Professor Mitchell’s main argument, though, is that in many of its capital punishment and substantive due process decisions, the Court is not responding to trends in public opinion but is instead just indulging its own ideological preferences or policy views. This argument, I think, raises some complicated issues. It may be worth distinguishing two questions. The first is: to what extent is the Court ruling according to the law, as opposed to ruling simply according to the justices’ views? In controversial cases, that will often be quite a difficult question to answer, for both empirical and conceptual reasons. The second question is: to whatever extent the justices are ruling according to the law (and not their policy views), where are they getting the law from? Are they getting it from the Framers’ understandings, or precedent, or tradition, or something else?

My objective in my Article on modernization was to answer the second question. My claim was that increasingly, in the areas I discussed, the Court is looking less to sources from the past and more to what it perceives as the current climate, or trend, in public opinion. That does not mean that the Court simply tries to implement public opinion. If the Court were assigned that task, it would either have to develop a conception of public opinion as something different from what the elected branches of government decide-how would it do that?-or else get out of the business of judicial review more or less completely. Probably the best way to understand modernization is that the Court treats trends in public opinion roughly in the way common law courts treat precedents. They limit the Court’s freedom of action and point it in certain directions, but usually there is a significant degree of flexibility and selectivity. Some trends, like some precedents, will be pushed further; others will be honored, but only in a narrow way. Where there is an arguable conflict (among precedents or among trends), the judges will, inevitably, choose the ones that seem better, to them, as a matter of fairness or good policy.

Take Lawrence v Texas,⁷ for example. It would certainly not be surprising to learn that most of the justices in the majority disapproved of the Texas law as a matter of policy (as did Justice Clarence Thomas, in dissent).⁸ But it is also hard to believe that they would have ruled the way they did had attitudes toward gays not developed as they did in the last generation. That is the sense in which their freedom of action is limited by public opinion. Of course, as political scientists have been saying for at least half a century, it is no accident that the justices’ own views corresponded with the more general views of the society in which they live.⁹ But that just means that modernization will come naturally to them (maybe too naturally, as I suggest at the end of the Article).¹⁰ The point is that they look to current trends and understandings-rather than some historically based principles-for validation.

By the same token, it is likely that several members of the Court believe that same-sex marriage should be allowed, or that capital punishment should be abolished. None of them will cast a vote for those things now, because the kind of “evolving understanding” that Lawrence described would not support such a vote. A decade from now, the climate of opinion might change to the point where we might see such votes from the justices. I think Professor Mitchell’s response would be that all this shows is that the Court is imposing its own policy views to the extent it believes it can get away with doing so. But one could also characterize common law judging (as described in, for example, Cardozo’s The Nature of the Judicial Process)¹¹ as a matter of judges’ advancing their policy views to the extent that precedent allows them to get away with it. The justices will go only so far not because they fear they will be impeached, or instantly delegitimated, but because they believe that going any further would be inconsistent with the proper judicial role (and perhaps have long-term repercussions for their legitimacy-as would also be true of common law courts). What is distinctive about modernization is that the limits of the judicial role are created by current popular understandings.

Near the end of his comment, Professor Mitchell suggests that modernization presents two particular risks. One is that modernization will provide insufficient protection for national minorities. I think he is right about that; as I tried to say in my original Article, modernization may (and arguably has) caused the Court to drift away from a more principled and appropriate judicial role, such as the protection of minorities that otherwise do not get a fair shake from the political process. (Of course, identifying those minorities, and deciding what constitutes a fair shake, are controversial and problematic tasks.) But Professor Mitchell also raises the possibility that because modernization may undermine the structural protections that the Constitution provides to national minorities, it presents a distinctively great threat of “undermin[ing] the rule of law.” The result, Professor Mitchell says, is that minorities that lose out to supposedly modernizing decisions may seize the opportunity, when they are in power, to manipulate the Constitution for their own political objectives.

Here again I think it is useful to distinguish the two questions I tried to separate at the beginning of this response. I am not sure that modernization-compared to, say, originalism, or precedent-based constitutional interpretation-presents an especially great danger of the kind of problem that Professor Mitchell identifies. The Court’s decisions about, for example, the role of women, or the rights of gays, are pretty obviously efforts to adjust constitutional rights to current understandings-and also, maybe just as obviously even to people who don’t spend their time studying constitutional law, hopelessly at odds with original understandings. But I do not think those decisions are especially likely to precipitate the kind of response that Professor Mitchell describes. Similarly, Brown v Board of Education¹² came to be accepted as fully legitimate-an icon, even-because of a recognition that American society needed to move into a new era of race relations. It was accepted because it was in line with popular understandings, not because it came to be seen as consistent with original understandings, or the text of the Constitution, or some other backward-looking source of law.

What creates the kind of danger that Professor Mitchell identifies so well is instead, I think, the perception that the Supreme Court is not “doing law” at all-that it is simply imposing its policy views and manipulating the law to conform to them. That accusation can be leveled at an originalist court, or a Carolene Products¹³ court, or a common law constitutional court, or a modernizing court. Once it becomes the accepted view among a political or ideological group that the other side does not do law but just does what it wants, then the downward spiral that Professor Mitchell warns against-when we get our turn, we’ll do the same thing-becomes all too probable. The cure for that-and on this point, I am sure that Professor Mitchell and I agree-is to avoid a toxic climate in which measured and responsible criticism (Professor Mitchell’s comment provides a great example) is drowned out by reckless accusations of lawlessness. There are lawless Supreme Court decisions, and we all have our favorite candidates. But it ought to be possible to engage in vigorous criticism, on the merits, of methods, approaches, or normative views, without impugning the other side’s commitment to the rule of law.

Acknowledgments:

Copyright © 2009 University of Chicago Law Review.

David A. Strauss is Gerald Ratner Distinguished Service Professor of Law at The University of Chicago Law School.

This Legal Workshop Editorial is a response to the following piece:   Jonathan F. Mitchell, Modernization, Moderation, and Political Minorities: A Response to Professor Strauss, LEGAL WORKSHOP (U. CHI. L. REV., May 3, 2009).

I am grateful to Jonathan Mitchell both for his comment on my original Article and for his help with this response.

In this Editorial, I want to consider a different (and surprising) fact that emerges from the data: juries do not appear to count prior convictions as “evidence” supporting the likelihood of a defendant’s guilt.  That is, although juries are more likely to convict a defendant with a prior record, they nonetheless suggest (in rating the strength of the evidence) that the proof against the defendant is apparently no stronger in such cases than in prior-record-excluded cases in which juries acquit.  That juries would not count a prior conviction as evidence of a defendant’s guilt of the crime charged is important (and surprising) in two respects.

First, a major reason that prior convictions are ordinarily thought to pose a risk of unfair prejudice against a criminal defendant is the fear that, regardless of instructions to the contrary, a jury is likely to draw the following inference: the defendant committed crimes in the past and is therefore more likely to have committed the crime for which he is currently being prosecuted.  If Hans and Eisenberg are correctly interpreting the data (and my review of their article suggests that they are), then this fear is not well founded: juries apparently do not fall into the trap of considering prior bad acts in deciding the likelihood of a particular bad act.  Juries understand, in other words, that a person’s apparent inclination to commit robbery does not tell us very much about whether it was he or some third party who robbed a particular bank three months ago.  This suggests a level of sophistication on the part of the jury about which the evidence law has often been quite dubious.

