September 28, 2020

Episode 45: 'SCOTUS without RBG'

[Cross-posted from “What Trump Can Teach Us About Con Law”]

By Elizabeth Joh

On Sept. 18, Justice Ruth Bader Ginsburg died at age 87. She was a trailblazing jurist who fought for the equality of women before the law. But her legacy is in peril, as President Donald Trump and Senate Republicans prepare to push through a conservative successor. What can Democrats do to alter the course of the SCOTUS? And what does the Constitution tell us about so-called "judicial supremacy?" Listen to episode 45 of "What Trump Can Teach Us About Con Law"

September 21, 2020

In celebration of Ruth Bader Ginsburg

By Marty West, Professor Emerita

(Remarks delivered at a Sept. 19 vigil in Davis honoring Justice Ginsburg’s life and legacy)

We are here tonight in Davis Central Park to celebrate the life of Justice Ruth Bader Ginsburg. She has always been a part of my professional life and our lives have intersected many times. I will miss her.

In fall 1971, when I was beginning my second year of law school at Indiana University in Bloomington, Ruth argued and won her first case in the U.S. Supreme Court. The case was Reed v. Reed, and she convinced the Court to rule, for the first time, that a sex-based classification in a law violated the Fourteenth Amendment’s Equal Protection Clause. The Supreme Court ruled that Idaho’s law automatically preferring a father over a mother as the executor of a child’s estate was unconstitutional.

In the fall of 1972, when I was a third-year law student, I went to a conference at Yale on how to create a law school course on Women and the Law. Ruth was there with her co-author Herma Hill Kay, law professor at UC Berkeley. They were the first ones to publish a law school textbook on sex-based discrimination.

As the founder of the ACLU Women’s Rights Project in New York in 1972, Ruth had been pleased with the result in Reed v. Reed, but really wanted the Court to find that a sex-based classification created a “suspect class,” mandating the highest level of judicial review, the same level of review given to a classification based on race. So Ruth tried again.

In 1973, Ruth argued Frontiero v. Richardson, involving a woman in the Air Force and her right to claim dependent’s benefits for her husband. The Court ruled in Ruth’s favor, and she got four members of the Court to agree with her that a sex-based classification created a “suspect class” subject to the most stringent judicial review. However, she did not get that fifth vote needed to adopt the higher standard.

That same year, 1973, I published my student law review article on the sex-based classifications in the Social Security system. I cited a lower-court case, then pending, brought by Ruth and the Women’s Rights Project: Weinberger v. Wiesenfeld. That case challenged the denial of any father’s benefits when a mother, covered by Social Security, died leaving young children. Ruth won the case before the Supreme Court in 1975, and the Court actually cited my law review article in the footnotes!

Ruth’s genius was demonstrated by her decision in these two cases to pursue fact patterns where striking down the sex classifications would benefit men, not women. Arguing before nine men on the Supreme Court, she wanted to find examples they could possibly identify with. She continued to follow this policy throughout the 1970s.

In 1976, I was the treasurer of the Equal Rights Amendment campaign in Indiana. We were the last state to ratify the ERA before the time expired, leaving the amendment three states short. Our ERA campaign got financial and other support from the ACLU Women’s Rights Project in New York, still headed by Ruth Bader Ginsburg.

In 1980, Ruth was appointed by President Carter to the federal Court of Appeals, joining the District of Columbia Circuit.

In 1982, I joined the faculty of the UC Davis Law School.

Justice Ginsburg took her seat on the U.S. Supreme Court in 1993.

In 1994, I received an invitation from Professor Herma Hill Kay, then dean of the UC Berkeley Law School, to join her as co-author of the law school textbook, Sex-Based Discrimination. Herma had been producing new editions by herself ever since Ruth had gone on the federal bench in 1980, but Ruth had been urging her for some time to get help. At some point, Ruth sent me a note, thanking me for agreeing to be Herma’s co-author. Herma and I published three more editions of the textbook over the next 12 years.

In 1996, Justice Ginsburg authored the Supreme Court opinion in U.S. v. Virginia, finding that the exclusion of women from the Virginia Military Institute, a public university, violated the Equal Protection Clause. She relied on all those cases she had litigated in the 1970s overturning sex-based classifications and got as close as she could to “strict scrutiny” of a “suspect class.” She labeled the level of judicial review as “skeptical scrutiny” for sex-based classifications. Five other justices joined her majority opinion.

