Friday, February 01, 2019

Did a 'Good Government' Reform Inadvertently Narrow Anti-Discrimination Law?

by Neil H. Buchanan

Typically, our columns here on Dorf on Law are very much "of the moment," because we are reacting to a recent court decision or proposed legislation, or because we are analyzing economic evidence and responding to (frequently quite bad) arguments, or often because we are directly engaging in current political analysis (most recently focused on various Democratic presidential candidates).

At the end of the day, however, we are academics; and sometimes it is refreshing to engage in purely academic thinking without worrying (too much) about the immediate relevance of the topic.  What better time than while I am a visiting scholar at the University of Cambridge to take a dive into some historical analysis -- ironically, given my location, sitting in a lecture hall listening to an American historian's lecture about early American legal history?

Yale professor Naomi Lamoreaux is a visiting scholar here at Christ's College.  Earlier this week, she presented the annual Lady Margaret Lecture: "Getting the American Model Right: State Constitutional Revision and the Achievement of General Laws in the Mid-Nineteenth Century U.S."

Here, I will offer a summary (reasonably accurate, I hope) of the historical evidence and argument that Professor Lamoreaux provided in her lecture.  I am doing this mostly because I simply found it fascinating, but also because it is likely to be especially interesting to people who (like many Dorf on Law readers) have studied law.

As the title of this column suggests, however, I found myself (as someone who admittedly does not even qualify as an amateur historian) wondering whether there might be a modern implication of the history that Professor Lamoreaux laid out so beautifully.

The lecture focused on the key difference between "general" legislation and "special" legislation.  It turns out that a large amount of the work in American state legislatures during the first half century or so after the founding involved passing laws that were narrowly -- very narrowly -- written to benefit one person or group of persons.  Legislatures would, for example, grant divorces on a case-by-case basis by legislative decree.  (Who knew?)  They would also create corporations, banks, and similar special-case benefits, and they would pass laws targeted only at specific localities within the state.

Unsurprisingly, this system was open to corruption, and legislators were adept at making sure that the people to whom they granted these special indulgences returned the favors in kind.  It was also bipartisan, because it was unrealistic to expect one party to refrain from opportunistically seizing the moment to grant its own set of special laws while it had the power, even though its candidates had run against the corruptions of their opponents when trying to turn them out of power.

A series of crises from 1839-42 (about which I know too little to summarize here, and which are not germane to my story) created the necessary impetus for states largely to end (by amending their constitutions) the passing of special legislation.  Only about three-fourths (Correction: Almost ninety percent) of the states did so, and Congress is not prohibited from passing special legislation at the federal level; but even those bodies that are not legally banned from passing special legislation have adopted the norm of passing only general legislation.

Of course, there is a form-versus-substance problem here, because a legislature can pass what looks like "legislation of general application" that is crafted specifically to apply only to one or a handful of targets.  Professor Lamoreaux mentioned a recent (ultimately abandoned) proposal in the Connecticut legislature to impose a tax on "all institutions of higher learning with an endowment larger than" some dollar limit that -- by no coincidence at all -- only Yale University's endowment exceeds.

In other words, Connecticut (which is one of the states that never adopted a constitutional ban on special legislation) understands the bad optics of special legislation, so the state legislature bothered to write the law in general terms rather than saying: "This tax applies to Yale University only."  And this is actually not a rare tactic, even at the federal level.  Many tax laws are written in ways that seem general but that specify dates of incorporation, location, net worth, and so on very carefully to target specific businesses.

Because of the nature of lobbying, most of those special-in-fact provisions are used to shower hidden benefits on corporate donors, not to impose hidden special costs.  Rather than saying, "Yale must pay this tax, and no one else has to do so," these provisions amount to saying, to use one prominent player of this game as an example, "General Electric receives this tax deduction, but no one else does."

And because tax legislation typically includes multiple provisions, it is very easy to hide such giveaways to business in a thicket of obscure verbiage.  Even when a legislative staffer for the opposite party notices such a provision, or when one of the shrinking number of investigative reporters (and the even more quickly shrinking number of reporters with sufficient training and experience even to hope to find needles in statutory haystacks) finds a goodie and tries to publicly shame the sleazy legislator, there is simply too much noise in the public debate for such a story to stall the legislation.

