Tracking the latest developments in the fight for a fair America
The latest news about the corporation with religious rights takes irony to new heights
By Michelle D. Schwartz
AFJ Director of Justice Programs
Justice Ginsburg’s masterful dissent in Burwell v. Hobby Lobby Stores, Inc. begins with this chilling sentence:
In a decision of startling breadth, the Court holds that commercial enterprises, including corporations, along with partnerships and sole proprietorships, can opt out of any law (saving only tax laws) they judge incompatible with their sincerely held religious beliefs.
When I read that line, two words immediately came to mind: forced arbitration.
Except that in the forced arbitration context, you could end that sentence after the phrase “can opt out of any law.” Full stop.
The Supreme Court has already held, in decision after decision, that commercial enterprises can opt out of virtually any federal or state law merely by inserting a few words into the fine print of their contracts and online terms of service.
President Obama understands how harmful this is. Today, he plans to sign an executive order barring companies seeking government contracts from forcing their employees into arbitration over civil rights or sexual harassment claims.
Of course, Hobby Lobby isn’t likely to be pursuing government contracts. So the company will be able to continue to impose forced arbitration on its employees.
More on that below, but first, a quick review of what forced arbitration is all about (for more, check out AFJ’s page on the subject): Every day, when you use Instagram, buy a cell phone, use a Microsoft product, get a credit card, and generally live in the 21st Century, you are forced to sign away your constitutional rights. We’re all familiar with the “click-through contracts” to which we’re frequently asked to consent without any opportunity to negotiate. Today, an increasing number of those contracts in the consumer context and even in the employment realm include, in the fine print, a requirement that any dispute with that corporation be resolved not in the courtroom, but in a private, rigged system called forced arbitration.
What’s so bad about forced arbitration? The decision-maker is chosen and paid for by the corporation that harmed you—not surprisingly, a study found that an arbitration firm ruled for the company 93.8 percent of the time. The normal rules of evidence don’t apply. No appeal is possible. And everything is done in secret, so wrongdoing doesn’t get exposed and stopped.
Yet the Supreme Court has held that companies’ right to force their customers and employees into arbitration trumps not only the Seventh Amendment right to trial by jury, but all manner of rights guaranteed under federal and state laws. Sound familiar?
In short, forced arbitration is a get-out-of-jail-free card for corporations that puts such hallowed laws as the Civil Rights Act of 1964, the Age Discrimination in Employment Act, and the Equal Pay Act at risk. So if your employer harasses you at work because you’re an African American, your employer pays you less because you’re a woman, or you get fired because of your age, you could be forced out of court—and forced to grin and bear it.
And so, ever since the Hobby Lobby decision came down just over a month ago, I’ve been telling anyone who would listen about the similarities between Hobby Lobby and forced arbitration. And then things came full circle. Earlier this week, RH Reality Check reported that Hobby Lobby itself has a forced arbitration clause in its employment contract.
Hobby Lobby’s clause came to light after it allegedly fired employee Felicia Allen when she tried to take unpaid leave for her pregnancy. Then Hobby Lobby tried to prevent the employee from receiving unemployment compensation. That hardly sounds like the company that argued not only that its owners’ religious beliefs prohibited them from providing insurance coverage for certain kinds of birth control, but also that those beliefs compelled it to provide health insurance for its employees.
It gets worse. When Allen tried to sue Hobby Lobby for discriminating against her based on her pregnancy, she learned that Hobby Lobby had a forced arbitration clause. Allen’s lawyers refused to take her case after they learned of the forced arbitration clause and she—like so many other American consumers and employees—was left out in the cold.
Hobby Lobby could take its case all the way to the Supreme Court, but its employee couldn’t even get through the courthouse doors.
If you’re like me, you’re mad as hell about the Hobby Lobby decision. And if you’re mad about Hobby Lobby, you should also be furious about forced arbitration and take action to support the solution, the Arbitration Fairness Act.
As AFJ President Nan Aron said in her statement, the Senate today “righted an historic wrong” with the confirmation of Ronnie White to the U.S. District Court for the Eastern District of Missouri. The background on Judge White’s prior nomination and the profound injustice of his failed confirmation is explained in AFJ’s full letter of support for Judge White, which is reprinted below.