In 2006, I was in Washington, D.C. on sabbatical. I called up Justice Ginsburg’s office and asked if I could sit in on a couple of oral arguments. I got to sit in the “family” section of the chambers, in Marty Ginsburg’s seat, and after the first set of oral arguments, the guard escorted me up to Justice Ginsburg’s office. We had a very pleasant fifteen-minute conversation. That was the last time I saw Justice Ginsburg.

I retired from the law school in 2007, and retired from teaching Gender and Law in Women’s Studies in 2012.

But, of course, Justice Ruth Bader Ginsburg never retired.

In the 1970s, Ruth Bader Ginsburg was responsible for developing the law of constitutional Equal Protection which has benefited all of us ever since. We owe her our deepest gratitude.

September 20, 2020

Constitutional basic values and the religion clauses

[Cross-posted from Canopy Forum]

By Alan Brownstein

The meaning of the religion clauses in judicial opinions has changed dramatically over the past 150 years. Doctrine has shifted, sometimes precipitously. The case law has been convoluted and unpredictable. The Free Exercise Clause, for example, was initially interpreted to protect religious belief, but not religious practice.  Many decades later, the U.S. Supreme Court shifted direction and held that any law that substantially burdened religious practice would receive rigorous judicial review. In theory, the Court appeared to reject the minimal protection provided by the early case law and substituted maximum protection in its place. But that theory was rarely reflected in judicial decisions. Time and again religious liberty claims were rejected because the Court found some rationale for declining to apply strict scrutiny review.

Less than 30 years later, free exercise doctrine shifted yet again. In 1990, in Employment Division v. Smith, the Court held that only laws that targeted religion or a specific faith would receive close judicial scrutiny. All other formally neutral and general laws, no matter how seriously they interfered with religious practice, would be upheld under very deferential review. 

Establishment Clause doctrine has been similarly fluid and equally convoluted. Consider just one area of dispute, whether religious institutions, such as religious schools, should be equally eligible to receive state aid provided to nonreligious institutions, such as public schools or secular, private schools. For many years the Establishment Clause was interpreted to sharply restrict such subsidies. Although the case law was often muddled, funding religious institutions was usually recognized to be problematic and frequently struck down. Today, under recent Supreme Court decisions in Trinity Lutheran Church v. Comer and Espinoza v. Montana, not only is the state funding of religious institutions permissible, it is unconstitutional for a state to refuse to provide subsidies to religious institutions that are available to their secular counterparts. 

Notwithstanding  these continuing shifts in interpretation, the Court, often, but not always, managed to advance religious liberty and equality in our country. Frequently, however, it failed to connect key values and basic principles to the holdings of particular cases. The resulting case law seemed incoherent and difficult to justify.  

The Supreme Court today appears to be on the verge of reinterpreting the religion clauses once again. In doing so, it may create more consistent doctrine. The risk, however, is that this doctrinal coherence will come at the cost of the Court ignoring basic principles and values that need to be taken into account to protect religious liberty and equality in a religiously open and pluralistic society.  Going back to basics may not resolve all or even many disagreements about the meaning of the religion clauses.1 Church-state disputes are often complex and difficult to resolve. But at least it may provide us a better understanding of what is at stake and how much we have to lose if the Court fails to connect its decision-making to the basic values in play in religion clause decisions.

Constitutional Law and Democratic Self- Governance

The foundational issue underlying all constitutional questions is the relationship between constitutional law and democratic self-government. Constitutional law displaces political decision-making.  Thus, a basic question about the meaning of the religion clauses is whether there are persuasive reasons for assigning the resolution of church-state disputes to constitutional adjudication rather than political deliberation. Advocates of rigorous and expansive interpretations of the religion clauses must explain why the conventional default process of political decision-making by popular majorities should be superseded  by  judicial decisions when religion is at issue.

At a high level of generality, one answer to this question is that the political branches of government often do a bad job when dealing with religion. The state simply cannot be trusted to make  decisions involving religion. This is a power that will too often be abused. Minority faiths, in particular, will be vulnerable to insensitivity to their interests at best and far too often will be victimized by discrimination and oppression. The immense power and resources of government should not be used to influence religious choice, by regulation or proselytizing. Americans of different faiths and those who hold secular rather than religious beliefs should be treated with equal respect by their government. We don’t trust  political majorities and the branches of government they control to do that.2

Core Religion Clause Values

A corollary to this lack of trust is the conviction that religion is an inalienable interest in the most basic sense. It is inherently a matter of individual conviction and voluntary association, not state authority. This is not an area of decision-making that is vested in government or majorities. What constitutes religious truth on transcendent matters or spiritually meaningful modes of worship should not be debated in the halls of the legislature or determined at the ballot box. Government does not need the power to decide religious issues to do its job and religion does not need the government to thrive in a free society.

