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April 10, 2015

Some “Teachable” First Amendment Moments in the Supreme Court’s Oral Argument About Confederate Flags on Texas License Plates

Cross-posted from Justia's Verdict.

In today's column, I analyze the Supreme Court oral argument held a few weeks ago in Walker v. Texas Division, Sons of Confederate Veterans, a case involving the First Amendment and Texas's regulation of license plates. Motor vehicles registered in the State of Texas must display a state-sanctioned license plate. Most vehicles use a standard-issue Texas plate that has a simple no-frills design and displays a random series of letters and numbers. Texas, like many other states, also permits individuals to submit personalized, or vanity, plates in which the numbers and letters on the plate form a message (such as "HOTSTUFF," a hypothetical example Justice Scalia used at oral argument).

In addition, Texas permits what are called "specialty" license plates, in which the overall design of the plate (but not the sequence of numbers and letters), is custom-made and might contain symbols, colors and other visual matter that is more elaborate than the relatively plain design of the standard-issue plates. Specialty designs may be adopted by the Texas legislature or proposed by private individuals or organizations. Specialty plate designs that come from outside the legislature must be approved (as must personalized vanity plates) by the Texas Department of Motor Vehicles Board, and the Board by law "may refuse to create a new specialty license plate if the design might be offensive to any member of the public" (a term that Texas authorities construe as meaning offensive to a significant segment of the public.) At least some specialized designs, once approved, can be used by members of the general public. As of a month ago, there were about 450 specialty designs that had been approved in Texas, around 250 of which are usable by the public. Although the majority of license plates in Texas are the plain-vanilla non-specialty plates, it is not uncommon on the Texas roadways to see license plates that make use of one of the approved specialty designs.

Applicants who seek approval of specialized plate designs must pay thousands of dollars to have their designs considered, and people who use the already approved designs pay for the privilege, the proceeds going to various state agencies.

The Texas Sons of Confederate Veterans (SCV) is a nonprofit organization dedicated to preserving the memory and reputation of Confederate soldiers. SCV applied for a specialty license plate that featured the SCV logo, "which is a Confederate battle flag framed on all four sides by the words 'Sons of Confederate Veterans 1896.'"

When this design was rejected by the Motor Vehicles Board (one of only a dozen or so designs that have been rejected), SCV sued, arguing (successfully in the lower court) that the State's decision to reject the design on the ground that the content of the design-in particular, the depiction of the Confederate flag-might be offensive to some observers constituted impermissible content- or viewpoint-based regulation of expressive activity insofar as the specialty license plate, while State property, is akin to a forum for speech that the government has created and opened up to people to use to express themselves. Texas, for its part, argues that because the State owns all license plates, and because the State of Texas name appears on all plates, including specialty plates, any expression on license plates constitutes "government speech" or at the very least a hybrid of government speech and private speech. Because the government is a (if not the) speaker in this setting, Texas argues, it necessarily has the authority to accept and reject whichever messages it chooses.

The case raises many fascinating and complex constitutional issues-far too many to meaningfully address in a single column. But in the space below, I use three particular kinds of questions that Justices asked at oral argument to illuminate important and often misunderstood aspects of First Amendment doctrine.

Less Can Be More (Important) Under the First Amendment

Let us first consider Justice Kennedy's questioning of the SCV lawyer. One of the things Justice Kennedy pointed out is that if Texas is not permitted to exclude Confederate flags (or Swastikas, or other potentially objectionable material) from license plates, it will almost certainly choose to abandon the specialty (and also the vanity) license plate design program altogether, and simply use old-fashioned, plain vanilla license plates. The result, said Justice Kennedy, is that we would end up with less, rather than more, speech, because individual expression that is currently taking place on specialty or vanity plates would no longer be permitted, and people would be forced to resort to things like bumper stickers, which they may not like or make use of as much as specialty plates. "If you prevail," Justice Kennedy asked SCV's lawyer, "you are going to prevent a lot of Texans from conveying a message. . . . So in a way, your argument curtails speech?"

Justice Kennedy's question is actually a profound but rarely explored one, in that the First Amendment's aversion to content- and viewpoint-based laws may indeed sometimes lead government to enact content-neutral counterpart laws that, quantitatively speaking, restrict far more speech. For example, a law that says "no pro-life rallies in the park after 6pm" is clearly unconstitutional, because it regulates speech on a matter of public concern in a traditional public forum in a viewpoint-based way. But if such a law is replaced with a law (that very well might be upheld) that simply prohibits all rallies in the park after 6pm-a so-called content-neutral regulation of time, place or manner-the result could be an even greater overall reduction in speech.

Of course, it is possible that by forcing government to regulate in a content-neutral way, we may actually make it harder for government to regulate speech at all, so that the end result could actually be an increase in the aggregate level of speech. In the example I gave above, perhaps it would politically difficult to pass a law prohibiting all rallies in the park after 6pm (because many kinds of groups may want to hold rallies, and overcoming the political opposition of all of these groups-as opposed to the merely the pro-life advocates-may not be feasible). If that is true, then striking down the law prohibiting pro-life rallies after 6pm will, in fact, increase rather than reduce the amount of speech.

