broad patents, and so on.  Even so, if the new rule is, "You cannot sue parties that were not given proper notice, and proper notice now requires listing on this centralized database," then we are more directly attacking the ex ante/ex post problem that I described above.

Moreover, the concerns that I raised yesterday, regarding who could reasonably be expected to consult such a database, could also be integrated into any such reform.  If the concern (as reported in the NYT article) is that restaurants, hotels, and other non-tech companies are receiving demand letters and being sued, then we are really saying that there is an entire category of parties who should never be sued for patent violations, because they are always innocent when they violate patents.  Only the people who might actually be wrongly and deliberately profiting from stealing the ideas of others should be sue-able.

Do I like that set of reforms?  Not really.  It is, by design, an attempt to figure out how to eliminate the egregious stuff that might currently be happening, without attempting to deal with the underlying problems.  And my ambivalence here is largely motivated by my sense that the political debate -- even on this very technical set of legal issues -- is being driven by anecdotes rather than data, and that we have no real sense of the degree of the problem.

Note also that a "searchable database as notice" second-best solution is likely to kill off quite a bit of trolling.  No more holding up non-tech firms.  No more suing for violations of patents that are not reasonably searchable.  Importantly, it is much more difficult to imagine truly wronged parties who will not get justice under this system (compared to those who would be scared off by fee-shifting provisions).

To be very, very, VERY clear, I am not endorsing any solution.  I am simply saying that it remains unclear whether there is a serious problem that needs to be addressed in the first place, that the anti-lawyer legislation has costs as well as benefits (neither of which are obviously large or small, relative to each other), and that there are other imperfect measures that could discourage what we apparently want to discourage.