If we focus on specific values, we see that the religion clauses implicate three basic rights; personal liberty and institutional autonomy, group equality, and freedom of speech. Religious liberty and autonomy is essentially a dignitary interest. It is intrinsic to human dignity for individuals to be able to make personal choices that define their identity and form the foundation of much of their lives. Accepting and abiding by a religious faith is the kind of self-defining decision that belongs, as of right, to the individual, not to the state. his liberty interest also includes the decision to not adopt a religious faith. Accordingly, protecting the freedom to exercise religion cannot impose undue costs on those who do not adopt a religious faith.

Religious liberty also further instrumental goals. If religion can be kept sufficiently separate from government, it can operate as a monitor and moral check of government abuses of power. Many of the most important movements for social change in American history were based on religious ideas and promoted by religious associations.

Religious equality requires equality of treatment and equality of respect. The latter value, grounded in an equal protection perspective, is directed at status as well as material discrimination. There is no state hierarchy of faiths according to which the government promotes or proselytizes in favor of certain religious communities and disparages or disfavors others.

Concern for freedom of speech precludes government from distorting the marketplace of ideas through the exercise of regulatory power in favor of certain viewpoints and against others. Many aspects of religious exercise are expressive in nature: proselytizing, sermons, songs and hymns, books and pamphlets, and prayer. Religion is a major voice in our society. Protecting expressive religious exercise, but not the expressive activities of secular individuals and institutions, or vice versa, raises free speech concerns. 

How do these various independent but overlapping values relate to contemporary doctrinal disputes about the meaning of the Free Exercise Clause and the Establishment Clause? In this brief essay, I cannot come close to discussing all of the church-state issues being debated and litigated today. I hope, however,  to demonstrate the importance of connecting basic values to the development of doctrine by examining three categories of cases.

Regulations That Burden Religious Exercise

Obviously, laws directed at the suppression of a particular faith conflict with the most basic principles of religious liberty and equality and are presumptively unconstitutional, a clear violation of the Free Exercise Clause. There are no legitimate purposes served by singling out religious practice or a particular faith for discriminatory regulatory treatment. Thankfully, state action of this kind is relatively rare in the United States today, in part because it would immediately be challenged and in most cases struck down.  

A much more complex question involves neutral laws of general applicability. These laws incidentally require religious individuals to engage in activities that their religion prohibits or prohibit individuals from engaging in conduct that their religion requires. The effect of the law is deemed incidental because the regulation governs both religious practice and secular activity. It is not designed to burden religious exercise. 

These are the most common kinds of laws that are challenged on free exercise grounds. A law that prohibits the possession and use of peyote is a neutral law of general applicability which prevents Native American faiths from using this drug in their religious rituals. Similarly, civil rights laws that prohibit discrimination in places of public accommodation on the basis of sexual orientation have been challenged by wedding cake bakers and wedding photographers on the grounds that they are required to facilitate and celebrate same-sex weddings, making them complicit with conduct that their religion prohibits.

Clearly, these neutral laws of general applicability may conflict with religious liberty values. Imposing civil or criminal sanctions on religious practice, even incidentally, substantially burdens the ability of individuals to abide by the dictates of their faith. Religious groups may request, and the political branches of government have the discretion to grant, discretionary religious exemptions from these general laws in order to avoid burdening religious liberty.  If we accept the basic principle that government cannot be trusted on matters relating to religion, however, depending on the political system to provide adequate protection of religious liberty is unlikely to provide a fair or adequate response to these requests. Constitutional law is a necessary alternative for protecting religious liberty when the political branches of government fail to do so.

Courts recognize the impact of these neutral, general laws on religious liberty. The reason why they  have been reluctant to take on the responsibility of protecting religious exercise against such laws is because  of the perceived difficulty of adjudicating these cases. No constitutional right is absolute. Freedom of speech and association, the right to keep and bear arms, and freedom of religion are all subject to being overridden by sufficiently important or compelling state interests. Unlike laws designed to suppress religion, neutral laws of general applicability that incidentally burden religious practice typically further legitimate and sometimes extremely important state interests. When religious liberty and these governmental interests are in conflict, how exactly are courts to evaluate and balance the competing interests at issue in a particular dispute? The problem here is not so much about the basic values underlying the religion clauses. The primary concern is whether courts can engage in principled judicial decision-making in adjudicating these cases as opposed to engaging in the subjective and arbitrary balancing of interests, a task more appropriately assigned to the political branches of government than the courts.

