Archives: 10/2012

Cato Files Brief in the First Federal Appeal Regarding the Contraception Mandate

In January, when the Department of Health and Human Services announced that qualifying health insurance plans under Obamacare would have to cover contraceptives and “morning after” pills, many religious institutions — most notably the Catholic Church — vehemently objected to being forced to fund health care that violates their religious beliefs.

More than 30 lawsuits challenging the contraceptive mandate have now been filed across the country by various individuals and religious institutions.  Two of those suits have now been consolidated for the first appellate argument on the issue: one brought by Wheaton College, a Christian liberal arts college in Wheaton, Illinois, and another brought by Belmont Abbey College, a North Carolina college based around a Benedictine abbey.

The legal point here is somewhat technical, but incredibly important for anyone who thinks his freedom of conscience may be violated by the government in the future (a category that includes essentially everyone).  As originally promulgated, the contraception mandate included a narrow exemption for religious institutions, one that wasn’t available to religiously affiliated colleges.  After the strong backlash against the mandate, HHS issued a “safe harbor statement,” saying that the government wouldn’t enforce the mandate for one year against certain non-profit organizations religiously opposed to covering contraception. 

In other words, the contraception mandate is still in place but just won’t be enforced — but only for a year and individuals are still free to sue to enforce it against their religiously opposed employers.  HHS also issued an Advance Notice of Proposed Rulemaking that announced the department’s consideration of more permanent methods of accommodating religious institutions.

Because of the safe harbor notice and the ANPRM, the district court dismissed the colleges’ lawsuits for lack of standing and ripeness — holding that the colleges aren’t currently suffering any injury and it was too early to challenge the proposed rule.  Now at the U.S. Court of Appeals for the D.C. Circuit – considered to be the second-most important federal court because of its role in reviewing executive branch actions – the colleges argue that they are in fact suffering a current injury and that the mere possibility of a future rule that may accommodate them in some way is too remote to terminate their case.

Last Friday, Cato joined the Center for Constitutional Jurisprudence and the American Civil Rights Union in filing an amicus brief supporting the colleges.  We argue that the trial court misapplied the constitutional test for standing by not focusing on the facts that existed at the outset of the case; subsequent government actions, such as the ANPRM, are irrelevant to the preliminary question of standing.  We also argue that the trial court’s ruling compromises the principle of separation of powers by giving the executive branch the power to strip a court of jurisdiction merely by issuing a safe harbor pronouncement and an ANPRM (which doesn’t legally bind an agency to act in any way).

It is thus entirely speculative whether the agency will alleviate the harms that the colleges are suffering.  Without intervention from the courts, therefore, the colleges are left in legal limbo while facing immediate and undeniable harms to their religious freedom:  On one hand, they can’t challenge the constitutionality of a final regulation. On the other, they can’t very well rely on a proposed regulatory amendment that may be offered at some unknown point in the future.

The trial court rulings in the Wheaton College and Belmont Abbey College cases are frightening examples of judicial abdication that permit the expansion of executive power far beyond its constitutional limits.  The D.C. Circuit will hear argument in these consolidated cases later this fall.

‘Micro-Unions,’ the NLRB and Bargaining-Unit Gerrymandering

In the (admittedly artificial and arbitrary) world of labor relations law, as of not too long ago, the going premise was that a union election should be held within whatever was the most appropriate bargaining unit considering the similarity of interests among groups of workers at a given enterprise. But in a ruling last year in a case called Specialty Healthcare, and more recently this May in one concerning New York’s Bergdorf Goodman department store, the National Labor Relations Board (NLRB) has ruled in favor of the carving out of so-called “micro-unions,” smaller grouplets of workers which the union has selected in part because it thinks it can assemble a majority within those groups if not necessarily within larger workplace aggregates. In the Bergdorf Goodman case, to quote the National Right to Work Legal Defense Fund,

the Regional Director held that the requested unit of “full-time and regular part-time womens’ shoes associates in the 2nd Floor Designer Shoes Department and in the 5th Floor Contemporary Shoes Department” is an appropriate unit considering traditional “community of interest” factors. The Neiman Marcus Group, Inc., d/b/a Bergdorf Goodman, 02-RC-076954.