But oftentimes (as in the SCV case) striking down a law on First Amendment grounds may in fact lead to less speech, but it still can be the right constitutional thing to do. The fact that sometimes we invalidate laws in ways that will create less speech overall tells us that maximizing the aggregate quantum of private speech is not the only thing the First Amendment is concerned with. Preventing the government from distorting the debate, by disabling some points of view, or by locking in majoritarian preferences (as is often the case when "offensive" speech is disfavored) is also an important objective. So too is making individuals feel that government respects them and does not act paternalistically and treat them the way parents treat children by telling them what topics they should be focusing on.

What's Good for the Goose. . . .

A second line of questioning of SCV's lawyer, this time by Justice Sotomayor, concerned whether the State should be given the same kind of free speech respect as individuals enjoy. Justice Sotomayor pointed out that that in the Court's most famous license-plate case to date, Wooley v. Maynard, the majority struck down a requirement that New Hampshire drivers make use of a state-issued license plate bearing the State's message "Live Free or Die." Justice Sotomayor then asked: "In Wooley we said we can't compel the individual[s] to put something on their plates that they disagree with . . . Why isn't the reverse true for the government [if it doesn't want to be associated with the Confederate flag]?"

Justice Sotomayor's symmetry instinct (which assumed arguendo that the Texas specialty license plate regime represents at least a hybrid of government and private speech) is very interesting but ultimately unpersuasive, to me at least. There are lots of constitutional rules that protect individuals that do not protect government in a symmetrical way. For example, a criminal defendant is entitled to have access to all exculpatory evidence in the government's possession, but the government is not entitled to all incriminating evidence in the defendant's possession, even though both sides are trying equally hard to prove their case.

I think there is asymmetry here as well. Even though the government can operate as a speaker, it is not a specific beneficiary of the First Amendment, and certainly shouldn't enjoy all the same First Amendment protections individuals (like the individuals who litigated in Wooley) do. Ultimately, the reasons the drivers in Wooley could not be forced to bear the State's message were rooted in individual dignity and autonomy aspects of the First Amendment. Institutional and organizational actors, as opposed to individuals, can be forced to be a vehicle for government messages and are relegated to engaging in counter-speech as a way of distancing themselves from any government message they don't like. This was true in Rumsfeld v. Forum for Academic and Institutional Rights (FAIR), a case last decade that upheld (9-0) a federal law that required law schools to allow military recruiters onto campus facilities to recruit students, notwithstanding the law schools' opposition to the then-existing policy of the military to discriminate against gays and lesbians ("Don't Ask, Don't Tell"). Like law schools, the State of Texas does not have the same kind of dignity and autonomy attributes that individual motorists have, and so (even granting that Texas has the authority to act as a speaker) requiring Texas to live with the private message on specialty plates and disclaim any endorsement of the message or design on a specialty plate by adding something like "Views on this license plate do not reflect the views of the State" does not violate the Constitution the same way requiring individuals to promulgate such disclaimers would.

The Relevance (or Not?) of a Profit Motive

A third interesting exchange involved the overridingly important question of whether the specialty plates can properly be thought of as pure (or at least hybrid) government speech at all. The State's lawyer argued that the fact that the government has retained the right to veto all specialty designs from the get-go makes this a government speech case, but that factor standing alone surely cannot be dispositive. If a public airport withheld for itself the power to ban any leaflets whose message it found unattractive, that would not justify its excluding leaflets in favor of affirmative action while permitting leaflets against it. Control is, as many Justices pointed out, a circular kind of argument about government power. Deciding what is and is not government speech is much more complicated than that.

One potential factor was mentioned by Chief Justice Roberts a few times, and that is the profit motive by the State. Why, he asked, should we view these specialty plates as government expression at all when government's real goal here was not to raise awareness (about anything) but to raise money? This, too, is an interesting instinct. As with Justice Sotomayor's question, if we analogize to private individual speech, the government fares better; the fact that a private individual or corporation is motivated by a desire to make a profit does not make his/its expression any less constitutionally valuable: the New York Times newspaper represents classic First Amendment speech even though it is published in order to make money.

But as was true for Justice Sotomayor's symmetry argument, here too I am not sure we should treat the government the same as individuals. It does seem a bit untoward that the State would raise revenue by charging people thousands of dollars for the privilege of submitting license plate designs, and then reject those whose content it doesn't like. The idea that the State was (mis)using the specialty-design applicants, and the moneys they paid, for its own monetary gain was one of the most sympathetic aspects of the SCV's case, which was otherwise not very sympathetic given that the Confederate flag has historically been tightly associated with slavery and insurrection (not to mention the fact that SCV's lawyer took the position that the State could not, consistent with the First Amendment, reject designs with swastikas on them.)

The opinions that emerge from this case in the coming months could be very interesting.

April 7, 2015

Academic highlight: Johnson on the demise of immigration exceptionalism

For SCOTUSblog by Amanda Frost, Professor of Law at American University. Original blog post here.

Kevin Johnson, who covers the Court’s immigration docket for SCOTUSblog, has posted an article analyzing trends in Supreme Court immigration cases over the last five years.  Although the Supreme Court has frequently departed from the normal rules of constitutional and statutory interpretation in immigration cases, Dean Johnson’s study of the 2009 through 2013 Terms suggests that “immigration exceptionalism” may be on its way out.