The weighing and comparison of religious liberty and state interests in these cases can certainly be difficult. There are real risks that judges will be influenced by their own personal values in reaching their decisions. But these costs can be overstated. Courts engage in balancing in many areas of constitutional law. The risks created by their doing so typically do not require displacing judicial review and assigning fundamental rights disputes to the legislature for resolution.

Moreover, the difficulty courts experience in adjudicating  these cases to some degree is a self- inflicted wound. Religious belief and practice, like speech, is pervasive in our society. When the exercise of a right is so broad and extensive, it will necessarily conflict with state interests in myriad circumstances. To deal with these inevitable and varied disputes, courts must develop nuanced, multi-factor doctrine to inform judges as to the appropriate standard of review to apply in particular cases. The courts have created a sophisticated doctrinal framework to do this for free speech cases. In interpreting the Free Exercise Clause, however, they have resorted to a simplistic, inadequate framework that applies only one of two standards, either extremely rigorous review or highly deferential review. Until courts develop complex doctrinal guidelines for free exercise rights, as they have done for free speech rights, it is hardly surprising that they worry that the outcome of free exercise cases may be arbitrary and unpredictable.3

Putting concerns about courts exceeding the proper role of judges aside, basic values have a role to play in deciding some free exercise cases. Many religious practices provide little in the way of secular material benefit to the religious individuals obeying the dictates of their faith and impose no harm on third parties. Exemptions from laws to permit such religious exercise provide no special advantage to religious individuals.

Some religious convictions and practices, however, have substantial secular value entirely removed from their faith-based motivation, or they impose costs on third parties. Protecting the exercise of religion in these situations raises two basic value concerns. First, freeing individuals from costly regulatory burdens has the potential to influence religious choice by providing secular, material benefits to those who receive such exemptions. Second, and similarly, the exemption in question may shift a material burden from religious believers to third parties. From the perspective of the individuals who must now bear the shifted burden, they are being penalized because they do not adhere to the protected faith.

Two examples are sufficient to illustrate this concern. Individuals avoiding military service on religious grounds as conscientious objectors obviously receive an exemption of secular value. And equally obviously, someone else must serve in their place. Similarly, if less dramatically, if Sabbath observers are given precedence for a weekend day off over secular employees who want weekend days off to spend with their family, the accommodation of the religious individuals has secular value and imposes a cost on third parties. Recognizing that protecting religious liberty has these secular consequences does not determine how cases should be decided. It should influence their adjudication, however. 

Another example of a clash of basic values involves exemptions from regulations for religious institutions that are substantially, albeit not exclusively, expressive in nature. Religious schools would be one example. Houses of worship serve important expressive functions as well. If these religious institutions are exempt from costly regulations that secular expressive institutions must obey, religious liberty values conflict with free speech values. Here, religious institutional voices are relieved of burdens that limit competing secular voices. For example, religious schools, but not their secular counterparts, may be shielded from the federal Americans with Disabilities Act or from state and local zoning regulations. If avoiding distortions of the marketplace of ideas in favor or against religious expression is a basic value, then exempting only expressive religious institutions from costly burdens may further religious liberty values but at the price of sacrificing free speech values. Indeed, from a formal legal perspective this conflict could not be more stark. A long line of Supreme Court authority has characterized religion as a viewpoint of speech. Further, it is black letter law that viewpoint discriminatory laws must receive strict scrutiny, the most rigorous standard of review the courts apply. Surely, exempting secular expressive institutions from costly regulatory burdens that their religious counterparts had to obey would be challenged as viewpoint discrimination. Providing favorable treatment to expressive religious institutions but not expressive secular institutions should be equally problematic.

State Sponsored Religious Symbols and State Directed Prayer

The church-state issues in this category of cases involve two types of disputes. In one, the government is challenged for sponsoring, directing, or expressing prayers to, or on behalf, of the community.  In the other, the government funds, maintains, or otherwise sponsors physical displays communicating a religious message. 

The government expressing or directing prayer clashes sharply with numerous basic values. If the government asserts that it is offering a prayer on behalf of, essentially in the name of, the community, as it commonly does when an official or invited guest offers a prayer to begin a city council meeting or other public event, doing so conflicts directly with a basic principle. The government is not vested with the power to speak to G-d in the name of the people. Speaking personally, I choose the words I express to G-d in prayer. The government usurps my inalienable right to determine when and what I say in prayer by claiming the authority to pray as my representative. Similarly, when students are directed to recite a prayer in public school, the state in essence is asserting the authority to decide what children express as their own religious sentiments. Yet surely, the basic value of the inalienable right of religious liberty precludes substituting the religious instruction offered to children by their faith communities with state mandated prayer.

