by Michael Dorf
On Tuesday, a 2-1 decision of a panel of the U.S. Court of Appeals Fifth Circuit affirmed the district court's preliminary injunction against President Obama's Deferred Action for Parents of Americans and Lawful Permanent Residents (DAPA) program. According to various news accounts (including this one in the NY Times), the Justice Dep't does not plan to seek a stay of that ruling from the Supreme Court. Consequently, if the case even gets to the Supreme Court during President Obama's remaining time in office, it won't be until next Term, and probably wouldn't be decided until nearly the end of next Term, in June 2016. As I told a reporter who asked me about the timing before the Fifth Circuit ruled, that puts any SCOTUS ruling in the middle of the presidential election campaign. (Although the conventions will take place in July, by late June 2016, the presumptive nominees will likely be known.)
Consequently, as the Times story linked above notes, DAPA will not likely be successfully implemented on President Obama's watch. Even if the Administration gets the all-clear from the SCOTUS in June 2016, undocumented immigrants eligible for DAPA would be reluctant to come forward knowing that a Republican victory in the presidential election would mean that any benefits obtained as a result would be taken away in January 2017. Meanwhile, they would have rendered themselves vulnerable to immigration enforcement. Indeed, a version of this dynamic would have been in play even if Judge Hanen had not enjoined DAPA; someone who signed up for DAPA in February of this year would still have had to worry that her DAPA advantages would go away in less than two years.
Meanwhile, one can also speculate on how the timing of the case will likely affect the presidential campaign itself. I think that its impact will be marginal, but perhaps interesting.
On the Democratic side, Hillary Clinton has already said that she would keep DAPA in place if elected and "go even further." A June 2016 SCOTUS ruling finding DAPA invalid could complicate her pitch, although much would depend on the details of the ruling. If the Court were simply to hold (as the district court and the appeals court did) that DAPA circumvented the Administrative Procedure Act (APA), President Obama could initiate a rulemaking to put it into place. Indeed, to my mind, the fact that the Administration hasn't already done so as a backup plan is at least a bit fishy. A conspiracy theorist might think that the Administration wants to preserve the APA objection so that if the government loses in the SCOTUS in 2016, it can be on that technical ground, allowing the Democratic nominee to continue to vow executive action in a credible way. By contrast, if the Administration were to lose in the Supreme Court in June 2016 on the ground that DAPA is invalid on statutory or constitutional grounds, the Democratic nominee could not credibly claim that she would be able to take effective executive action.
To be clear, I have no evidence that these sorts of political calculations are driving the Administration's go-slow litigation strategy. Moreover, there is a less political explanation for why the Administration has not simply initiated a notice-and-comment rulemaking as a Plan B: Doing so would produce a rule that would be challengeable as agency action under the APA. To this point, the government has been arguing that DAPA is agency non-action, and thus unreviewable pursuant to the doctrine of Heckler v. Chaney. The district court rejected this argument, as did the Fifth Circuit panel, but Judge Higginson, in dissent, accepted it, and the Administration may think it will fare better in the Supreme Court. Promulgating a rule that encapsulates DAPA would jeopardize the Heckler argument.
Meanwhile, the litigation timing could affect the Republican primaries and the position of the Republican nominee in the general. A candidate who wants to win both the Republican nomination and the general needs to take a hard line against undocumented immigrants to appeal to the the primary electorate but a softer, pro-reform line in the general. The danger (on this subject as on others, for Democrats as well as Republicans) is that statements made to appeal to the party base can be used against the candidate in the general.
The Obama policy is, in theory, a gift to Republicans because it offers them a way to take a seemingly tough stand on immigration in the primaries without the necessity of backtracking in the general. Someone like Jeb Bush or Marco Rubio can lambaste Obama for executive overreach on immigration and thus score points with the primary voters. He can then use the same tactic in the general against (let's assume) Hillary Clinton, but at this point couple criticism of presidential unilateralism with support for comprehensive immigration reform via statute. A June 2016 ruling by the SCOTUS would either buttress this strategy--if the Court invalidates DAPA--or undermine it--if the Court upholds DAPA. In the latter case, the Republican nominee would find it harder to restrict his criticism of Obama and Clinton to procedural irregularities, and that would highlight substantive disagreements on immigration.
All of that's in theory. In fact, American politics is probably too blunt for the foregoing to work for a Republican moderate on immigration, even if the SCOTUS invalidates DAPA. Even assuming that Republicans do not hold nearly as many debates as they did in 2012, the sheer size of the field ensures that one or more candidates who are doing poorly in the polls will try to gain traction by staking out a position that is very far to the right of the procedural straddle I've described above. Such a candidate--let's call him Ted Cruz--would highlight his disagreement with not only the procedure used by Democrats to arrive at DAPA but with the underlying policy itself. Cruz could essentially force Bush or Rubio to "go Romney" and promote something extreme like "self deportation." That would be much harder to walk back in the general, as Romney discovered in 2012.
Friday, May 29, 2015
Thursday, May 28, 2015
Triple Taxation and the Non-Dangers of Interstate Competition
by Neil H. Buchanan
For a relatively minor and unheralded case, Comptroller of the Treasury of Maryland v. Wynne presents a surprisingly large number of interesting issues, in both constitutional law and tax policy. Because constitutional and tax issues are the bread and (vegan) butter of the Dorf on Law team, we have been having some fun analyzing that case. Professor Dorf has written a Verdict column and a Dorf on Law post discussing Wynne, while I have written a short piece for The George Washington Law Review and a Dorf on Law post. Meanwhile, I published a new Verdict column yesterday that addresses additional issues raised by the decision. Here, I will complete our blanket coverage of Wynne with some discussion of two further issues, one a simple (but unappreciated) concept in tax policy, and the other a broad question about the Commerce Clause.
Suppose that you have received $1 million in taxable income in a given year. That does not, of course, mean that you earned only a million dollars, because taxable income is what remains after all of your deductions, exemptions, and so on have been subtracted from your gross income (which, itself, is not a full measure of your income, but I digress). Suppose further that you earn all of that income in your home state, and that your home state charges a single-rate income tax of 5% on taxable income. You thus pay $50,000 in state income tax.
Your neighbor also has $1 million in taxable income. Again, that does not actually mean that both of you have the same access to resources, or that you are similarly situated economically, but only that the neighbor ended up with $1 million when she computed her taxable income. Twenty percent of her income, however, was earned in another state: $800,000 was in-state income, $200,000 was earned elsewhere. Suppose that your home state imposes a 2% tax on out-of-state income (perhaps on the theory that the home state's resources were only partly responsible for the ability to earn the income, and that this taxpayer did not use local resources as heavily), but it does not provide a credit for any taxes paid elsewhere. The tax bill to the home state is $44,000 (five percent of $800,000 plus 2% of $200,000). If the other state also taxes the income earned there at a 2% rate, the tax bill to the other state is $4,000. The total tax bill for this taxpayer is $48,000.
Why go through this example? To make the very simple point that the second taxpayer, but not the first, has been subject to "double taxation," yet she has paid a smaller amount in taxes than the first taxpayer. As I pointed out in my Verdict column yesterday, the dissents as well as the majority opinion in Wynne all used the term "double taxation" as if being subject to taxes twice is automatically worse. It is obviously not. During the first week of my Federal Income Taxation class every semester, I ask rhetorically, "Would you rather pay a 99% tax rate once, or a 1% tax rate twice?"
