Corporate Takeover At The Supreme Court

I've written previously about the unprecedented pro-corporate bias of the current conservative majority of the Supreme Court, and the insidious role played by the U.S. Chamber of Commerce in getting the Court to hear business cases and to rule in favor of business interests.  (See, e.g., here, here and here.

The Constitutional Accountability Center points out that "without much fanfare, the U.S. Chamber of Commerce is edging towards what could be its first 'perfect' Term before the Supreme Court since at least 1994."  It has "declared victory in all seven of its cases that have reached a clear outcome," which "brings the Chamber’s overall win/loss rate before the Roberts Court up to 68% (60 of 88 cases)."

As CAC's "prior studies establish, this is significantly higher than the Chamber’s success before the Rehnquist Court of 56% (45 of 80 cases), and dramatically higher than its success rate before the Burger Court, when the Chamber only won 43% (15 of 35) of its cases."

The Difference Between Private And Public Morality

By Robert Reich, cross-posted from his website

DonkeyHotey

Republicans have morality upside down. Santorum, Gingrich, and even Romney are barnstorming across the land condemning gay marriage, abortion, out-of-wedlock births, access to contraception, and the wall separating church and state.

But America’s problem isn’t a breakdown in private morality. It’s a breakdown in public morality. What Americans do in their bedrooms is their own business. What corporate executives and Wall Street financiers do in boardrooms and executive suites affects all of us.

There is moral rot in America but it’s not found in the private behavior of ordinary people. It’s located in the public behavior of people who control our economy and are turning our democracy into a financial slush pump. It’s found in Wall Street fraud, exorbitant pay of top executives, financial conflicts of interest, insider trading, and the outright bribery of public officials through unlimited campaign “donations.”

Political scientist James Q. Wilson, who died last week, noted that a broken window left unattended signals that no one cares if windows are broken. It becomes an ongoing invitation to throw more stones at more windows, ultimately undermining moral standards of the entire community.

The windows Wall Street broke in the years leading up to the crash of 2008 remain broken. Despite financial fraud on a scale not seen in this country for more than eighty years, not a single executive of a major Wall Street bank has been charged with a crime.

Since 2009, the Securities and Exchange Commission has filed 25 cases against mortgage originators and securities firms. A few are still being litigated but most have been settled. They’ve generated almost $2 billion in penalties and other forms of monetary relief, according to the Commission. But almost none of this money has come out of the pockets of CEOs or other company officials; it has come out of the companies — or, more accurately, their shareholders. Federal prosecutors are now signaling they won’t even bring charges in the brazen case of MF Global, which lost billions of dollars that were supposed to be kept safe.

Nor have any of the lawyers, accountants, auditors, or top executives of credit-rating agencies who aided and abetted Wall Street financiers been charged with doing anything wrong.

And the new Dodd-Frank law that was supposed to prevent this from happening again is now so riddled with loopholes, courtesy of Wall Street lobbyists, that it’s almost a sham. The Street prevented the Glass-Steagall Act from being resurrected, and successfully fought against limits on the size of the largest banks.

Windows started breaking years ago. Enron’s court-appointed trustee reported that bankers from Citigroup and JP Morgan Chase didn’t merely look the other way; they dreamed up and sold Enron financial schemes specifically designed to allow Enron to commit fraud. Arthur Andersen, Enron’s auditor, was convicted of obstructing justice by shredding Enron documents, yet most of the Andersen partners who aided and abetted Enron were never punished.

Americans are entitled to their own religious views about gay marriage, contraception, out-of-wedlock births, abortion, and God. We can be truly free only if we’re confident we can go about our private lives without being monitored or intruded upon by government, and can practice whatever faith (or lack of faith) we wish regardless of the religious beliefs of others. A society where one set of religious views is imposed on a large number of citizens who disagree with them is not a democracy.

It’s a theocracy.

But abuses of public trust such as we’ve witnessed for years on the Street and in the executive suites of our largest corporations are not matters of private morality. They’re violations of public morality. They undermine the integrity of our economy and democracy. They’ve led millions of Americans to conclude the game is rigged.

Regressive Republicans have no problem hurling the epithets “shameful,” “disgraceful,” and “contemptible” at private moral decisions they disagree with. Rush Limbaugh calls a young woman a “slut” just for standing up for her beliefs about private morality.

Republicans have staked out the moral low ground. It’s time for Democrats and progressives to stake out the moral high ground, condemning the abuses of economic power and privilege that characterize this new Gilded Age – business deals that are technically legal but wrong because they exploit the trust that investors or employees have place in those businesses, pay packages that are ludicrously high compared with the pay of average workers, political donations so large as to breed cynicism about the ability of their recipients to represent the public as a whole.

An economy is built on a foundation of shared morality. Adam Smith never called himself an economist. The separate field of economics didn’t exist in the eighteenth century. He called himself a moral philosopher. And the book he was proudest of wasn’t “The Wealth of Nations,” but his “Theory of Moral Sentiments” – about the ties that bind people together into societies.

Twice before progressive have saved capitalism from its own excesses by appealing to public morality and common sense. First in the early 1900s, when the captains for American industry had monopolized the economy into giant trusts, American politics had sunk into a swamp of patronage and corruption, and many factory jobs were unsafe – entailing long hours of work at meager pay and often exploiting children. In response, we enacted antitrust, civil service reforms, and labor protections.

And then again in 1930s after the stock market collapsed and a large portion of American workforce was unemployed. Then we regulated banks and insured deposits, cleaned up stock market, and provided social insurance to the destitute.

