A Facebook Deal That Needs Unfriending

Time to end class-action settlements that only reward lawyers, not plaintiffs.

By David B. Rivkin Jr. and Lee A. Casey 

The Supreme Court will soon decide whether to hear a case that could determine the future of particularly abusive class-action settlements. Not abusive in the usual sense, where a class of injured plaintiffs is awarded an exorbitant amount. Instead, these settlements are abusive in that absolutely nothing goes to the injured plaintiffs. At issue is whether federal courts may approve such agreements rewarding lawyers and defendants, leaving plaintiffs out in the cold.

The case is Marek v. Lane, and it arose out of Facebook’s notorious 2007 “Beacon” program. Beacon gathered and published information about Facebook users’ other Internet activities as an advertising and marketing tool, invading the privacy of millions. It may also have violated a number of state and federal laws, including the 1988 Video Privacy Protection Act, which includes a liquidated-damages provision of $2,500 for each offense. A class-action suit was filed in 2008 on behalf of as many as 3.6 million injured social networkers.

Embarrassed (if unrepentant) and under media pressure, Facebook entered settlement negotiations, ultimately agreeing to pay $9.5 million. Of this, about $3.1 million (later reduced to $2.3 million) would go to the class-action lawyers, and the rest would be used to create a Digital Trust Foundation, controlled in part by Facebook. The DTF would sponsor programs and education regarding online threats to personal information and identity—including through funding consumer groups, such as the Electronic Frontier Foundation, that Facebook already supports and are often allied with Facebook on matters of regulation and public policy. Members of the class of injured plaintiffs, meanwhile, would get nothing and, unless they took action to “opt-out” of the settlement, their individual claims would be forever barred.

Such arrangements, through which a class recovery is diverted to purposes other than actually compensating the claimants, are known as “cy pres” awards, a term derived from the French legal expression cy pres comme possible (as near as possible). The idea is that where a court cannot directly achieve some remedial goal, such as meaningful payments to the injured parties, it may adopt other measures that, as nearly as possible, have the same compensatory result.

Cy pres remedies are very much an exception in the law, and are ordinarily subject to significant judicial policing due to the risk that defendants and class-action attorneys will use cy pres to cut a deal that benefits them both but gives plaintiffs little or nothing. For this reason, federal courts carefully assess whether proposed settlements are “fair, reasonable, and adequate” to the injured class members. A cy pres award can be approved only if a court finds that granting the recovery to a third party best advances member interests.

The Facebook settlement, however, provides zero benefit to class members. Breaking with all the other appeals courts to consider cy pres settlements, in February the U.S. Court of Appeals for the Ninth Circuit upheld a ruling that an award of millions to a foundation controlled in part by Facebook was good enough because it was not entirely “unrelated to the class’s interests.”

Yet the Ninth Circuit’s six dissenting judges wrote: “The DTF can teach Facebook users how to create strong passwords, tinker with their privacy settings, and generally be more cautious online, but it can’t teach users how to protect themselves from Facebook’s deliberate misconduct. Unless, of course, the DTF teaches Facebook users not to use Facebook. That seems unlikely.”

Nevertheless, both the trial court and the Ninth Circuit Court of Appeals approved this agreement, without assessing the value of class members’ claims. The agreement did not even forbid Facebook from reinstituting a program identical to Beacon under a different name in the future and injuring class members in the exact same fashion. If that’s “fair, reasonable, and adequate,” then anything goes.

The Ninth Circuit’s decision opens new vistas in class-action litigation, where lawyers (in the form of fat fees) and defendants (in the form of resolving expensive lawsuits on the cheap) could reap rich rewards simply by stiffing those actually injured. Sadly, even courts have been known to get in on the action by helping to choose the institutions or causes to receive cy pres payments—including awards to the alma mater of a plaintiffs’ lawyer, in one case, and to schools where judges either taught or served as a trustee, in others.

Only the Supreme Court can remedy this, by hearing Marek v. Lane and reversing a decision that carries the real and immediate danger of promoting significant abuse nationwide. Class actions should compensate the victims of genuine injuries, not promote some social good as defined by lawyers, defendants and judges.

Messrs. Rivkin and Casey served in the U.S. Justice Department under Presidents Reagan and George H.W. Bush. They are partners in the Washington, D.C., office of Baker & Hostetler LLP, representing claimants opposed to the Facebook settlement and who are now seeking Supreme Court review.


Why Shira’s Wrong

Frisk judge playing politics.

By David B. Rivkin Jr. and Elizabeth Price Foley

The recent federal court rebuke of New York City’s stop-and-frisk tactics shows that many disputes are best resolved through politics, not lawsuits.

Courts resolve discrete controversies — whether existing law has been violated. They’re not equipped to answer questions about what the law “should” be. Judicial remedies are supposed to make plaintiffs whole, not rewrite policies wholesale.

But try telling that to Judge Shira Scheindlin. She not only enjoined NYPD’s existing tactics, but also ordered the city to video all stops within certain precincts and appointed a monitor to “develop … a set of reforms of the NYPD’s policies, training, supervision, monitoring and discipline regarding stop and frisk.” Such intricate policy prescriptions are the stuff of statutes and regulations, not judicial opinions.

