Author:Epstein, Richard A.
Position:A - Thirty Sixth Annual Federalist Society National Student Symposium on Law and Public Policy

I have chosen a title for this article that looks, in some sense, to be innocence incarnate. On the one hand, the common law is an ancient and mostly honorable tradition. On the other hand, the First Amendment, with its protection of freedom of speech and the press, is one of the bulwarks of our current constitutional order. Taken together, the positive synergies between them should produce an intellectual structure that generates widespread political and social appeal. Nonetheless, on this score appearances are deceiving, and I shall try to explain the tension in the system. In Part I, I consider the tension between a generalized common law system of liability and the constitutional principles that underlie the First Amendment. For these purposes, I indulge in a bit of historical oversimplification by treating the common law as including both law and equity. I do so in order to consider the full range of remedies from damages to injunctions as part of a unified theory. In Part II, I explain how the tension between common law and constitutional methods results in serious breakdowns in legal doctrine. The central point should be clear. Constitutional law does not operate in an institutional and conceptual void. The successful articulation of First Amendment doctrine depends critically on understanding the private law rules that regulate speech and all forms of similar conduct.


    1. The Labor Law Analogy

      The title of this essay is consciously patterned on the title of an article that I published in the Yale Law Journal some thirty-four years ago--A Common Law for Labor Relations. (1) That article carried with it this subtitle--A Critique of the New Deal Labor Legislation. (2) That article was, and was meant to be, heretical. I had received a personal invitation to attend the conference from Eugene Illovsky, a member of the Yale chapter of the then-nascent Federalist Society. The grandees at the Yale Law School had allocated the society a single slot at the two-day conference on the celebration [sic!] of the fiftieth anniversary of the New Deal, and Illovsky wondered if I would have enough temerity to fill it.

      It was no secret that the other panelists would offer, in varying degrees, support for the New Deal enterprise. Without hesitation, I offered to pay my own airplane fare, if need be, to return to my alma mater. I wished to voice my deep disagreements with the reigning policy on American labor law. Labor law was a field in which I had done no systematic scholarship, but in which I had long sensed a deep, unbridgeable chasm between my own nascent views and the conventional wisdom on the subject, introduced to me as a student by my own Yale Law School professor, the late Harry H. Wellington. Wellington was an expert in legal process far more comfortable with the New Deal synthesis than was I. So for Wellington, it was important that the major premise--the desirability, if not necessity of collective bargaining--was taken more or less as a historical given. The hard work of scholarship and debate at the time was over the proper mode of implementing the National Labor Relations Act: were its objectives best achieved through rulemaking, through judicial decisions, by a board, through arbitration, through private contract, or some ideal combination of the above? I sat in the class often mumbling to myself, "You never ask the right question, which is whether you ought to blow up this entire system and start over."

      When I returned to the Yale Law School in 1983, I decided to exact my revenge by defending the common law alternative to the NLRA in a not-so-subtle effort to blow up the entire edifice. Having done some research, my choice of the subtitle was taken, and was meant to be taken, as deeply subversive of the established wisdom. Conceptually, my major thrust was a point-by-point defense of the common law system of labor relations. The high point of that exposition was my then-unthinkable defense of the "yellow-dog contract," under which a firm and worker could agree that the worker would not join, nor agree to join, a union so long as he continued to work for his employer. (3) The choice of my subtitle was a not-so-subtle allusion to my endorsement of a common law framework that was universally reviled and explicitly rejected by the major labor law reform statutes of the 1930s, including the Norris-LaGuardia Act of 1932 (4) and the National Labor Relations Act of 1935. (5)

      My impassioned defense of the common law system provoked a tart and indignant response from Professors Julius Getman and Thomas Kohler. They accused me of taking a "breathtakingly simple" approach to labor law, when a more nuanced and incremental approach was desperately needed. (6) The tenor of the reaction is evident in the following paragraph, which I quote with reluctance because it illustrates the establishment's resentment towards the defense of laissez-faire economics:

      Professor Epstein's work does not contribute in any way to our existing store of knowledge about labor law. It sheds no light on the reality of labor relations, nor does it contribute anything to our understanding of the impact of labor law on society. Given the antiquated nature of his methodology, it is not surprising that Professor Epstein reiterates many of the same propositions, syllogisms and rationalizations of those who opposed the enactment of the NLRA and the Norris-LaGuardia Act in the first place, and without any newer evidence. (7) Their article had its own problems. It offered no explanation as to why or how this costly system of cartelized labor relations outperforms competitive markets. (8) It failed to anticipate the level of decline in union membership in the years that followed. (9) It made no reference to the unprecedented improvement in human welfare in the United States that took place during the period of 1870 to 1940 when laissez-faire synthesis predominated (10) --which, as Johan Norberg chronicles, only a program of market liberalization could duplicate worldwide. (11)

      Their response prompted my equally pointed reply that, while their insistence on carefully studying incremental changes is an effective way to avoid serious intellectual inquiry, it offers no theoretical defense of the body of law that has come under attack. (12) My war cry then, and my war cry now, is that "it takes a theory to beat a theory," (13) and defenders of modern legislation, and modern constitutional theory, too often consider implacable outrage at older common law systems to be a refutation of that system's central premises.

      In fact, the use of the yellow-dog contract was a well-conceived private effort by employers to preserve competitive markets in labor. (14) Competition works as well for labor as for goods, so these contracts should be welcomed as a matter of public policy. At the time, this point was recognized when the unanimous 1908 Supreme Court decision in Loewe v. Lawlor (15) rightly applied the antitrust prohibitions of the Sherman Act to labor organizations, prompting the passage of Section 6 of the Clayton Act after the progressive Woodrow Wilson was elected president. (16) Applying separate common law rules to labor and goods was one sign among many of the weakness of the progressives' position. (17) There is no deep gulf that separates sound principles for labor markets from parallel principles that work for goods, real estate, or insurance, and a proper theoretical framework should reflect that.

      Decisions such as Hitchman Coal & Coke Co. v. Mitchell (18) and Loewe are consistent with a general theory of social welfare. The initial move of the common law can be simply stated: contract is good but coercion is bad. The explanation of this starting point is simple enough. Contracts improve the lot of both parties, and in general improve the opportunities of all third parties. Coercion restricts individual choices and thus produces losses that exceed the gains. Coercion also negatively affects third parties by hobbling or removing potential trading partners. There are of course both complications with, and limitations on these rules, most of which I cannot discuss here. But the critical move is to constrain contracts between people to use force against third parties, for these agreements are deeply subversive of social welfare. It is not enough to make these contracts unenforceable because informal norms allow them an extended time in which to wreak destruction. The synergistic gains from cooperation increase the likelihood of negative externalities if third persons will be subject to violence or forced to enter into transactions against their will. It is precisely because the negative externalities are so large that we develop a body of law that punishes conspiracies to rob banks or kill innocent persons.

      The dangers of conspiracy spill over, albeit less dramatically, into monopoly situations where parties enter into contracts in restraint of trade whereby they hope to become a single supplier of goods or services--the major target of the Sherman Act of 1890. (19) It is a well-established practice that a single supplier of key goods and services, as with public utilities and common carriers, is required to serve its customers on fair, reasonable, and nondiscriminatory terms. (20) The logic here is that breaking up these corporations is not feasible because the single supplier can serve the market more cheaply than multiple suppliers, given the need for heavy front-end investment. (21) So the next-best alternative is a cautious regime of price regulation, with an effort to bring those prices down to competitive levels. Socially, it is too costly to allow any party to refuse to deal with customers who have no market alternatives: the holdout position is just too strong. (22)

      This obligation to serve does not extend to competitive markets, including labor markets. In these...

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