One clear example of immigration exceptionalism is the “plenary power” doctrine, under which the Supreme Court has given Congress unusual leeway in regulating immigration.  The Court first invoked that doctrine 125 years ago in Chae Chan Ping v. United States to bar judicial review of federal laws excluding Chinese immigrants from the United States.  In recent years the Court has retreated from that position, but it has never explicitly abandoned the plenary power doctrine.  After closely analyzing the Supreme Court’s immigration decisions from 2009 through 2013, Johnson concludes that the Court has “slowly but surely moved away from anything that might reasonably be characterized as immigration exceptionalism,” including its previous reliance on the plenary power doctrine, bringing “U.S. immigration law into the legal mainstream.”

In addition to this insight, Johnson’s article provides a thorough review of the major immigration cases over the last five years, such as Padilla v. Kentucky (holding that a noncitizen could raise an ineffective assistance of counsel claim based on an attorney’s failure to accurately inform him of the possible immigration consequences of a criminal conviction) and Chamber of Commerce v. Whiting and Arizona v. United States (addressing whether federal immigration laws preempt state laws regulating non-citizens).  Immigration constitutes a surprisingly large percentage of the Court’s docket — the Court heard five immigration cases in the 2011 Term alone — and thus Johnson concludes that the “Justices consider immigration to be an important national issue worthy of attention.”  Happily for readers of SCOTUSblog, he will continue to analyze the Court’s immigration decision for us in the years to come.

March 26, 2015

Live Blog from UNAM International Immigration Conference


Our UC Davis Delegation: Cruz Reynoso, Beth Greenwood, Leticia Saucedo, and me

I am blogging live today from an immigration conference at UNAM in Mexico City. Visit Immigration Prof Blog for the latest entries!

March 25, 2015

International Immigration Conference in Mexico City

UC Davis School of Law, the National Autonomous University of Mexico (UNAM), and the Monterrey Institute of Technology are co-sponsoring an international conference on immigration at UNAM in Mexico City on March 26.

I am joining immigration experts Professors Leticia Saucedo and Cruz Reynoso from UC Davis to participate in a conference with colleagues from Mexico's top universities to explore the history of immigration policy and law, the present context of immigration in labor and the environment, and the human impact of immigration on families, their daily lives, and their human rights. The program will also examine the future of immigration law and policy as it impacts both the United States and Mexico.

Here is the schedule for the conference.  The Deans of the sponsor law schools (Dra. Maria Castaneda Rivas (UNAM), Kevin Johnson (UC Davis), and Gabriel Cavazos (Monterrey Tech)) will welcome the participants.

Panel 1 is entitled "Overview, History, and Culture of Immigration."  Panelists included Professors Nicolás Foucras (Monterrey Tech) and Gabriela de la Paz (Monterrey Tech).  I am also on the panel and my presentation will focus on the history of immigration law and enforcement in the United States.

Panel 2 ("Undocumented Immigrants in the US:  Impact, Challenges and Enforcement") includes Professors Leticia Saucedo (UC Davis), Cruz Reynoso (UC Davis), and Gregory Hicks (University of Washington).

Panel 3 ("Impact on Individuals") includes Professors Mariana Gabarrot (Monterrey Tech), Dean María Leoba Castaneda Rivas (UNAM), and Leticia Saucedo  (UC Davis).

Panel 4 ("Long Term Immigration Policy") includes Gerry Andrianopoulos (Monterrey Tech) and Victor Hugo Perez Hernandez (UNAM). I will discuss possible reforms to U.S. immigration law and policy.

The conference follows an "Immigration Dialogue" for law deans from the Pacific Rim hosted by UC Davis School of Law in October 2014. The conference provided an opportunity for legal experts to explore challenging issues related to immigration as it impacts both countries.

Beth Greenwood, Executive Director International Programs and the LL.M. program (UC Davis), and Concha Romero were instrumental in organizing the conference.

March 16, 2015

Breaking News: California Grants Law License to Hong Yen Chang

Today, the California Supreme Court today issued its opinion in In Re Hong Yen Chang. The first line says it all: "We grant Hong Yen Chang posthumous admission as an attorney and counselor at law in all courts of the state of California." (emphasis added).

More than a century ago, Chang was denied the opportunity to practice law in California because of his race.  Professor Jack Chin, a leading civil rights law professor, has been working on the case with the Asian Pacific American Law Students Association students and the law firm of Munger Tolles & Olson LLP.

Congratulations to all involved in this important effort to right a historic wrong. Congratulations, too, to the family of Hong Yen Chang, many of whom are lawyers right here in California.

See coverage of today's developments from major news outlets including Reuters, Los Angeles Times, San Francisco Chronicle, and the Associated Press, among others.

March 13, 2015

Reflections on the Oral Argument in the Arizona Independent Redistricting Commission Case

Cross-posted from Justia's Verdict.

