Yearly, on the vigil:
Lyman Johnson organized a group of law professors including yours truly to provide comments to HHS on its rulemaking to implement the Supreme Court's Hobby Lobby decision. Lyman put together a very interesting group. Eclectic in every dimension. Protestants, Catholics, agnostics. Liberals, progressives, moderates, conservatives. All brought together by a shared respect for religious liberty and diversity.
Citation: Lyman Johnson, and Stephen M. Bainbridge, Ronald J. Colombo, Brett McDonnell, David Millon, Alan J. Meese, and Nathan B. Oman, Comments on the HHS' Flawed Post-Hobby Lobby Rules (October 21, 2014), available at SSRN: http://ssrn.com/abstract=2513620.
Abstract: In late August 2014, after suffering a defeat in the Supreme Court Hobby Lobby decision when the Court held that business corporations are "persons" that can "exercise religion," the Department of Health and Human Services ("HHS") proposed new rules defining "eligible organizations." Purportedly designed to accommodate the Hobby Lobby ruling, the proposed rules do not comport with the reasoning of that important decision and they unjustifiably seek to permit only a small group of business corporations to be exempt from providing contraceptive coverage on religious grounds. This comment letter to the HHS about its proposed rules makes several theoretical and practical points about the Hobby Lobby holding and how the proposed rules fail to reflect the Court's reasoning. The letter also addresses other approaches to avoid in the rule-making process and argues for rules that, unlike what the HHS has proposed, align with the Supreme Court's reasoning while being consonant with generally applicable precepts of state law and principles of federalism.
Brett McDonnell has posted The Liberal Case for Hobby Lobby (October 22, 2014), available at SSRN: http://ssrn.com/abstract=2513380:
The recent Supreme Court decision in Burwell v. Hobby Lobby Stores, Inc. has stirred strong objections from political liberals. This article argues that those objections are unwarranted, and that the Court’s opinion reflects core liberal values. The decision has two main parts, and liberal objections to each part are misguided.
In the first part, the Court held that in some circumstances for-profit corporations committed to religious goals may invoke the religious liberty protection of the Religious Freedom Restoration Act (RFRA). Liberals have treated this as an appalling and/or humorous extension of rights which should apply only to humans. However, the Court’s decision rightly recognizes that corporations can and sometimes do pursue goals other than shareholder profits. This fits well with the stress on corporate social responsibility one finds in progressive corporate law scholarship such as the author’s. Where religious beliefs shape a corporation’s purposes, the protections of RFRA may rightly apply. The article suggests a detailed framework for determining when particular corporations are engaged in the exercise of religion, looking to both organizational and ownership dimensions of commitment to religion. This framework clarifies the somewhat sketchy analysis of the Court and more firmly roots that analysis in corporate law and theory.
In the second part of the opinion, the Court held that the contraceptive mandate of the Affordable Care Act substantially burdens the religious exercise of employers, and that the mandate is not the least restrictive means of achieving a compelling governmental objective. Liberals fear that this holding aggressively extends the protection of RFRA while undermining the compelling goal of the contraceptive mandate. The article argues that the holding is quite nuanced and limited, and that much liberal reaction reflects discomfort with RFRA itself. That is a shame, as creating a diverse society where persons and groups with differing beliefs are able to co-exist should be a core liberal commitment. The article suggests that liberals may have lost sight of this commitment as the groups invoking RFRA’s protection have shifted from social outcasts to more mainstream religious conservatives. That may explain, but does not justify, liberal opposition to Hobby Lobby.
As you can imagine, I disagree with the first for reasons well rehearsed in this space many time before.
The second point is one that I think makes a lot of sense. Sadly, however, I do not believe that today's modern liberals value a diverse society when the diversity is expressed along religious lines and, in articular, when diversity requires toleration of opinions that differ from the politically correct liberal catechism. Hence, where Brett says "liberals may have lost sight" of their commitments to religious diversity and freedom, I would say "liberals have definitely lost sight" thereof.