Whether or not any of this is good policy, it has very little to do with the law. Indeed, Supreme Court precedent is utterly at odds with Scheindlin’s Fourth and Fourteenth Amendment analysis.

Scheindlin concluded that NYPD’s policy violated the Fourteenth Amendment’s Equal Protection Clause, relying heavily on statistical evidence of the race of those stopped by the NYPD. But the Equal Protection Clause prohibits only intentional discrimination, not mere statistical differences in the racial impact of government policies.

In Washington v. Davis (1976), for example, the Supreme Court declared, “Our cases have not embraced the proposition that a law or other official act, without regard to whether it reflects a racially discriminatory purpose, is unconstitutional solely because it has a racially disproportionate impact.” Were it otherwise, the fact that standardized tests or even arrests have disproportionate racial impacts would be unconstitutional, transforming the Equal Protection Clause from a guarantee of equal protection to one of equal outcome.

No evidence showed that the NYPD’s practices were intended to discriminate against individuals because of race. Indeed, the notion that one of America’s most progressive cities, with a majority-minority police department, operates with animus towards racial minorities is absurd.

Scheindlin’s Fourth Amendment analysis is equally specious. The Fourth Amendment prohibits “unreasonable” searches and seizures. The key Supreme Court precedent is Terry v. Ohio, which held that police may stop and frisk individuals based on “reasonable suspicion” of criminal activity. Terry was decided by the Warren Court, the most liberal Supreme Court in US history. Even Justice Thurgood Marshall, whose career was dedicated to advancing civil rights, agreed that stop-and-frisk was consistent with the Fourth Amendment.

Some of the NYPD’s stops may lack reasonable suspicion and be problematic. But even the plaintiffs’ own expert found unconstitutional stops to be exceedingly rare, comprising only 6 percent of the 4.4 millions stops studied. Such data highlight the impropriety of adjudicating the constitutionality of stops en masse, as a class action.

If one insists, however, on a wholesale examination of the NYPD’s policy, it is still consistent with the Fourth Amendment. The Supreme Court’s “special needs” doctrine permits broad-brush, highly-intrusive searches, without individualized suspicion of wrongdoing, when grounded in public safety needs.

In Skinner v. Railway Labor Executives’ Association (1989), the court upheld random drug testing of railway employees employed in safety-sensitive positions, even though there was no evidence that the tested employees used drugs. The court found that the privacy intrusion involved — admittedly high — was outweighed by the public safety benefits.

The special-needs doctrine has been used to uphold sobriety checkpoints, border checks and other situations in which searches — lacking in individualized suspicion — are conducted to protect the public.

While the doctrine hasn’t been applied to routine police stops, this is because such stops have been litigated using the Terry framework, which focuses on the reasonableness of individual encounters. But when the constitutionality of a stop-and-frisk is challenged wholesale rather than retail — as in the NYPD case — the special-needs doctrine should apply.

Had Scheindlin considered the special-needs doctrine, she’d have had to conclude that New York’s stop-and-frisk policy is constitutional. A frisk is surely less intrusive than the random drug tests upheld in Skinner. Equally important, the public safety benefits are palpable.

New York City, for example, has seen dramatic decreases in violent crimes — particularly in poor, predominantly minority precincts — since implementing stop-and-frisk.Stop-and-frisk also deters crimes by interrupting overt criminal behavior and reducing the incentive to carry weapons. Scheindlin’s over-reading of the Constitution thus is not merely wrong; it is dangerous.

More is at stake here than the use of flawed constitutional arguments that warp well-established constitutional law. Scheindlin’s decision, while likely to be eventually reversed on appeal, further encourages the use of courts as venues for resolving complex policy, rather than legal, disputes.

The losers are the citizens of places like New York, including millions of minority voters, who have been disfranchised of their ability to enact reasonable stop-and-frisk policies through the democratic process.

David B. Rivkin Jr. is an appellate lawyer with Baker Hostetler LLP. Elizabeth Price Foley is a professor of constitutional law at Florida International University.

Source: http://www.nypost.com/p/news/opinion/opedcolumnists/why_shira_wrong_64aWDvK3AyqT3V7HRMRwoJ/1

The True Lesson of the IRS Scandal

There should be less federal regulation of political speech.

By David B. Rivkin Jr. and Lee A. Casey

President Obama and his political allies have dismissed as “phony scandals” mounting evidence that the Internal Revenue Service and other federal agencies hindered and punished conservative advocacy groups. Meanwhile, efforts are under way to impose even more regulation on core political speech.

The government’s abuses are very real, but the scandal’s lessons are not appreciated: The federal regulation of political speech has already gone further than can be justified by existing law, let alone the Constitution.

The debate about political speech has so far focused on a particular type of nonprofit entity: social-welfare organizations exempt from federal income tax under section 501(c)(4) of the Internal Revenue Code. A group qualifies for this exempt status if it is “operated exclusively for the promotion of social welfare.” This means its efforts cannot inure to the benefit of specific individuals, members or private clubs.