On the other hand, the second important (and surprising) aspect of juries” ability to discern the relatively low relevance of prior convictions to guilt and innocence in a particular case is that we are left to conclude that the jury is unable (or unwilling) to apply the standard of “guilt beyond a reasonable doubt” to defendants who have a prior record.  The jury, in other words, is not confused by the evidence; it is instead repelled—in the case of prior felons—by the demanding standard of proof.  If this is true, then juries appear far more willing than we might have thought to take the law into their own hands.  For an ordinary criminal defendant, it is acceptable to allow ten (or a hundred or a thousand . . . ) guilty people go free rather than incarcerate (or execute) one innocent person.  But for a habitual criminal, perhaps, this permissive approach to what we might call “wrongful acquittals” is harder for juries to swallow.  The stakes may simply feel too great.  To put this differently, the downside of a wrongful acquittal, in the case of a defendant with a record, is that a habitual offender is free to offend again, while the downside of a wrongful conviction is that a habitual offender who happens not to have committed the particular crime charged spends time behind bars.

If this is the cost/benefit analysis in play, then the jury is rejecting the fundamental structure of a criminal trial as an assessment of guilt or innocence of a specified act (rather than the suitability of a particular person for preventive detention).  This brings to mind the “war on terror” theory of detention with which we have lately become very familiar and which may pose a far greater threat to criminal justice than the comparatively benign (but apparently not-so-tempting) inference that a prior offense sheds light on the odds of a presently charged crime.

Acknowledgments:

Copyright © 2009 Cornell Law Review.

Sherry F. Colb is Professor of Law and Charles Evans Hughes Scholar at Cornell University Law School.

This Legal Workshop Editorial is a response to the following Legal Workshop Post:   Theodore Eisenberg & Valerie P. Hans, Taking a Stand on Taking the Stand: The Effect of a Prior Criminal Record on the Decision to Testify and on Trial Outcomes, LEGAL WORKSHOP (Sept. 14, 2009), based on 94 CORNELL L. REV. __ (forthcoming 2009).

In Retributive Damages: A Theory of Punitive Damages as Intermediate Sanction,¹ Professor Dan Markel “reimagine[s]” the law and proposes an interesting theory of punitive damages.² Unlike work by other scholars,³ Professor Markel intentionally situates his theory of “retributive damages” outside the historical framework and doctrinal limits of punitive damages.  Instead, Professor Markel argues that states should replace the current punitive damages framework with a new statutory scheme akin to the federal sentencing guidelines.  Though satisfying on a purely theoretical level, Professor Markel’s paradigm raises two initial questions.  First, can the “retributive damages” model properly be considered punitive damages?  Second, do “retributive damages” avoid the doctrinal problems that have plagued punitive damages for decades?  In my view, the answer to both questions is “no.”

 
I.
It’s Not “Punitive Damages”

In this first article in a planned quartet, Professor Markel proposes using public retributive justice theory to frame a new system of punitive damages.  Under his proposal, state legislatures would define the conduct subject to retributive damages by statute.  Plaintiffs who were harmed by a defendant’s violation of the retributive damages statute could seek retributive damages as a remedy in a traditional tort action.  However, if the plaintiff chose to forgo retributive damages or if the statutory violation did not cause any harm, private attorneys general could bring an action for retributive damages alone.  In either case, the jury would use a set of legislative guidelines to determine a reprehensibility “score” for the defendant’s conduct.  In a structure similar to the criminal sentencing guidelines, the judge would then take the jury’s reprehensibility score and apply it to a statutorily defined table setting the amount of damages based on the defendant’s wealth.  Next, courts would evaluate the profitability of the defendant’s conduct.  If the reprehensibility-based damages combined with compensatory damages did not eliminate the profit from the defendant’s wrongdoing, courts also would impose a gain-elimination penalty.  The reprehensibility penalty and the gain-elimination penalty would both be paid to the state and could be credited against future criminal sanctions.  To encourage suits under this scheme, the defendant would be required to pay a fixed $10,000 award to the named plaintiff as well as the plaintiff’s attorney’s fees.  Finally, a plaintiff could not settle a retributive damages claim without state approval.

Putting aside the merits of Professor Markel’s retributive damages scheme as a type of damages, one thing is clear: it is not punitive damages.  Like Professor Markel’s “retributive damages,” punitive damages are “extra-compensatory” in that both types of awards exceed the plaintiff’s actual harm.⁴ But that’s where the similarities end.  Unlike the statutory scheme envisioned by Professor Markel, punitive damages are a type of common law damages available in a civil tort suit by a private plaintiff.⁵ In most states, juries are instructed to calculate the amount of punitive damages based on a variety of factors.⁶ Those factors include the reprehensibility of the defendant’s conduct, but they also include numerous other factors.⁷ Moreover, in most states, plaintiffs keep the bulk of a punitive damages award.⁸

Professor Markel would change so many of these characteristics that it is impossible to consider his proposal a form of “punitive damages.”  Consider just a few of the differences.  Retributive damages can be pursued by uninjured third parties or the state itself; punitive damages can be pursued only by the tort victim.  Retributive damages are awarded wholly to the state; punitive damages are awarded to the private plaintiff.  Retributive damages are calculated according to a statutorily defined table; punitive damages are calculated by a jury according to common law principles.  Retributive damages cannot be settled without the approval of the state; punitive damages can be settled at the will of the parties.

To be sure, scholars have criticized many of these features of punitive damages.⁹ And it is true that judicial opinions largely have failed to articulate a coherent rationale for punitive damages.  Nevertheless, despite the ongoing debate about the theoretical justifications for punitive damages, nearly all fifty states and federal courts have accepted the doctrine of punitive damages.¹⁰ Indeed, punitive damages have a long historical pedigree dating back to the Hammurabi Code in 2000 B.C.¹¹

 
II.
A Few Due Process Problems with “Retributive Damages”

The question then becomes whether “retributive damages” would be better than the current system of punitive damages.  Because Professor Markel’s article is only the first of a planned series, much is left unanswered at this stage, which makes a complete assessment of “retributive damages” difficult.  I’d like to consider a couple of threshold due process issues.

As an initial matter, tying the amount of the retributive damages award to the defendant’s wealth, as Professor Markel’s model would do, raises facial due process concerns.¹² Under Philip Morris v. Williams, the Court held that “the Constitution’s Due Process Clause forbids a State to use a punitive damages award to punish a defendant for injury that it inflicts upon non-parties or those whom they directly represent, i.e., injury that it inflicts upon those who are, essentially, strangers to the litigation.”¹³ In addition, under State Farm v. Campbell, “[a] State cannot punish a defendant for conduct that may have been lawful where it occurred.”¹⁴ Nor can a state punish the defendant for unlawful conduct outside its jurisdiction.¹⁵ Basing a retributive damages award on a defendant’s wealth, however, risks punishing a defendant for harm to non-parties in violation of Philip Morris, and further risks punishing a defendant for lawful conduct and out-of-state conduct in violation of State Farm.¹⁶

Moreover, anchoring the amount of a penalty to the defendant’s wealth does not take into account the second BMW guidepost: the ratio between the extra-compensatory award and “the actual harm inflicted on the plaintiff.”¹⁷ Although Professor Markel correctly notes that “harm” is not per se limited to compensatory damages alone, his retributive damages scheme does not provide room for the jury—or judge on post-verdict review—to evaluate the reasonable relationship requirement.  In response, Professor Markel points to the legislative foundation of his new system and argues that the statutory nature of retributive damages justifies greater deference by courts.  Thus, he suggests that the reasonable relationship requirement would not apply to “retributive damages.”  As I previously have argued,¹⁸ however, legislative penalties are not immune from constitutional scrutiny.  Rather, the Supreme Court has applied the same constitutional excessiveness standards, including the reasonable relationship requirement, to jury awards of punitive damages as well as criminal fines and sentences.¹⁹ Thus, this constitutional requirement cannot be ignored.