My post the other day on the problems with the SEC's increasing use of administrative law judges prompted the great Henry Manne to send along this comment:
Steve, you might also have noted the other problem with administrative adjudication, and that is that it is often used as a way around the more taxing standards for explicit rule making. The most egregious case of this in history, I suspect, was Cady Roberts, an administrative adjudication (and in some respects also a case of double jeopardy) which displayed the chutzpa of inventing a new rule against insider trading. A reading today shows the total ignorance of economic effects and appears almost ludicrous in light of the ensuing scholarship on the subject. Certainly the most significant change in federal law of corporations and one of the most significant things the SEC ever did (ask them; they'll agree), deserved some kind of hearing with public comment, as rule making under the APA would require. None was allowed and the world has not been the same since.
David Millon sent along a response to my post "Corporate Law after Hobby Lobby":
A couple of brief thoughts on your remarks about the freedom of shareholders in closely held corporations to depart from a corporate law profit maximization requirement. First, I had not realized that you considered profit maximization to be a default rather than mandatory rule. Your view would appear to be inconsistent with at least some of the few judicial precedents involving closely held firms that profit maximization proponents cite in support of their view that corporate law mandates that corporate objective, namely the eBay case and also Dodge v. Ford (although, as we explain in our article, that case does not actually mandate profit maximization). Second, I don¹t see the legal basis for distinguishing closely held from public corporations on this point. The law could draw such a distinction, but I don¹t see where it has. Not in the corporate statutes and not in case law either. There may be policy reasons for such a distinction and as a practical matter it is probably impossible for shareholders qua shareholders in a public corporation to redefine the firm’s purpose, but it¹s hard to see where the closely held/public distinction exists in the law. Finally, to be clear, certainly a profit maximization default would be preferable to a mandatory rule, but we don’t think that even a default rule exists on this issue.
Todd posted that:
Here's what apperars to be the relevant passage:
A reader in Taiwan kindly sent along this translation:
"Both Sarbanes-Oxley Act and Dodd-Frank Act are devoted to making the board of a company become professional, qualified and neutral. However, [controlling] shareholders are not necessarily willing to cede board seats to [those professional, qualified and neutral directors], and independent directors do not function well. Therefore, Professor Bainbridge of UCLA and Professor Henderson of UChicago suggest that individual director should be replaced by BSP. The main reason: a company will not pay for a consultant who works several hours per month/season, so it is unreasonable, at the same or higher cost, to retain a director who works several hours per month/season either. Rather, [the directors' role] can be passed to BSP so that more experts can be hired for support. The two professors' suggestion leaves many questions unanswered, such as who shall decide to retain the BSP, the governance of BSP and whether BSP will dictate the operation of the board, etc. The reason for the two professors' revolutionary suggestion is due to the dysfunction of modern board that makes the company with limited liability, referred as the most important invention in modern history by [Nicholas Murray] Butler, ... the most serious disaster."
He also comments that:
As correctly indicated by Professor Henderson on his Facebook post, [the article's author] Mr. Chong Chen is the former prime minister in Taiwan, who is highly respected due to his expertise in the financial market.
I like what Cardinal Dolan said about the synod:
Pope Francis set a helpful tone. When we opened, he encouraged us to be open and honest, and not to look at our conversations as debates or lobbying, where there would be winners or losers.
Then, on Saturday, he closed by observing that we were first and foremost pastors, not advocates for causes, not captives of ideologies, whether of heartless rules, or diluted ideas of mercy and a fixation on change.
In general, those reporting on the Synod did not heed the Holy Father’s counsel. They prefer the language of tension, victory, loss, conservative vs. liberal, “Pope Francis’ bishops” versus stodgy traditionalists. ...
What was refreshing ... was a warm, gracious tone, so marvelously personified in Pope Francis, (who would tell us it’s hardly his style, but that of Jesus!), that the Church is at her best when she invites, embraces, understands, welcomes, and affirms, instead of excluding, judging, or condemning.
The Extraordinary Synod on the Family that just concluded has prompted me to reread Judge John T. Noonan's wonderful book A Church That Can and Cannot Change. Here's the gist, as summarized by Amazon:
Using concrete examples, John T. Noonan, Jr., demonstrates that the moral teaching of the Catholic Church has changed and continues to change without abandoning its foundational commitment to the Gospel of Jesus Christ.
Specifically, Noonan looks at the profound changes that have occurred over the centuries in Catholic moral teaching on freedom of conscience, lending for a profit, and slavery. He also offers a close examination of the change now in progress concerning divorce.