The U.S. Supreme Court last week heard oral arguments in an important case involving federalism and election regulation, Arizona Legislature v. Arizona Independent Redistricting Commission. As I have explained in a two-part series of columns (beginning with this one), Arizona is one of only two states (California being the other) where voters—responding to state legislatures’ tendency to engage in problematic gerrymandering—passed an initiative giving the job of drawing congressional districts to an independent redistricting commission (IRC) instead of the regular state legislature. The elected Arizona legislature brought a lawsuit and appealed the lower court ruling to the Court, arguing that the so-called Elections Clause, Article I, section 4 of the federal Constitution, which gives power to undertake districting in the first instance to the “legislature” of each state, prevents the people of a state from divesting the elected state legislature of district-drawing power.

One Generally (and Recurringly) Surprising Aspect: Federalism Inversion

Many aspects of the oral argument weren’t shocking. I continue to believe, for reasons I explained in the earlier column, that the challenge to the IRC is flawed, but many analysts anticipated that the more conservative Justices would be sympathetic to the arguments made by the elected legislature, which is being represented by former Bush Administration Solicitor General Paul Clement, and these Justices did seem to be. On the other hand, some liberal Justices generally seemed more receptive to the arguments in favor of the IRC, made by its lawyer, former Clinton Administration Solicitor General Seth Waxman. Though expected by Court watchers, this coalitional breakdown is itself surprising in at least one historical respect: the liberal Justices seem more inclined to favor “states’ rights” by giving states latitude to experiment with different modes of district drawing, while the conservative Justices seem disinclined to permit states free reign. In the 1980s and 1990s, conservative Justices were the ones who generally thought the federal Constitution allowed for broad state experimentation, and the liberals thought that states did not have as much running room. But beginning with Bush v. Gore, it is now hard to know how the conservative/liberal framework (which is, of course, overly simple but nonetheless somewhat useful) maps onto federalism matters. We see the same potential complexity in the pending Obamacare case, King v. Burwell, where liberal rather than conservative Justices will likely construe the Affordable Care Act (Obamacare) in a particular way so as to avoid imposing costs on states that might not have been fully aware of the potential consequences of their decisions not to set up their own healthcare exchanges.

A Surprising Inattention to Standing

In a few other respects, though, the oral argument in the Arizona case was surprising by any standard. For one thing, the Court included in the grant of review a question of whether the elected legislature had standing to sue (and the matter was briefed), yet the Justices asked no questions of Mr. Clement about whether his client did enjoy standing. There were some standing questions asked of the lawyer representing the United States (which supported the IRC as an amicus in the case) when he said he thought the elected legislature lacked standing, but one would think that if there is a question raised in a case about the plaintiff’s standing, the Justices would ask the lawyer representing the plaintiff to explain why the Court can hear the case. The burden to establish standing is on the party seeking to invoke federal judicial power, and yet the Justices gave Mr. Clement a pass on this in oral argument, even though the standing question is far from easy. (For an explanation of why the standing question is a complex one, readers may want to consult an earlier Verdict column focusing on that question).

And when they did engage in the standing analysis at all, the Justices seemed not to know what they themselves had said in past standing cases, including a particularly relevant one. Justice Kennedy, in questioning the lawyer for the federal government, intimated that the Court’s cases do not say that just because another plaintiff might be a better candidate to bring a lawsuit, the Court should deny standing to the party actually in front of it. And the federal government’s lawyer acknowledged that the Court often says close to the opposite—that the “even if [the Court’s rejection of standing in a given case] would mean no one would have standing to sue, that’s not a reason to find standing.” But what both of them seemed to forget is that in the standing case most germane to the Arizona legislature’s dispute, Raines v. Byrd—where the Court denied standing to members of Congress in a case challenging the Line Item Veto Act—the majority did suggest that whether another party might be a better candidate for standing was a factor that might cut against standing for the members of Congress. As Chief Justice Rehnquist’s opinion put it: “We also note that our conclusion . . . [that Congresspersons lack standing does not] foreclose[] the Act from constitutional challenge (by someone who suffers judicially cognizable injury as a result of the Act). Whether the case would be different if . . . [this] circumstance[] were different we need not now decide.” The clear implication of that last sentence is that the existence of a “better” candidate for standing may very well affect whether the Court is willing to stretch standing doctrine for the sake of the plaintiff actually before the Court.

A Surprisingly (and Problematically) Narrow View of Past Cases and U.S. History

This isn’t the only passage from previous cases that the Justices seemed to have forgotten they said. Justices Kennedy and Scalia repeatedly pressed Mr. Waxman for any instances elsewhere in the Constitution in which the Court had indicated that the word “legislature” was not necessarily a limited reference to the elected representative legislature, but could include the people themselves—the lawmaking authority. While Mr. Waxman had no clear answer, one thing he could have said is that Justice Scalia himself has intimated that “legislature” might in some constitutional contexts be read to include the people. In Salazar v. Colorado, in 2003, a case involving whether Colorado could involve state courts in discharging the power that Article II of the Constitution gives to “the legislature” of each state to prescribe the manner in which presidential electors shall be selected, Justice Scalia (along with Justice Thomas) joined an opinion, dissenting from a denial of certiorari, which said: “Conspicuously absent from the Colorado lawmaking regime, under the Supreme Court of Colorado’s construction of the Colorado Constitution to include state-court orders as part of the lawmaking, is participation in the process by a body representing the people, or the people themselves in a referendum” (emphasis added).