Finally, allowing a private attorney general to sue based on harm to a non-party violates the black letter of Philip Morris. Professor Markel acknowledges this issue, but he argues that the retributive damages scheme survives constitutional scrutiny because the private attorney general “is not suing to recover for harm to the victim, but rather to initiate an intermediate sanction for the defendant’s wrongful conduct.”²⁰ This argument misses the mark.  The Supreme Court stated unambiguously that the amount of a punitive damages award must be tied to the harm to the individual plaintiff: a punitive damages award cannot be used “to punish a defendant directly on account of harms it is alleged to have visited on nonparties.”²¹ Moreover, allowing a retributive damages award to be based on harm to non-parties would prevent the defendant from raising all possible defenses.  In Philip Morris, for example, the Court noted that other allegedly injured smokers might have known smoking was dangerous or might not have relied upon the defendant’s statements.²² Professor Markel’s retributive damages scheme raises similar concerns.

 
III.
Conclusion

In short, Professor Markel does not suggest a new theory of punitive damages that harmonizes the rather confused law in this area.  Rather, he offers a new statutory civil penalty system, and it remains unclear whether this system will survive due process scrutiny.  Beyond these questions, I wonder about the inevitable issues that would arise from a system that combines aspects of the harshly criticized sentencing guidelines with the complexity of qui tam law added on top of existing punitive damages jurisprudence.  I look forward to seeing how Professor Markel addresses these and other underlying issues in his subsequent pieces.

Acknowledgments:

Copyright © 2009 Cornell Law Review.

Sheila B. Scheuerman is Associate Professor of Law at Charleston School of Law.

Special thanks to Keith N. Hylton, Anthony J. Sebok, Christopher J. Robinette, and Benjamin C. Zipursky for comments.

This Editorial is a response to the following Legal Workshop Editorial:  Dan Markel, Retributive Damages as Intermediate Public Sanctions: A Synopsis, LEGAL WORKSHOP (May 12, 2009), based on A Theory of Punitive Damages as Intermediate Sanction, 94 CORNELL L. REV. 239 (2009).
Click Here for the Markel Legal Workshop Editorial.
Click Here for the full Markel Article.

In their example of how this process works, GKW rely on economic evidence indicating African-American individuals have steeper discount rates than white individuals to suggest that any offer of a salary with a fixed pension benefit will be of more value to the white applicant than to the African-American applicant,³ so that the employer can shift the distribution of his workforce in ways that advance discrimination. Armed with this knowledge, an employer could alter the racial composition of its workforce.

Assuming that this mechanism has its intended effect, it could work in both directions. An employer therefore could engage in race-based affirmative action under the radar screen by front-loading the employee’s wages and reducing their pensions in order to attract a higher fraction of African-American workers. I am not aware of any evidence that points to a conclusion that any affirmative action employer has ever engaged in this tactic, either deliberately or inadvertently. The usual way to run affirmative action programs is through aggressive recruitment, all of which takes place above the radar, given the one-sided application of Title VII: disparate impact theories are available for use by black applicants,⁴ while affirmative action practices are looked upon with real benevolence.⁵ In addition, it is instructive to note that for many jobs the pension element has little or no traction insofar as the (now discriminatory) social security system covers most of the pension obligation. Yet I hope that GKW lack the courage of their convictions and would not suggest that social security (and Medicare) be unraveled because of its implicit racial skew, or that benefits paid to African-American workers be grossed up to reflect the perceived difference in the discount rates by the median member of the respective groups.

Nor do I believe that this approach has much to commend it, even for a firm that wanted to practice race or sex discrimination under the radar. The simplest objection is that it is not likely to be effective. The initial point is that an employer would have to offer the now-suspect pension feature of the employment practice in constant proportions to all workers in order for the system to work at all. But that is not the way in which most employers want to deal with their employees. One of the most common practices for fringe benefits today is for firms to offer workers an allowance that they can use to make purchases from a menu of items, in exchange for a reduction in their base pay. This menu approach sets out an implicit indifference curve for the employer: the employee can pick any combination of items that he or she finds ideal, and thereby maximize the nonsalary portion of his or her compensation package. Single individuals do not have to buy life insurance; sicker individuals may stock up on health insurance, and so on down the line.

This ability to make the optimal choice thus counts as an implicit wage boost for all employers, regardless of race or sex. If the evidence offered in GKW is indeed correct, we should expect to find that different individuals, by race or sex, will choose different benefit packages. At that point the employer practice should be sheltered by the doctrine announced in EEOC v Sears, Roebuck & Co,⁶ because we have the most explicit declaration of unconstrained worker preferences that we can imagine. Commentators have, wrongly, attacked Sears on the ground that the female workers who opted for store commission jobs were conditioned wrongly by their social settings. But even if that strained interpretation made sense, it is hard to identify any external constraints on choice that fetter employee preferences in this situation. The widespread use of these menu options is not consistent with employers engaging in covert forms of discrimination. The menu strategy is an effective way to attract a diverse workforce because it does not shoehorn the benefits package into a one-size-fits-all straightjacket. GKW should praise employer ingenuity for maximizing the welfare of its employees under competition, not seek ways to expose employers to additional liabilities.

Nor is there any reason to think that GKW’s strategy for racial discrimination is likely to yield any forbidden fruits if put into play. In order for this to work, there has to be an assumption that the compensation demands across races are identical for both African-American and white workers. But suppose that they are not, and that on average the African-American workers have lower reservation wages than white workers, perhaps because of the discrimination in the general market. At this point, the pension-heavy strategy may well reduce the attractiveness of the compensation package somewhat. But that result is consistent with a loss in consumer surplus, and does not require us to assume that there will be much of a change in the rate at which African-Americans accept job offers. We know in addition that even if there is a variation in preferences across groups, there is also a variation in preferences within groups. At this point, one can ask just what the likely shift in workforce compensation is likely to be. My view is that it would be quite small, and for what end if it turns out that it makes it more difficult to recruit workers up and down the line. There does not seem to be much of a future in this practice.

There is, moreover, a real risk that the relentless effort to root out race and sex discrimination has serious adverse consequences of its own. In their article, GKW discuss briefly the Supreme Court’s most conspicuous effort into the field of sex discrimination in pensions, City of Los Angeles, Department of Water and Power v Manhart,⁷ where the City of Los Angeles followed standard actuarial practices by withdrawing more money from women’s salaries to cover its pension obligations than it did from men’s salaries. The statistical reason for this decision was that women lived longer than men and thus needed large amounts of money to fund their monthly payments, which were of the same magnitude as given to men. To put the point in a different fashion, the women paid into the pension plan the exact amount of money that they would have paid if there were no men at all in the employment pool. The men of course did the same.