Interestingly, I was recently describing the Maryland system (which, prior to the Wynne decision, did not provide a credit for out-of-state taxes paid), and before I even talked about the various tax rates involved, the person said, "Well, that's not fair, because some Marylanders are subject to triple taxation." Triple? "They also pay federal income tax." This misunderstanding is surprisingly widespread. Indeed, in a paper that I published in 1999, I described (starting at p. 516) a political document called "the Kemp Commission Report" that had tried to claim that every dollar earned in America is subject to multiple levels of taxation. The idea was that one could follow the path of a dollar, as it is earned in profits by a corporation, then paid in salary to a worker, then used to buys goods and services, which then makes it part of another company's profits, and so on, such that one could describe the system as quadruple taxation, or any multiple one chooses.
The narrower point here, then, as I described in my Verdict column yesterday, is that the supposed problem of double taxation is actually better labeled "cross-border disadvantage." It does not matter (other than any administrative inconvenience) whether one pays taxes on both sides of the border. The Eighteenth Century border wars that led to abandonment of the Articles of Confederation were a problem because the former colonies were discouraging cross-border trade by taxing imports into the states, and the interaction of states' income tax systems can end up mimicking such effects.
The broader point, however, concerns the Commerce Clause, which courts over the years expanded to include its "dormant" or indirect aspect, by which states are not supposed to be permitted to adopt policies that have the effect of disadvantaging cross-border economic activity. As I have pointed out in my Dorf on Law post earlier this week, however, the Wynne decision did not actually prevent the states from adopting tax systems that create real cross-border disadvantages. The majority in Wynne merely requires that Maryland adopt a system that is "internally consistent," which in practice would allow an even bigger cross-border penalty than Maryland's current system imposes.
To be clear, the actual rates adopted in Maryland and elsewhere did cause Marylanders who earned some income outside the state to pay more total state taxes (to all relevant states) than did Marylanders who stayed home and received the same amount of taxable income. Even if no other state currently taxed Marylanders' out-of-state income, however, Maryland's system would still have violated the Dormant Commerce Clause (DCC), according to the majority's logic, because that system was internally inconsistent, which means that (misnamed) double taxation was theoretically possible, simply because other states could decide to tax Marylanders' income.
As I also discuss in yesterday's Verdict column, the Wynne majority never seriously addressed the possibility that the other state could be required to mitigate any cross-border disadvantage. That is, if the other state chooses to tax out-of-state income, it could be required to credit taxes paid to the home state, rather than the other way around.
Setting aside the question of which state must provide the remedy, however, the constitutional issue comes down to whether the states can be prevented by the courts from adopting policies that create, or theoretically could create, cross-border disadvantages. The worry in the late 1700's, based on real experience, was that states would engage in policies that were deliberately discriminatory against interstate commerce. Thus, the Constitution gave Congress the power to regulate interstate commerce, acting as a brake on the supposedly inexorable tendencies of state politicians to favor the home team.
Is that still an issue today? Possibly. Consider, however, the examples of cross-border competition that I mentioned in my post on Tuesday. Courts (and Congress) have allowed the states to impose clearly discriminatory taxes on out-of-state residents who travel into a state, by imposing high user taxes on convention facilities, hotels, and so on. But so what? If the concern is that states' political processes will naturally disadvantage out-of-state residents, what about the political pressure that the state's politicians will feel from the people who own and work in the businesses that cater to non-locals? After all, the hotel tax in New Orleans (for example) is not 1,000%. Even for those who wish to draw revenue from a particular non-local source, the locals have a reason to prevent matters from getting out of hand.
Similarly, Maryland's now-disallowed system had the effect of encouraging people who expected to have out-of-state income to live elsewhere. And Maryland's state legislature could take that very real possibility into account. (I say "very real" because tiny Maryland, of all states, knows that it is possible to move out of the state without moving very far.) There are, in other words, clear and obvious considerations that would limit a state's decision to adopt discriminatory policies. One major difference between the late Eighteenth Century and today is that trade has been nationalized (and globalized), and thus it is much more likely that every state's legislature will be aware (or will be lobbied by people who are acutely aware) that trade is a two-way street.
There is thus a parallel between the Dormant Commerce Clause and the non-dormant Commerce Clause. In the context of the ACA case that the Supreme Court decided in 2012, some people reasonably argued that there really is no such thing as non-interstate commerce in the 21st century. The tides of history have thus made the Commerce Clause applicable to all economic activity, which means that the limitation on congressional action currently only applies to non-economic activity, not purely in-state activity. This is not because the courts should redefine what the Commerce Clause means, but because the modern patterns of commerce are simply different than they used to be, which necessarily changes how it should be applied.
Similarly, if the idea behind the DCC is, as Professor Dorf rightly described it, that the courts act as a "failsafe," dealing with the smaller cross-border problems that Congress cannot be bothered to fix, then maybe the world has outgrown that justification for the DCC. It is possible that the modern understandings of mutual economic interdependence, which were simply unknown in a world where Adam Smith's work was barely having an impact on widespread Mercantilist attitudes, will stop things from getting too far out of hand.
After all, even in international trade, the last half-century or so has seen trade barriers radically reduced by international agreements. And unlike in international arena, the failsafe in the interstate context in the U.S. is Congress itself. Maybe there is simply no need for the courts to get involved any more, because the cross-pressures of politics are keeping states from going too far, and Congress can deal with any big deviations.
There is an interesting, ongoing debate about whether judicial review is a good idea, as Professors Dorf and Segall recently debated, here and here. Even though I agree with Professor Dorf's views on that matter, the question here is not whether unelected courts should or should not be able to review states' decisions. Instead, the question is whether the political process will reasonably confine the range of outcomes, such that there is no need for the courts to intervene. (Compare same-sex marriage.)
There might have been a time when it made sense for the courts to prevent Congress from regulating purely in-state trade. And there might have been a time when states could not stop themselves from engaging in ruinous cross-border competition. Those times have passed. If we are worried about legislatures and Congress adopting laws that will be economically harmful, then we can confidently rely on the give-and-take of the political process to moderate those outcomes.
For a relatively minor and unheralded case, Comptroller of the Treasury of Maryland v. Wynne presents a surprisingly large number of interesting issues, in both constitutional law and tax policy. Because constitutional and tax issues are the bread and (vegan) butter of the Dorf on Law team, we have been having some fun analyzing that case. Professor Dorf has written a Verdict column and a Dorf on Law post discussing Wynne, while I have written a short piece for The George Washington Law Review and a Dorf on Law post. Meanwhile, I published a new Verdict column yesterday that addresses additional issues raised by the decision. Here, I will complete our blanket coverage of Wynne with some discussion of two further issues, one a simple (but unappreciated) concept in tax policy, and the other a broad question about the Commerce Clause.
Suppose that you have received $1 million in taxable income in a given year. That does not, of course, mean that you earned only a million dollars, because taxable income is what remains after all of your deductions, exemptions, and so on have been subtracted from your gross income (which, itself, is not a full measure of your income, but I digress). Suppose further that you earn all of that income in your home state, and that your home state charges a single-rate income tax of 5% on taxable income. You thus pay $50,000 in state income tax.