The Justices seemed somewhat forgetful not just of past statements in cases, but also of American history, in particular, the path by which U.S. senators came to be directly elected by the people. The text of the original Constitution (prior to the Seventeenth Amendment in 1913) provided that senators should be picked by the “legislature” of each state. Justice Kennedy, trying to draw a sharp distinction between the “legislature” and the people of the state based on this textual feature of the 1787 document, observed at argument that “until 1913, for close to a hundred years, many States wanted to have direct election of the senators . . . and not one State, not one State, displaced the legislature. It took the Seventeenth Amendment to do that. . . It seems to me that [for this reason] history works against the IRC.”

With all due respect, Justice Kennedy’s historical account here is extremely and problematically simplistic, in that many states did effectively, to use his term, “displace[] the legislature” in picking U.S. senators. Beginning in the mid-1800s, state-level political parties and organizations sought ways to involve the people more directly in selecting senators, and were devising increasingly effective ways to limit state legislators’ discretion in their choice of federal senators. What evolved into the most sophisticated approach, the so-called “Oregon Plan” (or Scheme), began simply as an opportunity for state legislative candidates to formally pledge to follow the will of the voters, as expressed through an advisory popular election, when it came time to pick the next federal senator. The pledges were considered merely moral at first. But as other states began to follow Oregon’s lead, more creative and more coercive devices were employed. Nebraska, for example, pioneered a “scarlet letter” approach, in which elected legislators who broke the pledge they took as state legislative candidates were burdened with a ballot notation to that effect in the event they sought state legislative reelection. Other states followed suit, crafting variations on the Oregon and Nebraska devices to suit their local needs. Oregon voters ultimately adopted a state constitutional amendment that, as a matter of state law, legally bound state legislators to select the U.S. Senate candidates who were most popular among state voters. By 1912, when the U.S. Senate approved the Seventeenth Amendment, nearly sixty percent of the senators were already selected by some means of direct election (and thus had nothing to fear from it). For this reason, it seems likely that even without ratification of the Seventeenth Amendment, direct election would in fact be with us today in most, if not all, states. In reality then, the Seventeenth Amendment was a formalizing final step in an evolutionary process.

Of course, the Oregon state constitutional provision binding state legislators, the Nebraska scarlet letter devices, and the somewhat similar measures from other states were never litigated in the U.S. Supreme Court or in lower courts. Yet that fact may itself be telling. Does Justice Kennedy think that these devices were in fact unconstitutional because they improperly deprived the elected legislatures of power Article I gave to them? If so, would Justice Kennedy be prepared to call into question the legitimacy of the senators elected from all the states that employed such devices for over a decade? And the actions taken by these Senates? And if not, doesn’t this historical episode support the Arizona electorate and its desire to experiment via the IRC?

In deciding what the word “legislature” in the Constitution means, in Article I and elsewhere—and whether that term can be read to include the people themselves—the Court should, at a minimum, be more careful and sophisticated in taking account of what the Court or various of its Justices have said, and what the full historical record of American democracy reveals.

March 13, 2015

California Supreme Court to Rule on Bar Admission of Hong Yen Chang

Cross-posted from Immigration Prof Blog.

Last spring, ImmigrationProf reported on the efforts of UC Davis law students to seek the posthumous admission of Hong Yen Chang to the California State Bar. More than a century ago,  Chang was denied the opportunity to practice law in California because of his race.

Students in the UC Davis School of Law Asian Pacific American Law Students Association (APALSA) asked the California Supreme Court to admit Hong Yen Chang to the bar. Professor Jack Chin, a leading civil rights law professor, has been working on the case with the APALSA students and the law firm of Munger Tolles & Olson LLP.

The California Supreme Court announced today that it would file an opinion in the case next Monday.  Stay tuned!

March 13, 2015

"Future of CEQA" Symposium Receives Coverage in Sacramento Bee

Our Environmental Law Society's symposium on the future of CEQA received a nod from the Sacramento Bee today:

Among the most intractable debates of California politics is what to do about the California Environmental Quality Act, or CEQA, the 1970 law regulating the environmental impacts of development projects. Defenders hold it up as a crucial protection, while business interests and local governments are exacerbated by what they see as overly burdensome requirements and abuses of the process to block construction. Political forces as large as Gov. Jerry Brown have been unable to maneuver a comprehensive overhaul of the law.

A day-long symposium hosted by the Environmental Law Society at UC Davis School of Law will explore the challenges and the future of CEQA. Kip Lipper, the Senate president pro tem's chief policy adviser on energy and the environment, kicks things off with a discussion of recent legislative developments. Sessions follow on nontraditional uses of CEQA, the implications of adding consultations with Native American tribes to the law, and how CEQA factors into the development of California's high-speed rail project and efforts to address climate change.

Representatives from the California Air Resources Board, the Governor's Office of Planning and Research, and the Department of Water Resources are scheduled to participate in the symposium, which begins at 9 a.m. at the UC Davis School of Law.

March 5, 2015

Opinion analysis: Court adopts broad standards for adjudicating what constitutes a tax discrimination under the 4-R Act

By Professor Darien Shanske. Cross-posted from SCOTUSblog.