Also, state prayer obviously and blatantly is in conflict with the principle that government should not  directly influence religious belief or worship. By placing the imprimatur of state approval and support on specific religious messages and modes of worship, the state can hardly claim even the pretense of neutrality. State prayer always reflects religious favoritism. These prayers almost routinely express the beliefs of larger faiths and ignore the religious sentiments of religious minorities. Just as we do not trust government or the majority to protect the free exercise rights of minority faiths or those faiths out of step with secular orthodoxy, we cannot trust government or political majorities to protect the religious equality of minorities when the power and resources of the state are used to promote religious beliefs and identity. 

State prayer conflicts with the basic principle that people of all faiths are entitled to be treated with equal respect. Religious minorities are denied equal respect when the government acts as if they do not exist or are unworthy of recognition when it chooses prayers to express or promote. One of the consequences of such discrimination is status harms, a commonly recognized result of violations of equality values. Minorities are injured in their “hearts and minds” by decisions that demonstrate the state’s commitment to religious hierarchy through the favoring of faiths with the political power to command the state’s attention and the promotion of their beliefs. This harm is also described as treating religious minorities as outsiders, as individuals who are not fully recognized members of the community.

It is important to understand that no one is arguing that there is anything intrinsically alienating about exposure to the prayers of other faiths. Many of us attend religious life cycle events, such as a wedding or Bar Mitzvah, of friends and neighbors of different faiths and experience no lack of respect when we are asked to stand, for example, when prayers are offered during the ceremony. In these circumstances, we appreciate that we are outsiders, invited guests who respect the religious practice of our hosts. 

The crucial distinction, of course, is that we are not invited guests in the communities in which we live and work. We belong here as of right and expect to be treated by the government with the same recognition and respect as other members of the polity. The measure of equality in a diverse and pluralistic society is the understanding that the majority does not own the public life of the community —  to which minorities are only welcomed as invited guests, if they are welcomed at all.

State sponsored or directed prayer conflicts with religious liberty as well as religious equality values. This argument is grounded in the coercive nature of these events and the nature of that coercion varies depending on context. The most obvious and incontrovertible scenario is one in which individuals are subject to explicit state sanctions if they do not attend or join in government organized worship and prayer. These circumstances are relatively rare.

Much more pervasive are situations involving implied threats of sanction or the loss of benefits. Put simply, whenever a government official exercises considerable discretionary authority over the benefits to be received by private individuals or the burdens imposed on them, the relationship between the official and individual is intrinsically coercive in nature. If government officials invite people over whom they exercise authority to join them in prayer, the invitees will experience the officials’ request as coercive whether it is intended to be or not.

Numerous examples illustrate this kind of implied coercion. If a judge requests the attorneys and litigants appearing before her to join her in prayer before a trial begins, the directed prayer is coercive. Judges exercise far too much discretion in conducting trials for attorneys and litigants not to fear they risk alienating the person whose decisions control their destiny by rejecting such a request. Nor does the request to participate in prayer lose its coercive nature in a more political setting. Town residents  attempting to influence city council members about some issue of importance to their family or neighborhood will experience coercion if they are asked to stand and join in prayer before public comment to the council. Most contested matters before a city council involve considerable political discretion. Residents planning to petition their representatives during public comment will not want to alienate the very officials whose decision they are trying to influence by refusing a request to stand and join in an offered prayer. These directed prayers are intrinsically coercive even if residents accept the implicit risk of antagonizing the decision-makers they plan to address by refusing to participate in the religious exercise.4

Concerns about implicit coercion also provide one of the strongest foundations for striking down teacher or administrator directed prayer in public schools. State sponsored religious exercises are impermissible violations of the Establishment Clause in part because of the impressionability of young children. Coerced participation in religious exercise is equally invalid, however, whether the victim is likely to succumb to state pressure or has the fortitude to resist it. A stronger argument recognizes the very substantial discretionary power that school teachers and administrators can wield over their students. Students who challenge a teacher by refusing to stand and recite a prayer as they are directed to do may find themselves penalized in myriad ways because the scope of teacher discretion in grading, classroom discipline and other aspects of a student’s life is so broad. 