Your neighbor also has $1 million in taxable income. Again, that does not actually mean that both of you have the same access to resources, or that you are similarly situated economically, but only that the neighbor ended up with $1 million when she computed her taxable income. Twenty percent of her income, however, was earned in another state: $800,000 was in-state income, $200,000 was earned elsewhere. Suppose that your home state imposes a 2% tax on out-of-state income (perhaps on the theory that the home state's resources were only partly responsible for the ability to earn the income, and that this taxpayer did not use local resources as heavily), but it does not provide a credit for any taxes paid elsewhere. The tax bill to the home state is $44,000 (five percent of $800,000 plus 2% of $200,000). If the other state also taxes the income earned there at a 2% rate, the tax bill to the other state is $4,000. The total tax bill for this taxpayer is $48,000.
Why go through this example? To make the very simple point that the second taxpayer, but not the first, has been subject to "double taxation," yet she has paid a smaller amount in taxes than the first taxpayer. As I pointed out in my Verdict column yesterday, the dissents as well as the majority opinion in Wynne all used the term "double taxation" as if being subject to taxes twice is automatically worse. It is obviously not. During the first week of my Federal Income Taxation class every semester, I ask rhetorically, "Would you rather pay a 99% tax rate once, or a 1% tax rate twice?"
Interestingly, I was recently describing the Maryland system (which, prior to the Wynne decision, did not provide a credit for out-of-state taxes paid), and before I even talked about the various tax rates involved, the person said, "Well, that's not fair, because some Marylanders are subject to triple taxation." Triple? "They also pay federal income tax." This misunderstanding is surprisingly widespread. Indeed, in a paper that I published in 1999, I described (starting at p. 516) a political document called "the Kemp Commission Report" that had tried to claim that every dollar earned in America is subject to multiple levels of taxation. The idea was that one could follow the path of a dollar, as it is earned in profits by a corporation, then paid in salary to a worker, then used to buys goods and services, which then makes it part of another company's profits, and so on, such that one could describe the system as quadruple taxation, or any multiple one chooses.
The narrower point here, then, as I described in my Verdict column yesterday, is that the supposed problem of double taxation is actually better labeled "cross-border disadvantage." It does not matter (other than any administrative inconvenience) whether one pays taxes on both sides of the border. The Eighteenth Century border wars that led to abandonment of the Articles of Confederation were a problem because the former colonies were discouraging cross-border trade by taxing imports into the states, and the interaction of states' income tax systems can end up mimicking such effects.
The broader point, however, concerns the Commerce Clause, which courts over the years expanded to include its "dormant" or indirect aspect, by which states are not supposed to be permitted to adopt policies that have the effect of disadvantaging cross-border economic activity. As I have pointed out in my Dorf on Law post earlier this week, however, the Wynne decision did not actually prevent the states from adopting tax systems that create real cross-border disadvantages. The majority in Wynne merely requires that Maryland adopt a system that is "internally consistent," which in practice would allow an even bigger cross-border penalty than Maryland's current system imposes.
To be clear, the actual rates adopted in Maryland and elsewhere did cause Marylanders who earned some income outside the state to pay more total state taxes (to all relevant states) than did Marylanders who stayed home and received the same amount of taxable income. Even if no other state currently taxed Marylanders' out-of-state income, however, Maryland's system would still have violated the Dormant Commerce Clause (DCC), according to the majority's logic, because that system was internally inconsistent, which means that (misnamed) double taxation was theoretically possible, simply because other states could decide to tax Marylanders' income.
As I also discuss in yesterday's Verdict column, the Wynne majority never seriously addressed the possibility that the other state could be required to mitigate any cross-border disadvantage. That is, if the other state chooses to tax out-of-state income, it could be required to credit taxes paid to the home state, rather than the other way around.
Setting aside the question of which state must provide the remedy, however, the constitutional issue comes down to whether the states can be prevented by the courts from adopting policies that create, or theoretically could create, cross-border disadvantages. The worry in the late 1700's, based on real experience, was that states would engage in policies that were deliberately discriminatory against interstate commerce. Thus, the Constitution gave Congress the power to regulate interstate commerce, acting as a brake on the supposedly inexorable tendencies of state politicians to favor the home team.
Is that still an issue today? Possibly. Consider, however, the examples of cross-border competition that I mentioned in my post on Tuesday. Courts (and Congress) have allowed the states to impose clearly discriminatory taxes on out-of-state residents who travel into a state, by imposing high user taxes on convention facilities, hotels, and so on. But so what? If the concern is that states' political processes will naturally disadvantage out-of-state residents, what about the political pressure that the state's politicians will feel from the people who own and work in the businesses that cater to non-locals? After all, the hotel tax in New Orleans (for example) is not 1,000%. Even for those who wish to draw revenue from a particular non-local source, the locals have a reason to prevent matters from getting out of hand.
Similarly, Maryland's now-disallowed system had the effect of encouraging people who expected to have out-of-state income to live elsewhere. And Maryland's state legislature could take that very real possibility into account. (I say "very real" because tiny Maryland, of all states, knows that it is possible to move out of the state without moving very far.) There are, in other words, clear and obvious considerations that would limit a state's decision to adopt discriminatory policies. One major difference between the late Eighteenth Century and today is that trade has been nationalized (and globalized), and thus it is much more likely that every state's legislature will be aware (or will be lobbied by people who are acutely aware) that trade is a two-way street.
There is thus a parallel between the Dormant Commerce Clause and the non-dormant Commerce Clause. In the context of the ACA case that the Supreme Court decided in 2012, some people reasonably argued that there really is no such thing as non-interstate commerce in the 21st century. The tides of history have thus made the Commerce Clause applicable to all economic activity, which means that the limitation on congressional action currently only applies to non-economic activity, not purely in-state activity. This is not because the courts should redefine what the Commerce Clause means, but because the modern patterns of commerce are simply different than they used to be, which necessarily changes how it should be applied.
Similarly, if the idea behind the DCC is, as Professor Dorf rightly described it, that the courts act as a "failsafe," dealing with the smaller cross-border problems that Congress cannot be bothered to fix, then maybe the world has outgrown that justification for the DCC. It is possible that the modern understandings of mutual economic interdependence, which were simply unknown in a world where Adam Smith's work was barely having an impact on widespread Mercantilist attitudes, will stop things from getting too far out of hand.
After all, even in international trade, the last half-century or so has seen trade barriers radically reduced by international agreements. And unlike in international arena, the failsafe in the interstate context in the U.S. is Congress itself. Maybe there is simply no need for the courts to get involved any more, because the cross-pressures of politics are keeping states from going too far, and Congress can deal with any big deviations.
There is an interesting, ongoing debate about whether judicial review is a good idea, as Professors Dorf and Segall recently debated, here and here. Even though I agree with Professor Dorf's views on that matter, the question here is not whether unelected courts should or should not be able to review states' decisions. Instead, the question is whether the political process will reasonably confine the range of outcomes, such that there is no need for the courts to intervene. (Compare same-sex marriage.)
There might have been a time when it made sense for the courts to prevent Congress from regulating purely in-state trade. And there might have been a time when states could not stop themselves from engaging in ruinous cross-border competition. Those times have passed. If we are worried about legislatures and Congress adopting laws that will be economically harmful, then we can confidently rely on the give-and-take of the political process to moderate those outcomes.
