What do we mean by a 'pro-business' court - and should we care?

• Author: Copland, James R.
• Position: Symposium: Business in the Roberts Court

CONTENTS INTRODUCTION I. WHAT'S WRONG WITH A PRO-BUSINESS COURT? II. METHODOLOGICAL DIFFICULTIES IN ASSESSING WHETHER THE ROBERTS COURT IS PRO-BUSINESS A. How Do You Count "Wins?" B. Equal Weighting of Unequal Cases C. Doctrinal Direction Matters D. Review of Methodological Concerns E. A Holistic Discussion of the Roberts Court's Business Doctrine III. IS THE EMPHASIS ON THE SUPREME COURT MISSING A BIG PART OF THE PICTURE? A. The Rise of the Shadow Regulatory State B. The Rise of Social Activism by Proxy CONCLUSION INTRODUCTION

A consistent theme in recent years in Supreme Court reporting--at least that of the "mainstream media" that skews to the left side of the American political debate (1)--has been the notion that the Roberts Court' (2) is unusually "pro business." (3) For example, Adam Liptak, the lead Supreme Court reporter for The New York Times, reported in 2013:

The business docket reflects something truly distinctive about the court led by Chief Justice John G. Roberts Jr. While the current court's decisions, over all, are only slightly more conservative than those from the courts led by Chief Justices Warren E. Burger and William H. Rehnquist, ... its business rulings are another matter. They have been, a new study finds, far friendlier to business than those of any court since at least World War II. (4) Liptak's story was based on an academic study by Lee Epstein, William Landes, and Richard Posner published in the Minnesota Law Review. (5) The Epstein, Landes, and Posner study examined all Supreme Court cases from 1946 through 2011. (6) Rather than coding specific cases as "liberal" or "conservative," the study principally examined cases that had one and only one business party and looked at case outcomes. (7) In addition to concluding that the Roberts Court is friendlier to business interests than its predecessors, (8) the study also concluded that Chief Justice John Roberts and Justice Samuel Alito are likelier to vote in favor of business interests than any other justices to have served on the Court during the past sixty-five years. (9)

In this Article, I advance three main observations about these claims. In Part I, I argue that there is nothing inherently wrong about the Supreme Court being pro-business, at least to the extent that it is not favoring "crony capitalism" or the fruits of big-business lobbying that generate barriers to entry, but rather reaching decisions that are generally applicable and pro-free-market, expanding the economic opportunity set for Americans over time. In Part II, I outline some of the methodological problems underlying the evidentiary claim that the Roberts Court is, in fact, pro-business and give a summary evaluation of the Court's recent docket with respect to business. Finally, in Part III, I question the premise and ask if we are placing undue emphasis on the Supreme Court, when so much government enforcement power over business today exists essentially outside of judicial review.

1. WHAT'S WRONG WITH A PRO-BUSINESS COURT?

   If I should ask you what kind of economic order the Founding Fathers contemplated when they established the constitutional order, you would doubtless reply capitalism or a market economy. If I addressed that question to a similar number of professional American historians, the answer would be the same, the difference being that most of you would add "Thank God" and most of them would add "unfortunately. "

   --Forrest McDonald, Address to the Economic Club of Indianapolis, 2006 (10)

   [It's] the economy, stupid.

   --Bill Clinton Campaign Board, 1992n

   [T]he chief business of the American people is business.

   --President Calvin Coolidge, Address to the Society of American Newspaper Editors, 1925 (12)

   To begin, I want to make the normative claim that a pro-business orientation for the Supreme Court--at least as I think pro-business should be rightly construed--is something to be applauded, not lamented. That I should take this normative stance is perhaps unsurprising, given that I have worked for over a decade as a scholar at a think tank with a stated mission "to develop and disseminate new ideas that foster greater economic choice and individual responsibility." (13)

   But this normative posture should hardly be controversial in light of our national history: the interests of business clearly underlie the American experiment in self-government itself. When the Declaration of Independence lists affronts to the colonies in Parliamentary laws affirmed by the crown, it lists--after only the quartering of troops and trials exonerating the military execution of colonists--trade and taxation; and among the powers claimed for the declared independent states--after only matters of war, peace, and treaty--is "establish[ing] Commerce." (14)

