Posts Tagged ‘Elizabeth Warren’

Nevada’s antitrust deal sheds light on Elizabeth Warren’s big plan

T-Mobile and Sprint, the #3 and #4 wireless carriers, would like to combine so as to more effectively compete with Verizon and AT&T, the two dominant players in the cellular service market. Various states went to court against the merger, arguing (dubiously) that the combination would harm consumers and drive up prices. And now, via Reuters, this:

Also on Monday, Nevada said it would withdraw from the lawsuit in exchange for early deployment of the next generation of wireless in the state, creation of 450 jobs for six years and a $30 million donation to be distributed by Nevada Attorney General Aaron Ford and aimed at helping women and minorities, Ford’s office said.

How blatant can you get? The best touch, of course, is the $30 million fund with which to ingratiate lucky beneficiaries around the state. (“The recipients of these grants for the use of the charitable contribution will be at the discretion of Nevada’s attorney general” — that is, the same AG Ford who filed and settled the state’s case, and from whose press release is excerpted that sentence.) It looks a lot like the familiar cozytown set-up in many cities in which permission to build a large development or win a public contract just might call for a hefty donation to a local nonprofit with ties to the mayor and council.

Notwithstanding the best efforts from some quarters to develop per se rules in hopes of generating clear and predictable legal outcomes, antitrust law remains a world of subjective interpretation in which government office-holders are left with great discretion regarding how and against whom to wield enforcement power. Whether you want to call it logrolling or use a less flattering term like “extortion,” the temptation is to trade off antitrust leniency for some of the other sorts of favors business might be able to render government actors.

All of which brings us to presidential candidate Elizabeth Warren’s and other candidates’ new proposals for antitrust, which a CNBC headline accurately reports (as to Warren’s) “would dramatically enhance government control over the biggest U.S. companies.” In particular, the proposals would invite the government far more deeply into oversight of business practices, including refusal to share “essential” facilities with competitors, pricing goods below the cost of production, and much more, as well as mergers and acquisitions.

It’s hard to know whether Sen. Warren sees all this new arbitrary discretion as a bug, or a feature, in her enormous plan. Either way, an accumulation of power that tempting will sooner or later attract appointees seeking either a political whip hand over the U.S. corporate sector, a source of payouts like that in Nevada, or both. [cross-posted from Cato at Liberty]

November 6 roundup

  • In the greater Oklahoma City area next Tuesday, Nov. 12? Come out to my lunchtime law school talk at the U. of O. on employment law, sponsored by the school’s Federalist Society chapter [details]
  • A Sixth Circuit opinion thus begins: “This court once observed, ‘[w]hen a party comes to us with nine grounds for reversing the district court, that usually means there are none.’ Steven Hank comes to us with twenty-seven.” [Hank v. Great Lakes Constr. Co., Court Listener]
  • Elizabeth Warren tale of “two cents” wealth tax Hallowe’en costume doesn’t quite add up [my Cato post; another point]
  • Speaking of Warren, when asked what would happen to displaced health insurance workers once private insurance is done away with — not, to be sure, the strongest objection to her plan, but still one worth having an answer for — saying they can go work for auto or life insurers makes about as much sense as saying displaced workers from dance studios can go work for recording or graphic design studios [The Hill]
  • No good deed: Brad Pitt, others on charitable foundation can be sued over alleged flaws in New Orleans homes [AP/WDSU]
  • “Coincidentally or not, current and former members of the Baltimore Orioles, which the Angelos family owns, were dispatched to the [Maryland] State House for a good will visit while the [Angelos asbestos] bill was under consideration.” [Josh Kurtz, Maryland Matters]