The Regional Director noted that, although the employer’s contention that a larger unit of all retail sales associates would also be appropriate or even more appropriate, the test is not the single most appropriate unit. Rather, to defeat a union’s petitioned-for unit, the burden is now on the employer to demonstrate that employees in its counter-proposed, larger unit “share an overwhelming community of interest with those in the [union’s] petitioned-for unit.

Business is up in arms about the change of policy, which it says will engender chaos and unpredictability all for the sake of giving unions a foothold in workplaces where a majority of workers do not welcome them. But a Congressional bid to cut off funding for the policy’s enforcement failed this summer on a party-line Senate committee vote.

Last year, when Overlawyered noted this emerging issue, commenter Chris Hoey wrote that it was not actually all that new:

At one point this tactic was called “extent of organization,” and was considered to be invalid as against the statutory scheme of Section 9 of the NLRA. It was used extensively in the early 60’s by the so called Kennedy and later Johnson Board. As an example of the ridiculous extremes, at one of my clients, a garment maker, the NLRB included the fabric cutters who cut 1” and over strap widths were in the unit, while those who cut 1/2” were excluded, notwithstanding the fact their machines were intermingled on the production floor.

The client closed the plant before the absurdity could be tested in the courts.

‘The Obamacare Cases Keep Coming’

Jonathan Adler at National Review Online:

During oral arguments in the Supreme Court challenge to the individual mandate, NFIB v. Sebelius, the plaintiff’s lawyer Paul Clement warned the justices not to make the same mistake they made in the 1970s with Buckley v. Valeo. In Buckley, the Court upheld portions of the post-Watergate campaign-finance reforms while invalidating others. The result was a muddled statute that Congress and the courts would repeatedly revisit for years to come. Repeating this approach with the Patient Protection and Affordable Care Act, Clement cautioned, could produce similar undesirable results. It’s too soon to know how quickly Congress will revisit the PPACA, but Clement’s warning already seems to be coming true in the courts…

More than three months after the Court’s decision, over three dozen legal challenges to the PPACA or its implementation are pending in federal courts, and more are sure to come.

At a Cato briefing on Capitol Hill this Wednesday, Adler and I will be speaking about one of those cases.

D.C. Employers: ObamaCare ‘Exchange’ an ‘Undefined, Untested, More Expensive Entity’ Offering ‘Standardized, Cookie-Cutter Coverage’

More than 150 local employers have written a letter to the District’s ObamaCare board, protesting the destruction of D.C.’s individual and small-group health insurance markets:

Those of us who may have had doubts about the health reform law were comforted by President Obama’s repeated assurances that, “If you like your health plan…you will be able to keep your health care plan. Period.” But, by dismantling and recasting the separate health insurance marketplaces that serve small employer groups and individuals in the District, D.C. policymakers would take away the option of keeping the health plan that they now have. Rather, to continue to offer health benefits to employees after 2013, small employers like us would have no choice but to go to an undefined, untested, more expensive entity to obtain coverage. Especially in these uncertain economic times, many employers, and their workers, must be given the time to adjust their budgets for the estimated price increases of the Exchange. In addition, many of us have long-established relationships with health insurers we know and are guided by broker advisors who understand our unique needs. We do not want to be forced to buy the standardized, cookie-cutter coverage that would be offered through a government-run Exchange…

Indeed, forcing all consumers seeking Individual or Small Group health coverage to go to the Exchange to purchase health plans runs counter to the ACA’s essential promise of more – not less – choice…The diversity of small employer health plans currently available in the District cannot be replicated in the standardized plans offered by the Exchange. Small employers rely on choice amongst a wide array of health plans available in the current commercial marketplace and the flexibility to design contributions to complement each employer’s unique budgetary and financial situations…With the many changes that will be required of employers of all sizes under the new federal health care reform law, it seems unreasonable to add to those concerns by eliminating the commercial marketplace which we know for an undefined, unfamiliar and untested Exchange-driven marketplace.

In addition, we cannot ignore the significant costs of administering the Exchange which will undermine one of the key goals of the federal law - affordability.