Neither side came away with a clear victory in the Court's decision in Alabama Department of Revenue v. CSX Transportation, Inc., as the Court remanded the case to the Eleventh Circuit. Again. The clear loser in the case is the Eleventh Circuit, which has been given the specific task that the court of appeals had already eschewed as "Sisyphean." Justice Scalia wrote the majority decision. Justice Thomas wrote the dissent, with Justice Ginsburg signing on. This is the second time that Justices Thomas and Ginsburg dissented on the same issue in the same case.

The issue in the case was interpretation of Section 11501(b)(4) of the [4-R] Act, which prohibits a state from "impos[ing] another tax that discriminates against a rail carrier." Alabama imposes a general sales tax, which includes tax on the sale of diesel fuel to railroads, but motor and water carriers (i.e., trucks and boats) are exempt from paying this tax on their fuel.   The Court held that the appropriate comparison class for assessing discrimination under the Act can vary depending on the alleged discrimination. In this case, the Court found that CSX properly alleged that motor and water carriers, as competitors to railroads, were a proper comparison class.

The Court also held that "discrimination" in the statute requires some analysis of a state's overall tax system. It is not enough, as CSX argued, to look to the burden imposed by one tax in isolation when there could be another tax that demonstrates that there is, in fact, not an unlawful discrimination.   It is true that only the railroads pay the sales tax on their fuel, but Alabama countered that this did not amount to discrimination because motor carriers, but not railroads, had to pay an excise tax on diesel fuel. The Eleventh Circuit refused to consider this argument, but it will have to consider it on remand as the Supreme Court has now held that the statute requires an assessment whether there is a "roughly equivalent" tax that offsets an apparently discriminatory tax.

As for the issue of comparison class, oral argument already strongly indicated that a majority of the Justices were not going to accept the limitation on what can constitute the class that was proposed by the state and that had been proposed by Justices Thomas and Ginsburg in dissent the last time this case was before the Court. The anti-discrimination provision at issue is in subsection (b)(4), which does not explicitly state what the proper comparison class would be. However, subsections (b)(1)-(3) of the same provision do explicitly indicate such a class, namely "commercial and industrial" property. The majority found that this limitation does not carry over from the first three subsections to the last, primarily because the earlier subsections were specifically about the property tax and the final residual provision is not so limited.

Once the Court found that this limitation did not restrict subsection (b)(4), the question becomes just what does constitute a comparison class. Here the Court provided only broad guidance. On the one hand, the analysis as to what constitutes a comparison class cannot be the same as would be performed in connection with the Equal Protection Clause. This is because, as to economic matters, the Equal Protection Clause permits very fine distinctions. As the Court explained, importing this analysis into the analysis of the 4-R Act "would deprive subsection (b)(4) of all real-world effect, providing protection that the Equal Protection Clause already provides."  The right analysis as to proper comparison class must take into account the purpose of the 4-R Act, and here the opinion cites the statute: to "restore the financial stability of the railway system of the United States, [while] foster[ing] competition among all carriers by railroad and other modes of transportation." Given this purpose, the Court agrees that competitors, such as motor carriers, can be an appropriate comparison class. As for other possible comparison classes, the Court put that question to the side, exclaiming that "[s]ufficient unto the day is the evil thereof."

As to how to do the discrimination analysis, the Court explained that "it does not accord with ordinary English usage to say that a tax discriminates against a rail carrier if a rival who is exempt from that tax must pay another comparable tax from which the rail carrier is exempt." In other words, how can there be an unlawful discrimination if in reality the railroads were no worse off than their competitors? The Court therefore "could not approve" the Eleventh Circuit's refusal to consider Alabama's argument that its fuel excise tax is the "rough equivalent" of its sales tax on diesel fuels. Though the Court was "inclined to agree" that this is not the kind of analysis that courts are likely to do well, it is nevertheless the duty of courts to try because that is the task Congress assigned them "by drafting an antidiscrimination command in such sweeping terms."

Both as to the question of comparison class and as to the question of the scope of analysis, the Court's opinion adopted an interpretation of the statute that requires courts to apply broad standards. Justice Thomas in dissent does more than just argue for his reading of the statute; he also needles the majority about reaching a "predictably unworkable" result.

A concluding observation. The dormant Commerce Clause also forbids discrimination in taxation, and thus the Court has already analyzed what constitutes discrimination in taxation at some length. And, in the dormant Commerce Clause cases, as noted very briefly in the opinion in this case, the Court has long accepted the possibility that states can defend themselves from a charge of discriminatory taxation by showing that there is some other compensating tax. By referring back to an early (1932) dormant Commerce Clause case, the majority opinion appears to accept that this piece of conceptual analysis is sound. Yet a lot has happened since 1932. In particular, the Court developed the so-called complementary tax doctrine, complete with its own three-part test, which has been applied fairly recently . The doctrine was also discussed in the briefs, including that of the United States, which appeared as an amicus in support of neither party. This is especially significant because the Court largely followed the disposition of this case proposed by the United States in its brief and at oral argument.

What does it mean that the complementary tax doctrine made no appearance in the majority opinion? Rather than reference the doctrine, the majority used a form of the phrase "rough equivalent" twice, along with "roughly comparable," to describe what the Eleventh Circuit must assess. Is this standard stricter or looser than the complementary tax doctrine? Is this doctrine not mentioned because the Court finds it unsatisfactory or only applicable to dormant Commerce Clause cases? The opinion does not answer these questions, but perhaps we will find out what the Court thinks if - when? - this case returns to the Court for a third time.