Dear Senate Judiciary Committee Member:
I write in support of the nomination of Ronnie L. White to the U.S. District Court for the Eastern District of Missouri. White, a former chief justice of the Missouri Supreme Court, has an impeccable record of public service that demonstrates his integrity, intelligence, commitment to the rule of law, and judicial temperament. If confirmed, Justice White would serve the people of Missouri and our federal justice system with great distinction.
Confirming Justice White would also rectify a profound injustice, and reverse one of the Senate’s most shameful exhibitions of partisan obstruction. President Clinton first nominated Justice White to the Eastern District in 1997. But after then-Senator John Ashcroft mounted a politicized opposition that distorted Justice White’s record and smeared him with baseless accusations of being “pro-crime,” Justice White’s nomination was defeated by a party-line vote in 1999. This time, with a renewed opportunity to do right by an extraordinary public servant—and, more importantly, the people of Missouri—the Senate should swiftly confirm Justice White.
Justice White’s legal career is defined by more than two decades of distinguished public service as a lawyer, legislator, and judge. After earning his J.D. at the University of Missouri’s Kansas City School of Law, Justice White spent six years as a trial attorney at the public defender’s office in St. Louis. In 1989, Justice White successfully ran for State Representative in the Missouri General Assembly, where he served three terms and chaired both the House Judiciary and Ethics Committees. While serving in the legislature, Justice White also practiced at the Law Offices of Cahill, White & Hemphill, where he represented individual criminal defendants and plaintiffs in civil litigation. He also accepted assignments from the Office of the Special Public Defender to represent indigent defendants charged with serious felonies. In 1993, Justice White left the state house to become the first African American City Counselor for the City of St. Louis. Missouri Governor Mel Carnahan then appointed Justice White to the Missouri Court of Appeals in 1994, and to the Missouri Supreme Court in 1995, where he became the state’s first African American Supreme Court Justice. The St. Louis Post-Dispatch described Justice White’s elevation to the state’s highest court as “one of those moments when justice has come to pass.”
Justice White’s first nomination to the Eastern District was met with long delays, and President Clinton had to renominate him in 1999. Justice White was favorably reported out of the Judiciary Committee on two separate occasions, but his nomination was ultimately defeated on the Senate floor. It was the first district court nomination the full Senate voted down in nearly 50 years, and it was the result of a strict party line vote. What’s more, seven Republicans switched their affirmative Committee votes to vote “no” on confirmation.
The disgraceful 1999 campaign against Justice White—which was orchestrated almost entirely by Senator Ashcroft—has been thoroughly discredited. Facing a contested reelection in 2000, Ashcroft used Justice White as a political pawn in a misguided attempt to appear “tough on crime,” and attacked White with outlandish claims that he was “pro criminal” and had “a tremendous bent toward criminal activity.” In support, Ashcroft cited two cases in which Justice White was the lone dissenter from a decision affirming a death sentence. Even these two cases fail to advance Ashcroft’s position. In one, Justice White said that a judge who explicitly contrasted “minorities” with “hard-working taxpayers” should have recused himself before presiding over a trial in which an African American defendant could be sentenced to death. In the second, Justice White thought the incompetence of defense counsel warranted reversal, but added that if the defendant “was in control of his faculties when he went on this murderous rampage, then he assuredly deserves the death sentence he was given.” But more importantly, when considered as a whole, Justice White’s full judicial record reflects an unwavering commitment both to faithfully applying Missouri state law on capital punishment, and to upholding the constitutional rights of criminal defendants, particularly those charged with capital crimes. As of October 1999, Justice White had reviewed 59 capital cases. He voted with the majority in 51 of those cases, or nearly 90 percent of the time. Of those 51, he voted 41 times to uphold a death sentence and 10 times to reverse for serious legal error. Eight of his votes to reverse were unanimous, and in only three instances did he author a solo dissent when the majority affirmed.