   Similarly, the Constitution of the United States centrally affirms not only the right to self-government and the need for a stronger national government, but also limitations on that government oriented around property and contractual rights. The substantive powers of Congress laid out in Article I, Section 8 lay out in sequential order taxation, debt, commerce, bankruptcy, money, counterfeiting, infrastructure, and intellectual property--before turning to matters of adjudicatory tribunals, war, and military matters. (15) Article I, Section 9 lays out specific substantive limitations on federal taxation, commercial regulations, and appropriations. (16) Article I, Section 10 limits states' ability to levy taxes and impair contracts. (17) Article VI consolidates in the federal government state governments' debts. (18) The Fifth Amendment to the Constitution, proposed through a joint resolution of Congress in 1789 and ratified in 1791, prohibits the government from depriving persons of property without due process of law or from taking "private property ... without just compensation." (19) And in keeping with the pro-business focus of the early republic, the economic plans laid out by the first U.S. Treasury Secretary, Alexander Hamilton, centered around government debt, taxation, money, banking, and manufacturing. It would be incongruously ahistorical to argue that the American project itself and the U.S. Constitution arc not suffused with property and business interests- just as anti-business critics of the document have long lamented. (20)

   To be sure, the Fourteenth Amendment to the Constitution "does not enact Mr. Herbert Spencer's Social Statics," (21) and judges and justices are charged with interpreting laws--not with seeking to maximize business profits or economic utility. Still, courts have at least some discretion in resolving cases of constitutional and statutory interpretation; and it would seem to be consistent with American constitutional design that they resolve these cases--controlling for ideological and methodological tenets of constitutional and statutory interpretation--in keeping with free-market wealth maximization norms. Indeed, common-law judges regularly reached "efficient" legal outcomes, as Posner and Landes themselves helped to chronicle decades ago. (22)

   A pro-business outcome and an efficient outcome are not necessarily the same thing. A business litigant may win in litigation--or a business's lobbying team may win in the policy arena, achieving legislative or regulatory outcomes--yet achieve inefficient outcomes. Most obviously, such results can happen when a business secures some sort of special favoritism from government or barriers to entry reinforcing an existing business's market power. Indeed, the notion that there is a significant distinction between pro-business and efficiency undercuts the salience of efforts to draw inferences from pro-business "wins." Cases in which businesses interests are adverse to those of organized labor, for example, may be those in which a pro-business outcome is deemed a pro-market-efficiency outcome. But in other cases, the success of a business litigant is less informative about the ideological and market-conforming valence of a decision, as I discuss in more detail in Part II.

   Before turning to a discussion of the methodological difficulties in assessing whether the Roberts Court (or any Supreme Court) is pro-business, I would like to emphasize that the normative case for efficient, pro-business outcomes rests not only on ideology or history, but also empirically demonstrable current trends that mitigate against "anti-business" policies or case outcomes. Notably, U.S. productivity growth has slowed down over the last forty-five years--and even more in the current business cycle, in which productivity growth and hours worked have trended well below other business cycles in the post-WWII period. (23) Alongside these trends, the number of publicly traded companies in the United States has fallen dramatically, down from 8,025 in 1996 to 4,102 in 2012. (24) The number of U.S. public-company listings in 2012 were fourteen percent below the number in 1975; non-U.S. listings increased (219)% over the same period. (25) Smaller businesses have found it increasingly difficult to list publicly; (26) the number of U.S. initial public offerings valued at less than $75 million fell from 168 in 1997 to seven in 2012. (27) Although there is disagreement about the underlying causes of these trends, there is little doubt that they have a significant effect on the broader economy. (28) And in light of these trends, it would be troubling if the Supreme Court were lurching in an anti-business direction.

2. METHODOLOGICAL DIFFICULTIES IN ASSESSING WHETHER THE ROBERTS COURT IS PRO-BUSINESS

   Empirically assessing judicial behavior is hard. To begin with, it is often hard to determine what counts as a "win" in a legal case. Of course, one party wins and the other loses. But a legal win may result in an effective loss--and a win in a given piece of litigation may nevertheless entail the creation of a legal rule that disadvantages a litigant's "side" in prospective...