The least direct, but not inconsequential, form of coercion involves the unavoidable pressure to conform to beliefs and activities that the state promotes as deserving of public support. The Court in Engel v. Vitale, a case invalidating a state directed prayer to be recited by public school students as a violation of the Establishment Clause, made this point explicitly clear. “When the power, prestige and financial support of government is placed behind a particular religious belief, the indirect coercive pressure upon religious minorities to conform to the prevailing officially approved religion is plain.”5

State support of religious displays, such as a Ten Commandments monument, a Latin Cross, or a Nativity Scene, create many, but not all of,  of the same conflicts with basic values that render state prayer constitutionally problematic. Here, the state’s physical imprimatur of support for majoritarian religious messages is flatly inconsistent with the principle that the state should not be influencing religious belief or affiliation. Similarly, the state’s favoring of certain faiths but not others communicates a hierarchy of religious status  and a lack of respect for those whose beliefs are not deemed to be worthy of recognition. The same mistrust of political majorities that supports protecting religious liberty under the Free Exercise Clause supports protecting religious equality under the Establishment Clause.

True, there is no direct or implied coercion created by these passive displays. But the indirect coercion which the Court described in Engel v. Vitale remains a concern. Further, the duration and magnitude of religious displays and monuments may amplify the message of religious influence and favoritism much more than an isolated and situation specific state prayer.

Some religious displays acknowledge the religious diversity of America, avoid favoritism, and communicate the message that Americans of all faiths and those who hold no religious beliefs are worthy of equal respect. The Department of Veterans Affairs provides the families of eligible American military veterans who have died a headstone for the decedent and the choice of a belief symbol to be engraved on it. Currently, 74 symbols are available, representing myriad religious faiths and nonreligious beliefs as well.6 The message of this display system is clear. Americans who serve their country under arms hold a broad range of beliefs about religion. Each veteran is entitled to equal respect from the country he or she served. If we compare this tribute to religious diversity and equality to a war memorial exhibiting a single religious display such as a large Latin Cross, the dissonance between the two displays exemplifies the inconsistency of the later memorial with basic values of religious equality and neutrality.

State Funding of Religious Institutions Engaged in Programs of Secular Value

There are a range of church-state issues implicated by the state funding of religious institutions providing services of secular value, such as schools, hospitals, and various social welfare programs. Given space constraints, I will focus on two generic disputes. First, should the government subsidizing of these programs be sharply restricted by establishment clause doctrine as the Court frequently ruled in cases prior to the mid 1980’s? Second, should religious institutions be able to demand free exercise exemptions from conditions on government funds that limit the way these institutions operate government supported programs.

With regard to the first dispute, basic values can be asserted to support both sides of this issue. For example, families seeking to have their children receive a secular education in a religious environment argue that a denial of state support burdens their religious liberty. They pay substantial taxes for the secular education of their children and they lose the entire benefit of those payments if they send their children to religious schools that receive no support for the secular part of the curriculum these schools provide. Alternatively, the religious schools themselves may claim their religious liberty is burdened if they must isolate or eliminate the religious component of their programs in order to receive state funds.

Religious liberty values also support significant limits on state subsidies of religious institutions, however. Religious institutions may assert the right to engage in faith-based discrimination and deny access to publicly funded jobs or publicly funded benefits to individuals of different faiths or who are not religious. Prospective employees or applicants for benefits argue that their religious liberty is seriously burdened when they are excluded from jobs or benefits to which they would otherwise be eligible solely because they hold the “wrong” religious or nonreligious beliefs. Equally problematic for religious liberty purposes, religious institutions may require employees  in, and beneficiaries of, state funded programs to engage in organized prayer or other religious activities. 

There is also a structural religious liberty problem created by government subsidies. The distinctive instrumental justification for religious liberty is grounded in the independence of religion from government. It is this separation of church from state that allows religion to operate as a moral check on potential abuses of government power. If religious institutions receive substantial support from the state, they risk becoming dependent on government largess, a dependency which will undermine the authenticity and commitment of their critical voice to counter government wrongdoing.

In addition to dependency, government financial support often comes with conditions and strings attached to it. As the old adage recognizes. “He who pays the piper calls the tune.” What the government funds, the government will seek, not unreasonably, to control. These controls may impose serious constraints on the religious liberty of subsidy recipients. The government may, for example, prohibit discrimination on the basis of various characteristics including race, gender, and sexual orientation by institutions receiving state support. Some of these requirements may conflict with the tenets of various faiths.

