FedSoc Blog

The Federalist Society hosted its financial services panel at its National Lawyers Convention this afternoon. The panel’s title was “The Constitutionality of the Dodd-Frank Financial Services Reform Act.” Hon. C. Boyden Gray; Professor Ronald M. Levin; Hon. Peter J. Wallison; and Professor Arthur E. Wilmarth, Jr. made up the panel. Hon. Carlos T. Bea moderated.

Mr. Gray was the first panelist to speak and he began by noting vagueness concerns associated of the Dodd-Frank Act. He continued on to note how the Act cuts Congress and the White House out the equation, at least in part, due to funding coming from the Federal Reserve. Mr. Gray concluded his opening remarks by suggesting that the Act presents significant risks of agency capture and resent seeking.

Professor Levin started his opening remarks with commenting on the non-delegation doctrine difficulties that the Act invites and the inevitable difficulty that courts will face in light of the line drawing that the Act all but guarantees. He went on, however, to suppose that the vagueness that appears in the Act may have been the best Congress could have done given the extraordinary circumstances in which they were operating.

Mr. Wallison started his opening remarks by suggesting that it is an open question whether not acting during the financial crisis was a credible option.  He raised the question of just how much power Congress can delegate to the Executive Branch while simultaneously not running afoul of the separation of powers doctrine. Mr. Wallison concluded his opening remarks by suggesting that at least one reading of the Act would cause the Federal Reserve to essentially be managing the financial services market. Put differently, the Federal Reserve will have the ability to decide who will succeed and who will fail in the competition for business from consumers in the financial services market.

Professor Wilmarth maintained that the Act effectively does not solve the “too big to fail problem” and would still allow bailouts. He noted a number of loopholes that allow the problems to persist.

Following the opening remarks from the panelists, Professor Levin suggested that in the context of separation of powers questions, there is a difference between one branch grabbing power from another branch and one branch giving power to another branch. The second case, according to Professor Levin, does not evoke separation of powers concerns that are as severe because the “giving branch” is losing power voluntarily, can oversee and manage the power, and ultimately take back the power if it wishes to do so.

Mr. Gray decried the provision of the act that requires district court judges make decisions on certain cases within twenty-four hours. The limited time permitted to decide these cases, combined with an additional constraint that they must occur in secret, lead Mr. Gray to liken the arrangement to a star chamber. Professor Levin admitted that Mr. Gray’s interpretation of the Act is possible, but also suggested that it was unlikely to occur in light of the typical ways that courts interpret statutes.

In response a question from an audience member, Mr. Wallison explained how the individual responsible for managing the financial services market will not only be effectively unaccountable to the Congress and the President, but also from the Federal Reserve.

Towards the end of the panel, Mr. Wallison contended that the Dodd-Frant Act did not address the United States’ housing policy, which was, him, the major cause of the financial crisis. Mr. Wallison pointed out that Congress actually passed the legislation that was meant to address financial crisis before a study on what caused the crisis was completed. Moreover, the Act permits the U.S. government to continue to create the same sort of mortgages that contributed to the financial crisis.

The Federalist Society hosted its professional responsibility panel at its National Lawyers Convention this afternoon. The topic of the panel was "The Bloody Crossroads: Republican Party of Minnesota v. White Runs Into Caperton v. Massey." The panelists were Mr. James Bopp, Jr., Bopp, Coleson, and Bostrom; Hon. Thomas R. Phillips, former Chief Justice, Supreme Court of Texas; Hon. Patience Drake Roggensack, Wisconsin Supreme Court; and Hon. Clifford W. Taylor, former Chief Justice, Michigan Supreme Court. Judge Thomas M. Hardiman of the U.S. Court of Appeals for the Third Circuit moderated.

James Bopp began the program by arguing that Caperton and Republican Party are not in fact in conflict because Justice Kennedy limited the decision to its facts. There are therefore no "bloody crossroads."

Justice Roggensack noted that Republican Party had to do with a candidate's speech, while Caperton had to do with third-party speech. Caperton causes no problems for judicial candidates, but Republican Party does create issues because motions to recuse have increased, and this hurts the legitimacy of the court.

Chief Justice Taylor predicted, unlike Mr. Bopp, that Republican Party and Caperton would be read together to create some problems. They are likely to intersect. According to Chief Justice Taylor, the state supreme courts have taken more control of policy issues, so it makes sense that First Amendment rights attach to those who seek these offices because they are forced to tell voters about their judicial philosophy.

Chief Justice Taylor continued by saying that it is likely in the future that not making a recusal motion in a closely-decided case will be considered malpractice. The result, he said, will be devastating to the public's confidence in the way the courts function.