The key point here is that the program adopted by Los Angeles should be regarded as the epitome of sound gender discrimination policy insofar as it prevented an illicit wealth transfer between the sexes. Stated otherwise, the present value of the entire benefit package was identical for men and women. Men got the additional benefit of a higher monthly payment. Women got the benefit of a longer expected life. Manhart thus showed the capacity for the employment discrimination law to disrupt the rational behavior of both public and private institutions, by using the antidiscrimination law to create an undeserved cross subsidy between men and women, which was a consequence of the rigid formalism of the United States Supreme Court.

Yet note these flexible notions of discrimination could put employers into an impossible bind. Thus, suppose that attention shifts to employer life insurance policies. Under the menu approach set out above, the correct response is to offer the best competitive rates for men and women, and these will show that women receive better offers as a consequence of their lower risk of death in any given period. But now suppose that the City of Los Angeles decided that consistency required it to use the same formal approach for life insurance that the Supreme Court in Manhart forced upon it for pensions. At this point, the women workers could rely on the theories of GKW to demonstrate that they were the victims of employer discrimination. The firm picked a mandatory insurance benefit which it then deliberately mispriced to drive women applicants from the roost. So we now have a new theory of inevitable discrimination. Women, but not men, and African-Americans, not whites, get to pick whether the economic or the formal conception of discrimination governs the case. Since every case will have either formal or impact discrimination, no employment practice is safe.

There are two conclusions that I draw from this general saga. The more modest one is that we should give new theories of employment discrimination a well-deserved vacation on the grounds that they are likely to spawn more discrimination than they prevent and to do so at a public and private cost that makes everyone worse off. My more aggressive conclusion tracks that which I have argued for since I wrote Forbidden Grounds: The Case against Employment Discrimination Laws. Just repeal the employment discrimination laws in their entirety, except as they apply to monopoly situations, of which there are virtually none in private unregulated markets.⁸ One of the reasons for this position is that it frees up any and all affirmative action programs from the legal limbo in which they are rightly placed under the current law. The text of Title VII is perfectly neutral on race and sex, for it applies to “any individual” as a conscious effort to introduce a color- and sex-blind regime into the law.⁹

The tortured interpretation of the text to allow affirmative action on the one side and to impose disparate impact liability on the other¹⁰ has had two serious dysfunctional consequences. The first is to abandon all principled rules of statutory construction in order to adopt a highly race-conscious endeavor. What could be done in the one case can be done in the next, which imposes a serious crimp on all rule-of-law values. The second is to create the need to develop some ad hoc public justification for affirmative action programs in the private and public sector, which in turn gives all institutions a strong incentive to develop narrative accounts that overstate the level of discrimination, especially in recent times, in order to lend legitimacy to these programs. In the private sector, at least, the principle of freedom of association allows the programs to go forward without needing to tarnish the reputation of other individuals. And for public institutions the correct test, I continue to believe, is to allow them in employment contexts to mirror the voluntary practices that dominate private institutions, which in turn permits the same kind of employment practices in both markets. And this freedom in labor markets comes at a much lower cost than the current suffocating regime.

And to what end? GKW do not offer any aggregate statistics that indicate that the position of African-American workers lags behind that of whites, controlling for the usual key differences in education and work experience and the like. That literature is of course enormously complex, and among its most persistent findings are that wage gaps between blacks and whites prove significant for men, but not for women.¹¹ The explanations for that disparity are likely to prove complex, but invidious discrimination on racial grounds does not look to be one of them.

The situation on the ground, moreover, is quite different from what it was some years ago. When I started teaching in 1968, the faculties were pretty much white and male. My first Dean, Dorothy Nelson, was a real pioneer.  The composition of every university and every business has been transformed in the interim. I do not think that this is in response to legal pressures, but in response to real perceived demands inside the organizations in question. The high level of support for affirmative action cannot be squared with a covert racial or sexual animus on the part of white men who now occupy a shrinking proportion of the dominant positions. Abigail Thernstrom was quite right to attack the Attorney General, Eric Holder, for his dismal account of race relations in his February 18, 2009 speech.¹² It does not help matters today to make bald assertions that “in things racial we have always been and continue to be, in too many ways, essentially a nation of cowards.”¹³

That broad denunciation denigrates the brave work and large sacrifices of too many honorable people. There is no reason to get smug on questions of progress on matters of race and sex, but the thought that any tightening of the anti-discrimination laws can help improve the current situation should be put firmly to one side. Yet Congress does not seem to be listening. Recently, it adopted the Lilly Ledbetter Fair Pay Act, which included an unexplained one-sentence finding about the “reality of wage discrimination” in American life.¹⁴ It is therefore not too much to note the recent statistical information that the unemployment rates for men is higher in all relevant categories than for women.¹⁵ There are doubtless many possible explanations for this turn of events. But the one point that does seem clear is that on matters of race and sex discrimination our first order of business should be to give it a rest, not to embrace new theories of liability under a statute that has already outlived its usefulness.
 

Acknowledgments:

Copyright © 2009 The University of Chicago Law Review.

Richard A. Epstein is James Parker Hall Distinguished Service Professor of Law, The University of Chicago Law School; Peter and Kirsten Bedford Senior Fellow, The Hoover Institution; and a visiting law professor at New York University Law School.

This Editorial is a Response to the following Legal Workshop Editorial: Jonah Gelbach, Jonathan Klick & Lesley Wexler, Passive Discrimination, LEGAL WORKSHOP (U. CHI. L. REV. June 22, 2009).

Although the Duke Law Journal’s article, Milberg’s Monopoly: Restoring Honesty and Competition to the Plaintiffs’ Bar,¹ reflects a lot of effort by student author James McDonald, it is a very disappointing article in terms of analysis and reliability of information. Mr. McDonald and the Duke Law Journal are entitled to express their opinions on the important issues raised by class actions, but the article misapprehends many of the realities of class action law and practice, and repeats highly pejorative rumors and speculation about class actions as though they were fact.

By way of introduction and disclaimer, I was a partner in the Milberg Weiss firm for several years, and was an editor of the Duke Law Journal many years before that. I now practice and teach law.

The following are my principal concerns with the article:

1. Milberg Weiss did not suffer an “Enron-like collapse,” (p. 506), and is alive and well.

2. The federal prosecutors never charged, nor could they ever prove, that class members were harmed by the wrongdoing (p. 506). The best they could do when the trial judge asked them whether this was a “victimless crime” was to suggest that competing class action firms might have lost business to Milberg Weiss. The underlying cases were real fraud cases, prosecuted to judgments or court-approved settlements, yielding court-awarded attorneys fees. No client or defendant was disadvantaged by the wrongdoing, which affected only internal issues among class counsel as to leadership of the cases.

3. For the reasons stated in the prior paragraph, it is a gross overstatement to say that the tactics at Milberg Weiss were “as fraudulent and unethical as any action taken at Enron, WorldCom or Tyco.” (p. 507). Stockholders lost billions in those frauds, and the wrongdoing was central to the issuers’ businesses and was widespread. The vast majority of Milberg Weiss’s lawyers were uninvolved in the wrongdoing, and continue to represent investors and others, with court approval. Indeed, the Coughlin Stoia Robbins Geller & Rudman firm, partial successor to Milberg, was appointed to represent the investors in Enron despite ad hominem attacks like those in this article made by competing class action firms seeking competitive advantage from the indictment.

