Are We Returning to a New Lochner Era?

Pictured: The Supreme Court of the United States

By Britteny Leyva

On July 9, 2018, President Donald Trump nominated Justice Brett Kavanaugh of the United States Court of Appeals District of Columbia Circuit to replace Justice Kennedy on the Supreme Court. In the wake of the recent Supreme Court decision in Epic Systems Corporation v. Lewis, this appointment could quite possibly launch a new Lochner era for the Court, something American Society has not seen since the start of World War II.[1]

The Lochner era was the laissez-faireperiod of the Supreme Court, during which it struck down progressive legislation time and time again.[2] Justices claimed that these progressive statutes infringed on the constitutionally protected “freedom of contract.”[3] Although the basis for striking down was the “freedom of contract,” the Justices stood by a pro-business bias.[4] Scholars view this period of jurisprudence as the “anti-canon of constitutional law,” and a prime example of judicial failure.[5] Since we are currently in a period of Republican hold on politics, Justice Kennedy stepping down has sounded the alarm for President Donald Trump to further tip the balance of the Court in favor of conservatives.[6]

Many critics of Kavanaugh’s nomination argue that he is a diehard conservative, citing major cases in which ruled on deeply contentious issues.[7] But a closer read into the dissents reveals even more uncertainty about Kavanaugh’s legal viewpoint on issues relating to business practices. In PHH Corp. v. Consumer Financial Protection Bureau, Kavanaugh dissented from the majority, which upheld the Dodd-Frank Wall Street Reform and Consumer Protection Act’s provision structuring the CFPB under one soledirector who can only be removed for cause prior to the end of the director’s five-year term.[8] Kavanaugh argued that the CFPB is unconstitutionally structured because it is an infringement on executive power, although he did not argue that the CFPB’s functions are unconstitutional.[9] This point seems to be in stark contrast with the picture many organizations and news outlets painted, claiming that Kavanaugh has an open hostility against the agency.[10] However, in practice, there is no contrast because the independence of a sole director allows for the CFPB to function and protect the rights of consumers without pressure from the executive.[11]

In United States v. Anthem, Kavanaugh’s dissent labored on the majority failing to remand the case to the District Court to decide whether the merger between Anthem and Cigna would create monopsony power, or buyer’s control of prices, for insurance companies against hospital service providers.[12] Kavanaugh’s take on the merger affects consumers because it would have removed one of the competing insurance companies from the already saturated market, removing choices from service providers and affecting prices.[13] In Verizon New England v. National Labor Relations Board, Kavanaugh, writing for the majority, held that the National Labor Relations Board failed to apply a deferential standard when it overturned an administrative law judge’s decision and arbitration in favor of Verizon.[14] This decision affects workers because it reduced their ability to collectively endorse their ability to support their union during a dispute.

But what do Kavanaugh’s opinions mean for the Supreme Court? As it was, Kennedy’s Supreme Court had already taken a pro-business stance. Take Epic Systems, for example.[15] In an opinion by recently confirmed Justice Neil Gorsuch, the majority rejected the argument that the NLRA’s guarantee to the right to engage in “other concerted activity for the purpose of collective bargaining or other mutual aid or protection” did not override arbitration agreements that mandate individual arbitration and prevent concerted actions.[16] The Court also found that the NLRA did not de facto override the Federal Arbitration Act and that such arbitration agreements are enforceable as written. In a fiery dissent, Justice Ruth Bader Ginsburg condemned the majority’s willingness to sanction the infamous yellow dog contracts of the Lochner era.[17] With workers’ rights taking a hard blow, it seems like Epic is a continuation for businesses to receive favorable decisions by SCOTUS.[18] While some of Kavanaugh’s decisions have tended to favor big business, many of his arguments tended only to be a seemingly indirect preference toward business.[19] For example, Kavanaugh has argued, seemingly objectively, that the wrong standard was applied, or that his interpretation posed a benefit to consumers.[20] However, Justices during the Lochner era and beyond also attempted to cloak their pro-business biases in decisions regarding violations of substantive due process.[21]

One thing that is for sure, however, is that the Lochner era reasoning Kavanaugh employs is a cause for concern.[22] This notion of individual liberty, used time and time again to strike down progressive legislation in the twentieth century to achieve Justices’ private agendas, is problematic, and should be scrutinized by the Senate Judiciary in its confirmation hearing.

[1] See generally Epic Sys. Corp. v. Lewis, 138 S. Ct. 1612 (2018) (holding that the National Labor Relations Act did not de facto override the Federal Arbitration Act); Stephen A. Siegel, Lochner Era Jurisprudence and the American Constitutional Tradition, 70 N.C. L. Rev. 1, 3 (1991) (explaining the constitutional tradition that lasted until 1937).