Chief Justice Phillips argued that Caperton was a "one-shot" case with a unique situation. Caperton will be limited to its facts, he said, as have all the Supreme Court cases on this subject.

Chief Justice Phillips talked at some length about free speech, saying that it is as much the benefit of the voters who can ask anything they want as it is a benefit of a candidate. Even though there is a free speech right in judicial elections, there are very important governmental interests in the judiciary that make it impossible to have a full right.

In the question and answer session, Justice Taylor and Mr. Bopp noted that opponents of judicial elections have been using the Caperton issue to support their view, and yet a majority of Americans still view judicial elections as a necessary check on judicial activism.

Justice Taylor talked about how he doesn't think that political contributions are inherently corrupting, though Buckley v. Valeo has made most people view them as a favor to be repaid.

Mr. Bopp said that he thought it was wrong for judges not to be allowed to raise money to defend what they are doing in order not to be voted out of office.

The National Convention's Litigation Panel, composed of Prof. Randy Barnett, Hon. Richard Cordray, Prof. Charles Fried, and Mr. David B. Rivkin, Jr., this afternoon discussed the topic "Debating the Constitutionality of the Federal Health Care Legislation."

David Rivkin started off the panel by arguing that the health care law violates several fundamental constitutional prohibitions. According to Mr. Rivkin, forcing people to engage in economic activity by requiring them to buy health insurance "turns the Bill of Rights on its head."

The mandate is different from such requirements as serving in the military and jury duty, he said, because the latter are "reciprocal duties" owed to the rest of society, while the former is simply a requirement of individuals to pay money to other individuals.

Prof. Barnett continued the attack on the constitutionality of the mandate, arguing that Congress' power is confined to regulating commerce that goes from one state to another and that this case therefore depends on whether the individual mandate falls within the Necessary and Proper Clause. Prof. Barnett said that the limit of this Clause, contained in the word "Necessary," falls short of allowing Congress to mandate non-fundamental activities. Courts should draw a line between activity and inactivity, just like the line between economic and noneconomic activity it has already drawn, he argued.

Prof. Fried began with a discussion of the Supreme Court's interpretation of the Commerce Clause, quoting Chief Justice Marshall from the case Gibbons v. Ogden in saying that Congress's power under the Commerce Clause is "a power to regulate, that is, to prescribe the rule by which Commerce is to be governed." He said that Congress, in passing the individual mandate, is prescribing the rules by which health insurance is to be governed.

To Prof. Barnett's proposition that Congress' regulation of inactivity is unprecedented, Prof. Fried said, "So what?" Prof. Barnett's argument, he claimed, not only limits the power of Congress to mandate the people but limits the power of the states to do so as well.

Hon. Richard Cordray spoke next. Modern health care would not be recognizable to the Founders, so the originalist arguments are irrelevant. The proper place for this issue to be resolved is in Congress, he said. Congress determined that it had to redress the free-rider issue in its health care reform legislation, and, if the courts overturn the mandate, then Congress will never be able to address a free-rider problem in regulating economic activity.

During the following question and answer session, Prof. Fried said that athough Congress might be able to make you buy Fruit Loops, the Constitution did not give Congress the power to make you eat the Fruit Loops. Mr. Rivkin said that Prof. Fried and Mr. Cordray had stipulated to the government being able to force people to buy any business services, and that there is no limiting principle. "Health care ain't unique," and free-riding occurs in every sphere of activity, said Rivkin.

Prof. Barnett said that in every recent Commerce Clause case, the Court has referred to "economic activity," not "economic matter." This is where his activity/inactivity distinction comes from, he said. "A mandate is the commandeering of the people," and it is an improper commandeering of people in the same way that it is improper for Congress to commandeer state officials. If the mandate is not overturned, he stated, then the principle will be established that Congress can make the people do anything.

Michael Barone, senior political analyst of the Washington Examiner, spoke this morning at The Federalist Society's National Lawyers Convention. He called the 2010 elections a rejection of "big government policies," and said of the Tea Party movement that "we are going back to the theories of the Founding Fathers."

Drawing laughter from the audience, he said of the elections this year that "the 2010 tsunami was prevalent between the George Washington Bridge and the Donner Pass. It had cannibals on both ends."

He predicted that Democrats will probably not challenge President Obama in the primaries in 2012. According to Barone, Americans have not seen this kind of expansion of government in a long time, and he indicated that, though people in the U.S. will hesitate to reject our first black President, the negativity will carry over to the next election.

Speaking on the issue of how religiosity affected the elections weeks ago, he said that the impact of people's religious views on their votes had diminished because voters were "faced with a different set of issues," namely the "expansion of the size and scope of government."