4. The term “strike suit,” (p. 507), is both pejorative and highly ambiguous in meaning. Contrary to the Note’s suggestion, it is most often used to refer to cases that have little merit but are filed to obtain a quick “cost of defense” settlement. That does not seem to be what the author means because few (if any) of the cases the author refers to were settled at that low level. It does not advance understanding of class actions to use such undefined (but highly charged) terms.

5. At page 508, Mr. McDonald says that Milberg Weiss breached its fiduciary duty to clients, but again, the Note provides no backup for that statement, and the prosecutors declined to state a theory for proving it.

6. Securities fraud cases do not pit stockholders against their own company. (p. 511). Rather, they pit stock purchasers during a period of alleged fraud (often far less than all stockholders, and including many ex-stockholders) against those who made false statements (officers, directors, accounting firms, investment bankers, et cetera, plus the company). The fact that business interests attack class actions by misdescribing them this way is not a good reason for the author to parrot this language. (Derivative cases do meet the author’s description, but derivative cases and class actions are different, and a serious legal journal should be able to keep them straight.)

7. To say that “many suits settled quickly for only a fraction of their potential worth” (p. 512) is the kind of vague attack we often hear on Capitol Hill. Nearly every civil case settles for a “fraction of its worth,” the only question being whether the fraction is three-fourths, or one-hundredth. Again, the author is repeating pejorative and empty phraseology employed by those unhappy with the fact that investors can band together and try to recover their fraud losses. Professor Janet Cooper Alexander’s article suggesting that all cases settle for the same fraction of their worth reached that conclusion by extrapolating from a grand total of three cases! It is rebutted in a piece I coauthored in the San Diego Law Review. Possibly the author’s research did not find it.

8. Mr. McDonald says that Mr. Lerach and his colleagues in California (I guess that would include me) “dreamed up” new types of claims and defendants, and went so far as to sue accountants, lawyers and bankers! There is nothing exotic about suing accountants for securities fraud, and lawyers (White & Case) were defendants in the first securities case I ever worked on, years before I joined Milberg Weiss. Bankers paid most of the billions recovered in Enron, so if we dreamed it up, it was a good thing.

9. The Note says that unidentified sources with whom the author has not spoken call Mr. Lerach a “Godfather-like . . . ruthless don” who demanded “tribute” from other law firms. (p. 514 n.60). This seems like a rather reckless statement to make without sources, and seems more appropriate to the pages of People Magazine than of the Duke Law Journal.

10. As the author points out, the 1995 Private Securities Litigation Reform Act (written by people who didn’t like class actions) placed large investors in a favored position as class action plaintiffs on the theory that large investors would know whom to sue, whom to hire as counsel, and when to settle. Thereafter, Milberg Weiss was retained by many large investors—public and union pension funds. Unable to accept a positive point that does not fit into his thesis, the author adds that “rumor suggests that Milberg Weiss paid a share of its attorneys’ fees to labor pension funds it represented.” (p. 532). I do not believe this to be true, nor have I ever read it anywhere else, and in any event, this type of rumor-mongering is really quite outrageous for an academic publication.

11. Mr. McDonald concludes, based on who knows what, that even after the 1995 Act, and separate and apart from the Milberg Weiss wrongdoing, “law firms continue to be chosen [for class actions] using suboptimal criteria such as personal relationships, as opposed to quality of representation.” (p. 533). How did he conclude this? Institutional plaintiffs choose law firms the same way corporate defendants do—location, reputation, prior relationships, price, et cetera. If institutional plaintiffs are choosing the largest, best funded, best staffed plaintiffs’ firms, and often using the same firm more than once, (p. 535) what exactly is wrong with that?

12. Even when the author trips over useful information, he misapprehends it. The reason securities lawyers were puzzled over the Milberg Weiss investigation and dubious about serious charges resulting therefrom (p. 533 n.188) is that they understood that what was being investigated was basically beside the point to securities litigators focused on the merits of their cases. (See next point.)

13. More generally, defense lawyers and other sophisticated players in this field (including judges) understand that the individual plaintiff does not run a class action, his lawyer does (with court oversight), and class action law recognizes this in many ways, for example, permitting counsel to settle a case even if the class representative does not support the settlement. Picayune disputes over who the plaintiff is, and whether he will “supervise” counsel bore serious litigators to death, because they are phony issues entirely collateral to the merits.

14. The author bemoans the lack of small firms obtaining lead counsel status (p. 535), but small firms do not get the defense side of class actions either, probably because these are not small cases.

15. Why should a pension fund that litigates one class action successfully be presumed less qualified to litigate another one (p. 541)? The author believes that constantly changing plaintiffs and constantly changing plaintiffs’ counsel somehow provides a public benefit, but it would appear more of a detriment to investors. Experience counts, and certainly is not a negative.

16. The author suggests that the class action market is dominated by “a few large firms seeking fast settlements.” There is no support cited for the latter half of this assertion, and it is simply wrong. The largest and best firms in this business settle some cases fast, settle some cases on the courthouse steps, and take some cases to trial. It is the smaller firms, and the neophytes, the very firms the author wishes to elevate, who often settle fast before they bankrupt their small law firms with a case that is more challenging than they suspected when they read breezy articles about the riches of class action lawyers.

I am sorry to sound so harsh toward a student piece, but Mr. McDonald chose a controversial topic, and having waded into deep water, he should have known how to swim better than this. I have spent thirty-five years in this field defending, prosecuting, and teaching class actions, and it is sad to read some of these misunderstood points, inaccurate allegations, and outlandish rumors in a publication I once served on, which is published at an institution I care about very much.

Acknowledgments:

Copyright © 2009 Duke Law Journal.

Len Simon is a former Partner at Milberg Weiss and a former Editor of the Duke Law Journal.

This Editorial is a response to the following full-length Note:  James McDonald, Milberg’s Monopoly: Restoring Honesty and Competition to the Plaintiffs’ Bar, 58 DUKE L. J. 505 (2008). Click here for the full version.

In The Modernizing Mission of Judicial Review,² Professor Strauss argues that the Supreme Court’s decisions in these areas are efforts to “modernize” the law by facilitating and accommodating developments in popular opinion, rather than actions that merely entrench the justices’ ideological viewpoints or personal whims. A modernizing court decision must satisfy two conditions. First, it invalidates a law only if it “no longer reflects popular opinion” or if “trends in popular opinion are running against it.”³ Second, the Court “must be prepared to change course” if “popular sentiment has moved in a different direction from what the court anticipated.”⁴ In one sense, the Supreme Court is always prepared to respond to developments in popular opinion, because the president and the Senate will use their appointment prerogatives to bring the Court into line. But Professor Strauss describes something different from these external constraints on judicial decisionmaking. A modernizing court itself designs principles and doctrines that are responsive to future developments in popular opinion.

No one can deny that the justices’ beliefs regarding future popular opinion are factors in the Court’s decisionmaking. Justices care about their legacies and future reputations; they would prefer to be remembered as a prescient jurist, such as the first Justice Harlan,⁵ rather than as Roger Taney.⁶ And these forward-looking influences have undoubtedly produced some Supreme Court decisions that fit within the modernizing paradigm that Professor Strauss describes.

