Disenchantment and the Supreme Court

Where have I been for the last month?  What happened to practice, practice, practice?  I'm sure there are a host of factors - laziness, distraction, premature spring making me want to be outside - but the one worth talking about is disenchantment, disillusion, however you want to call it.  The events of the last month tend to inspire me to something more akin to crawling under a rock than to the critical engagement that writing requires.  Shall I count them?  Let's see, there was the Trayvon Martin shooting, with the less-than-inspiring conversations it begat of Florida gun laws, seemingly-backwards law enforcement, President Obama's reaction, and ... ahem... hooded sweatshirts.  There has been the GOP primary, with its plethora of depressing candidates and discussion topics apparently trying to distract voters from the dismal economic situation.  (Reproductive rights becoming a priority during the Great Recession?  Really?)  And...steeling myself...the health care arguments at the Supreme Court. 

Question:  What is a clear signal that you have been feeling disillusioned?
Answer:  When the most refreshing voice you've heard in weeks belongs to John McCain. 

So I'm listening to this week's This American Life episode and it is uber-depressing (enlightening in a "now I know about the pink slime in my hamburgers" kind of way.  Oh yeah, I forgot to put that one on the list of uninspiring news topics).  First they talk about how lobbying has worked in Congress in recent years, with choice facts like: Nancy Pelosi attended 400 fundraisers in 2011, typical lobbyists dodge phone calls from Congress members who are calling them to ask for fundraising and contributions (not the other way around), and the return on investment for lobbying over the American Jobs Creation Act was 22,000 %.  And this is only Act I.  After the break, the show goes on to discuss how Citizens United makes all of this even worse.  How it ups the ante - exponentially - for Congress members' fundraising goals.  How Karl Rove's super PAC is expected to spend $300 million on the various races of 2012.   How Rove's Super PAC's ad-buy of $700,000 in a 2010 congressional race single-handedly increased the Republican campaign's spending by 1/3 in a single day - and of course, the Democratic was defeated. 

So, into this morass comes this really great - but too brief! - interview with John McCain and Russ Feingold, sponsors of the legislation evicerated by Citizen United.  After the antagonism I have felt toward John McCain since the 2008 election, it was such a surprise to feel like this guy was on my side of this dismal issue.  John McCain, saying that Citizens United was "beyond ridiculous."  John McCain, saying that Scalia's "arrogance" and "sarcasm" was "stunning."  John McCain, calling the Supreme Court "clueless." 

Ok, I realize that McCain is really the representative of a dying breed of Republicans, being pushed aside by the Tea Partiers and their Santorums.  But it's refreshing to remember that it is not entirely an us-against-them world, that there are some folks on the right that have the same critiques of the Supreme Court that I have.  And not just critiques, but anger, frustration, dismay. 

Feingold then said something that gives a glimmer of hope to all of this.  He said, "One thing that John and I experienced was that sometimes the corporations that didn't like the system would come to us and say, you know, you guys, it's not legalized bribery, it's legalized extortion. Because it's not like the company CEO calls up to say, gee, I'd love to give you some money. It's usually the other way around.  The politician or their agent who's got the Super PAC, they're the ones that are calling up and asking for the money." - this quote was entirely consistent, by the way, with the reporting in part 1 of the episode - "So a lot of businesses, I think, are going to help us rebel against this and say, you know, we don't want to be a part of this mess." 

Let's stop and think about that for a minute.  Amidst all the cynicism I have felt that corporations will just buy government and destroy any semblance of democracy, Feingold suggests this alternate reality: businesses don't want to buy government - not at these prices anyway! - and they will become allies in the fight against the new reality.  Could it be, even just a little bit, possible?

So this brings me back to the Affordable Care Act.  I could devote pages to this - along with the attendant agonizing - but I'll try to be brief here. 

As a lawyer, my belief in the legal system is an article of faith, a core value that I thought I shared with the other members of the legal community, and especially our leaders at the pinnacle of the profession, the Supreme Court:  separation of powers, federalism, stare decisis, judicial restraint, constitutional avoidance, deciding only cases and controversies and avoiding "advisory opinions", avoiding political questions.  In law school, I had the privilege of taking "Federal Courts" with Professor Shapiro, a student of the original authors of the seminal textbook on this study, Hart & Wechsler.  Thinking about all I learned there makes me feel the roots of my disenchantment acutely.  Fed Courts, as it is known to law students, is a notoriously "gunner" class, taken by everyone on law review, by anyone who aspires to a federal appellate clerkship, and was the most challenging class I've taken since AP calculus in high school.  It is always hard to explain what makes it so challenging, but what makes it challenging is exactly what makes it so crucial to my faith in the legal system.  The point of Fed Courts, as I learned it, is about how the Supreme Court has shaped the role of the federal judiciary in the American system, and much of it is about the limits on that power - deferring to the political branches on political questions, deferring to the states on state questions, not rendering opinions on constitutional questions unless absolutely necessary to deciding a case (this is the doctrine of "constitutional avoidance"), not rendering opinions on anything unless necessary to deciding a "case or controversy" before it (this is the doctrine of avoiding "advisory opinions).  In recent years, the Supreme Court seems to have turned all this on its head.  (I realize in my quick "research" for this blog post that for many years now scholars have been arguing that the "Hart & Wechsler paradigm" "no longer serves us well either as an account of what the Supreme Court does in Federal Courts cases or as a guide to what the Court ought to do."  Perhaps I am coming to agree with that view, or the first part of it, anyway.)