On Wednesday, Rep. Chris Van Hollen (D., Md.) filed a federal lawsuit seeking to force the IRS to tighten the eligibility rules for politically active groups seeking 501(c)(4) status. Yet “social welfare” is a capacious term that includes many policy and political goals—from preserving historic battlefields to repealing laws for or against same-sex marriage.

The IRS has long recognized this by permitting such groups, if consistent with their stated social-welfare purpose, to engage primarily or even wholly in public-issue advocacy or lobbying. In other words, they are permitted to engage in political speech directed at government officials. At the same time, however, the IRS says that political campaign activities cannot account for more than half of a 501(c)(4)’s expenditures. But the statute itself contains no such limitation. In short, the IRS effectively robs social-welfare organizations of one half of their potential political speech.

This distinction between lobbying and election advocacy is entirely arbitrary. Electing candidates who support an organization’s principles and goals may be the most effective (and in some cases the only) means of achieving that organization’s social-welfare purpose. Yet the IRS rules here are consistent with the federal government’s overall approach to regulating elections since at least the 1970s. Bizarre as it may be in the world’s leading democracy, federal election laws treat the most effective form of political speech as the most disfavored. Stricter regulations like those sought by Rep. Van Hollen and others would only worsen the problem.

Until recently, the Supreme Court largely supported this system, interpreting the Constitution’s free-speech guarantees to permit these limitations in order to avoid corruption or its appearance. Even so, the court rejected efforts to control political activities, including expenditures, in support of a candidate but made independently of a candidate’s own campaign organization. The exception was corporations, which could not make independent expenditures.

In Citizens United v. FEC (2010), a majority of the court more sensitive to the First Amendment invalidated restrictions on independent political campaign expenditures by corporations, associations and labor unions. Since Citizens United, the use of 501(c)(4) organizations to engage in political speech has burgeoned—largely because such groups need not disclose their donors as purely political organizations still must. Calls for the IRS to close this supposed “loophole” also have multiplied.

That is a bad idea, not supported by the statutory language, and it is unconstitutional to boot. Although the Supreme Court has held that there is no duty to subsidize political speech through tax exemptions, there is no plausible basis on which the IRS (or Congress) can limit tax-exempt status to groups that eschew independent campaign spending while permitting other forms of political speech, such as lobbying.

Where the potential for corruption—for example, giving money to a candidate in exchange for favors—is absent, as the Citizens United ruling found with regard to independent expenditures, treating one form of political speech differently than others is not rational. It fails even the most deferential judicial review standard, much less the more exacting compelling governmental interest ordinarily applied under the First Amendment. The IRS-created 50% limit is vulnerable to challenge on the same grounds. It should make no difference under the existing statutory language what form the political speech of a 501(c)(4) takes; the organization should be able to spend 100% of its funds on independent campaign spending.

There also are sound policy reasons to cut 501(c)(4)s loose from such regulations. Such groups allow ordinary people to compete with the better-funded media industry, political parties, celebrities and other wealthy players, in the marketplace of ideas. Constraining the activities of 501(c)4s would not, as “progressives” claim, protect the little guy and level the playing field. Instead it would protect entrenched interests and, most of all, incumbents who can raise money simply because they hold public office.

Congress could abolish the 501(c)(4) status entirely. However, neither the IRS nor Congress can produce a result in which some groups, whose social-welfare purposes can be advanced through nonpolitical speech (such as promoting botany or historical research), can use 100% of their resources to do so, while others groups, whose social-welfare purposes can be advanced only through political speech, cannot.

To conclude otherwise would enable the government to engage in content-based restrictions on speech that have always been viewed as the most insidious violation of the First Amendment. The Supreme Court also has long made clear that Congress cannot deploy tax subsidies as a means of suppressing “dangerous ideas.”

The IRS scandal is a moment of reckoning. It offers the country a unique opportunity to free a substantial portion of political speech from government regulation.

This is an opportunity not to be wasted. Republicans should broaden their oversight inquiries into the constitutional and statutory basis on which the IRS has limited 501(c)(4) expenditures in the past—and force the agency to justify any plans it has to continue or expand those limits.

Messrs. Rivkin and Casey served in the Justice Department during the Reagan and George H.W. Bush administrations. They are partners in the Washington, D.C., office of Baker & Hostetler LLP.

Source: http://online.wsj.com/article/SB10001424127887323477604579001263134291446.html

President’s call to end such laws is federal government’s attempt to impose its will.

By David Rivkin Jr. and Andrew Grossman

After George Zimmerman’s acquittal for shooting Trayvon Martin, President Obama and Attorney General Eric Holder urged the state of Florida to abandon its “stand your ground” law. If this were just taking advantage of a high-profile case to advance a political agenda, that would be bad enough. But the president’s and attorney general’s demands are inappropriate for a more fundamental reason: the federal government trying to impose its will on states.

The debate over where to draw the line between federal and state authority has been hard-fought from the early days of the republic. But the one area where state authority has gone unchallenged is in the power to define criminal laws. The states are better placed than the federal government to respond to local conditions and their citizens’ immediate concerns regarding public safety.