But it is hard to accept Professor Strauss’s descriptive claim that modernization is the Court’s “dominant” or “central” approach in its capital-punishment and modern substantive-due-process jurisprudence.⁷ His analysis overstates the Supreme Court’s willingness and ability to accommodate future public opinion at the expense of judicial preferences; the Supreme Court simply has not displayed the level of modesty, or the respect for popular opinion, that Professor Strauss seeks to attribute to it. Nor can the modernization framework reconcile the Court’s capital-punishment and substantive-due-process cases with principles of democratic government. On the normative side, there are reasons to object to modernization as a theory of judicial review in addition to those that Professor Strauss identifies.

 
I.
Capital Punishment

Professor Strauss invokes the Supreme Court’s refusal to declare capital punishment unconstitutional per se in Gregg v Georgia⁸ as evidence of its “willingness to retreat” from its earlier decision in Furman v Georgia.⁹ Furman had declared capital punishment (as then practiced) to be unconstitutional, and prompted thirty-five states to reenact legislation authorizing the death penalty. But Gregg is only a small part of the Court’s post-Furman capital-sentencing jurisprudence. After Gregg, the Court continued to impede capital punishment by allowing multiple rounds of habeas corpus review,¹⁰ and imposing new procedural requirements that hinder prosecutors’ efforts to secure death sentences.¹¹ The Court eventually established contradictory constitutional requirements that states eliminate arbitrariness while giving sentencers unfettered discretion to dispense mercy;¹² this empowered lawyers to mount credible constitutional challenges to any capital-sentencing regime. And the same Court that decided Gregg invalidated mandatory capital-punishment regimes in North Carolina and Louisiana, which the legislatures had enacted only two years earlier in direct response to Furman.¹³ It is hard to characterize these post-Furman obstacles to capital punishment as “modernizing”; popular support for capital punishment grew steadily from 1972 through 1994, and exceeded 60 percent in every Gallup poll taken since 1976.¹⁴ And few, if any, of these rulings suggest that the justices relied on an honest but mistaken belief that popular support for capital punishment was waning, or that the sentencing procedures that they invalidated were “outliers” or relics of a bygone era.¹⁵ Yet the Court continues to impose heavy costs on states with capital-punishment regimes, which allow only a fraction of condemned inmates to be punished in accordance with popular opinion.¹⁶ When one considers the Court’s death-penalty jurisprudence as a whole, the decision in Gregg looks less like an effort to accommodate the popular backlash to Furman and more like a strategy shift by the justices to undermine capital punishment through more subtle, underhanded means.

Atkins v Virginia,¹⁷ which prohibited executions of mentally retarded inmates, is another decision that appears to support Professor Strauss’s modernization thesis. Crucially, Atkins left the task of defining “mental retardation” to legislatures,¹⁸ which established a clear mechanism for the Court to accommodate political-branch pushback. If future popular opinion turns against Atkins, legislatures can establish high (or insurmountable) thresholds for “mental retardation.” This will enable prosecutors to seek capital punishment against mentally retarded defendants, and the justices can reconsider their stance if the condemned inmates challenge their death sentences in court.

Thompson v Oklahoma¹⁹ also appears to be a modernizing decision. The petitioner in Thompson was a fifteen-year-old murderer who argued that his death sentence violated the Eighth Amendment. Four justices wanted to impose a constitutional ban on capital punishment for those who were under sixteen years of age when they committed their crime. But Justice O’Connor refused to join their opinion, and opted for a narrower holding that prohibited fifteen-year-old offenders from being executed pursuant to a capital-punishment statute that fails to specify a minimum age. This allowed future legislatures to respond by explicitly authorizing capital punishment for fifteen-year-old murderers, in the event that the Court’s decision had misconstrued the “evolving standards of decency” in American society. Like Atkins, Justice O’Connor’s approach in Thompson provided a mechanism to accommodate political-branch pushback in the near or distant future.

Yet Atkins and Thompson show that Roper v Simmons²⁰ and Kennedy v Louisiana²¹ cannot possibly fit within the modernization framework that Professor Strauss describes. In those cases, the Court decreed an end to executing juveniles and child rapists, but left no mechanism for future cases that could test the Court’s “willingness to retreat.” Even if a large number of legislatures defied the Court and enacted statutes authorizing the death penalty for juveniles and child rapists, every trial-court judge, bound to follow the Supreme Court’s rulings,²² would bar prosecutors from seeking capital punishment in those cases. Without the ability to secure a death sentence against a juvenile or a child rapist at trial, there would never be an Article III “case” that would enable the Supreme Court to reconsider Roper or Kennedy. Even if the justices are “willing to retreat” from these decisions in the future, they would be unable to do so.

If the Roper and Kennedy Courts were truly engaged in modernization, they would have adopted the approach that Justice O’Connor used in Thompson: invalidate the existing death-penalty statutes, but leave the door open for legislatures to reauthorize capital punishment for juveniles and child rapists. The justices were aware that this was an available option, there was Court precedent to support it, yet they chose not to use it. One can only conclude that the purpose and effect of these decisions were to entrench the justices’ ideological preferences, rather than to accommodate present or future popular opinion.²³

 
II.
Substantive Due Process

Here, too, Professor Strauss is too quick to characterize the Court as willing to accommodate political pushback. Although Lawrence v Texas²⁴ disclaims any ruling on same-sex marriage, or other gay-rights issues, it also contains broad, sweeping language that could easily be read to support more expansive constitutional rights for homosexuals.²⁵ Professor Strauss predicts that this “open-ended” opinion will enable the Court to decide future gay-rights controversies in accordance with evolving trends in popular opinion. He interprets the Court’s abortion jurisprudence in a similar manner. Despite Roe v Wade’s²⁶ rigidity, Professor Strauss believes that Planned Parenthood v Casey’s²⁷ “undue burden” test is a device to accommodate future developments in public opinion.

But one could just as easily surmise that the vague language in Lawrence and Casey is designed to accommodate judicial preferences at the expense of future popular opinion. Applications of loose standards, or open-ended opinions, are impossible to falsify. This empowers the justices to decide cases in accordance with their own preferences, as they can invoke Court precedents to support almost any result. And they need not spell out the full range of their ambitions until later, which avoids the public backlash that a more transparent or rule-like decision might provoke.

We have at least one data point that corroborates this view of the Court’s substantive-due-process jurisprudence. After Casey established the undue-burden regime, thirty-one states enacted laws against the procedure known as “partial-birth abortion,” and refused to allow broad exceptions when the mother’s health was endangered. Indeed, more states had outlawed partial-birth abortion than the juvenile death penalty. Yet Stenberg v Carhart²⁸ invalidated these statutes, disproving any notion that the vague “undue-burden” test was meant to accommodate future trends in popular opinion. Instead, the vagueness empowered the Court to impose its own preferences against the political branches. As for “willingness to retreat,” the Court later upheld a federal statute banning the procedure,²⁹ but that was only after the Court’s membership had changed. And the dissenters in Gonzales v Carhart,³⁰ far from showing a “willingness to retreat” in the face of this federal statute, threatened to overrule the majority’s decision at the earliest opportunity, without any regard for how future public opinion might evolve.³¹ None of this is “modernization”; the justices are voting according to their own views without any regard to trends in popular opinion. If “modernization” were driving the Supreme Court’s substantive-due-process decisions, then one would expect the Court to have invalidated Florida’s unique-in-the-nation ban on adoptions by homosexual parents,³² rather than the partial-birth abortion bans that thirty-one states had enacted.