March 2, 2015

How Prospective Law Students Can Make Better Use of the U.S. News Law School Rankings That Are About to Be Released

Co-authored with Dean Kevin R. Johnson. Cross-posted from Justia's Verdict.

Over the next month or two, tens of thousands of admitted applicants will make decisions about which law schools to attend. One tool that many will no doubt use to guide their decisions is the annual U.S. News & World Report rankings, which will be released in a little over a week. Many analysts criticize the methodology (or various aspects of it) that U.S. News employs to rate law schools (and some folks doubt whether all the nation's law schools could ever be meaningfully graded according to any single set of criteria.) But, for the time being at least, U.S. News remains the most looked-at, and seemingly influential, ranking system out there. For that reason, in the space below we offer-based on our collective experience in both evaluating other law schools and having our own law school evaluated-five pieces of advice for making the most sophisticated use of the rankings that U.S. News is poised to unveil.

#1: The Importance of Trends: Remember That Each Year's Rankings Capture a Snapshot in Time

The rankings that are set for release on March 10 present a great deal of raw and processed information, but they data they contain-and the bottom-line rankings they assign-represent only a snapshot in time. Any sensible consumer of the rankings should look not just at one year's result, but at a longer track record, perhaps attaching more weight to a five-year average rather than to any single year's numbers.

To be sure, sometimes there is, as to a particular law school or type of law school, a clear trend line-in particular components within the ranking or as to the bottom-line performance - and it may be important to try to discern what accounts for any such consistent assent or decline. More commonly, a school may bounce around somewhat because of short-term factors, such as a bad year in passing the bar and/or placing graduates in jobs, or an anomalous drop in application volume or quality due to some administrative gaffe or regional downturn. Such volatility is itself a basis on which the U.S. News rankings are often criticized-how much could a school's overall quality really change within the space of a year?-but taking a somewhat longer view may partially address that criticism and make the bottom-line ratings more meaningful.

In looking at changes over time, it is important to realize that certain parts of the U.S. News evaluations very rarely move much from year to year. This would include a school's reputation rank among other law professors who are surveyed (which accounts for 25% of a school's overall ranking) and its reputation rank among lawyers and judges who are polled (which accounts for 15% of the overall result). The relative quality (compared to other schools) of a school's student body-as judged by median LSAT scores, college GPAs, and the school's acceptance rate-also has tended, as an historical matter, not to change tremendously in a single year (but rather evolves much more gradually), but this factor has itself become a bit more volatile in recent years as the national decline in application volume has hit some schools harder than others. Other factors, such as the percentage of graduates who are placed in law-related jobs at or nine or ten months after graduation, bar pass rates, and dollars-per-student spent by a school (more on that later), have tended to fluctuate much more, and thus may account more for the year-to-year changes in bottom-line rankings.

One might argue that the parts of the U.S. News survey that are more stable are more reliable and thus should be taken more seriously than the overall rankings. There is something to that, but even these stable components have been open to significant criticism. The response rate by lawyers and judges who are polled has often been quite low, and the integer-based scale (ranging from 1 to 5) on which law professors, lawyers and judges are asked to place schools is not sufficiently finely grained for people to draw the kind of nuanced distinctions that the U.S. News rankings purport to depict overall. Moreover, it may be that larger law schools, with more graduates, may have an easier time making a positive impression on judges and lawyers, simply because members of the bench and bar may be more likely to encounter recent alums of schools that pump out more graduates. (There are other, smaller aspects of the U.S. News methodology-such as student-faculty ratios-that might tend to inadequately reward economies of scale and thus favor small schools.)

#2 The U.S. News Data Is Necessarily Limited in Scope

In addition to being limited in time, the data that U.S. News employs and presents every year is limited in scope. Among the data that it ignores is how diverse a law school's faculty or student body is. We have argued (in an earlier series of online columns) that this information concerning racial/ethnic (and perhaps other kinds) of diversity ought to be incorporated into the rankings. Most law school faculty and administrators around the country believe that diversity within a school is a helpful plus in a world where graduates are going to encounter and serve clients of various different backgrounds. Yet U.S. News has declined to include a diversity component in its overall scoring (although it separately presents raw data as to racial diversity). As we have explained before, the main reason U.S. News has offered for not including diversity-that some schools are located in places where diversity is harder to accomplish-simply doesn't wash. Some schools are located in places where there are fewer high-LSAT performers in the community, yet we still include median LSAT as a rankings input because we think a law school student body's LSAT performance is a relevant characteristic. If, as the Supreme Court has held and as most people in academia believe, a diverse school is pedagogically better than a less diverse school, all other things being equal, then we should develop a way to have diversity count for at least something when we evaluate and rate schools. In the meantime, prospective students can find helpful data on each school at the ABA "Standard 509" website.