Wednesday, May 27, 2015
Formalism and Functionalism in the Fifth Case in the Article III "Trilogy"
By Michael Dorf
Article III grants federal judges life tenure and salary protection. Nonetheless, Congress may assign some business that could be assigned to an Article III court to adjudication by personnel who lack life tenure and salary protection. For example, under the so-called Madisonian Compromise, Congress need not have created any lower federal courts in the first place, and Congress has never granted the lower federal courts the full jurisdiction allowable by Article III. For example, Title 28 generally requires "complete diversity" and a minimum of $75,000 in controversy for diversity jurisdiction, even though Article III would permit jurisdiction based on minimal diversity with no minimum amount in controversy. Likewise, under Title 28 as construed by the SCOTUS, federal district courts only have federal question jurisdiction in cases in which the federal question appears on the face of the plaintiff's well-pleaded complaint, even though Article III would allow federal question jurisdiction in cases in which the federal issue arises by way of defense or counterclaim. All of these cases that could be adjudicated by Article III judges are instead relegated to state courts in which judges lacking life tenure and salary protection preside. In addition, Congress has authorized administrative adjudication over large numbers of cases that could have been assigned to Article III judges. It has also authorized trial by military commission and territorial courts in numerous cases that could have been given to Article III courts.
Despite all of these Article-III-court-adjudicable cases that are adjudicated by non-Article III personnel, the SCOTUS has said that there is a limit. Some Article-III-court-adjudicable cases cannot be assigned to non-Article III federal adjudicators. The limits are set forth in a series of cases that begins with the 1982 ruling in Northern Pipeline v. Marathon Pipe Line. In that case, the Court invalidated the assignment to non-Article III bankruptcy judges of certain traditional common law cases. Justice Brennan's plurality opinion was formalist in the sense of rule-like. He said that unless a case fell within one of three traditional exceptions for military courts, territorial courts, or public rights cases, Congress had to assign adjudication to an Article III judge. The next two cases in what for some time was regarded as a trilogy--Thomas v. Union Carbide and CFTC v. Schor--upheld non-Article III adjudication under a multi-factor balancing test, leading most commentators to conclude that functionalism had replaced formalism in this area. But then, in 2011, the SCOTUS decided a fourth case in the "trilogy." In Stern v. Marshall, the Court invalidated a provision of the revised bankruptcy code, invoking the formalism of Northern Pipeline. Somewhat surprisingly, the Court split on conservative/liberal lines--surprisingly because the liberal Justice Brennan had been the author of the original formalist opinion in this line.
Yesterday came the fifth case in the "trilogy." (Yes, that's a tribute to the late great Douglas Adams.) In Wellness Int'l Network v. Sharif, Justice Sotomayor, writing for the Court, explained that bankruptcy judges could adjudicate cases that could not otherwise be assigned outside of the Art III judiciary (if assigned to federal adjudication at all), so long as the parties consent to such adjudication. Wellness Int'l could be said to mark the return of functionalism. Justice Sotomayor writes:
But is the majority opinion really functionalist? It might instead be understood as simply expressing a formal rule that consent vindicates non-Article III adjudication. After all, as Justice Alito notes in a partial concurrence, arbitrators are not Article III judges; yet everyone accepts that parties may consent to binding arbitration of cases that otherwise fall within the jurisdiction of the Article III courts. And in fact, Justice Sotomayor's Wellness Int'l opinion purports to reconcile the holding with Stern in just this way, arguing that the right to an Article III forum, while having structural implications, is ultimately a personal right subject to waiver, just like most other personal rights.
Why, then, do the majority and dissenting Justices all treat the case as reviving functionalism and rejecting formalism? The answer, I think, is that consent as an on/off switch has no logical stopping point.
Consider a hypothetical example. Suppose that Congress phased out the lower federal courts entirely and created a new cadre of non-Article III (i.e., non-tenured, non-salary-protected) adjudicators. Most of the jurisdiction formerly vested in Article III courts is now transferred to the non-Article III courts, but only with the consent of the parties. As a practical matter, this is accomplished by making all of the federal non-Article III courts' jurisdiction concurrent with state court jurisdiction (as it mostly is already for Article III courts) and by giving any defendant a right to remove to state court. Now the non-Article III federal courts would completely replace the Article III lower federal courts but their jurisdiction would be only by consent. Would that be permissible?
I think that any fair attempt to apply the past precedents would have to result in a negative answer. But the only way to get to that negative answer is by recognizing that consent is a factor, but only one factor, in a balancing test that the majority is applying in Wellness Int'l. If consent were really on/off determinative, as it would have to be to reconcile the holding with the formalism of Stern, then my hypothetical law would be valid. To be able to say that the hypothetical law is unconstitutional notwithstanding the role consent plays in validating less extreme laws, one needs the balancing test. Thus, in the end, the majority and the dissent are right to see Wellness Int'l as an important turning point that restores the balancing test of Thomas and Schor. At least until the next sequel.
Article III grants federal judges life tenure and salary protection. Nonetheless, Congress may assign some business that could be assigned to an Article III court to adjudication by personnel who lack life tenure and salary protection. For example, under the so-called Madisonian Compromise, Congress need not have created any lower federal courts in the first place, and Congress has never granted the lower federal courts the full jurisdiction allowable by Article III. For example, Title 28 generally requires "complete diversity" and a minimum of $75,000 in controversy for diversity jurisdiction, even though Article III would permit jurisdiction based on minimal diversity with no minimum amount in controversy. Likewise, under Title 28 as construed by the SCOTUS, federal district courts only have federal question jurisdiction in cases in which the federal question appears on the face of the plaintiff's well-pleaded complaint, even though Article III would allow federal question jurisdiction in cases in which the federal issue arises by way of defense or counterclaim. All of these cases that could be adjudicated by Article III judges are instead relegated to state courts in which judges lacking life tenure and salary protection preside. In addition, Congress has authorized administrative adjudication over large numbers of cases that could have been assigned to Article III judges. It has also authorized trial by military commission and territorial courts in numerous cases that could have been given to Article III courts.
Despite all of these Article-III-court-adjudicable cases that are adjudicated by non-Article III personnel, the SCOTUS has said that there is a limit. Some Article-III-court-adjudicable cases cannot be assigned to non-Article III federal adjudicators. The limits are set forth in a series of cases that begins with the 1982 ruling in Northern Pipeline v. Marathon Pipe Line. In that case, the Court invalidated the assignment to non-Article III bankruptcy judges of certain traditional common law cases. Justice Brennan's plurality opinion was formalist in the sense of rule-like. He said that unless a case fell within one of three traditional exceptions for military courts, territorial courts, or public rights cases, Congress had to assign adjudication to an Article III judge. The next two cases in what for some time was regarded as a trilogy--Thomas v. Union Carbide and CFTC v. Schor--upheld non-Article III adjudication under a multi-factor balancing test, leading most commentators to conclude that functionalism had replaced formalism in this area. But then, in 2011, the SCOTUS decided a fourth case in the "trilogy." In Stern v. Marshall, the Court invalidated a provision of the revised bankruptcy code, invoking the formalism of Northern Pipeline. Somewhat surprisingly, the Court split on conservative/liberal lines--surprisingly because the liberal Justice Brennan had been the author of the original formalist opinion in this line.
Yesterday came the fifth case in the "trilogy." (Yes, that's a tribute to the late great Douglas Adams.) In Wellness Int'l Network v. Sharif, Justice Sotomayor, writing for the Court, explained that bankruptcy judges could adjudicate cases that could not otherwise be assigned outside of the Art III judiciary (if assigned to federal adjudication at all), so long as the parties consent to such adjudication. Wellness Int'l could be said to mark the return of functionalism. Justice Sotomayor writes:
The question here, then, is whether allowing bankruptcy courts to decide Stern claims by consent would “impermissibly threate[n] the institutional integrity of the Judicial Branch.” And that question must be decided not by “formalistic and unbending rules,” but “with an eye to the practical effect that the” practice “will have on the constitutionally assigned role of the federal judiciary.”And indeed, CJ Roberts, in a dissent joined by Justices Scalia and Thomas, sees the majority opinion as once again displacing formalism. "I would not yield so fully to functionalism. The Framers adopted the formal protections of Article III for good reasons," the Chief Justice warns.