These structural religious liberty concerns segue into the second religious liberty dispute: whether religious institutions should be able to demand free exercise exemptions from contract conditions and other regulatory requirements that limit the way they operate government funded programs. If the Constitution required rigorous review of conditions on government funds  provided to religious institutions, some of the concerns about religious liberty risks associated with government support would be reduced. Much would depend on how courts applied rigorous review to government conditions limiting the use of state funds by private entities which receive subsidies to further state purposes. For example, the government may assert a compelling state interest in enforcing anti-discrimination requirements in hiring employees or providing services to beneficiaries in government funded programs. Courts may conclude that while religious institutions merit protection from state interference with the use of their own resources, they cannot commandeer state resources intended to benefit the general public with discriminatory limitations required by their faith.

While protection against direct government control of subsidized programs will alleviate religious liberty concerns for religious institutions receiving state support, including institutions of minority faiths, it will, simultaneously, exacerbate the religious liberty interests of those individuals denied access to employment or benefits because of their beliefs. A job training program operated by a government agency or secular nongovernmental provider, for example, will not discriminate on the basis of religion, race, gender, and sexual orientation in its hiring decisions. The work force is integrated, including employees with all of these characteristics. The hiring practices of religious institutions permitted to impose faith-based restrictions on employees in state funded programs based on religion, gender, and sexual orientation, may result in starkly different consequences.

The burden on the religious liberty of employees denied jobs because of their beliefs is apparent. To the extent that we recognize as a basic value that there must be some limitations on the costs and harms that religious liberty exemptions can impose on third parties, the loss of government funded job opportunities because of a person’s gender or sexual orientation would implicate this concern as well. 

Religious equality principles are also relevant to disputes about government funding of religious institutions. Under current establishment clause doctrine, state funding can only be provided under formally neutral, secular criteria. It would be unconstitutional to offer subsidies to Christian, but not Muslim institutions. While this mandate resonates with equality values, it is far from sufficient to adequately protect minorities against discrimination. Any first year law student could draft formally neutral eligibility criteria that will predictably divert funds to larger faiths and away from minority institutions. Consider a private school funding scheme that restricts subsidies to only those schools with an enrollment of over 100 students that have been in existence for over 5 years. It is formally neutral, but minority faiths are far less likely to be able to satisfy this requirement than larger faith communities.

This brief essay is intended to be illustrative of the importance of evaluating religion clause doctrine through the prism of first principles and basic values. It certainly does not come close to being comprehensive. It does suggest that a great deal is at stake when the Court interprets the religion clauses to resolve church-state disputes. There is much to be lost if the Court’s decisions ignore the core foundations of the religion clauses and the liberty, equality, and speech values that should be considered in deciding Free Exercise and Establishment Clause cases.

September 17, 2020

Corporate governance in negotiated takeovers: The changing comparative landscape

[Cross-posted from the Oxford Business Law Blog]

By Afra Afsharipour

Takeover transactions raise significant corporate governance questions about the allocation of decision-making power among firm participants, whether and to what extent participants are constrained in their exercise of decision-making power, and whether and to what extent participants can be held accountable for their decisions. Public company M&A deals, especially, involve complex steps and contracts, and are transactions that unfold over time. This timeline involves a variety of decisions for the board of each company, and the ultimate decisions made by the board can be subject to shareholder voting or acceptance. The rules designed to address corporate governance in takeovers often reflect the ownership structure prevalent in a particular jurisdiction, but they also reflect the political power of interest groups that influence the law. The result is thus a mishmash of rules that attempt to balance both concerns about ownership structure and the desires of powerful interest groups.

In a forthcoming book chapter, I consider how corporate governance concerns are reflected in the law’s approach to regulating friendly takeovers, ie acquisitions by third party bidders that are negotiated and supported by the management of the target company. Two countries with similar capital markets and institutional frameworks, the US and UK, approach these corporate governance concerns and the balance of power between the board of directors and shareholders in increasingly divergent ways. I argue that while the UK approach to friendly takeovers constrains director power, the US approach continues to maintain and reinforce the centrality of director decision-making.

The UK is characterized by ex-ante rules that constrain managerial power and favor shareholder voice, whether deals are done via a takeover or some other structure such as a scheme of arrangement. For both structures, UK rules provide a significant voice, through voting rights or otherwise, for target shareholders. In a departure from the US model, in acquisitions of a significant size shareholders of UK bidder firms also have voting rights that constrain bidder boards. Furthermore, while the US takes a board-centric approach to director power in erecting takeover barriers, the Takeover Code limits the ability of directors to diminish or ‘frustrate’ shareholder power through takeover defenses. Significantly for friendly deals, in 2011 the UK revised its takeover rules to also dramatically constrain the power of directors to negotiate deal protection mechanisms. A key principle in the UK’s approach to friendly takeovers is constraint on director power and negotiating leverage. The shareholder-centric approach of the UK in many ways reflects the power of institutional investors who have been central to the drafting and design of the Takeover Code.