Check soon on the website of The Federalist Society for video of Mr. Barone's address.

The Convention's opening showcase panel, "Enumerated Powers, the Tenth Amendment, and Limited Government," just concluded. Prof. Randy Barnett, Hon. Ted Cruz, Prof. Michael Gerhardt, Prof. Michael Stokes Paulsen, and Prof. Mark Tushnet engaged in a lively discussion on the issue of the limits placed on the federal government's power.

The panel also discussed the Repeal Amendment that Prof. Barnett, along with William J. Howell, proposed in The Wall Street Journal in September. The amendment would authorize two-thirds of the states to overturn any federal law or regulation.

Senate Minority Leader Mitch McConnell gave the opening address at the Federalist Society's National Lawyers Convention this morning. In his remarks, Senator McConnell surveyed the impact and results of the 2010 elections, stating that the elections had served as a message to members of Congress that it was the people who controlled the government.

Click here to visit our Facebook page and view photos from the speech. Video of the speech will be coming soon on the Federalist Society website.

Over the next three days (Nov. 18-20), we'll be liveblogging from the 2010 Federalist Society National Lawyers Convention in Washington, D.C. The blog will cover the Convention panels and addresses and link to pictures and video as they become available.

You can also check our Facebook page for pictures and updates from the Convention.

The New York Times' Room for Debate blog has a new debate about the rising trend of "specialized litigation lenders," who finance complex lawsuits, mostly involving mass torts, for plaintiffs and lawyers who lack the money to pay for such suits.

Examples of the trend include the lawyers for workers at ground zero borrowing $35 million to finance their suit against New York City. However, does such lending pose problems for the legal system? And what, if any, regulation is necessary?

Anthony Sebok of Cardozo School of Law supports allowing third-party financing of lawsuits, despite predictions from some that it will increase litigation costs, because it will help even the playing field between plaintiffs and defendants:

While I am concerned about the overall cost of litigation, I am more concerned about the imbalance of resources available to the average American. Right now, our system depends on lawyers who take on plaintiffs' cases to carry the costs of the cases.... I have nothing against lawyers financing litigation, but I do not understand why lawyers are the only option available to plaintiffs seeking capital from an outside source.

Paul H. Rubin of Emory disagrees, arguing that allowing third parties to finance litigation will have negative effects on an already-litigious society:

(A)llowing third-party finance will create an interest group - those with experience in financing lawsuits. As an interest group these financiers will act so as to increase the amount of lawsuits in society, and to resist efforts at reform. Since we already have excessive litigation in the U.S. anything which increases the amount of litigation like third-party finance is likely to be harmful.

The debate also includes contributions from Richard A. Epstein, N.Y.U. School of Law; Laurel Terry, Penn State University; and Susan Lorde Martin, Hofstra University.

Click here to view this article on the source site »

Listen to the audio here.

On October 12, the Supreme Court heard oral argument in Bruesewitz v. Wyeth, Inc. This case concerns the National Childhood Vaccine Injury Act, which protects vaccine manufacturers from liability for certain injuries caused by their vaccines; injured patients receive compensation from the government instead of the vaccine manufacturers. The question in this case is whether that immunity applies when the victim claims that the design of the drug created an avoidable and unnecessary risk to patients.

To discuss the case, we have Mark A. Behrens, who is a partner at Shook, Hardy, & Bacon L.L.P.

Click here to view this article on the source site »

There has been much debate over whether the Dodd-Frank Wall Street Reform & Consumer Protection Act of 2010 will accomplish its stated intent "(t)o promote the financial stability of the United States ..., to end 'too big to fail,' to protect the American taxpayer by ending bailouts," and "to protect consumers from abusive financial services practices," but there is also a growing exchange about whether the law is constitutionally infirm, primarily due to separation of powers, vagueness, and due process concerns.

In a new article published by The Federalist Society that will appear in Volume 11, Issue 3 of Engage, the journal of the Society's Practice Groups, Hon. C. Boyden Gray and Mr. John Shu query whether the Act provides effective oversight by any branch of government - the President, Congress, or the Judiciary.

The article comes as a prelude to a panel The Federalist Society is hosting this Friday, Nov. 19, at its annual National Lawyers Convention, on the topic "The Constitutionality of the Dodd-Frank Financial Services Reform Act." The panelists will be Hon. C. Boyden Gray, Gray & Schmitz LLP; Prof. Ronald M. Levin, Washington University in St. Louis School of Law; Hon. Peter J. Wallison, American Enterprise Institute; and Prof. Arthur E. Wilmarth, Jr., George Washington University Law School. Hon. Carlos T. Bea, 9th Cir. Court of Appeals, will moderate.