These principles are part of the outrage amongst lawyers over Bush v. Gore - that the Supreme Court would ignore the centuries-old "political question doctrine" in that decision.  Citizens United continues this trend.  To me, steeped in the law of the Hart & Wechsler fed courts paradigm, it is the constitutional avoidance problem that has me most baffled: the statute at issue could have been construed far more narrowly to avoid the constitutional question of whether corporations have free speech rights.  There was just no need to reach that issue, except to flex the Supreme Court's muscle in a manner that had been studiously avoided for, again, centuries. 

And now comes the Affordable Care Act.  (What is that case called, anyway? . .[quick search] . .  It is two consolidated cases, the easier of which is HHS v. Florida.)  In this case, precedent appears to dictate - as Obama recently noted - upholding Congress's commerce clause authority.  Congress's enactment of economic laws has not been questioned since the Court's review of New Deal legislation about 75 years ago.  And then there are the questions.  Argh...the questions!  Asking about Congress's other options, why Congress chose this method of dealing with the health care problems, asking about the costs of the program.  When your understanding of the federal court is shaped by an intense study of doctrines created by the Court itself to limit its power, these questions feel like nails on a chalkboard.  They are not the kind of questions the Justices are supposed to ask; they are precisely the questions they are supposed to avoid.  (Click here for a good article on the Supreme Court arguments.)

The entire basis of these doctrines is that this small, unelected, tenured-for-life group - without the power of the purse or the military - secures its legitimacy only by the citizenry and the rest of government maintaining a kind of faith or trust in its legitimacy, and it maintains that respect by limiting its powers.  The 5 members of the current conservative wing seem to have a different set of principles at work, and I fear that they are taking a knife to their own legitimacy.  Oh what a great relief it will be if they uphold Obamacare!  But based on what I've seen so far, from Citizens United to the oral arguments in HHS v. Florida, the wound has been inflicted, and whether the knife is turned remains to be seen. 

And as a lawyer, as a lawyer with a tremendous faith in the deepest principles of the federal judicial system, the carving away at those tenets causes me greater disillusion than all of those other events.

The Promised Stella D'Oro Strike Post

I am writing this blog entry, in its entirety, for the second time. After Sunday's post on deep practice, making mistakes and correcting them, you may think that I am successfully pushing myself to self-critique and revise. But no, it’s a simple case of a computer glitch losing an hour’s worth of work and – after a bit of rage, glass of wine, and good night’s sleep – forcing me to do the whole thing over again. After that post, however, I can only conclude that this was a sign that I should in fact push myself to rework and revise, and improve upon the prior version. You’ll have to take my word on the improvement part.

I promised a blog on last week’s New Yorker article, Out of the Bronx: Private Equity and the Cookie Factory, by Ian Frazier (subscription required). And as promised, I read the NLRB decision in the labor dispute, available here (.pdf). After the initial blog crash, I found some more sources - a radio interview with the striking employees, for example. (As it turns out, there is also a documentary about the strike, "No Contract, No Cookies," which I'll admit to not having seen. HBO subscription required for this one.)

And I find that the more I learn, the more questions I have.

Let me begin with a brief synopsis. Stella D'Oro began as a family-owned business in Bronx, and during that era, the employees became represented by the Bakery, Confecionary, Tobacco Workers and Grain Millers International, Local 50. At some point the family sold the business to Nabisco, which in turn sold to Kraft, which, in 2006, sold to a private equity fund, Brynwood Partners. Brynwood purchased in the middle of the term of a collective bargaining agreement, and the labor dispute arose during neogtiations for a successor contract. During those negotiations, Brynwood told the Union and employees that it needed wage and benefit concessions because the business was not profitable and, without concessions, it would have no alternative but to close down. After months of negotiating without agreement, on August 14, 2008, the employees decided to go on strike. They offered to return more than seven months later, on May 1, 2009, but Stella refused to take them back. Two months later, on June 30, 2009, an NLRB administrative law judge found for the Union (on the NLRB General Counsel's complaint), holding that Stella had violated federal labor law and was required to take the employees back to work.

This fleeting victory ends the success part of the story, for the employees. The bad part came just three months later, when Brynwood announced on September 8 that it had sold the business to another corporate bakery, Lance, Inc. Exactly one month later, the Stella plant in the Bronx closed for good. Lance moved the Stella product line to one of its factories in Ohio, and the 130-plus employees in the Bronx received a severance of one week's pay for each year of service, and set off to look for new work.