In balancing corporate governance concerns in friendly takeovers, the US has historically emphasized the interplay between ex ante protections (ie disclosure and shareholder voice) and ex post policing (ie litigation) in ways that reflect a director-centric approach. Shareholder voice is more constrained than in the UK. Not only is the voting threshold lower for shareholder voting in M&A deals, but bidder shareholders are often deprived of voting rights even in significant transactions. While shareholders may have a voice, the transaction is controlled by management. Management controls the timing and negotiation of the deal, as well as the information upon which shareholders rely in deciding whether to approve the matter or to tender in their shares. The shareholders’ vote on a deal hinges on the structure of the deal as designed by directors, including the deal protection provisions of the transaction. Unlike in the UK, directors of US firms have wide latitude to design deal protection measures. In fact, over the past decade, deal protection mechanisms have become stronger in the US with a proliferation and expansion of a variety of mechanisms that provide management with tools to protect its preferred deal.

Cognizant of management control and their conflicting incentives in negotiating takeovers, Delaware law has historically provided target shareholders two avenues to hold directors accountable through the courts—fiduciary duty litigation and appraisal rights. Over the past decade both avenues have been eroded by new doctrine. Shareholders seeking to pursue a claim for breach of fiduciary duties in a friendly takeover can file a suit for a preliminary injunction seeking to bring forth additional disclosure or to modify the merger agreement, particularly deal protection measures. Since the mid-2010s, however, the Delaware courts have tightened the standard for preliminary injunctions in merger cases, thus limiting shareholders’ ability to pursue fiduciary-based claims. Through the Corwin case and its progeny, the Delaware courts have also limited ex-post judicial review of board decisions in third-party takeovers. These decisions were a systematic move by the Delaware Courts to place limits on the wave of merger-related litigation sweeping its courts.

Under Delaware law, in certain takeovers, stockholders are entitled to an appraisal right; that is to refuse to accept the consideration offered and instead turn to the courts to determine the fair value of their shares. Appraisal was long seen as a limited remedy, but in the last decade appraisal actions gained steam with sophisticated investors acting as dissenting shareholders. The increase in appraisal actions led to a trio of important decisions by the Delaware Supreme Court.  These decisions place great emphasis on the agreed-to deal price as the ‘fair value’, substantially weakening appraisal as a remedy. The courts’ deference to deal price is driven by many of the same considerations that have driven limitations on fiduciary duty litigation in friendly takeovers.

Overall, Delaware jurisprudence now emphasizes the value of ex ante methods—such as deal process or deal-requirements like shareholder voting—to address corporate governance concerns. The shifts in Delaware have been depicted as elevating governance and procedure over costly and uncertain litigation. Some commentators have even argued that these moves recognize increased shareholder power in the US and bring Delaware closer to the UK model where the primary role of the target board is ensuring a stockholder vote.

I argue, however, that once we take into account the authority that boards have in designing a deal and putting into place a wide variety of deal protection mechanisms, the move toward expanding the value of ex ante shareholder voice and devaluing ex-post litigation in reality maintains and reinforces management power in Delaware. This is not surprising. The Delaware approach to takeovers, with courts as the arbiter of corporate governance disputes, has long been concerned with maintaining the centrality of board decision-making. And when that centrality came under attack with the rise in fiduciary duty and appraisal litigation, the courts responded to the significant management backlash to these rising trends by reverting to the pro-manager approach of Delaware jurisprudence. Thus, Delaware maintains the deference given to board decisions and continues to insulate director decisions on deal protection from second-guessing by shareholders or courts. Similarly, the turn in appraisal jurisprudence reflects judicial faith in deal process as designed by boards and management. While the US litigation regime now appears to elevate the value of a shareholder vote in friendly deals, this vote is in the context of deals that have been designed through a plethora of deal protection mechanisms to tie the hands of shareholders and leave them stuck with the deal as presented by management.

The primacy of directors under the US regime becomes even more pronounced when one compares that regime with the UK’s, which places significant constraints on the board’s ability to negotiate deal protection devices. The question remains open, however, as to which system is better for the corporation and its shareholders.

Afra Afsharipour is Senior Associate Dean for Academic Affairs & Professor of Law at the UC Davis School of Law.