The overwhelming number of ordinary crimes is prosecuted by the states. The federal government lacks the resources and the manpower to take over any substantial portion of them. When a person is prosecuted in federal court, it’s for a federal offense, such as fraud in national financial markets or terrorism. While the federal government has been encroaching on state responsibility to address local crime, federal prosecution still remains the exception.

This division of power reflects the reality that there is not any one-size-fits-all criminal law. The states can and do adopt different approaches to defining crimes to meet their unique needs and their citizens’ preferences. When an innovation works, other states are free to adopt it.

That is how the “stand your ground” defense quickly spread to the majority of the states — 31, according to law professor Eugene Volokh’s count. “Stand your ground” has long been the default rule for self-defense within the home, and more recent statutes, such as Florida’s, extend this protection to public places. The difference is that traditional self-defense puts a victim of an attacker outside the home at risk of conviction if a jury second-guesses whether retreat might have been possible and, if so, at what risk to the victim. “Stand your ground” shifts the focus back to where many believe it should be: the attacker and the attack.

That’s hardly a radical change, and it raises no concern — for example, that such laws are motivated by racial discrimination or produce racially disparate result — that might justify federal meddling. Indeed, a 2012 analysis by Florida’s Tampa Bay Timesfound that black defendants who asserted a “stand your ground” defense went free 66% of the time, slightly more than white defendants. Moreover, blacks took advantage of the defense at a rate nearly twice their proportion of the state population. If blacks are more likely to be victims of violent crime, it only makes sense that they would disproportionately benefit from a stronger right to self-defense.

So then why all the controversy? Blame those who would make a federal issue of states’ legitimate differences of opinion. A virtue of federalism, apparently lost on the president and attorney general, is that there doesn’t have to be only one right answer.

David B. Rivkin Jr. and Andrew M. Grossman practice law in the Washington office of BakerHostetler.

Source: http://www.usatoday.com/story/opinion/2013/07/24/david-rivkin-and-andrew-grossman-on-federal-and-state-laws/2578625/

Why the President’s ObamaCare Maneuver May Backfire

By postponing the employer mandate, Obama has given millions of Americans the legal standing to sue.


President Obama’s announcement on July 2 that he is suspending the Affordable Care Act’s employer health-insurance mandate may well have exposed his actions to judicial review—even though that is clearly what he sought to avoid.

The health-care reform law’s employer mandate requires businesses with more than 50 employees to provide a congressionally prescribed set of health-insurance benefits or pay a penalty calculated at about $2,000 per employee. The law was to take effect on Jan. 1, 2014, but Mr. Obama has “postponed” its application until 2015. His aim, the administration said, was to give employers more time to comply with the new rules. But it was also seen as a way to avoid paying at least part of ObamaCare’s mounting political price in the 2014 congressional elections.

Whatever the reason, the president does not have the power to stop the implementation of a law. If there is one bedrock constitutional legal principle, it is that the president must “faithfully execute” federal statutes. He cannot suspend laws he dislikes on policy grounds or because he fears their political consequences.

Mr. Obama, however, has made a habit of exercising an unlawful suspending power, refusing to enforce selected federal laws, including various provisions of the immigration laws against young, undocumented aliens; work requirements enacted as part of the 1996 federal welfare reform law; and the testing accountability provisions of the No Child Left Behind education law.

One key problem with suspension power—aside from the fact that it destroys the balance of power between the two political branches—is that, when skillfully exercised, it sidelines the judiciary. The Constitution requires that a party commencing litigation must have what is commonly called “standing,” i.e., the party must have suffered or will suffer a legal injury that a court can redress. A determined president can head off litigation by effectively rewriting federal statutes in ways that do not create individual injuries so no party has standing.

By suspending the Affordable Care Act’s employer insurance mandate, however, the president has potentially given millions of Americans the necessary standing to challenge his conduct. This is because the Affordable Care Act is a highly integrated law, with many of its key provisions dependent on each other. In addition to the employer mandate, the law also contains an “individual mandate,” requiring most Americans to sign up for a required level of health-insurance coverage or pay a penalty.

The individual mandate was one of the core parts of the Affordable Care Act considered by the Supreme Court in the 2012 case of NFIB v. Sebelius, where the court upheld the statute against constitutional attack. Throughout that litigation, the Obama administration portrayed the individual mandate as an “integral part of a comprehensive scheme of economic regulation” that included the employer insurance mandate, which was intended to give millions of Americans a way of meeting their new obligation to have health insurance. In other words, suspending the employer insurance mandate prevents the individual insurance mandate from working the way Congress intended.

Like the employer mandate, the individual mandate by law will take effect in January 2014 (unless the president postpones that as well). Individuals who will then have to buy their own health insurance will arguably have suffered an injury sufficient to give them standing to sue.

Once in court, these litigants can argue that the very integrated nature of the Affordable Care Act would make it unlawful to apply one part against them, while suspending another section. They can also argue that only Congress can determine whether, once a statute is fundamentally changed post-enactment, it should survive or fall.

This inquiry usually arises when courts, having invalidated on constitutional grounds part of a statute, must determine whether or not Congress would have wanted the valid remaining parts of the law to remain in effect. The relevant constitutional doctrine is called “severability.”