Banking and finance roundup

  • Supreme Court poised to strike down structure of Consumer Financial Protection Bureau (CFPB) as unconstitutional [Ilya Shapiro, National Review]
  • No love lost between Elizabeth Warren’s, Barack Obama’s teams when consumer finance regulation was on the table [Alex Thompson, Politico]
  • Cato Daily Podcasts on two topics with Diego Zuluaga and Caleb Brown: Congress is considering a ban on cashless stores, and Bernie Sanders wants to create a public credit scoring system;
  • And speaking of the Vermont senator: “The Economic Consequences of Sen. Sanders’ Stock Confiscation Plan” [Ryan Bourne, Cato]
  • State Street hearing before Boston federal judge lays bare politics and accounting issues of one large securities class action settlement [Daniel Fisher/Legal Newsline and more, Law360 also via Fisher]
  • SEC rules on “accredited investors” are an attempt “to protect us from ourselves. Yet there are no such rules for betting in Las Vegas.” [David Henderson]

Labor and employment roundup

  • Democratic contenders’ platforms on employment issues: Sanders still gets out furthest to left but Warren, Buttigieg, and O’Rourke giving him some serious competition [Alexia Fernández Campbell, Vox]
  • Occupational licensure: more states embrace reform [Eric Boehm] Bright spots include Colorado (Gov. Jared Polis vetoes expansion) and Pennsylvania (recognition of out-of-state licenses) [Alex Muresianu and more] Connecticut catching up on nail salons, in a bad way [Scott Shackford]
  • “Trump’s Labor Board Is Undoing Everything Obama’s Did” [Robert VerBruggen, NRO] A theme: to protect employee freedom of choice [Glenn Taubman and Raymond J. LaJeunesse, Federalist Society]
  • Mistaken classification of a worker as an independent contractor, whatever its other unpleasant legal implications for an employer, is not an NLRA violation when not intended to interfere with rights under the Act [Todd Lebowitz; Washington Legal Foundation; In re Velox Express]
  • Modern employers need to watch out for their HR departments, says Jordan Peterson [interviewed by Tyler Cowen, via David Henderson]
  • Despite effects of federal pre-emption, state constitutions afford a possible source of rights claims for workers [Aubrey Sparks (Alaska, Florida constitutions) and Jonathan Harkavy (North Carolina), On Labor last year]

Wealth registries and exit taxes

Not scary or intrusive at all: presidential candidate Sen. Bernie Sanders (I-Vt.) has called for enacting a “national wealth registry,” the better to enforce future schemes of taxation, confiscation, and restraints on expatriation [Brittany De Lea, Fox Business; related, Chris Edwards, Cato; Emily Ekins on opinion poll] And the steep “exit tax” that Sen. Elizabeth Warren (D-Mass.) and Sanders propose to slap on wealthy individuals who depart the U.S., of up to 40 and 60 percent respectively, did not sound better in the original German [Ira Stoll; earlier]

P.S.: On the constitutionality angle, note that the Competitive Enterprise Institute has just filed a lawsuit on behalf of a couple challenging the constitutionality of a provision of the 2017 tax reform law known as the Mandatory Repatriation Tax. Counsel Andrew Grossman, quoted in the CEI press release, stated:

The Mandatory Repatriation Tax is unconstitutional for the same reason that a wealth tax would be. The Constitution does not permit Congress to simply declare money that it wants to tax to be income and then demand its cut. And the courts have never permitted retroactive taxation reaching back anywhere near the 30 years, as the Mandatory Repatriation Tax does. The details of the tax may be complicated, but the constitutional violations are clear.