Signatories include such notorious right-wing groups as the Brady Center To Prevent Gun Violence:

  1. ACDI/VOCA
  2. AIDS United
  3. Allen & Associates
  4. Alliance Insurance Services
  5. American Academy of Orthotists & Prosthetists
  6. American Association for Clinical Chemistry, Inc.
  7. American Bakers Association
  8. American Cleaning Institute
  9. American Council for an Energy-Efficient Economy
  10. American Immigration Lawyers Association
  11. American Insurance Association
  12. American Road & Transportation Builders Association
  13. American Society of Association Executives
  14. Andre Chreky, the salon spa
  15. Apartment and Office Building Association of Metropolitan Washington
  16. Ashcraft & Gerel LLP
  17. Association for Competitive Technology
  18. Association for Professionals in Infection Control and Epidemiology
  19. Axar Management
  20. Beacon Consulting Group, Inc.
  21. Blue House Design
  22. Bogart
  23. Brady Campaign and Brady Center To Prevent Gun Violence
  24. Brawner Management, LLC
  25. Building Owners and Managers Association International
  26. Capital Medical Associates
  27. Center for Constitutional Litigation, P.C.
  28. Center for Nonprofit Advancement
  29. CGH Technologies, Inc.
  30. Chef Geoff’s
  31. Columbia Lighthouse for the Blind
  32. Combined Properties, Incorporated
  33. Communications Development
  34. Consortium of Universities of the Washington Metropolitan Area
  35. David All Group
  36. DC Chamber of Commerce
  37. Development Gateway, Inc.
  38. Distilled Spirits Council
  39. Elizabeth M. Ross and Kenneth M.H. Lee, M.D., P.C.
  40. Entertainment Software Association
  41. Environmental Law Institute
  42. EOP Group, Inc.
  43. Euroconsultants, Inc.
  44. Federation of American Hospitals
  45. Good Neighbors, LLC
  46. Government Accountability Project
  47. Hemsley Fraser Group
  48. High Noon Communications
  49. History Matters
  50. Howard Eales, Inc.
  51. Howard W. Phillips & Co.
  52. ICI Mutual Insurance Company
  53. Innovators Network Foundation
  54. Interstate Natural Gas Association of America
  55. J. Todd Miller & Associates, Inc.
  56. Kaludis Consulting Group, Inc.
  57. Katz, Marshall & Banks LLP
  58. Knightsbridge Restaurant Group
  59. LEVICK
  60. LimeLeap Solutions
  61. Marvin A. Address & Associates, Inc.
  62. McBride Real Estate
  63. McClendon Center
  64. MCLA Inc.
  65. Metro TeenAIDS
  66. Metropolitan Washington Road & Transportation Builders
  67. Miller & Shook Companies
  68. National Association for Gifted Children
  69. National Association of Health Underwriters
  70. National Association of Regulatory Utility Commissioners
  71. National Association of State Departments of Agriculture
  72. National Council for Interior Design Qualification
  73. National Customs Brokers & Forwarders Association
  74. National Mining Association
  75. National Propane Gas Association
  76. Navista, Inc.
  77. NetChoice
  78. Pacific Cargoes
  79. Park Limited
  80. Passion Food Hospitality
  81. Promundo-US
  82. Radio Television Digital News Association / Foundation
  83. Regis & Asociates, PC
  84. Reiter & Hill
  85. Restaurant Association Metropolitan Washington
  86. RULG-Ukranian Legal Group, P.A.
  87. Sabin Vaccine Institute
  88. Society of Chemical Manufacturers & Affiliates
  89. Spiegel & McDiarmid LLP
  90. The Council for Responsible Nutrition
  91. The Episcopal Center for Children
  92. The Farm Credit Council
  93. The Ford Agency, Inc.
  94. The Gabriel Company, LLC
  95. The Prime Rib, Inc.
  96. Timothy A. Price, MD, PC
  97. Triad Communication / TRC Real Estate
  98. U.S. Grains Council
  99. U.S. Soccer Foundation
  100. United Fresh Produce Association
  101. Vinyl Siding Institute, Inc.
  102. Vogel, Slade & Goldstein, LLP
  103. Waterman and Associates
  104. Wenderoth, Lind & Ponack, L.L.P.
  105. Widmeyer Communications
  106. Appleseed Foundation
  107. Atelier Architects
  108. Bockorny Group
  109. Bond & Pecaro
  110. Bonner, Kiernan, Trebach & Crociata
  111. Bonstra Haresign Architects
  112. Capitol Process Services, Inc.
  113. Carr Workplaces
  114. Casey Trees
  115. Clement’s Pastry Shop
  116. Communications Development Incorporated
  117. Computer World Services
  118. Colonnade Condos
  119. Compressus
  120. Environmental Design & Construction
  121. The Fund for American Studies
  122. Fund for Global Human Rights
  123. Futures Industry Association
  124. Hartman-Cox Architects
  125. Hecht, Spencer and Associates
  126. The Herald Group
  127. I. Gorman Jewelers
  128. International Center for Research on Women
  129. International Dairy Foods Association
  130. International Franchise Association
  131. James E. Brown & Associates, PLLC
  132. Jewish Primary Day School of the Nation’s Capital
  133. Jewish Women International
  134. King Branson LLC
  135. Land Trust Alliance
  136. Law Resources
  137. MAG America
  138. Man-Machine Systems Assessment, Inc.
  139. McBee Strategic
  140. McBride Real Estate Services
  141. Medical Device Manufacturers Association
  142. Medical Society of the District of Columbia
  143. Metropolitan Engineering, Inc. | Shapiro – O’Brien
  144. National Institute of Building Sciences
  145. North American Millers’ Association
  146. North American Securities Administrators Association
  147. Pascal & Weiss, P.C.
  148. Poker Players Alliance
  149. Potomac Communications Group, Inc.
  150. Public Properties
  151. Rust Insurance Agency, LLC
  152. Safety Net Hospitals for Pharmaceutical Access
  153. Salsa Labs
  154. Society of the Plastics Industry
  155. Springboard Enterprises
  156. Theodore Roosevelt Conservation Partnership
  157. The Washington Center for Internships and Academic Seminars
  158. Washington Partners, LLC