As the Supreme Court noted in the leading severability case, Ayotte v. Planned Parenthood of Northern New England (2006), the ultimate fate of the revised statute is decided based on the “legislative intent.” In the case of the Affordable Care Act, if the courts were, for example, to determine that the employer insurance mandate is unconstitutional, the well-established severability analysis would lead them to conclude that the individual mandate (and likely the entire law) must also fall because Congress did not intend those provisions to operate in the absence of the employer insurance mandate. The president’s suspension of that part of the law, therefore, should also produce the same result, rendering the remainder of the statute unenforceable.

This argument should find favor with judges who are weary of the use of suspension power that improperly aggrandizes presidential authority, diminishes congressional power, and denies the judiciary an opportunity to have its say. Courts would have to conclude that the whole statute must fall while the president’s suspension is in effect. While reaching this conclusion, they might also declare the suspension itself unconstitutional. Both results would mark a significant win for the American people.

Source: http://online.wsj.com/article/SB10001424127887323368704578596360026187772.html?mod=wsj_streaming_stream

An ObamaCare Board Answerable to No One

The ‘death panel’ is a new beast, with god-like powers. Congress should repeal it or test its constitutionality.

By David B. Rivkin Jr. and Elizabeth P. Foley

Signs of ObamaCare’s failings mount daily, including soaring insurance costs, looming provider shortages and inadequate insurance exchanges. Yet the law’s most disturbing feature may be the Independent Payment Advisory Board. The IPAB, sometimes called a “death panel,” threatens both the Medicare program and the Constitution’s separation of powers. At a time when many Americans have been unsettled by abuses at the Internal Revenue Service and Justice Department, the introduction of a powerful and largely unaccountable board into health care merits special scrutiny.

For a vivid illustration of the extent to which life-and-death medical decisions have already been usurped by government bureaucrats, consider the recent refusal by Health and Human Services Secretary Kathleen Sebelius to waive the rules barring access by 10-year old Sarah Murnaghan to the adult lung-transplant list. A judge ultimately intervened and Sarah received a lifesaving transplant June 12. But the grip of the bureaucracy will clamp much harder once the Independent Payment Advisory Board gets going in the next two years.

The board, which will control more than a half-trillion dollars of federal spending annually, is directed to “develop detailed and specific proposals related to the Medicare program,” including proposals cutting Medicare spending below a statutorily prescribed level. In addition, the board is encouraged to make rules “related to” Medicare.

The ObamaCare law also stipulates that there “shall be no administrative or judicial review” of the board’s decisions. Its members will be nearly untouchable, too. They will be presidentially nominated and Senate-confirmed, but after that they can only be fired for “neglect of duty or malfeasance in office.”

Once the board acts, its decisions can be overruled only by Congress, and only through unprecedented and constitutionally dubious legislative procedures—featuring restricted debate, short deadlines for actions by congressional committees and other steps of the process, and supermajoritarian voting requirements. The law allows Congress to kill the otherwise inextirpable board only by a three-fifths supermajority, and only by a vote that takes place in 2017 between Jan. 1 and Aug. 15. If the board fails to implement cuts, all of its powers are to be exercised by HHS Secretary Sebelius or her successor.

The IPAB’s godlike powers are not accidental. Its goal, conspicuously proclaimed by the Obama administration, is to control Medicare spending in ways that are insulated from the political process.

This wholesale transfer of power is at odds with the Constitution’s separation-of-powers architecture that protects individual liberty by preventing an undue aggregation of government power in a single entity. Instead, power is diffused both vertically—with the federal government exercising limited and enumerated powers and the states exercising all remaining authority—and horizontally, with the powers of the federal government divided among the executive, legislative and judicial branches.

This diffusion of power advances another key liberty-enhancing constitutional requirement: accountability. Accountability enables the people to know what government entity is affecting them, so that they can hold officials responsible at the polls. Congress can also hold the executive responsible through oversight and measures like impeachment.

As Chief Justice John Marshall observed in Wayman v. Southard (1825), Congress may delegate tasks to other bodies, but there is a fundamental constitutional difference between letting them “fill up the details” of a statute versus deciding “important subjects,” which “must be entirely regulated by the legislature itself.” Distinguishing between the two, the court said, requires an inquiry into the extent of the power given to the administrative body.

The power given by Congress to the Independent Payment Advisory Board is breathtaking. Congress has willingly abandoned its power to make tough spending decisions (how and where to cut) to an unaccountable board that neither the legislative branch nor the president can control. The law has also entrenched the board’s decisions to an unprecedented degree.

In Mistretta v. United States (1989), the Supreme Court emphasized that, in seeking assistance to fill in details not spelled out in the law, Congress must lay down an “intelligible principle” that “confine[s] the discretion of the authorities to whom Congress has delegated power.” The “intelligible principle” test ensures accountability by demanding that Congress take responsibility for fundamental policy decisions.

The IPAB is guided by no such intelligible principle. ObamaCare mandates that the board impose deep Medicare cuts, while simultaneously forbidding it to ration care. Reducing payments to doctors, hospitals and other health-care providers may cause them to limit or stop accepting Medicare patients, or even to close shop.