 
III.
Should Courts Modernize?

Professor Strauss expresses some doubts as to whether modernization is a normatively desirable role for the Court to play.³³ There are additional reasons to look askance at modernization as a theory of judicial review.

First, a modernizing court discourages compromise, moderation, and nuance in the political branches. Consider moderate conservatives who oppose same-sex marriage, yet support (or at least tolerate) other legal reforms, such as civil unions, that give some legal recognition to same-sex couples. These individuals must confront the very real possibility that a modernizing court will use their toleration for civil unions as evidence to support a constitutional right to same-sex marriage. Similar quandaries exist for moderates who support capital punishment but want it used sparingly. The rarity of juvenile executions led to their extinction by court decree; capital punishment might suffer a similar fate if elected officials allow the execution rate to fall. Former Attorney General John Ashcroft was criticized for pursuing death sentences in federal prosecutions against the recommendation of US attorneys.³⁴ Yet such behavior is rational in a world where the Supreme Court anticipates trends in public opinion and entrenches them as constitutional law, even if it produces wasted government resources and gratuitous loss of life.

Modernization forces politicians, interest groups, and informed citizens to extremes. It induces them to oppose beneficial reforms solely out of fear that such reforms might cause a modernizing Court to impose a more radical solution that they oppose.³⁵ “Slippery slope” concerns, so often contrived or exaggerated in political discourse,³⁶ become real and salient with a modernizing court. Interest groups will fight with even more ferocity when they know the Supreme Court will use a political compromise as evidence that the country is ready for more radical change—because yielding an inch today may surrender a mile tomorrow. None of this is conducive to rational policymaking.

Modernizing courts also erode the protections that the Constitution confers on political minorities. The Constitution does not establish rule by national political majorities (much less emerging majorities); it establishes a federal republic that provides extensive protections to political minorities. The federal government’s powers are confined to the enumerated provisions in Article I; this enables national political minorities to migrate to local jurisdictions with more agreeable laws. Article I’s bicameralism-and-presentment requirements effectively create supermajoritarian requirements for national political majorities that seek to impose their will. And Article V’s amendment process establishes an extraordinary supermajority hurdle before a political majority can constitutionalize its preferences and remove issues from the normal political process. All of these provisions are designed to protect political minorities, empowering them to block majoritarian initiatives, or to insist on compromise in exchange for their assent.

The modernization theory enables the Supreme Court to circumvent these protections from national-majority rule by constitutionalizing emerging trends in popular opinion, in the guise of interpreting vague constitutional language such as “cruel and unusual punishments” or “due process of law.”³⁷ This not only leads to the “bias toward centralization”³⁸ that Professor Strauss describes, it also threatens to undermine the rule of law. Almost everyone acknowledges that constitutional text, at the very least, serves as a “focal point” that enables a diverse society to agree on what qualifies as law.³⁹ Today’s national majorities accept the Constitution’s limits on national-majority rule on the understanding that those limits will protect them if they become a national minority in the future. But when the Supreme Court uses loose construction to subvert the explicit constitutional limits on national-majority rule (or emerging-majority rule), then a national majority’s decision to accept constitutional limits on its power begins to seem less like a social contract and more like an act of unilateral disarmament. There is far less risk of this happening when courts use judicial review merely to correct defects that undermine the lawmaking processes that the Constitution establishes,⁴⁰ to enforce established and accepted understandings of constitutional provisions, or to adopt a plausible (even if disputed) interpretation of the Constitution’s original meaning. Indeed, many, though not all, of the modernizing cases that Professor Strauss describes can be defended on such grounds.⁴¹ It is quite another matter, however, when the Supreme Court transparently circumvents the explicit constitutional limits on emerging-majority rule and the Constitution’s criteria for creating or changing federal law. The danger is that those who find themselves on the losing end of such modernizing court decisions will be less willing to uphold their end of the bargain by adhering to the Constitution’s limits on emerging-majority rule when they control one of the other branches of government.⁴² Indeed, one need only read the Bush Administration’s legal memoranda to see how the executive branch, just like the Supreme Court, can use loose interpretation to erode the Constitution’s limits on emerging-majority rule and its procedures for enacting or amending federal law.⁴³ One should expect the constitutional focal points that protect political minorities from national-majority rule to further unravel if the public tolerates, or if academic elites rationalize, the notion that “modernization” is a proper or legitimate role for the Supreme Court to play.

Acknowledgments:

Copyright © 2009 University of Chicago Law Review.

Jonathan F. Mitchell is Assistant Professor of Law, George Mason University School of Law.

Thanks to Richard Epstein, Ashley Keller, Adam Mortara, David Schleicher, and David Strauss for comments.

 
I.
Public Use versus Public Ownership

And so we begin:  “[N]or shall private property be taken for public use, without just compensation.”²  Of the boundless interpretive issues that arise, one indisputable point of direct relevance to Bell’s article is that “public use” is not synonymous with “public ownership.”  It follows therefore that there can be takings for public use that result in private ownership. The trick is to identify these cases, and explain why they make sense. To see how this works, it is useful to tie the public use issue in takings law to the general law of common carriers. This general law has been frequently discussed under the elusive rubric, drawn from Sir Matthew Hale, of “property affected with the public interest.”³ Hale’s view, which came to dominate, held that it was proper to subject property affected with the public interest to regulation on the key issues of access and rates.

These two venerable phrases, both of which contain the word “public,” are linked together in an instructive way. The public use for which condemnations are unambiguously allowed are those condemnations, as Bell notes, that are done for the benefit of, or at the instance of, railroads and grist mills. Historically, these institutions typically had an obligation to serve all comers at reasonable and nondiscriminatory rates, precisely because they exercised monopoly power owing to their strategic locations. The condemnations were routinely allowed in large measure because the assembly problem of which Bell speaks is much more acute with respect to these activities over which an entrepreneur has limited locational choice. As the Mill Act cases of the last third of the nineteenth century⁴ make clear, only so many dams can be spaced along the river, and each of them has to flood farmland owned by many separate parties.⁵ And the assembly problems faced by the long and skinny railroads that have not received government land grants present the holdout problems to which Bell rightly refers.

Yet there is a second side to this issue. Once the assembly is completed with the eminent domain power, the rules governing property affected with the public interest allow for state regulation to control monopoly power. An essential portion of that program was access to the public at large. The two parts of the picture thus worked hand in hand. The private owner has to make his property available for public use. The Clause is well drafted not to require public ownership, which would have the horrific consequence that all railroads, mills, electricity companies, and so on, which relied on public condemnation, would have to be state-owned. Think what one may of the various systems of regulation; usually they beat total nationalization hands down, if only because they face the risk of erosion through technological changes.

 
II.
The Historical Evolution of Public Use

So far Bell has to be right in insisting that private takings have long been an essential portion of the legal landscape. But it is a giant leap to assume that Kelo and its progeny represent an orderly continuation of a development that has a strong constitutional and historical pedigree. In fact, the historical evolution of the public use doctrine leading up to Kelo shows the poverty of its internal analysis.