It’s time once again to save capitalism from its own excesses — and to base a new era of reform on public morality and common sense.

Robert Reich is Chancellor's Professor of Public Policy at the University of California at Berkeley.  He writes a blog at www.robertreich.org.  His most recent book is Aftershock.

Can Corporations Violate Human Rights?

By John Knox, cross-posted from Center for Progressive Reform

On February 28, the Supreme Court will hear argument in Kiobel v Royal Dutch Petroleum, a case with far-reaching implications for efforts to hold corporations accountable when they commit or are complicit in abuses of human rights.

For over fifty years, Shell has extracted oil from Nigeria, causing great harm to the environment and people of the Niger delta.  The Ogoni people living in the delta protested Shell’s operations, and in response the Nigerian government harshly oppressed them.  Most infamously, in 1995 it executed the author Ken Saro-Wiwa, together with eight other leaders of the protests.  

Esther Kiobel, the widow of one of the executed men, as well as other affected Ogoni, sued Shell in U.S. federal court, claiming that it aided and abetted the Nigerian government in its violations of human rights law.  The plaintiffs relied on the Alien Tort Statute (ATS), a law enacted by the First Congress, in 1789, which gives federal courts jurisdiction over claims by aliens arising from torts committed in violation of international law.  In 2004, in Sosa v Alvarez-Machain, the Supreme Court affirmed that the ATS still provides jurisdiction for international tort claims, but it cautioned federal courts not to recognize claims “for violations of any international law norm with less definite content and acceptance among civilized nations than the historical paradigms” familiar when the law was enacted.  As an example of such a historical paradigm, the Court cited the long-standing prohibition against piracy.

Foreign plaintiffs have used the ATS to accuse corporations of committing grave human rights abuses, including genocide, war crimes, and forced labor.  A few of the suits have resulted in payments, including a 2009 settlement by Shell of another claim arising from its Nigerian operations.  In 2010, however, the Second Circuit Court of Appeals rejected Esther Kiobel’s claim on the sweeping ground that corporations could never be liable for violations of customary international law, because customary international law never imposes any obligations on corporations.  In short order, the Seventh, Ninth, and D.C. Circuits rejected the Second Circuit decision, holding that plaintiffs can sue corporations under the Alien Tort Statute.

Last fall, the Supreme Court granted certiorari to review the Second Circuit decision.  Its ruling will be its first ATS decision since Sosa, and it will determine whether the many other pending ATS suits against corporations may continue.  It’s possible that the Court will decide the case on grounds that allow it to avoid addressing corporate duties under international law.  But if the Supreme Court does take on international law, as seems likely, what should it decide?  Is the Second Circuit correct that international norms do not prohibit corporate abuses of human rights?


The Second Circuit is wrong, but it isn’t completely wrong.  Most obligations under human rights treaties are explicitly placed on states, not individuals or corporations.  That doesn’t mean that human rights law has nothing to say about non-state actors, though.  On the contrary, one of the main obligations it imposes on states is to protect against human rights abuses committed by non-state actors, including corporations.  In that sense, human rights law clearly imposes indirect duties on individuals and corporations.  They include, for example, obligations not to engage in slavery.

Although the Supreme Court might conclude that these indirect duties are enough to satisfy the language of the ATS, it seems more likely that it will look for evidence that international law may impose direct duties on corporations.  No one doubts that international law imposes direct duties on individuals not to commit certain particularly heinous abuses, including genocide and war crimes.  The Nuremberg and Tokyo tribunals tried and convicted individuals of violating international law, and today individuals who commit genocide, war crimes, and other international crimes are subject to prosecution before the International Criminal Court.

The Second Circuit based much of its decision on the fact that these criminal tribunals were not given the authority to try corporations.  Nuremberg tried officials of I.G. Farben, but not the company itself, for using slave labor.  But the decisions not to try corporations for committing international crimes were reached not because corporations were thought to be exempt from international norms, but because many countries don’t impose criminal liability on corporations.  Civil liability, as under the ATS, is a different matter.  I.G. Farben wasn’t off the hook just because it wasn’t sentenced at Nuremberg.  On the contrary, as Judge Richard Posner explained for the Seventh Circuit:  “At the end of the Second World War the allied powers dissolved German corporations that had assisted the Nazi war effort, along with Nazi government and party organizations – and did so on the authority of customary international law.”  I.G. Farben was declared to have “knowingly and prominently engaged in building up and maintaining the German war potential” and its assets were seized.

The application of human rights law to corporations has become clearer in recent years, thanks in large part to the efforts of Harvard Professor John Ruggie, who in 2005 was appointed Special Representative of the UN Secretary-General on Business and Human Rights.  After years of consultations with governments, corporations, and human rights groups, he proposed Guiding Principles on Business and Human Rights, which the UN Human Rights Council unanimously adopted last summer.  The Guiding Principles emphasize that corporations have a responsibility to respect human rights, and that states have a legal duty under international law to protect against corporate human rights abuses and to provide remedies for such abuses when they do occur.

By providing such remedies, the ATS can provide critical support to the Guiding Principles and other efforts to bring human rights law to bear on corporations.  Its threat of civil liability helps to encourage corporations to support and implement their responsibility to respect, as many corporations around the world already have. 

The most defensible result for the Supreme Court in Kiobel would be a decision that legal persons are just as subject to human rights law as natural persons are.  A decision affirming the Second Circuit’s position that corporations – unlike governments or individuals – are uniquely free from any duty to abide by human rights norms would be a step backwards legally as well as morally.


John Knox is a law professor at Wake Forest University School of Law and a member scholar at the Center for Progressive Reform.