But is the majority opinion really functionalist? It might instead be understood as simply expressing a formal rule that consent vindicates non-Article III adjudication. After all, as Justice Alito notes in a partial concurrence, arbitrators are not Article III judges; yet everyone accepts that parties may consent to binding arbitration of cases that otherwise fall within the jurisdiction of the Article III courts. And in fact, Justice Sotomayor's Wellness Int'l opinion purports to reconcile the holding with Stern in just this way, arguing that the right to an Article III forum, while having structural implications, is ultimately a personal right subject to waiver, just like most other personal rights.
Why, then, do the majority and dissenting Justices all treat the case as reviving functionalism and rejecting formalism? The answer, I think, is that consent as an on/off switch has no logical stopping point.
Consider a hypothetical example. Suppose that Congress phased out the lower federal courts entirely and created a new cadre of non-Article III (i.e., non-tenured, non-salary-protected) adjudicators. Most of the jurisdiction formerly vested in Article III courts is now transferred to the non-Article III courts, but only with the consent of the parties. As a practical matter, this is accomplished by making all of the federal non-Article III courts' jurisdiction concurrent with state court jurisdiction (as it mostly is already for Article III courts) and by giving any defendant a right to remove to state court. Now the non-Article III federal courts would completely replace the Article III lower federal courts but their jurisdiction would be only by consent. Would that be permissible?
I think that any fair attempt to apply the past precedents would have to result in a negative answer. But the only way to get to that negative answer is by recognizing that consent is a factor, but only one factor, in a balancing test that the majority is applying in Wellness Int'l. If consent were really on/off determinative, as it would have to be to reconcile the holding with the formalism of Stern, then my hypothetical law would be valid. To be able to say that the hypothetical law is unconstitutional notwithstanding the role consent plays in validating less extreme laws, one needs the balancing test. Thus, in the end, the majority and the dissent are right to see Wellness Int'l as an important turning point that restores the balancing test of Thomas and Schor. At least until the next sequel.
Tuesday, May 26, 2015
Interstate Trade Wars, Taxes, and the Dormant Commerce Clause
by Neil H. Buchanan
Last Wednesday, Professor Dorf's Verdict column and Dorf on Law post responded to Justice Scalia's dissent in the Supreme Court's 5-4 decision in Comptroller of the Treasury of Maryland v. Wynne. Professor Dorf chose to focus on that dissent, in which Justice Scalia had offered one of his trademarked overstatements about the Dormant Commerce Clause (DCC), calling it "a judicial fraud." Professor Dorf concluded that it is not, and that if Justice Scalia thinks that it is, then much of Scalia's work (re, say, anti-commandeering or state sovereign immunity) must similarly be fraudulent.
Nonetheless, Professor Dorf constructed his column and post last week not as defenses of the DCC itself. As he put it, "[o]ne might reasonably think that the DCC is on balance a bad idea or has taken a wrong turn or something of that sort," and he concludes that "[n]one of this is to say that one cannot criticize any particular DCC rule or even the DCC doctrine as a whole." Here, I will not critique the DCC overall, but I will consider whether the particulars of the Wynne case suggest that the doctrine was misapplied.
The George Washington Law Review recently began an online affiliated journal called On the Docket. in which GW faculty write short pieces responding to recent Supreme Court cases. Last week, I wrote a response to Wynne, because it is a tax case, noting a particularly odd standing problem that the Court ignored, and showing how that unresolved standing issue led to an even more puzzling remedies problem. Interested readers are invited to click on that (blog-length) piece at their leisure, but I will not discuss those arguments further here.
At the end of that piece, I also noted that the Wynne majority failed to solve the DCC-inspired problem that supposedly motivated the justices to hold against Maryland in the first place. Before explaining that argument more completely, however, it is necessary to explain the tax provisions at issue in that case.
Most states tax incomes, and those states that do so generally tax the incomes of their residents, along with the incomes of nonresidents whose income is earned in the state. In order to prevent "double taxation" -- a gross misnomer that I plan to discuss in my Dorf on Law post later this week -- states give their residents a credit for taxes paid to another state. Thus, if a resident of Illinois earned all of her income in Ohio, and Ohio levied a tax of $20,000 on that income, then Illinois would reduce its resident's state taxes by $20,000. (If Illinois's tax on the relevant income were $20,000 or less, then the tax liability to Illinois would be zero.)
Maryland ran a similar system, with a slight twist. Maryland's state income tax is formally levied as a progressive-rate-structure state-level tax, along with a single-rate county add-on tax. Residents of Howard County, where the Wynnes live, could pay a maximum marginal tax rate of 5.75% to the state, plus a uniform 3.2% rate to the county. As an administrative matter, the county tax is actually paid to the state, using the same tax forms that one uses to determine state tax liability.
The twist is that Maryland provides the out-of-state tax credit only on its state-level tax computations, but not on the county add-on taxes. The Wynne majority held that this violated the DCC. The five-justice coalition concluded that the failure to credit out-of-state taxes was an example of one state discriminating against interstate trade, "the quintessential evil" that the DCC was designed to avoid. After all, if Maryland is setting up its system such that a resident will end up paying more in total taxes (to Maryland and to other states combined) if she earns any of her income in another state, then Maryland must be engaging in a "trade war"-like effort to discriminate against interstate trade.
As I noted above, and in my piece in On the Docket, the problem with the Court's holding is that it does not actually prevent the quintessential evil that supposedly motivates the majority. Specifically, the majority explicitly would allow Maryland to choose to eliminate the out-of-state tax credit entirely. Doing so would be even more discriminatory toward out-of-state trade, because taxpayers like the Wynnes would face an 8.95% tax on out-of-state income, not 3.2%. This passes muster under the DCC, says the majority, because it is "internally consistent," that is, it would not cause cross-border discrimination IF all other states adopted it. Justice Scalia rightly mocks this as an "imaginary" benefit from applying the DCC.
Now, one might object that Maryland would never even consider eliminating the credit for all out-of-state income, because that would imply a tax increase on many Marylanders, which would be politically unpopular. Similarly, that Maryland's state taxes are higher than, say, Virginia's does not raise DCC concerns, even though Maryland's system discourages Virginians from doing business in Maryland, on the theory that Maryland's legislature made a "tough choice" in slightly discouraging business from out-of-staters in order to provide the level of services to Marylanders that the political system could support. There would, apparently, be no "race to the top" in which states increase their taxes to harm interstate trade, meaning that cross-border discrimination is only a problem if it actually threatens to create a multistate series of retaliatory measures, with each state trying to take an advantage over another. Such retaliatory frenzies, after all, were a large part of the motivation to replace the Articles of Confederation with the Constitution.
But what is the "retaliation" that other states might have considered, in response to Maryland's system? Repealing their state tax credits for out-of-state-sourced income would similarly impose higher taxes on their own in-state residents, which would be similarly politically inconvenient. According to the Maryland high court's decision in this case, Maryland's current bifurcated system was adopted (sort of by accident) in 1975, yet there has been no evidence in the four decades since then that other states have even considered retaliating. If a trade war is brewing, it is on a very slow burn.