One might add the Center for Science in the Public Interest, whose president emeritus complains, “the only option the board publicly considered has been this unpopular and unnecessary plan to close the private marketplace to many businesses.”

If the Auto Bailout Was a Success, I’d Hate to See What a Failure Looks Like

Sometimes it’s no fun to be an economist. Or, to be more specific, it’s rather frustrating to understand Bastiat’s insight about the “seen” and the “unseen” and to always be asking “at what cost?” and “to what effect?” when politicians make inane statements.

The GM bailout is a good example. Politicians want us to believe that it was a success because the company is still in business. Heck, the Vice President’s favorite campaign statement is that “Osama bin Laden is dead and General Motors is alive

But if you’re the type of person who recognizes the importance of tradeoffs and incentives, then it’s easy to see how a political success can be an economic failure. Which is the message of this new video from the Center for Freedom and Prosperity Foundation.

This is music to my ears. I’ve been saying for years that any company can be kept afloat indefinitely with taxpayers subsidies. So if that’s the definition of success, we can party until we hit the fiscal brick wall. But that wall won’t feel good, as we can see from the fiscal chaos in Greece and other European welfare states.

But this issue involves more than just inefficient subsidies. I’m also concerned about the corruption that inevitably exists when cronyism replaces capitalism.

It’s quite likely, after all, that GM is spending lots of money on the Chevy Volt because of pressure from Washington rather than demand from consumers. And when you have a car company executive endorsing higher gas taxes, it’s reasonable to think that he’s currying favor with the political masters in DC rather than looking out for the best interests of drivers.

The GM bailout may be a win-win situation for politicians and lobbyists, but it’s a lose-lose proposition for taxpayers and the economy.

P.S. If you want some auto bailout humor, here’s a spoof on the Chevy Volt, an advertisement for the new GM Obummer, a couple of good political cartoons, and a very funny video on the Pelosi GTxi SS/RT.