Liability roundup

  • As one who wrote at length about the silicone-implant litigation at the time — founded as it was on junk science theories hyped to panic potential plaintiffs — I agree that Elizabeth Warren has nothing to apologize for about her bankruptcy work for Dow Corning. Move on to better criticisms, please [Darren McKinney, WSJ] Related: Federalist Society teleforum on mass tort bankruptcies with Steven Todd Brown, Ralph Brubaker, and Dan Prieto;
  • “What should be the duty of public retailers whose customers have bizarre or offensive clothing, appearance, demeanor or behavior but do not actually engage in or threaten violence on the retailers’ premises? To avoid risk, should the retailers exclude them from their stores?” [Eugene Volokh quoting federal court opinion in Budreau v. Shaw’s Supermarkets, Inc. (D. Maine)]
  • New York residents should brace for higher taxes as trial-lawyer-backed bill in Albany exposes public authorities to more road claims [John Whittaker, Jamestown Post-Journal]
  • “Kansas Supreme Court Throws Out Personal Injury Damages Cap” [Associated Press]
  • Whose proposal for joint trial counts as triggering removal of mass action under the Class Action Fairness Act? The court’s? Choice between federal and state courts implicates fundamental questions of fairness [Eric Alexander, Drug and Device Law on Supreme Court certiorari petition in Pfizer v. Adamyan]
  • Glyphosate, talc verdicts suggest juries may be paying more attention to purported smoking-gun documents than to scientific evidence on causation [Daniel D. Fisher, Northern California Record; Corbin Barthold, WLF] “Inconsistent Gatekeeping Undercuts the Continuing Promise of Daubert” [Joe G. Hollingsworth and Mark A. Miller, WLF]

Banking and finance roundup

  • Neat trick: banks can get Community Reinvestment Act credit for lending in “low-income census tracts” even when that means extending $800K mortgages to gentrifiers [Diego Zuluaga, Politico, related policy analysis and Cato podcast]
  • Sen. Elizabeth Warren has a plan to regulate private equity. It’s not good [Steven Bainbridge] When you’ve lost veteran liberal columnist Steven Pearlstein… [Washington Post]
  • Speaking of terms with ugly histories, maybe it’s time for Sens. Warren and Sanders to retire the metaphor of the financial sector as vampires or “vultures” engaged in “sucking” or “bleeding” [Ira Stoll, related]
  • Volume of securities litigation is on sharp upswing, policy remedies needed [Kevin LaCroix/D&O Diary and more, Chubb “Rising Tide” report] Rising in Australia too [Nicola Middlemiss, Insurance Business Australia]
  • Unconstitutionality of CFPB structure hasn’t gone away and neither has the need for the Supreme Court to tackle the issue [Ilya Shapiro on Cato certiorari amicus brief in Seila Law LLC v. CFPB] Appointment process for Puerto Rico financial oversight board under PROMESA law is of doubtful constitutionality [Shapiro on Cato amicus brief in Financial Oversight & Management Board for Puerto Rico v. Aurelius Investment, LLC]
  • In an age of professional consultants, why does the law continue to require corporate governance to be delivered by way of individual board members? Firms specializing in board services could offer attractive alternative [Todd Henderson, Charles Elson, Stephen Bainbridge, Federalist Society Forum]

Elizabeth Warren on white-collar prosecution — and what to do instead

My new piece at Cato, citing Carissa Byrne Hessick and Benjamin Levin at Slate, discusses Sen. Elizabeth Warren’s proposal to lower the standard for criminal culpability in many white-collar prosecutions to simple negligence. It begins:

Presidential candidate and Sen. Elizabeth Warren (D-Massachusetts) wants to see more business people behind bars, and she’s not fussy about how to make that happen. In a Washington Post op-ed last week she unveiled a new Corporate Executive Accountability Act, which in her words would expand “criminal liability to any corporate executive who negligently oversees a giant company causing severe harm to U.S. families.” She says she wants top executives to know that they can be (again in her own words) “hauled out in handcuffs for failing to reasonably oversee the companies they run.”

And ends:

The civil courts already hear many thousands of cases seeking damages over claims that serious harm arose from industry conduct that falls short of being reckless or deliberately wrongful. Not infrequently – as with claims over supposed “sudden acceleration” in cars, cancer from Roundup, and autoimmune disease from silicone breast implants – large sums get paid even when science finds no basis for concluding the products caused the harms alleged, such is our legal system’s tendency to tilt against business defendants as unsympathetic. Under the Warren standard, complaints that driverless cars have gotten into avoidable accidents or vaccines have caused side effects – maybe even that cheeseburgers, supersize sodas, and margaritas have worsened the harms of obesity – will put business people at risk for long prison terms. To her backers, will this count as a bug? Or a feature?