One might object, however, with a classic slippery slope argument, saying that the courts are required to police the smallest possibility of one state's taking advantage over others, in order to prevent things from getting out of hand. As Professor Dorf described the modern defense of the DCC, in his Verdict column:
Moreover, states are permitted to engage in "tax exportation," which is the snarky term for figuring out ways to tax people who are passing through the state. Hotel taxes, airport taxes, and so on are essentially ways for state legislatures to empty the wallets of people who cannot vote the legislature out of office. Why would the courts not get involved, even though this is clearly discriminatory? Apparently, because the modern DCC is not actually a method by which the courts implement a high-alert, anti-slippery slope version of the anti-trade war principle.
Or perhaps the idea is to prevent things from getting too far out of hand. Congress has the power (within some limits) directly to require the states to be consistent in their tax policies. It has not done so, even though its inaction does allow states to act in ways that are mutually self-defeating. There is a sort of negative version of this inaction, which Professor Dorf explains in his column:
Last Wednesday, Professor Dorf's Verdict column and Dorf on Law post responded to Justice Scalia's dissent in the Supreme Court's 5-4 decision in Comptroller of the Treasury of Maryland v. Wynne. Professor Dorf chose to focus on that dissent, in which Justice Scalia had offered one of his trademarked overstatements about the Dormant Commerce Clause (DCC), calling it "a judicial fraud." Professor Dorf concluded that it is not, and that if Justice Scalia thinks that it is, then much of Scalia's work (re, say, anti-commandeering or state sovereign immunity) must similarly be fraudulent.
Nonetheless, Professor Dorf constructed his column and post last week not as defenses of the DCC itself. As he put it, "[o]ne might reasonably think that the DCC is on balance a bad idea or has taken a wrong turn or something of that sort," and he concludes that "[n]one of this is to say that one cannot criticize any particular DCC rule or even the DCC doctrine as a whole." Here, I will not critique the DCC overall, but I will consider whether the particulars of the Wynne case suggest that the doctrine was misapplied.
The George Washington Law Review recently began an online affiliated journal called On the Docket. in which GW faculty write short pieces responding to recent Supreme Court cases. Last week, I wrote a response to Wynne, because it is a tax case, noting a particularly odd standing problem that the Court ignored, and showing how that unresolved standing issue led to an even more puzzling remedies problem. Interested readers are invited to click on that (blog-length) piece at their leisure, but I will not discuss those arguments further here.
At the end of that piece, I also noted that the Wynne majority failed to solve the DCC-inspired problem that supposedly motivated the justices to hold against Maryland in the first place. Before explaining that argument more completely, however, it is necessary to explain the tax provisions at issue in that case.
Most states tax incomes, and those states that do so generally tax the incomes of their residents, along with the incomes of nonresidents whose income is earned in the state. In order to prevent "double taxation" -- a gross misnomer that I plan to discuss in my Dorf on Law post later this week -- states give their residents a credit for taxes paid to another state. Thus, if a resident of Illinois earned all of her income in Ohio, and Ohio levied a tax of $20,000 on that income, then Illinois would reduce its resident's state taxes by $20,000. (If Illinois's tax on the relevant income were $20,000 or less, then the tax liability to Illinois would be zero.)
Maryland ran a similar system, with a slight twist. Maryland's state income tax is formally levied as a progressive-rate-structure state-level tax, along with a single-rate county add-on tax. Residents of Howard County, where the Wynnes live, could pay a maximum marginal tax rate of 5.75% to the state, plus a uniform 3.2% rate to the county. As an administrative matter, the county tax is actually paid to the state, using the same tax forms that one uses to determine state tax liability.
The twist is that Maryland provides the out-of-state tax credit only on its state-level tax computations, but not on the county add-on taxes. The Wynne majority held that this violated the DCC. The five-justice coalition concluded that the failure to credit out-of-state taxes was an example of one state discriminating against interstate trade, "the quintessential evil" that the DCC was designed to avoid. After all, if Maryland is setting up its system such that a resident will end up paying more in total taxes (to Maryland and to other states combined) if she earns any of her income in another state, then Maryland must be engaging in a "trade war"-like effort to discriminate against interstate trade.
As I noted above, and in my piece in On the Docket, the problem with the Court's holding is that it does not actually prevent the quintessential evil that supposedly motivates the majority. Specifically, the majority explicitly would allow Maryland to choose to eliminate the out-of-state tax credit entirely. Doing so would be even more discriminatory toward out-of-state trade, because taxpayers like the Wynnes would face an 8.95% tax on out-of-state income, not 3.2%. This passes muster under the DCC, says the majority, because it is "internally consistent," that is, it would not cause cross-border discrimination IF all other states adopted it. Justice Scalia rightly mocks this as an "imaginary" benefit from applying the DCC.
Now, one might object that Maryland would never even consider eliminating the credit for all out-of-state income, because that would imply a tax increase on many Marylanders, which would be politically unpopular. Similarly, that Maryland's state taxes are higher than, say, Virginia's does not raise DCC concerns, even though Maryland's system discourages Virginians from doing business in Maryland, on the theory that Maryland's legislature made a "tough choice" in slightly discouraging business from out-of-staters in order to provide the level of services to Marylanders that the political system could support. There would, apparently, be no "race to the top" in which states increase their taxes to harm interstate trade, meaning that cross-border discrimination is only a problem if it actually threatens to create a multistate series of retaliatory measures, with each state trying to take an advantage over another. Such retaliatory frenzies, after all, were a large part of the motivation to replace the Articles of Confederation with the Constitution.
But what is the "retaliation" that other states might have considered, in response to Maryland's system? Repealing their state tax credits for out-of-state-sourced income would similarly impose higher taxes on their own in-state residents, which would be similarly politically inconvenient. According to the Maryland high court's decision in this case, Maryland's current bifurcated system was adopted (sort of by accident) in 1975, yet there has been no evidence in the four decades since then that other states have even considered retaliating. If a trade war is brewing, it is on a very slow burn.
One might object, however, with a classic slippery slope argument, saying that the courts are required to police the smallest possibility of one state's taking advantage over others, in order to prevent things from getting out of hand. As Professor Dorf described the modern defense of the DCC, in his Verdict column:
"Congress lacks the capacity to keep track of and override all of the laws that discriminate against or unduly burden interstate commerce that may be enacted by any of the fifty states and thousands of local governments. The judicially enforceable DCC thus operates as a kind of default principle. The courts presume that Congress would preempt such state and local laws if it had the capacity to do so."That justification, however, is inconsistent with reality. (To be clear, Professor Dorf took no position on that justification. He simply described it.) The DCC does not eliminate all burdens on interstate commerce, as the Wynne decision itself shows. (Again, the Wynne majority blessed a system that would be discriminatory in practice.) Moreover, consider all of the ways in which states routinely compete with each other, in openly retaliatory ways. The Court has allowed "race to the bottom" tax competition among states, in which corporations play different states against each other, allowing the corporations to receive taxpayer dollars. If the concern is that state legislators are going to be induced by interstate competition to enact policies that are ultimately unwise (such as beggar-thy-neighbor tariffs, a la pre-Constitution U.S. states), then this kind of effort to use tax and spending policies to disadvantage other sovereign states should also be a concern.
Moreover, states are permitted to engage in "tax exportation," which is the snarky term for figuring out ways to tax people who are passing through the state. Hotel taxes, airport taxes, and so on are essentially ways for state legislatures to empty the wallets of people who cannot vote the legislature out of office. Why would the courts not get involved, even though this is clearly discriminatory? Apparently, because the modern DCC is not actually a method by which the courts implement a high-alert, anti-slippery slope version of the anti-trade war principle.