As Bell rightly notes, the two related notions that mark this first generation of private-ownership public-use cases are a combination of holdout and necessity. The key question is whether those grounds are sufficient to justify a government taking for private use when the ultimate party is not an industry affected with the public interest, bound by some obligation of universal service. The early twentieth-century cases were grudgingly uneasy about this point, but in the end they relented so that private easements of necessity in difficult terrain could be granted to parties who would otherwise be at the mercy of a few nearby landowners. The owner of scrubland must be forced to surrender an easement so that the owner of a mine—whose assets are not mobile—can reach a railroad track that is built after the mine is put into operation. The doctrine here is in more evident tension with the text, but the outcome is justified on the ground that holdouts and externalities are the two greatest weaknesses of voluntary markets. Thus, the coercive power of the state should be allowed to overcome the former, so long as it does not wipe out the property interests of the servient tenement, who is of course protected by the just compensation requirement.

Putting the problem in this way shows historically that the class of private takings was not infinitely expandable. On the other side of the line would be taking land from one person and giving it to another when no holdout or assembly problem was involved at all. Yet that is precisely the movement that started in the 1930s when the advocates of public housing started insisting that they raze neighborhoods in order to make way for large, forbidding projects that looked more like fortresses than homes. Here it is, to say the least, bad policy to engage in these massive forms of social intervention, especially since there is no reason at all to build huge government housing projects that are destined to become the slums of the next generation. Such large-scale government interventions have largely been abandoned today. Under a sensible public use requirement, it would never have been tried.

The giddy optimism of New Deal judges brushed aside the carefully circumscribed extension of public use congenial to classical liberal judges. So while the public use requirement could not prevent Robert Moses from laying waste to neighborhood after neighborhood for cross-town highways, it could have stopped construction of massive housing projects. Unfortunately, the planning movement reached its zenith in 1954 in Berman v Parker,⁶ where Justice Douglas, in celebration, signaled that the courts were getting out of the business of superintending local planning authorities,⁷ to borrow a phrase, “with all deliberate speed.”  He was therefore all too happy to allow the local Washington, DC planners to throw an owner out of his department store on the ground that his neighborhood was blighted, even if his store was fine. What misplaced faith in land use planning!

 The trend accelerated in 1984 with the decision in Hawaiian Housing Authority v Midkiff,⁸ when Justice O’Connor uttered a word that she came to truly regret (but not entirely repudiate) in holding that any “conceivable” public purpose would do.⁹  One such purpose was counteracting the supposed oligopolistic tendencies in Hawaiian land law, when the real villain was Hawaii’s insanely restrictive zoning ordinances that kept new housing units from coming online. So in Midkiff the law moves from overcoming the bona fide blockade to blessing a carefully staged play in which a tenant could condemn his landlord’s interest in real property at the end of a short-term lease, so long as he put the money in escrow with public authorities before they pulled the trigger. The public, of course, just shrugged at this version of strong-arm behavior because no one cared about large companies that lost their reversionary interests. If anything, they probably cheered on the state for helping the little guy.

 
III.
At Last Kelo

Kelo is of course worlds apart from Midkiff in the popular eye. Unlike the earlier decisions, the wise elders of New London targeted ordinary people for eviction from their homes for the sake of a real estate project that was misconceived from the start. That is a theme to which populists can easily relate, because it is easy to condemn developers when all the hanky-panky was done by public actors. The key analytical question, however, asks how the facts of Kelo match up with the extended holdout rationale that Bell locates at the core of modern takings laws. Badly in fact: Kelo did not present any holdout question at all. Ms. Kelo was a modern day Greta Garbo: all she wanted was to be left alone, which is why throughout her long ordeal she posted a “not for sale” sign in front of her property.

Ah, the answer may come, this was just a way to play the holdout game at its highest. Not really. To play the holdout game a landowner has to have some leverage over a developer that wants to put up an integrated project. It is for that reason that eminent domain powers are often invoked in order to erect athletic facilities like the approved misbegotten arena at Atlantic Yards in Brooklyn.

Unfortunately, the vaunted planners in New London were, and to this day remain, the gang that could not shoot straight. They had no idea what use they wanted to make of Ms. Kelo’s house on the periphery of their site. Indeed, they had no plans to fill up the empty contiguous lands that they had acquired from abandoned government projects in transactions that had no eminent domain source at all. Justice O’Connor generated lots of hurrahs when she protested that after Kelo,  ”[n]othing is to prevent the State from replacing any Motel 6 with a Ritz-Carlton, any home with a shopping mall, or any farm with a factory.”¹⁰ We should be so lucky. Unfortunately, the Ritz-Carlton was never in play in Kelo. The true disgrace of public governance is that the city replaced a perfectly serviceable home with nothing at all—which is why Ms. Kelo’s site stands vacant to this day. The empty land stands in mute tribute to the fancy efficiency justifications for Kelo. Mark Moeller and I were not proud in the amicus brief we wrote in Kelo. We urged the Supreme Court to take the low visibility road of delaying the taking of the houses until the City of New London could figure out what to do with the vacant land. But it did not work out that way in part because the City must have felt pressure to spend the huge state subsidy it received for running the project. There was no “bargaining flaw” to correct in Kelo—just an ill-conceived bailout.

Nor should we take comfort in thinking that we can actually generate consistent revenue if a local government can gobble up whatever land it wants. Justice O’Connor made clear her distaste of takings executed for revenue enhancement purposes¹¹ (a position that the Michigan Supreme Court took in 2004 in Wayne v Hathcock,¹² which reveals a far more prescient attitude on eminent domain). She could have added that the City’s revenue gambit really won’t work. Sure, it may increase the revenue in the short term, but the live specter of strategic condemnations will lead other landowners to hold back on customized improvements that could easily be condemned for a “market” value that is far lower than their customized value to the owner. Who needs to stifle development in all cases to condemn some parcels of land in a few?

 
IV.
Conclusion

In fact, the efficiency case is one that speaks strongly to the stability of property rights, which means that we should go easy on eminent domain even when there is a bona fide public use. Bell makes reference to notion of “pliability rules,” which, in essence, allow local governments to mix and match injunctive relief for landowners with compensation for their losses. No doubt some cases will call for the application of both remedies. But by taking a leaf from the work of Calabresi and Melamed,¹³ Bell repeats their mistake of thinking that local governments should be free to mix and match these remedies at will. That is not a good idea. In general, the right impulse is to stick with strong ownership rights except when there are real holdout problems for the construction of public projects. Shopping malls and housing projects need not apply, for while individual developers may have grandiose ambitions, others are willing to work on a small canvas that permits voluntary assembly. Some affirmatively want to steer clear of the fancy plans of Michael Heller, Rick Hills, Amnon Lehavi, and Amir Licht, which propose allowing individual developers to file area-wide development plans on whatever scale they see fit, so long as they give public notice to the world so that other bidders can join in the fray.¹⁴  This is all too clever by half. There is enough hysteria in the air now. What we need is a set of public reassurances that the adventurism in Kelo will not be repeated so that good people can sleep well at night.

Acknowledgments:

Copyright © 2009 University of Chicago Law Review.

Richard A. Epstein is James Parker Hall Distinguished Service Professor of Law, University of Chicago Law School.