Some Refreshing Honesty in China-Bashing

This is Dartmouth B-School Professor Richard D’Aveni writing in the Washington Post over the week-end, explaining how U.S. businesses “can win against China”:

Many people argue in favor of economic efficiency — investing capital and hiring labor anywhere in the world to reap the highest returns — that is theoretically achieved by an across-the-board opening of the U.S. domestic market. But this hurts American businesses in the long term. Fierce free-market competition with countries such as China drives down prices, which may make goods cheaper for consumers but comes at the expense of healthy profit levels. …

Ah, so it’s high corporate profits he supports, and that takes precedence over lower prices for consumers.  Well, yes, if you think high corporate profits should trump overall economic welfare, then minimizing free-market competition makes sense.  On the other hand, if your goal is general economic growth rather than helping specific corporations, “fierce free-market competition” is actually a good thing!

Nobel Peace Prize Committee Ignores the Real Heroes of Peace and Freedom

And the 2012 Nobel Peace Prize goes to Mikhail Khodorkovsky, who languishes in a Siberian jail for crossing Russia’s strongman Vladimir Putin. It goes to Prime Minister Morgan Tsvangirai, who was severely beaten by Robert Mugabe’s thugs in Zimbabwe. It goes to Cuban political prisoners (both known and unknown), and millions of North Koreans enslaved in that country’s labor camps.

Just kidding!

The esteemed members of the Nobel Peace Prize Committee have awarded the 2012 prize to the European Union. So, if you thought that awarding it to President Barack Obama for the sole reason of not being George W. Bush was strange and unusual, think again. (By the way, I have nothing against our president. I am sure he was just as embarrassed as everyone else.)

So, let us subject the reasons for this “great honor,” to quote the president of the EU Commission Jose Manuel Barroso, to my laser-like scrutiny.

According to the Committee, the EU got the Prize for “the advancement of peace and reconciliation, democracy and human rights in Europe.” To be sure, trade liberalization and the breaking down of the national barriers to the movement of goods, services, people, and capital made Europe more prosperous and cooperative.

However, pan-European peace was primarily a result of Reich’s total defeat in World War II, occupation of large chunks of the old continent by Les Anglo-Saxons, and creation of the North Atlantic Treaty Organization. It was NATO that turned the former mortal foes into allies in an effort to contain the spread of the communist cancer from Eastern Europe to the West.

When the Yugoslavs started slaughtering each other over bits and pieces of impoverished Balkan real estate, the EU had a real chance to promote peace. It did nothing of the sort. The greatest humanitarian disaster in Europe since Auschwitz ended only after the U.S. Air Force swooped over the hills surrounding Sarajevo and sent the Serbs packing.

So much for peace, then. As for democracy, the Peace Prize award to the EU drips with irony. The EU is not only un-democratic, in the sense that it is run by unelected and unaccountable bureaucrats, it is positively anti-democratic, in the sense that the democratically expressed wishes of the European peoples are either ignored or treated with contempt. When the Danes voted against the Maastricht Treaty, they were forced to vote again. When the Irish sunk the Lisbon treaty, they too had to repeat the vote. And when the Dutch and the French said no to the EU Constitution, they were simply ignored.

Here is how the president of the eurozone, Jean-Claude Juncker, sums up the decision-making process in the great bastion of democracy that is today’s EU: “We decide on something, leave it lying around and wait and see what happens. If no one kicks up a fuss, because most people don’t understand what has been decided, we continue step by step until there is no turning back.”

I could write about the overgrown and arrogant bureaucracy in Brussels; about the monstrously high and recession-proof salaries of European decision makers; about widespread and widely tolerated corruption; about the prosecution and silencing of whistleblowers, and about many other ways in which the EU does not deserve the Nobel Peace Prize. Suffice it to say that those have been widely documented and are available to anyone interested.

The truth is that the world is full of people doing heroic things every day. Just think of the “tank man” who stopped a column of the Chinese tanks in the Tiananmen Square in 1989. Or corruption fighters like John Githongo in Kenya and Nuhu Ribadu in Nigeria. These people are worthy of the Nobel Peace Prize.

To give it to the EU is absurd. Then again, the current members of the Nobel Peace Prize Committee would probably fail to recognize absurdity if it slapped them in the face and did a Macarena.