Or perhaps the idea is to prevent things from getting too far out of hand. Congress has the power (within some limits) directly to require the states to be consistent in their tax policies. It has not done so, even though its inaction does allow states to act in ways that are mutually self-defeating. There is a sort of negative version of this inaction, which Professor Dorf explains in his column:
"The fact that Congress has the power to override a judicial ruling finding a DCC violation acts as a failsafe in case the presumption fails. And the fact that Congress only very rarely exercises that power shows that in applying the presumption embodied in the DCC, the courts have done a pretty good job of approximating what Congress would do to combat state-versus-state protectionism if it had the capacity."That is, we could read congressional inaction to reverse the courts' DCC rulings as proof that Congress broadly agrees that not all discriminatory actions by state legislatures need to be blocked. Yet that is not a reason to say that all of the Court's DCC decisions are presumptively correct, nor is it a reason to read all congressional inaction as an endorsement of the Court's DCC jurisprudence. The best that we can say is that Congress is not upset enough with the status quo to do anything about the marginal cases, one way or the other. But that means that, if the Court presumes to be acting as Congress's failsafe, it has to have a decent reason to adopt a DCC that allows some blatantly discriminatory behavior while disallowing something as minor as Maryland's now-disallowed system.
Monday, May 25, 2015
Ireland's Yes Vote on Same-Sex Marriage as Seen by the SCOTUS
by Michael Dorf
Ireland's decisive referendum vote in favor of recognizing same-sex marriage is obviously important, indeed historic, in its own right. But inevitably one finds it hard not to see this through one's own lens. What lessons will and should be drawn here from the Irish experience?
During the oral argument last month in Obergefell v. Hodges, Chief Justice Roberts cited the example of rapid changes in public opinion in Maine and said: "People feel very differently about something if they have a chance to vote on it than if it's imposed on them by . . . the courts." He thus suggested that it would ultimately be better for the marriage equality movement itself if the plaintiffs lost in the courts but won through legislation and ballot initiatives in the states.
In one sense, the Chief was right. As a matter of basic psychology, having a say matters to people. Tom Tyler's work confirms this general proposition specifically with respect to law.
Yet the Chief's suggestion ultimately missed the mark because the possibility of extra-judicial relief is not a reason to deny judicial relief that's otherwise appropriate. Suppose Homeowner sues Neighbor to enjoin a nuisance. It might well be better for eveyone over the long run if, instead of litigating, Homeowner and Neighbor went to mediation and arrived at a mutually satisfactory resolution. However, if Homeowner and Neighbor have not done so, then the judge's obligation is to resolve the dispute according to law. If the law entitles Homeowner to the injunction, then it is not the place of the court to deny the injunction because it would be better for both Homeowner and Neighbor for them to work things out in a more participatory fashion. Likewise here, if, all things considered, the Fourteenth Amendment is best read to recognize a right to same-sex marriage, then it is not the place of the SCOTUS to deny such a right on the ground that it would be better for the plaintiffs if they won the right through the democratic process.
To be sure, court-ordered mediation is generally a possibility, but where courts order mediation, they order parties to participate in mediation. There is no obligation to resolve an issue through mediation. Moreover, the analogy does not hold because of the timing difference. Mediation takes days or at most weeks. Obtaining a right to marry through democratic means in every state in the U.S. would take years, notwithstanding recent dramatic shifts in attitudes.
Even if Congress supported a right to SSM, it lacks the authority to enact a law guaranteeing such a right. Congress would have the power to enact laws enforcing such a right under Section 5 of the Fourteenth Amendment but only if the SCOTUS were first to recognize such a right under Section 1 of the Fourteenth Amendment. Otherwise, rules governing who can marry generally fall within the reserved powers of the states.
Ireland got its right to marry via a national referendum amending the Irish Constitution, but the procedure for amending the U.S. Constitution is more demanding. There is not currently 2/3 support for marriage equality in the House or the Senate. Perhaps when there is such support there will also be majority support in 3/4 of state legislatures, but changes in public opinion do not translate into changes in legislators' preferences in a perfectly linear fashion, and so it would be, at best, years before a national consensus in favor of SSM would make itself felt as an express constitutional right to SSM. For the U.S., at least for the next few years, it is the Supreme Court or nothing.
Given the difference between, on one hand, Articles 46 and 47 of the Irish Constitution, and, on the other hand, Article V of the U.S. Constitution, it would thus be a profound mistake to read the Irish referendum as signalling that it would be fine for the SCOTUS to leave the SSM issue to the political process. Doing so would mean delaying justice--and thus denying justice--for years. Instead, the right lesson to draw from the Irish referendum is that throughout the world of constitutional democracies, marriage equality is increasingly seen as a fundamental right.
Ireland's decisive referendum vote in favor of recognizing same-sex marriage is obviously important, indeed historic, in its own right. But inevitably one finds it hard not to see this through one's own lens. What lessons will and should be drawn here from the Irish experience?
During the oral argument last month in Obergefell v. Hodges, Chief Justice Roberts cited the example of rapid changes in public opinion in Maine and said: "People feel very differently about something if they have a chance to vote on it than if it's imposed on them by . . . the courts." He thus suggested that it would ultimately be better for the marriage equality movement itself if the plaintiffs lost in the courts but won through legislation and ballot initiatives in the states.
In one sense, the Chief was right. As a matter of basic psychology, having a say matters to people. Tom Tyler's work confirms this general proposition specifically with respect to law.
Yet the Chief's suggestion ultimately missed the mark because the possibility of extra-judicial relief is not a reason to deny judicial relief that's otherwise appropriate. Suppose Homeowner sues Neighbor to enjoin a nuisance. It might well be better for eveyone over the long run if, instead of litigating, Homeowner and Neighbor went to mediation and arrived at a mutually satisfactory resolution. However, if Homeowner and Neighbor have not done so, then the judge's obligation is to resolve the dispute according to law. If the law entitles Homeowner to the injunction, then it is not the place of the court to deny the injunction because it would be better for both Homeowner and Neighbor for them to work things out in a more participatory fashion. Likewise here, if, all things considered, the Fourteenth Amendment is best read to recognize a right to same-sex marriage, then it is not the place of the SCOTUS to deny such a right on the ground that it would be better for the plaintiffs if they won the right through the democratic process.
To be sure, court-ordered mediation is generally a possibility, but where courts order mediation, they order parties to participate in mediation. There is no obligation to resolve an issue through mediation. Moreover, the analogy does not hold because of the timing difference. Mediation takes days or at most weeks. Obtaining a right to marry through democratic means in every state in the U.S. would take years, notwithstanding recent dramatic shifts in attitudes.
Even if Congress supported a right to SSM, it lacks the authority to enact a law guaranteeing such a right. Congress would have the power to enact laws enforcing such a right under Section 5 of the Fourteenth Amendment but only if the SCOTUS were first to recognize such a right under Section 1 of the Fourteenth Amendment. Otherwise, rules governing who can marry generally fall within the reserved powers of the states.
Ireland got its right to marry via a national referendum amending the Irish Constitution, but the procedure for amending the U.S. Constitution is more demanding. There is not currently 2/3 support for marriage equality in the House or the Senate. Perhaps when there is such support there will also be majority support in 3/4 of state legislatures, but changes in public opinion do not translate into changes in legislators' preferences in a perfectly linear fashion, and so it would be, at best, years before a national consensus in favor of SSM would make itself felt as an express constitutional right to SSM. For the U.S., at least for the next few years, it is the Supreme Court or nothing.