These actions will limit seniors’ access to care, causing them to wait longer or forego care—the essence of rationing. ObamaCare’s commands to the board are thus inherently contradictory and, consequently, unintelligible.

Moreover, authorizing the advisory board to make rules “relating to” Medicare gives the board virtually limitless power of the kind hitherto exercised by Congress. For instance, the board could decide to make cuts beyond the statutory target. It could mandate that providers expand benefits without additional payment. It could require that insurers or gynecologists make abortion services available to all their patients as a condition of doing business with Medicare, or that drug companies set aside a certain percentage of Medicare-related revenues to fund “prescription drug affordability.” There is no limit.

If the Independent Payment Advisory Board exercises these vast powers, political accountability will vanish. When constituents angrily protest, Congress, having ceded its core legislative power to another body, will likely just throw up its hands and blame the board.

Since ObamaCare eliminates both judicial review for any of the board’s decisions and public-participation requirements for rule making, this unprecedented insulation of the board guts due process. Even the president’s limited ability to check the board’s power—since he can remove members only for neglect or malfeasance—represents a more circumscribed standard than usual for presidential appointees.

The bottom line is that the Independent Payment Advisory Board isn’t a typical executive agency. It’s a new beast that exercises both executive and legislative power but can’t be controlled by either branch. Seniors and providers hit hardest by the board’s decisions will have nowhere to turn for relief—not Congress, not the president, not the courts.

Attempts to rein in government spending are laudable, but basic decisions about how and where to cut spending properly belong to Congress. In the 225 years of constitutional history, there has been no government entity that violated the separation-of-powers principle like the Independent Payment Advisory Board does.

While the board is profoundly unconstitutional, it is designed to operate in a way that makes it difficult to find private parties with standing to challenge it for at least its first several years in operation. An immediate legal challenge by Congress might be possible, but also faces standing difficulties. Unless and until courts rule on IPAB’s constitutionality, Congress should act quickly to repeal this particular portion of ObamaCare or defund its operations.

Mr. Rivkin, a partner at Baker Hostetler LLP, served in the Justice Department under Presidents Reagan and George H.W. Bush and represented 26 states in challenging ObamaCare. Ms. Foley is a professor of constitutional law at Florida International University and the author of “The Law of Life & Death” (Harvard, 2011).

Source: http://online.wsj.com/article/SB10001424127887324634304578539823614996636.html

The Case Against Deference

Judges should be unafraid to review government actions

Jun 10, 2013, Vol. 18, No. 37

By David B. Rivkin Jr. and Elizabeth Price Foley

For at least half a century, judicial restraint has been the clarion call of the conservative legal movement. After the Warren Court era, Roe v. Wade, and very nearly a “right” to welfare benefits, it was not surprising that conservatives would seek to rein in judicial self-aggrandizement.

The principal conservative response was to promote judicial deference: Judges should resist the temptation to legislate from the bench and “defer” to the political branches. Unfortunately, time has shown that this response was too blunt. Particularly in constitutional cases, judicial deference has led to a steady expansion of government power. This, in turn, has undermined the delicate constitutional architecture, which calls for a federal government of limited and enumerated powers.

Fortunately, a younger generation of conservative lawyers has come to recognize that there is no principled distinction between inventing new rights, unmoored from the Constitution’s text or history, and refusing to uphold constitutionally anchored limits on government power. In both instances, judges are ignoring the Constitution and engaging in—for lack of a better term—judicial activism. Judicial deference may have reined in judicial power, but at an unacceptable constitutional price. For both doctrinal and pragmatic reasons, the concept needs rethinking.

First, the “counter-majoritarian difficulty” that lies at the heart of judicial restraint has been oversold. The label itself suggests that judges should esteem current majoritarian preferences and be loath to overturn them. But why, when the Constitution instructs otherwise? Article VI declares that the Constitution is the “supreme law of the land,” and trumps conflicting ordinary laws. Judges take an oath to “support this Constitution,” reflecting their duty to heed the constitutional language. Enforcing the written Constitution—not reflexively deferring to extant legislative majorities—was (and still is) the will of We the People. If the people desire constitutional change, Article V provides the mechanism, allowing every generation to put its stamp on our fundamental legal charter.

In Federalist 78, Alexander Hamilton described the crucial judicial role in ensuring that the Constitution reigns supreme, explaining that judicial independence was “peculiarly essential in a limited Constitution,” where the government possessed only enumerated powers. In such a government, he observed, “[l]imitations of this kind can be preserved in practice no other way than through the medium of courts of justice, whose duty it must be to declare all acts contrary to the manifest tenor of the Constitution void. Without this, all the reservations of particular rights or privileges would amount to nothing.” Hamilton and other Framers understood that robust judicial review was essential to enforce limited and enumerated powers.

Second, the virtues of judicial deference have declined over time. Early Supreme Court decisions justified deference as necessary to ensure that the newly established federal government could fulfill its essential responsibilities. As Chief Justice John Marshall explained in the famous 1824 case Gibbons v. Ogden, a “narrow construction” of government powers “would cripple the government, and render it unequal to the object for which it is declared to be instituted.” Accordingly, the Court concluded “we cannot perceive the propriety of strict construction, nor adopt it as the rule by which the Constitution is to be expounded.”