In light of this record, the “soft on crime” campaign was preposterous and transparently partisan, a conclusion shared by major law enforcement groups that backed Justice White’s nomination. Both the Missouri State Fraternal Order of Police and the Missouri Police Chiefs Association endorsed White wholeheartedly. Upon White’s defeat in the Senate, the President of the Fraternal Order of Police, Thomas Mayer, wrote solemnly that “nothing can undo the needless injury which has been inflicted on the reputation of Justice White, and our nation has been deprived of an individual who surely would have proven to be an asset to the Federal Judiciary.” Perhaps even more damning, a prominent St. Louis businessman and one of Ashcroft’s Senate campaign fundraisers, Gentry Trotter, resigned his post in protest of what he called Ashcroft’s “marathon public crucifixion of White,” and dismissed Ashcroft as an “extremist.”
Justice White went on to serve for another seven years on the Missouri Supreme Court, leaving in 2007 to enter private practice. Unsurprisingly, Justice White’s more recent judicial record reaffirms his commitment to the rule of law. From 2000 through 2007, Justice White wrote more than half a dozen opinions affirming a death sentence. In one, State v. Deck, the United States Supreme Court reversed and set aside the death sentence when it held, for the first time, that “the Constitution forbids the use of visible shackles [on the defendant] during the penalty phase” of trial. And once again, with seven more years of decisions to consider, the State Fraternal Order of Police has formally endorsed Justice White’s nomination. Writing in support, the FOP said that, “as front line law enforcement officers, we recognize the important need to have jurists such as Ronnie White, who have shown themselves to be tough on crime, yet fair and impartial.”
We often say that justice delayed is justice denied, but if the Senate does its job and swiftly confirms Ronnie White, that will be only partly true. It is true that Justice White’s reputation was recklessly tarnished, and that our federal justice system has thus far been deprived of White’s service on the bench. But now the Senate has the opportunity to correct a grievous error, and to confirm a stellar nominee with vast experience, restoring in some measure the justice withheld 14 years ago. I urge you to vote in favor of his nomination.
John Cornyn passes the buck on Texas judicial vacancies
By Kyle C. Barry
AFJ Legislative Counsel
Somehow, Texas Senator John Cornyn’s brazen efforts to blame others for the judicial vacancy crisis in Texas have reached a new level of shameless. Cornyn has already blamed the president for failing to nominate judges in Texas, a contention he makes knowing that the White House will not nominate until the home state senators—in this case, Cornyn and fellow Republican Ted Cruz—make formal recommendations. But in a letter to the editor published Saturday, Cornyn makes an even less defensible claim, suggesting, nonsensically, that longstanding judicial vacancies in Texas are the fault of Senate Democrats not “willing to do their part.” In so doing, Cornyn makes no mention of the central role he and Cruz play in nominations, fails to draw any connection between Senate Democrats and his failure to make timely recommendations for judgeships, and ignores the extraordinary work Senate Democrats have done to confirm judges despite relentless and unprecedented Republican obstruction.
As we’ve detailed, the administration of justice in Texas is in crisis. There are 11 federal judgeships currently vacant in Texas (more than any other state), including two seats on the Fifth Circuit Court of Appeals. Of those 11, eight do not yet have a nominee, and seven are “judicial emergencies,” a designation for courts that do not have enough judges to handle their existing caseload. What’s more, even assuming all these vacancies are filled, the nonpartisan Judicial Conference, led by Chief Justice John Roberts, has called for the creation of eight new permanent judgeships in Texas. With such a dramatic shortage of judges, Texans must suffer through long delays to access justice, delays which can often mean that justice is denied altogether.
The blame for this crisis falls largely on Cornyn and Cruz. By longstanding tradition, home state senators have the primary responsibility to screen district court candidates, and the president will not nominate district court judges until the senators have made recommendations and approved the nominations. This restraint is with good reason, because it is difficult if not impossible for a nominee to be confirmed without home state senator support. Thus, the timely review of judicial candidates is one of the most important responsibilities that a senator has. However, although several of Texas’ vacancies have been around for years (one bench in the Western District has been empty since November 2008), Cornyn and Cruz did not begin the application process until last April, and that process didn’t even include all of the current vacancies. Now more than a year later, that process has yielded only three nominations.