In these changes, Noonan perceives the Catholic Church to be a vigorous, living organism, answering new questions with new answers, and enlarging the capacity of believers to learn through experience and empathy what love demands. He contends that the impetus to change comes from a variety of sources, including prayer, meditation on Scripture, new theological insights and analyses, the evolution of human institutions, and the examples and instruction given by persons of good will.
Noonan also states that the Church cannot change its commitment to preaching the Gospel of Jesus Christ. Given this absolute, how can the moral teaching of the Church change? Noonan finds this question unanswerable when asked in the abstract. But in the context of the specific facts and events he discusses in this book, an answer becomes clear. As our capacity to grasp the Gospel grows, so too, our understanding and compassion, which give life to the Gospel commandments of love, grow.
Noonan is a brilliant judge and lawyer and deploys his considerable skills as an advocate to great effect here. But he's not neutral. He has an axe to grind and does so at length. So while I recommend it very highly, I also recommend reading some of his critics. Avery Cardinal Dulle's review at First Things would be a good place to start. After reviewing each of the doctrines Noonan claims have evolved, Dulles concludes that:
Noonan has written a stimulating book dealing with questions of great importance. He shows himself to be knowledgeable about the history of the four problems here treated. He brings to bear many of the skills of a historian, a civil lawyer, a canon lawyer, and to some degree those of a theologian. Anyone who wishes to question Noonan’s conclusions must at least take account of the facts he has unearthed. He renders no small service in presenting the most powerful objections against continuity that can be raised.
The reader should be warned, however, that Noonan manipulates the evidence to make it seem to favor his own preconceived conclusions. For some reason, he is intent on finding discontinuity” but he fails to establish that the Church has reversed her teaching in any of the four areas he examines.
Arthur Hippler's review would also reward study.
Lastly, one might ponder Cardinal Dolan's recent observation that:
A synod by its nature can hardly change the Church’s teaching. We Catholics pledge allegiance to what is called a “revealed religion” (so do Jews, other Christians, and Moslems). That simply means that we believe that God has told us (“revealed”) certain things about Himself and ourselves through the Bible, through our own nature, especially through His Son, all celebrated and taught by His Church. ...
Anyone who thought this synod could change that has not read Catholicism for Dummies. The Church does not change God’s revelation, but attempts to change us so we can live it.
Does Church teaching evolve? Adapt? It's an important and fascinating debate. Noonan and his critics provide plenty of food for thought.
The Economist reports that:
THE assertion that Jews “control” finance is commonplace among anti-Semites. A new academic study* finds that people who live in areas of Germany where persecution of Jews was most intense are less likely to invest in the stockmarket, even today.
The relationship has very strong historical roots. People who live in districts from which Jews were likeliest to be sent to concentration camps under the Nazis are 7.5% less likely to invest in stocks than other Germans; those who live in districts where pogroms occurred during the Black Death (back in the 14th century) are 12% less likely to do so. ...
The effect of this distrust is that German savers in such districts earn lower returns, because they have lower exposure to the stockmarket. “The legacy of Jewish persecution—distrust of finance—has hindered generations of Germans from accumulating financial wealth,” the authors argue. In other words, “Persecution of minorities reduces not only the long-term wealth of the persecuted, but of the persecutors as well.”
The good news, of course, is that haters don't get a free ride. They are paying a cost for indulging their hate.
The bad news, of course, is that haters apparently are willing to pay that cost in very large numbers and over a very long period. This raises serious questions about whether market forces can eradicate discrimination. Hence, even those of us who generally favor limited government should be open to the need for government intervention to prevent intentional discriminaton. (Which is not to say reasonable people cannot differ about the form government intervention ought to take.)
Retired Harvard Professor Ruth Wisse makes the case that Harvard "needs to have its patriotic bona fides buffed."
On a related note, what about starting even earlier?
[T]he flag salute and the pledge of allegiance [in school] is a ceremony clearly designed to inculcate patriotism and to instill a recognition of the blessings conferred by orderly government under the Constitutions of the State and nation. The study of those instruments is a proper subject for instruction in the public schools. It is plain that the Republic and the State undertake to establish liberty and to provide justice for all within their borders in accordance with standing laws. The flag is a symbol of those aims of government. It is important for all who attend the public schools to know these facts and to appreciate these advantages. An understanding of these matters enables citizens to comprehend and to assert their rights and to seek and obtain their safety and happiness.