[2] See generally Carter v. Carter Coal Co., 298 U.S. 238 (1936) (holding that Congress does not have the power to regulate wage and hours); Adkins v. Children’s Hospital, 261 U.S. 525 (1923) (holding that Congress cannot regulate the federal minimum wage for women because it violates the freedom of contract); Hammer v. Dagenhart, 247 U.S. 251 (1918) (holding that Congress may not use the Commerce Clause to regulate child labor).

[3] Id.at 7.

[4] David E. Bernstein, Lochner’s Legacy’s Legacy, 82 Tex. L. Rev. 1, 5 (2003).

[5] Paul Kens, Lochner v. New York: Tradition or Change in Constitutional Law, 1 N.Y.U. J. L & Liberty 404, 405 (2005).

[6] John Bowden, Who Top Conservatives Want Trump to Pick for the Supreme Court, The Hill (July 7, 2018, 4:40 PM), http://thehill.com/homenews/administration/395960-who-top-conservatives-want-trump-to-pick-for-supreme-court.

[7] Kavanaugh Conformation Would Do Grave Harm, All. for Justice (July 9, 2018), https://www.afj.org/scotus-nominee-brett-kavanaugh (noting that Kavanaugh dissented in several high-profile cases, including against the Consumer Financial Protection Bureau having one director, against the Federal Communication Commission’s net neutrality rule, and against the D.C. Circuit’s decision to allow a teenage immigrant to obtain an abortion).

[8] 881 F.3d 75, 84, 164 (D.C. Cir. 2018) (en banc) (Kavanaugh, J., dissenting).

[9] Id. at 165-66 (noting that the director of the CFPB wields enormous power over American businesses and consumers and agreeing with PHH that the agency headed by a single director violates Article II of the Constitution).

[10] Martha C. White, Why this Supreme Court Candidate Could Reverse a Century of Financial Regulation, NBC News (July 2, 2018, 6:28 PM), https://www.nbcnews.com/business/business-news/why-scotus-candidate-could-reverse-century-financial-regulation-n888316(noting that open hostility to the CFPB was a cause for concern).

[11] PHH Corp. v. CFPB, 881 F.3d at 78 (reasoning that the CFPB’s independence shields the nation’s economy from political incumbents).

[12] 855 F.3d 345, 369, 377 (D.C. Cir. 2017) (Kavanaugh, J., dissenting) (arguing that the District court should have reviewed the factual dispute on the monopsony issue); see also Roger D. Blair & Jeffrey L. Harrison, Anti-Trust Policy and Monopsony, 76 Cornell L. Rev. 297, 298 (1991) (defining monopsony power as a market with only one buyer that uses its power to reduce the quantity purchased, thereby reducing the price).

[13] Anthem, 855 F.3d at 361 (noting that neither Anthem nor Cigna provided evidence demonstrating that consumers would benefit from the merger).

[14] 826 F.3d 480, 480, 485, 487 (D.C. Cir. 2016) (noting that the labor union negotiated with Verizon and entered into an agreement, which was consistent with the National Labor Relations Act because it was a waiver); see, e.g., Olin Corp., 268 N.L.R.B 573, 574 (1984) (holding that the standard is that the Board will defer to an arbitration award unless it is “clearly repugnant” to the National Labor Relations Act).

[15] Epic Sys. Corp. v. Lewis, 138 S. Ct. 1612, 1624 (2018).

[16] National Labor Relations Act, 29 U.S.C. § 157 (2018); Epic Sys. Corp. v. Lewis, 138 S. Ct. at 1625.

[17] Id. at 1649.

[18] See Halliburton Co. v. Erica P. John Fund, Inc., 134 S. Ct. 2398, 2417 (2014) (holding that defendants must be afforded an opportunity before class certification to rebut the presumption of a material misrepresentation through evidence that the market price was not affected); AT&T Mobility, LLC v. Concepcion, 563 U.S. 333, 341 (2011) (holding that the Federal Arbitration Act preempts state laws defining arbitration agreements disallowing class wide procedures as unconscionable).

[19] See, e.g., United States v. Anthem, 855 F.3d 345, 373 (D.C. Cir. 2017) (arguing that the crux of his disagreement with the majority is that the merger between the two insurance companies would benefit employer-customer relations); In re District of Columbia, 792 F.3d 96, 101 (D.C. Cir. 2015) (agreeing with the District Court’s decision to allow nursing home residents to sue the District as a class).

[20] Anthem, 855 F.3d  at 373; see generally In re District of Columbia, 792 F.3d 96 (D.C. Cir. 2015).

[21] Bernstein, supra note 4, at 5.

[22] PHH Corp. v. CFPB, 881 F.3d 75, 166 (D.C. Cir. 2018) (noting that the CFPB’s concentration of power in a single director poses a risk to individual liberty); see also Lochner v. New York, 198 U.S. 45, 46 (1905) (holding that the general right to make a contract in relation to his business is part of the liberty of the individual protected by the Fourteenth Amendment).