In response to this dereliction of duty, the Dallas Morning News called on Cornyn and Cruz to “pick up the pace” in recommending candidates to the White House. But Cornyn thinks that’s unfair because Senate Democrats have likewise failed to “prioritize filling needed judgeships.” Specifically, Cornyn claims that Democrats spent too much time confirming the president’s three nominees to the D.C. Circuit Court of Appeals, while it took “many months” to confirm Judge Gregg Costa, whom both Cornyn and Cruz supported, to a Texas seat on the Fifth Circuit.
Cornyn’s defense, such as it is, fails for two distinct reasons. First, neither the D.C. Circuit nor Judge Costa’s confirmation has even the slightest relation to the longstanding Texas vacancies. The full Senate’s role in confirming judges is entirely separate from the process of soliciting applications and reviewing candidates for vacancies that do not have a nominee. Nothing about time spent on the Senate floor prevents Cornyn and Cruz from doing their jobs back home, and so Cornyn’s argument is more meager attempt at misdirection than substantive response on the merits.
Second, the claim that Senate Democrats are not “willing to do their part” on judicial confirmations, particularly when contrasted with Republican obstruction, is preposterous. The Senate “spent weeks” confirming three D.C. Circuit judges because Senate Republicans filibustered each of them, refusing to permit yes-or-no confirmation votes. This obstruction was prompted not by objections to the nominees’ qualifications, but by a partisan effort to prevent President Obama from appointing anyone to the D.C. Circuit. Indeed, Republicans went so far as to introduce legislation eliminating seats from the D.C. Circuit, and Cornyn himself bizarrely accused the president of “court packing.” That Cornyn now accuses Senate Democrats of dilatory conduct reveals how disingenuous his interest in an expedited nomination process really is.
As for Judge Costa’s confirmation, Cornyn writes that the Senate took “many months just to confirm” him, suggesting that the Senate accomplished nothing else during that time, and that Judge Costa had to wait an unusually long time for confirmation. Neither is true. Judge Costa was confirmed 152 days after he was nominated—third fastest among President Obama’s 50 circuit court appointees. Judge Costa’s confirmation was delayed, but that’s only because Senate Republicans forced a needless cloture vote and then wasted 30 hours of debate time before the Senate could vote. In fact, that’s exactly what Republicans have done for every judicial nominee in 2014. As retribution for Senate rules reform last November, which finally allowed confirmations for the D.C. Circuit nominees, Senate Republicans have wasted as much floor time as possible, requiring cloture votes for even the most non-controversial nominees, and then refusing to vote until the full allotment of debate time has expired. Yet despite this obstruction, Senate Democrats have already confirmed 55 judges this year, compared to just 28 at this point in 2013. With the Republican caucus so committed to gridlock and shutting down confirmations, the continued work of Majority Leader Harry Reid and the Senate Democrats to confirm judges makes clear who really cares about a functioning judiciary.
Ultimately, Cornyn’s rather half-hearted defense depends not just on the supposed failures of Senate Democrats that are irrelevant, but on the failures of Senate Democrats that do not exist. To his credit, he does “agree that judicial vacancies are an impediment to justice,” but until he and Senator Cruz accept responsibility for solving the vacancy crisis in Texas, justice for his constituents will be hard to come by.
By S. Douglas Bunch
Associate, Cohen Milstein
On June 23, 2014, the U.S. Supreme Court issued its decision in Halliburton Co. v. Erica P. John Fund, Inc. (“Halliburton II”). In rejecting Halliburton’s attempt to radically restrict the rights of investors, the Supreme Court affirmed the principles it announced over a quarter century ago in Basic v. Levinson, a decision that ensures investors have the opportunity to prove their claims—and those of other investors—in a class action.
Halliburton II had generated much anticipation and commentary due to its potential to threaten the continued viability of the fraud-on-the-market presumption of reliance recognized by the Court in Basic v. Levinson, 485 U.S. 224 (1988). Under the fraud-on-the-market presumption, publicly available information is assumed to be reflected in the market price of a stock, and, in turn, investors can be presumed to have relied on the information because their purchasing and sales decisions account for the price of the security. This eases the burden on investors, who need not show reliance on a defendant’s misrepresentations when bringing suits for securities fraud.