Aside from the propriety of criminalizing simple negligence, the issue is not so much that individuals as such are the wrong target for white-collar prosecution — as Stephen Bainbridge has argued, holding them personally culpable will often make more sense than prosecuting the corporate entity — as that notions of collective guilt must not be used to impute criminal culpability to others within an organization not proved to have committed wrong acts or acted with wrong mind. While the Warren proposal would march off in the wrong direction, in the Cato Handbook for Policymakers two years ago,
I contributed a chapter on white-collar prosecution with the following recommendations:

Congress and state lawmakers (and where appropriate, the president and executive branch law enforcement officials) should

  • review existing law with an eye toward rolling back overcriminalization and replacing criminal penalties with civil sanctions where feasible;
  • enact reforms such as the model Criminal Intent Protection Act to bolster recognition of mens rea (punishment should ordinarily require a guilty state of mind, not inadvertent noncompliance) as well as the related mistake of law defense in criminal law;
  • codify the common law rule of lenity (ambiguity in law should be resolved against finding guilt), as Texas joined other states in doing in 2015;
  • devise safe harbor provisions that enable economic actors to avoid criminal liability by behaving reasonably and in intended compliance with the law;
  • limit agency discretion to create new crimes without an act of the legislature;
  • enact guidelines to strengthen judicial oversight of deferred prosecution agreements and nonprosecution agreements (explicit court approval, not the unilateral say-so of government prosecutors, should be required for appointment of corporate monitors or the extension of time under supervision);
  • enact asset forfeiture reforms such as Rep. Jim Sensenbrenner’s (R-WI) Due Process Act, including requiring that conviction be a prerequisite for forfeiture; review and, where appropriate, reduce or coordinate per offense fines and sanctions to avoid levying penalties disproportionate to the gravity of misconduct;
  • prohibit, as a proposed New Mexico law would do, the allocation of settlement moneys (cy pres) to charities, nonprofits, or advocacy groups not themselves injured;
  • assign penalties, forfeitures, and settlement proceeds to the public treasury or, where appropriate in certain cases, to private parties who can show specific individual injury from the offense (penalties should not fund particular government agencies in ways that incentivize zealous enforcement or insulate the agencies from appropriations oversight);
  • prohibit the payment of public lawyers and forensics experts on contingency, that is, in ways dependent on case outcome or the magnitude of penalties (this principle should apply alike to career prosecutors, other staff public lawyers, experts, and outside law firms); existing contingency arrangements should be terminated; and
  • impose transparent principles of selection and payment on outside contracting for legal services.

Social media law roundup

  • Was this an entry in a contest to draft the most unconstitutional bill? “Florida Bill Would Make It a Crime for Minors to Post Pictures of Guns on Social Media” [Eugene Volokh]
  • “Everyone involved in politics has bad days, when one’s interests conflict with one’s ideals.” But conservatives should resist the temptation to call in government to regulate the Internet [John Samples] New Republican interest in antitrust explainable by wish to bust corporations considered unfriendly to Republicans [Steven Greenhut]
  • Lafayette, La. mother jailed after posting video to social media showing fight between two high school students [Megan Wyatt, The Advocate; editorial; Dave Cohen, WWL]
  • Suit over online harassment could puncture liability protections of Section 230, some hope and others fear [Elizabeth Nolan Brown]
  • “So, to be blunt here, Warren’s campaign screwed up with its ad design [by] including the [Facebook] logo.” The really bad part, though, was the spinning afterward [Scott Shackford]
  • Tweeting wrong sorts of things about gender can result in a visit from the British police, cont’d [Tom Potter, Ipswich Star (Suffolk; quoting local activist who “said police had a right to intervene if it was felt the posts were causing offence.”)] And another case from Hitchin, Hertfordshire [Martin Beckford, Daily Mail; earlier here, here, etc.
  • Content moderation “is, in many ways, the commodity that platforms offer.” Will they be left free to offer it? [Will Duffield, Cato Journal, reviewing Custodians of the Internet by Tarleton Gillespie]