Click here to view this article on the source site »

The U.S. Court of Appeals for the District of Columbia heard oral arguments yesterday in a suit to overturn D.C.'s firearm restrictions as a violation of the 2nd Amendment's right to bear arms, reports The Blog of Legal Times. D.C. prohibits assault rifles and magazines capable of holding more than ten bullets, and it also requires that all gun owners register their firearms and pass a training course.

Lawyers for the District residents challenging the law argued that the restrictions are "highly unusual" in requiring the registration of every firearm and that the government could ban a weapon if officials believe it is in the "public interest." They said that because of these problems, the laws do not pass constitutional muster.

On the other side, lawyers for D.C. argued that the 2nd Amendment is aimed at allowing people to keep and bear arms, "but not to keep guns secret from the government or to possess military-style weapons and high-capacity magazines." Todd Kim of the D.C. Office of the Attorney General argued that assault rifles are not intended for self-defense but are rather designed for "mass murder."

Click here to view this article on the source site »

The Washington Post reported Saturday that the Obama Administration will most likely keep Khalid Sheik Mohammed, mastermind of the terrorist attacks of Sept. 11, 2001, in military detention without trial "for the foreseeable future." Although the Administration announced last year that it would try KSM and other detainees from al-Qaeda in federal district court in New York, opposition from members of Congress and lawmakers in New York has caused federal officials to delay these plans and to continue holding KSM.

The article states that there is also not much support within the Administration for a military prosecution of KSM, which means that he and the other al-Qaeda operatives will probably continue to be held pursuant to the laws of war without a hearing before any tribunal, military or civilian. If any trial is to take place, Administration officials say, it is unlikely that it will occur before the 2012 presidential election and, "even then, would require a different political environment."

Click here to view this article on the source site »

Adam Liptak has an article today in The New York Times noting that, with 25 arguments completed so far this Supreme Court Term, Justice Elena Kagan has recused herself from 10 of those cases. He argues that the Supreme Court's recusal practices are "sometimes rigorous, sometimes idiosyncratic and often quite mysterious," since Justices routinely take no part in considering cases without explaining their reasons why.

Liptak suggests that, because our justice system is in part based on the courts explaining the reasoning behind their decisions, it is odd that the Justices decide for themselves whether or not they will take part in a case and then issue no reasons for their choice.

In a 2004 letter to members of the Senate Judiciary Committee, who had asked then-Chief Justice Rehnquist about the Court's recusal practices in light of Justice Scalia's decision not to recuse himself in a case involving Dick Cheney, with whom he had gone duck-hunting, Chief Justice Rehnquist wrote:

While a member of the Court will often consult with colleagues as to whether to recuse in a case, there is no formal procedure for Court review of the decision of a Justice in an individual case. This is because it has long been settled that each Justice must decide such a question for himself.

The Associated Press reports that the U.S. Supreme Court decided today to allow the military to keep the "don't ask, don't tell" policy, which prohibits openly gay service members, in place during the government's appeal in the 9th Circuit. The 9th Circuit issued a temporary stay of Judge Virginia A. Phillips' ruling striking down the policy that will now last until at least mid-March.

While the Obama Administration is seeking to repeal the "don't ask, don't tell" policy in Congress during the lame-duck session, government lawyers are currently defending the policy in court.

Click here to see SCOTUSblog's discussion of the Supreme Court's order. Click here to view the order.

David G. Savage of The LA Times reports that the U.S. Supreme Court yesterday heard oral arguments in Flores-Villar v. United States (click for coverage on SCOTUSblog), where the question for the Court is whether harsher restrictions on unwed fathers than on unwed mothers in gaining U.S. citizenship for their children is constitutional under the Equal Protection Clause. According to Savage, the Court appears set to uphold the law against constitutional challenge.

Current U.S. law grants citizenship to the foreign-born child of an unmarried American woman as long as the woman lived in the U.S. for at least a year, whereas an unmarried man needs to have lived in the U.S. for at least five years in order to pass on citizenship to his child. Thus, the federal government found that the convicted drug dealer in this case, who was born in Mexico to a Mexican mother but raised in San Diego by his American father, was subject to deportation.

Flores-Villar's lawyer argued that the law was passed under outdated "gender stereotypes that women, not men, would care" for their children. However, both Justices Kennedy and Scalia indicated that they saw no reason to second-guess the government's determination in laying out citizenship rules. Justice Kagan recused herself because she worked on the case during her stint as Solicitor General.

Click here to view this article on the source site »