Deference to exercises of government power arguably made more sense in the republic’s early days, to ensure that federal power could accomplish the Constitution’s basic, enumerated ends. But as the administrative state has matured, the sheer weight of government has grown exponentially, and every new accretion weighs more heavily on individual liberty. Complex statutory frameworks increasingly operate at cross-purposes, and statutes rarely get repealed, with new regulations being piled on top of old ones. Today, the cumulative reach of government power is far more than adequate to counsel judges against knee-jerk deference to all exercises of government power. The unfolding IRS scandal, accompanied by the Obama administration’s remarkable claim that the president should not oversee the federal government’s law enforcement activities, makes the need for vigorous judicial review of governmental actions all the more apparent. The courts must unapologetically enforce constitutional boundaries to facilitate trust in, and accountability of, government.

Third, the early Court’s notion of deference was distinct from its modern incarnation. Today’s judicial deference is the product of the progressive era of the late 19th and early 20th centuries. Judges schooled in the original understanding had no qualms about being perceived as “counter-majoritarian,” conceptualizing their role as enforcing the written Constitution against the daily assaults of ordinary legislation. Progressives, who wanted to remake American society, viewed such judges and the written Constitution as an impediment. Achieving progressive goals was possible only if judges could be restrained from scrutinizing ordinary laws for adherence to higher constitutional principles.

One of the most powerful early advocates of judicial deference was progressive Harvard law professor James Bradley Thayer, who, in 1893, argued in the Harvard Law Review that judges “can only disregard [an] Act when those who have the right to make laws have not merely made a mistake, but have made a very clear one, so that it is not open to rational question.” He justified this “rational basis” review by asserting that the Constitution “often admits of different interpretations; that there is a range of choice and judgment,” and that a judge’s role “is merely that of fixing the outside border of reasonable legislative action.” Thayer remarkably asserted that, in applying such light judicial review, “virtue, sense, and competent knowledge are always to be attributed to that [legislative] body.” It is ironic that modern conservatives, concerned about the freewheeling behavior of liberal judges during the Warren Court era, have chosen as their principal bulwark against activism a doctrine of judicial deference whose genesis lies in the progressive era’s desire to expand government power.

The fourth problem with judicial deference is pragmatic, stemming from the judiciary’s inconsistent application of restraint. Since the New Deal, economic regulations, for one example, have received the utmost deference. Yet when it comes to so-called individual rights—a category that, for some inexplicable reason, does not include economic rights—courts jettison deference and apply heightened scrutiny. This bifurcation between “individual” and “economic” rights makes zero sense, as neither the Constitution itself, nor any theory of individual rights, suggests that the former are more important than the latter, or indeed that they are different in kind. The artificial distinction, moreover, invites judicial manipulation and selective invocation of aggressive scrutiny.

In 2005, for example—after over 200 years of constitutional history—the Supreme Court, in Roper v. Simmons, determined 5-4 that the death penalty for 17-year-olds violated the Eighth Amendment’s prohibition of cruel and unusual punishments. Just 15 years earlier, in Stanford v. Kentucky, the Court had decided precisely the opposite. According to the Roper majority, the Constitution’s meaning changed in the intervening 16 years because a “majority of States have rejected the imposition of the death penalty on juvenile offenders under 18, and we now hold this is required by the Eighth Amendment.”

Since 20 of the 38 states that allowed the death penalty at the time of Roper also allowed it for 17-year-olds, the Court cooked the numbers. It included in its calculations 12 states that prohibited the death penalty altogether, leading it to find a “consensus” of 30 states against the juvenile death penalty. As Justice Scalia’s dissent observed, this “is rather like including old-order Amishmen in a consumer-preference poll on the electric car. Of course they don’t like it, but that sheds no light whatever on the point at issue,” because a total prohibition on the death penalty reveals nothing about whether juveniles should receive an exemption.

The Roper decision disregarded the policy preferences of at least 20 states—policy preferences that neither the Constitution’s text nor its historical context condemned—based on the “evolving standards of decency” that five justices wanted the Eighth Amendment to reflect.

Similarly, in the 1980 decision Stone v. Graham, a 5-4 Supreme Court concluded that requiring display of the Ten Commandments in public schools—funded entirely by private dollars—violated the First Amendment’s Establishment Clause. The Stone majority believed posting the commandments had no secular educational purpose, despite the fact that they are the foundation upon which much of the Western world’s legal codes rest.

The Stone and Roper decisions did not “defer” to the reasoned policy judgment of legislators; quite the opposite. Even though legislators had rational reasons for believing that a 17-year-old is capable of cold-blooded murder and deserving of the death penalty, or that posting the Ten Commandments may have a positive, nonreligious educational effect, the Supreme Court was eager, under the guise of constitutional construction, to impose its own views and stifle further democratic debate.

In contrast to the overly aggressive scrutiny applied in “individual rights” cases such as Roper and Stone, the Supreme Court has shirked its duty to scrutinize many other exertions of government power. The net result is an odd mixture of judicial activism and restraint, whereby judges actively and unapologetically overturn laws purported to infringe certain favored individual rights, yet simultaneously espouse a duty to be restrained in reviewing laws alleged to exceed the proper scope of government power.