#3. Distributions Within Each Law School Student Body

While we are talking about the makeup of the student body of each law school (which many prospective students would find an important factor since law students often learn from, and are judged by the outside world by, the company they keep), we should point out that the data that U.S. News weighs most heavily-median LSATs and GPAs-while relevant to an assessment of student-body academic strength, itself can mask important differences within each student body. Two law schools may have similar medians, but they may have very different LSAT scores and GPAs at the 75th and 25th percentiles within their student bodies. Let us compare, for example, using 2014 data, Northwestern and Cornell, both excellent law schools with undeniably strong student bodies. Northwestern's LSAT median was a 168, and its median college GPA was a 3.75. Cornell's were a bit lower on both-a 167 and a 3.68. But Cornell's 25th percentile LSAT and GPA were somewhat higher than Northwestern's (166/3.55 compared to 162/3.53). How could the school with higher medians have lower numbers at the 25th percentile? There could be a number of possible explanations. Northwestern may prefer applicants who have either a very high LSAT or a very high GPA (sometimes known as "splitters"), whereas Cornell may prefer people who were reasonably (but not quite as) high on both metrics. Perhaps Northwestern's 25th percentile LSAT is lower because it has enrolled more students who have been out of college for a longer period of time, in which case LSAT scores may be less important than real-world accomplishment. Or maybe some different reason altogether.

We are not suggesting here that having medians that diverge from a school's 25th percentile numbers is inherently problematic (although it might be problematic for law schools that, unlike Cornell and Northwestern, have many low LSAT performers and that may have low bar pass rates); instead, we are simply saying that when an applicant is looking at the student bodies of schools in which s/he is interested, it may make sense to look at more than medians. We note, in this regard, that the ABA "Standard 509 Report" website has a good tool that enables users to search and compare law schools along these axes.

We should add that if critics believe that U.S. News creates a perverse incentive for schools to admit "splitters" (perverse in the sense that pedagogical considerations would otherwise incline these schools to admit folks who present reasonably strong LSAT scores and GPAs instead), there might be ways to tweak the U.S. News student-quality formula, but any such changes could create other incentives or disincentives about which other observers might complain.

#4. Looking Behind the Employment Numbers

Two final observations warrant mention. First, one of the most volatile-and thus influential as to many schools' rankings in a given year-factors in U.S. News is the percentage of graduates who have a full-time, long-term, law-related job ten months after graduation. Certainly a school's ability to help place its graduates is an important factor in any decision about where to attend law school. But note, importantly, that the percentage employed in full-time, long-term, law-related jobs does not by itself convey any information about the particular type of jobs a school's graduates are getting. U.S. News does not present or make use of salary data (although it did decades ago); it does not break jobs down by geography; as of last year it did not even tell consumers how many jobs are funded by the graduate's law school or home university. We should add that some law school- or university-funded jobs are quite meaningful and reasonably paid, whereas others are less so. In any event, here too, the ABA provides much more finely grained data on job type and salary; applicants should consult the web page on which the ABA collects and presents the employment surveys for all ABA-approved schools.

#5. Follow (or at Least Examine) the Money

Finally, speaking of money, we should point out that there is one factor in U.S. News as to which the underlying data and the use to which U.S. News puts it are harder to see and thus harder to analyze, and that is the so-called "faculty resources" component that looks at "average fiscal expenditures per student for instruction, library and supporting services." This inscrutable factor accounts for about 10% of a school's overall score and often determines where a school lands within a bunched-up grouping. For example, if one looked at all the other major U.S. News components-peer academic assessment, lawyer/judges assessment, median LSATs/GPAs, acceptance rates, placement rates, bar pass rates, student-faculty ratio, etc.-Yale should be tied with, or even slightly behind Harvard. And yet Yale consistently beats Harvard for the top spot in the rankings by a non-trivial margin; last year it was four overall score points out of a possible 100. And this difference seems likely accounted for by the fact that Yale spends more-although precisely how much more is hard to know-per student than any other school by a significant margin.

Now four points out of 100 in the U.S. News overall score may not seem like a lot, but given how bunched up schools are, four points can be a big deal. (Yale's four-point lead over Harvard last year was four times larger than Harvard's lead over #3 Stanford, and four points farther down the scale was all that separated #29 from #42.) And Yale's perch atop U.S. News every single year for over two decades likely accounts for its qualitatively better yield among admitted applicants than that of any other law school, thus enabling Yale essentially to have first choice among the applicant pool. (Yale these days admits only around 250 people to get 200 to attend, generating a yield of about 80%, compared to Harvard's yield of about 60%, which itself is much higher than the yields of almost all other top law schools.)

To say that expenditures-per-student can have these important consequences on a school's ranking and its yield is not to imply that this spending criterion is illegitimate. But one cannot help wondering: if the additional spending-per-student isn't elevating placement rates or lowering student-faculty ratios, or allowing a school to obtain a faculty that is seen by other law professors as superior to that of other schools (and all of these are already measured directly and counted by the ranking system), precisely why should the money matter so much? The U.S. News methodology may result in double-counting of many considerations, but dollars spent may be a particularly problematic example. Yet there may be responses: perhaps Yale's resources don't increase its placement rate, but affect the kinds of jobs its graduates are able to obtain. For example, maybe its resources allow more students to undertake their own original research, which leads to more jobs in the academy. And so forth. Again, as with most other features of the U.S. News rankings that we've discussed above, our goal here is not so much to provide definitive answers as to cause students to think a bit more critically as they consume the bottom-line ordinal rankings for which U.S. News is best known.