Actually, there was one more success. On August 27, 2010, the National Labor Relations Board affirmed the decision of the administrative law judge. Of course, by this point another legal feather in the cap wasn't good for very much. The legal battles, and victories, do not touch on Brynwood's decision to sell Stella, or Lance's decision to move the work to Ohio, and they can't bring the work back to the Bronx. In fact, (unless I'm missing something, a lawyerly caveat) the best that the employees can hope for as a result of the Board's decision (which is currently on appeal to the Second Circuit) is backpay giving them the wages they should have earned from the date of their offer to return from the strike on May 1, 2009, until the time when the employer shut down the business five months later.  That is, five-month's wages is the all that is still at stake here, as far as I can tell.

The New Yorker article seems to contemplate whether the decision to strike was a good one.  Frazier notes that two years later, "most" of the employees have either retired or "are still looking for new jobs."  (The employees on the radio show reported that about 25 of their coworkers, out of 130, had found new jobs.)  He goes on to muse that the Stella D'Oro strike seems "similar" to Occupy Wall Street (of which strike leader Mike Filippou is a supporter, he tells us) because both are "not about specific demands but about inequality."

This caught my attention, and I'm wondering if Frazier is correct, or if he is idealizing the Stella strike.  Or is it possible that there was a hint of idealism among the strikers themselves?  And if there was, is that a bad thing?

Hearing about the events, with the benefit of hindsight, it is nearly impossible to avoid concluding that the strike was the wrong choice - and I am trying to avoid viewing this entirely through the 20/20 lense of hindsight. I am reminded of the guiding image in the excellent new book by Joe McCartin (my former professor, I'm proud to report), Collision Course: Ronald Reagan, the Air Traffic Controllers and the Strike that Changed America. McCartin uses this image of a "collision course" to describe the unfortunate trajectories of the union's and employer's positions, showing how the conflict between the union and the Reagan administration ultimately led, first to a massive strike, and then, to breaking the union and a loss for the labor movement as a whole.  Though I am admittedly simplifying, this image comes to mind here.

Here, the employees were justifiably angered and motivated by what they viewed as the private equity firm's greed.  I was struck listening to employees Filippou and George Kassai  in the WNYC interview by how they so proudly discuss their years of commitment to the company and its product, and accuse the company of making inferior cookies after its cost cutting. In the negotiations, Filippou appeared to understand Brynwood's calculus: he remarked that the employees knew that the employer could just close the facility, sell the brand and real estate, and make a profit in the process, or it could obtain the concessions it was requesting and then still sell the company, but at an even greater profit.  355 NLRB No. 158 at 21.  The employees clearly understood that Brynwood could sell the company at any time, but as I understand it, this paradoxically seemed to fuel their motivation to fight the company.

While the employer's perceived greed, the principle of fighting "inequality" (a la Occupy Wall Street), seemed to motivate the employees through the eight-month strike, the truth of this perception was ultimately their undoing. Filippou was correct that Brynwood could sell at any time and, indeed they did.

So what were the employees to do? Is the takeaway from the Stella story that every time employees go up against a private equity fund, the employees have to capitulate to whatever demands the employers makes of them?

This New York Times article looking at labor and private equity suggests - thankfully - that employees have had better outcomes in other cases.  As best as I can tell from the Union website, the U.S. Foods strike profiled in the article resulted in a new contract in December 2011. These employees were fighting none other than the king of private equity firms, Kohlberg Kravis Roberts. The Times article also mentions a victory by employees when Hugo Boss "reversed a decision to close a factory in Ohio after succumbing to an aggressive union-led campaign."  The union, Workers United, gives credit for bringing Hugo back to the bargaining table to the findings of a NLRB regional investigation; the business press remarks that Ohio's pension fund threatened to pull the €110 millon it had invested with the private equity owner. I'll refrain from drawing conclusions from my two sentences of research, but this certainly suggests that the battle of labor against private equity must be, at the very least, fought on many fronts. 

Rather than conclude with some sense of undeserved authority, let me instead share the questions that remain in my mind: what lessons can the labor movement (such as it is) take from the Stella battle? Do the Stella employees in fact regret their decision to go on strike? What would they have done differently? Was there any way to predict, at the time, the course of events that would unfold? Do private equity-owned-employers require a different calculus than typical employers for the employees and unions that try to stand up to them?

Stella D'Oro Blog Preview

I'm very excited about this article in this week's New Yorker, "Out of the Bronx - Private equity and the cookie factory" by Ian Frazier (subscription required). As the article (ever so briefly) recounts, the Stella D'Oro labor dispute was the subject of a NLRB case out of my office. Plus, the entire story concerns what happens when a once-upon-a-time-family-owned-business is bought and sold by a private equity firm. Private equity, also an important meme of January 2012. (See, e.g., this insightful article at TPM about the significance of the media confusing Romney's former firm as "venture capital" rather than "private equity".) I think the Stella case is an interesting look at the import/impact/significance of labor laws. This is a case that the employer lost, but I'm not sure that in the grand scheme of things the employees won much (I hope to be proved wrong that). So here's a preview: I'm going to finish reading the New Yorker article, then read the NLRB decision, and go from there with anything else that catches my attention, and then I'll share my reactions.