Nicholls v. Mayor & Sch. Comm. of Lynn, 297 Mass. 65, 69, 7 N.E.2d 577, 579 (1937).
The WSJ today reports that:
The Securities and Exchange Commission is increasingly steering cases to hearings in front of the agency’s appointed administrative judges, who found in its favor in every verdict for the 12 months through September, rather than taking them to federal court.
The winning streak comes amid a marked shift at the agency toward trying cases that are more complex before its administrative law judges. Historically, the SEC had more often turned to these judges for relatively straightforward legal actions, such as barring stockbrokers who had been convicted of criminal fraud. Thanks in part to enhanced powers granted in the 2010 Dodd-Frank financial-reform bill, the SEC lately has been using the administrative judges for complicated cases, including several involving insider trading.
“It’s fair to say it’s the new normal,” Kara Brockmeyer, head of the SEC’s anti-foreign-corruption enforcement unit, told a legal conference in Washington last week. “Just like the rest of the enforcement division, we’re moving towards using administrative proceedings more frequently.”
I see this as a serious problem. Set aside the whole debate over the constitutionality (and advisability) of the independent agencies acting as a fourth branch of government just to focus on the role of ALJs.
There is a serious question of whether the SEC's ALJs are biased in favor of the agency, as suggested by the data the Journal reports:
The agency’s win rate in recent years is considerably higher in front of its administrative law judges than it is in jury trials. In the 12 months through September, the SEC won all six contested administrative hearings where verdicts were issued, but only 61%—11 out of 18—federal-court trials, according to previously unpublished figures.
There has been a similar winning rate in previous years. The agency won nine of 10 contested administrative proceedings in the 12-month period through September 2013 and seven out of seven in the 12 months through September 2012, according to SEC data. The SEC won 75% and 67%, respectively, of its trials in federal court in those years.
Concerns about the impartiality of ALJs and the fairness of the procedures they apply are not new, of course. Twenty five years ago, for example, Karen Lewis explained that:
Although judges must abide by standards of ethical conduct proscribed by the Code of Judicial Conduct (CJC), no such uniform restraint exists for administrative law judges (ALJ's). ALJ's adjudicate significant controversies between administrative agencies and the public; these proceedings resemble typical judicial court actions. … ALJ's are recognized as being functionally comparable to trial judges, and ALJ's decisions have considerable impact upon the lives of most Americans. Their powers, duties, and status have been the subject of debate on several occasions by state and federal courts. Nevertheless, due to their status as agency employees under the executive branch of government and their lack of complete independence, ALJ's are not held to the same ethical code as trial judges.
The employer-employee relationship between agencies and ALJ's gives rise to a public perception that ALJ's are not unbiased or impartial judges.
Karen S. Lewis, Administrative Law Judges and the Code of Judicial Conduct: A Need for Regulated Ethics, 94 Dick. L. Rev. 929, 929-31 (1990).
The problem persists, as Jonathan Turley observed just last year:
Under Article III of the Constitution, citizens facing charges and fines are entitled to due process in our court system. As the number of federal regulations increased, however, Congress decided to relieve the judiciary of most regulatory cases and create administrative courts tied to individual agencies. The result is that a citizen is 10 times more likely to be tried by an agency than by an actual court. In a given year, federal judges conduct roughly 95,000 adjudicatory proceedings, including trials, while federal agencies complete more than 939,000.
These agency proceedings are often mockeries of due process, with one-sided presumptions and procedural rules favoring the agency. And agencies increasingly seem to chafe at being denied their judicial authority. Just ask John E. Brennan. Brennan, a 50-year-old technology consultant, was charged with disorderly conduct and indecent exposure when he stripped at Portland International Airport last year in protest of invasive security measures by the Transportation Security Administration. He was cleared by a trial judge, who ruled that his stripping was a form of free speech. The TSA was undeterred. After the ruling, it pulled Brennan into its own agency courts under administrative charges.
Congress has never seriosuly reconsidered the desirability of this appalling state of affairs, nor has the Supreme Court ever taken seriously the many constitutional issues raised by the emergence of the SEC and its ilk as a fourth branch of government. It is time they did so.