Given the difference between, on one hand, Articles 46 and 47 of the Irish Constitution, and, on the other hand, Article V of the U.S. Constitution, it would thus be a profound mistake to read the Irish referendum as signalling that it would be fine for the SCOTUS to leave the SSM issue to the political process. Doing so would mean delaying justice--and thus denying justice--for years. Instead, the right lesson to draw from the Irish referendum is that throughout the world of constitutional democracies, marriage equality is increasingly seen as a fundamental right.
Saturday, May 23, 2015
What would you do if you were a Supreme Court Justice?
By Eric Segall
Last week on this blog, Mike and I debated the role that personal values and prior law play in Supreme Court decision-making. This issue, of course, has been a major source of contention among legal academics, political scientists and Court watchers for generations.
This discussion is important because we accept the Court’s authority, at least in part, because the Justices claim to be judges making legal decisions, not politicians making policy decisions. I have spent the better part of the last decade, however, trying to demonstrate that our Supreme Court is not really a court at all, and thus we should re-examine the premises that allow these governmental officials we call judges to so often make such important decisions that affect us all.
Last week on this blog, Mike and I debated the role that personal values and prior law play in Supreme Court decision-making. This issue, of course, has been a major source of contention among legal academics, political scientists and Court watchers for generations.
This discussion is important because we accept the Court’s authority, at least in part, because the Justices claim to be judges making legal decisions, not politicians making policy decisions. I have spent the better part of the last decade, however, trying to demonstrate that our Supreme Court is not really a court at all, and thus we should re-examine the premises that allow these governmental officials we call judges to so often make such important decisions that affect us all.
One way to think about the question is to ask, “What would you do if you were a Supreme Court Justice?” But, first some background.
The Supreme Court of the United States is a unique political institution. Our Justices are the only judges in the free world who serve on a nation’s highest court for life. In addition, the power of judicial review (the authority of courts to set aside laws of elected governmental officials), began with our Constitution and in no other country has that authority been wielded for so long and in so many important ways. As Alexis de Tocqueville said in the 19th century, “There is hardly a political question in the United States which does not sooner or later turn into a judicial one.”
Since 1803, Supreme Court Justices (left and right, republican and democrat) have consistently decided cases based on a complex array of personal, political, and professional values, not prior law. This idea, which I detailed at length in a book, is neatly captured by the advice Justice William Brennan used to routinely give his new law clerks about the most important rule of the Supreme Court. That rule wasn’t “study the law,” or “make sure everything we say has a sound legal basis.” The rule, in effect, was “with five votes we can get anything done around here.” That is advice for a political veto council not a court of law.
Although most political scientists who study the Court agree that personal values, life experiences, and politics drive Supreme Court decisions not the law, legal academics push back on my project with two major critiques. First, they argue that appellate judges at all levels possess similar discretion as the Justices (and at the federal level also hold their positions for life), and thus the Justices may be a bit more “political” but the difference is only a matter of degree not kind. I responded fully to this argument in a conversation with Judge Richard Posner here. My main point was that it is the confluence of life tenure, deciding the most important cases, and being effectively unreviewable that makes the Court different in kind from all other courts (none of which possess all those characteristics).
The second critique is that my account of how the Justices make decisions is an “external” not “internal” one, and thus flawed. The argument is that the Justices believe that they are doing the best they can to make decisions under the law, and that they view themselves as judges. Thus, who am I to suggest otherwise?
I have two answers to this critique the second of which leads to the title of this essay. First though, since when do we accept the self-promoting statements of important governmental officials at face value? When President Obama or Senator Cruz or Governor Christie explain why they made an important decision, do either the media or the American public simply say, “oh sure that is obviously the reason?” When is the last time a politician said that she made a particular choice because it will “get me more votes?” We have a healthy skepticism about the rationales offered by public servants and the same should be true for Supreme Court Justices. It is true they don’t have to be re-elected but neither do second term Presidents and term-limited mayors and governors.
More importantly though, what would we expect these Justices to do when faced with many of this country’s most important and difficult legal (capital punishment), political (campaign finance reform, voting rights and redistricting), social (affirmative action, guns, abortion), and economic (health care) issues? What would you do if the following was your job description?
You hold your office for life and you can never be fired unless you commit a high crime or misdemeanor. Your constitutional decisions are functionally unreviewable. The cases you are called upon to decide are by definition usually the hardest our legal system has to offer as a matter of legal doctrine and the most important for public policy (on a national level).
Unlike other judges, you are not bound by prior cases that are directly on point (the Court is allowed to reverse its own precedent and frequently does so in the most important areas). The legal texts you are called upon to interpret are usually hopelessly vague (“unreasonable searches and seizures,” “establishment of religion,” “due process,” “equal protection,” etc.,) and those provisions have deeply contestable historical origins (the Second Amendment for example). Finally, you have before you dozens of briefs written by this country’s smartest and most persuasive lawyers, litigators, and legal academics on both sides of every important case. In other words, the country’s most engaged and knowledgeable legal experts are telling you the law supports their (or your) side.
Now imagine an issue of deep importance to you personally. For Chief Justice Roberts maybe it is voting rights restrictions on the states (he wrote a memo in 1981 evidencing his distaste for the Voting Rights Act of 1965). For Justice Kennedy, it is gay rights and personal liberty which he evidenced great fondness for before he was nominated to be a Supreme Court Justice. For Justice Ginsburg, it is issues uniquely pertaining to women which she fought for valiantly before she became a judge. Is it really a surprise that Chief Justice Roberts authored the opinion striking down a major part of the Voting Rights Act twenty-five years after he wrote that memo, or that Justice Kennedy has written all three Supreme Court decisions in history favoring gay rights, or that Justice Ginsburg proudly wrote the decision requiring VMI to accept women to its military institute?
You know you have the last word. You know you cannot be fired for the decisions you make. You know these cases raise fundamental questions that define who we are as a people and what our country stands for. You know you are not bound by prior cases and you have countless briefs justifying both sides of the argument. Are you going to somehow be able to put your personal values and strongly held political views aside or are you either consciously or unconsciously going to do what you sincerely and in good faith believe is best for this country (all things considered law be damned). What would you do?
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 conference 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: http://www.sbc.senate.gov/
[Note: The witness's claim could be interpreted in a number of different ways, all of which involve one level or another of trafficking in paranoid fantasies. My comment in the paragraph immediately above deals with the claim in its literal form, which is the only version of the story that could even imaginably be subject to falsification with evidence, whereas the other versions simply amount to, "We know that the IRS corruptly decided to misconstrue the ACA to benefit Democrats and Obama, because the IRS is corrupt and hates Republicans." Hardly an improvement.]
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!
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 conference 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: http://www.sbc.senate.gov/
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.
[Note: The witness's claim could be interpreted in a number of different ways, all of which involve one level or another of trafficking in paranoid fantasies. My comment in the paragraph immediately above deals with the claim in its literal form, which is the only version of the story that could even imaginably be subject to falsification with evidence, whereas the other versions simply amount to, "We know that the IRS corruptly decided to misconstrue the ACA to benefit Democrats and Obama, because the IRS is corrupt and hates Republicans." Hardly an improvement.]
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.
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):
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.
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.
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.
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.
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