All of which was true, by the way, back when legislation was still being written under "regular order."  Now that we have seen Republicans in Congress throw all of that away, most egregiously by passing their hugely regressive tax cut at the end of 2017 without any hearings or debate, we have little hope of catching this kind of nonsense during the lawmaking process.

Even so, Professor Lamoreaux made a very good case that the abandonment of special legislation moved us significantly in the right direction.  This is an example of the adage that the exceptions prove the rule, because even though it is possible to be clever with general legislation, the overall impact has been to reduce the effectiveness and frequency of such special pleading.

During her talk, she showed that the number of laws that state legislatures enacted plummeted (along the lines of an eighty percent reduction, if I recall correctly) after special laws were banned.  If the guys in the state capital are not passing bill after bill granting divorces and chartering individual banks, after all, their workload was bound to decrease.  Indeed, she noted that there was so little work to do that many legislatures switched to holding sessions every other year, because it was simply unnecessary to continue to meet annually.

Toward the end of her talk, Professor Lamoreaux commented on a very positive aspect of the move away from special legislation.  She noted that, back when states could pass laws that were specific to individuals, it was not possible to say that the legislature was being discriminatory in the larger senses that we think about discrimination today.  Because individuals differ along any number of dimensions, how can we say that the legislature is being discriminatory when each piece of legislation can be justified by the specifics of the life of the law's beneficiary or victim?

Because she framed her lecture around questions of equality -- noting in particular the currently popular (and essential) challenge to extreme economic inequality -- Professor Lamoreaux argued that this movement away from special legislation is a great historical example of how a reform movement can force governments to provide equal treatment politically, not just economically.

That conclusion, as powerful as it is, caused me to wonder whether there was perhaps an unfortunate connection between the move that Professor Lamoreaux described and American law's longstanding discomfort with taking note of de facto inequality.  The obvious example is the law surrounding racial and sexual discrimination.

Even most conservatives are generally comfortable saying that "disparate treatment" is unacceptable.  That is, de jure bigotry is widely rejected as wrong, both when practiced by governments and by businesses in employment, public accommodations, and so on.  But -- precisely because de jure discrimination is so easy to fight, yet bigotry refuses to die -- the real action in anti-discrimination law is on the "disparate impact" side of the story, that is, when facially neutral laws and practices have discriminatory impacts in the real world.

There was a bit of a stir this week when people noticed that a BigLaw firm had announced a new partnership class that was all white and almost all male.  That looks bad, which is heartening, but it is essentially up to the firm to decide how much they care about the public relations damage that it is currently suffering.  Absent extraordinary circumstances, there is little doubt that the firm will not be criminally or civilly liable for discrimination on the basis of race or sex.

What if we had never moved away from special legislation, meaning that legislatures had continued to pass laws aimed at individual people and companies?  It strikes me that we would not have simply said, "Oh well, special is special, and who can untangle the reasoning behind what the legislature has done here, really?"  We might instead have noticed that, for example, a state legislature was granting divorces only to people of certain races, religions, and so on.  Evidence would mount that only white people were being allowed into the banking business, or that business licenses were being denied to women.

Without the fig leaf of general legislation's neutral language, it might have more quickly become obvious that we need to worry about indirect evidence of motives, which could have developed into a disparate impact-like analysis.  Of course, this could then have pushed legislatures to cover their tracks by passing only de jure neutral laws without being required to do so.  This, however, would correctly be seen not as the end of the story (as disparate treatment analysis treats it, for all intents and purposes) but as a reason to inquire more deeply into the motives of the legislature and the real-world impacts of the laws that it passes.

That is not to say that the move away from special legislation was a bad thing.  Again, I am convinced that there were benefits from that historical change.  Yet as Professor Lamoreaux wrote at the end of the description of her lecture: "What did it mean for laws to be general?  Might not the mandate for generality itself become a new source of inequality?"

Although her lecture did not directly address the matter that I have raised here, she clearly is aware that the move toward better legislative practice might have had a downside.  My question is whether that downside might include having slowed down the law's willingness to grapple with the messy reality that facially general action can still be discriminatory.