Take the case of Grutter v. Bollinger (2003), in which the Court was asked to determine the constitutionality of the University of Michigan law school’s use of race as a “predominant” admission factor. An unsuccessful white applicant asserted that such a race-conscious policy violated the Constitution’s guarantee of equal protection.

The law school claimed race-based admissions were needed to achieve a “critical mass” of minority students, needed for the educational benefit of “diversity.” A five-justice majority agreed, concluding, “The Law School’s educational judgment that such diversity is essential to its educational mission is one to which we defer.”

The Grutter majority did not see the case as involving an individual’s right to be free from state-sponsored racial discrimination, but instead as one involving the right of a public university to define and implement its educational mission. Consequently, the Court deferred to the university, allowing it to exercise its power the way it saw fit. The Grutter Court’s choice—to view affirmative action as an exercise of power requiring deference rather than an individual right requiring scrutiny—emphasizes the manipulability inherent in the modern deference doctrine.

The Supreme Court’s decision last year in National Federation of Independent Business v. Sebelius, upholding the Affordable Care Act, further shows the extent of modern judicial contortions to uphold aggressive exercises of government power, even when it harms individual liberty. A 5-4 majority upheld the act’s mandate for individuals to buy health insurance as a “tax,” even though the president and congressional leaders repeatedly and publicly denied that the mandate was a tax, and the law specifically denominated the mandate as a “penalty” while simultaneously labeling multiple other provisions as taxes.

The NFIB majority opined that the mandate “may be reasonably characterized as a tax” even though it was not “the most natural interpretation” of it. And since the Constitution allows Congress to impose taxes, the majority concluded, “it is not our role to forbid it, or to pass upon its wisdom or fairness.”

Like GrutterNFIB v. Sebelius demonstrates the breadth of deference in cases viewed by the Court as challenges to government power. And the NFIB majority didn’t merely defer, it rewrote a statute to survive constitutional attack. Leaving aside the fact that functioning as the legislature’s scrivener is not a proper judicial role, the Court was oblivious to the fact that forcing the political branches to articulate what they are enacting is essential to accountability, one of the key purposes of the Constitution’s separation of powers. Indeed, had the Obama administration publicly described the mandate as a tax, it would never have passed, even in a Democratic Congress.

The NFIB decision also illustrates the fifth problem with judicial deference: It has decayed into virtual rubberstamping. Courts bless government actions using either the rationale advanced by the government or—if that proves unsatisfactory—a rationale the courts themselves concoct. This is a far cry from relying on reasons advanced by the government at the time a statute or regulation was adopted.

For example, in Williamson v. Lee Optical Co. (1955), the Supreme Court upheld an Oklahoma law that made it illegal for anyone other than an optometrist or ophthalmologist to replace eyeglass lenses. Opticians challenged the law, asserting that it violated both the Equal Protection Clause and the liberty protected by the Due Process Clause. They offered evidence that opticians could just as safely make replacement lenses, and that optometrists and ophthalmologists received no special training in lens making. The evidence suggested that the law was not designed to guard the public from poor quality lenses, but to protect optometrists and ophthalmologists from the healthy competition of less expensive opticians.

The Williamson Court nonetheless deferred to the legislature, opining it “might have” concluded that limiting lens replacement to optometrists and ophthalmologists was a good thing and that the legislature “need not be in every respect logically consistent in its aims to be constitutional.” It was sufficient that the Court itself could imagine some rational basis for the law, even if the legislature did not actually rely on the basis identified by the Court.

As cases like Williamson show, modern judicial deference doesn’t require the government to prove anything at all to justify exertions of power. Judges must uphold the law if the legislature could have theoretically believed that the law serves a legitimate purpose (even if it actually doesn’t).

Upholding laws if judges can dream up some legitimate justification for them is not being deferential; it is being biased in favor of the government and against the citizen. The net effect is to rubber-stamp government power. Reflexive deference to the government in constitutional cases has undermined the chief goal of originalism—the preservation of the architecture and original meaning of the Constitution—by a steady and inevitable aggrandizement of government power.

It is high time for judges to abandon reflexive deference. Judges should be unafraid to review government actions and defend constitutional principles. This would entail, among other things, beefing up the “rational basis” review of government actions and making it a serious examination of both the government’s ends—are they properly derived from the government’s legitimate purposes?—as well as the government’s means—do they rationally advance the ends that the government articulated at the time it undertook the action being challenged? By making these important shifts in the way constitutional cases and the facts underlying them are viewed, judges can best live up to their obligation to uphold the Constitution—a goal judges of all political stripes should be able to embrace

David B. Rivkin Jr., a veteran of the Reagan and George H. W. Bush administrations, has represented 26 states challenging the constitutionality of Obamacare. Elizabeth Price Foley, a professor of constitutional law at Florida International University, is the author, most recently, of The Tea Party: Three Principles (Cambridge).

Source: http://m.weeklystandard.com/articles/case-against-deference_732052.html?page=1