The presumption is crucial in class actions. Justice Thomas, joined by Justices Scalia and Alito, wrote an acrimonious concurrence to the Court’s opinion, in which he argued that Basic should have been overruled because “[l]ogic, economic realities, and our subsequent jurisprudence have undermined the foundations of the Basic presumption, and stare decisis cannot prop up the façade that remains.” Had Justice Thomas’s viewpoint prevailed, it might have meant the end of securities fraud class actions altogether, because without the Basic presumption, each individual investor in the class would have needed to demonstrate that he or she directly relied on the alleged misstatements when deciding to purchase or sell stock, making class certification in securities fraud cases nearly impossible.
However, in an important victory for investors, the Supreme Court in Halliburton II declined to overrule Basic and instead reaffirmed the principles underlying that decision. The Court rejected the arguments advanced by Halliburton that the fraud-on-the-market presumption is inconsistent with congressional intent, that the presumption is no longer justified by economic theory, and that the presumption is undermined by the notion that some investors do not rely on the integrity of the stock’s market price.
The Court also squarely rejected Halliburton’s policy arguments contending that Basic should have been overturned because of the supposed “harmful consequences” of securities class actions. The Court properly noted that the forum for addressing such concerns is Congress, not the courts. This portion of the Court’s ruling will hopefully put an end to the repeated and baseless anti-investor policy arguments raised by defendants during litigation in an attempt to curtail investor rights.
The Court did adopt one of Halliburton’s proposed alternatives to overruling Basic: defendants will now be allowed to attempt to rebut the presumption of reliance at the class certification stage by trying to present evidence that the misrepresentations did not affect the stock price. Defendants were already permitted to introduce such “price impact” evidence at the class certification stage to rebut a plaintiff’s showing that the stock at issue traded in an efficient market, and could even introduce such evidence, at the merits stage, to defeat the presumption of reliance itself. All the Supreme Court’s ruling in Halliburton II means is that defendants may now attack the presumption of reliance earlier, by submitting such evidence at class certification.
This changes very little. In fact, the Second and Third Circuit already allowed defendants to do just this. See, e.g., In re Salomon Analyst Metromedia Litig., 544 F.3d 474, 484 (2d Cir. 2008); In re DVI, Inc. Sec. Litig., 639 F.3d 623, 638 (3d Cir. 2011). The fact that the Supreme Court essentially just adopted the precedent of these Circuits should prevent defendants from attempting to make new arguments based on Halliburton II in those courts, and also defeat misleading arguments about the opinion’s meaning, like the fallacious notion that plaintiffs must now show a price increase to demonstrate price impact.
Affirming the continued vitality of Basic and the efficient market theory that underpins Basic is a significant victory for investors. The procedural guidelines imposed by the Court keep the burden on defendants to attempt to rebut the presumption of reliance with evidence that the alleged misrepresentation did not impact the price of a defendant’s stock. The ruling should not unduly restrict the rights of investors, and the conduct of securities class actions should not substantially change in the wake of the decision. Indeed, in her own concurrence, joined by Justices Breyer and Sotomayor, Justice Ginsburg made it clear that because the burden for demonstrating lack of price impact continues to rest solely on defendants, the Court’s ruling “should impose no heavy toll on securities-fraud plaintiffs with tenable claims.”
S. Douglas Bunch is a member of the Securities Fraud/Investor Protection practice group at Cohen Milstein. He is currently litigating multiple securities class actions.
From AFJ President Nan Aron’s latest column in The Huffington Post:
This is a very bad time for American women in the Supreme Court.
Three big cases were decided right at the end of its term that will profoundly affect women’s lives, subject them to conditions that are never applied to men, and damage their ability to control their own lives and health.
In McCullen v. Coakley, the Court in a “faux-nanimous” decision in which the four moderate-liberals clearly played defense, found that a 35-foot buffer zone around the entrance to abortion clinics in Massachusetts was a violation of the First Amendment. The Commonwealth had established the zones in reaction to the brutal murder of two people at a Boston clinic in 1994 and the endless harassment of women and their families attempting to enter reproductive health clinics.
But Chief Justice John Roberts, writing for the Court, swept aside reality, superimposed his own view of what happens outside clinics, and somehow found that so-called “sidewalk counselors” need to be protected more than the people who work at or make use of the clinics.