How corporations are using the First Amendment to destroy government regulation.
In late summer 2011, the National Labor Relations Board (NLRB) released a new rule requiring businesses to put up an eleven-by-seventeen-inch black-and-white poster notifying employees of their rights under federal law.
The poster, drafted over the course of a year by a committee of rule makers taking into account more than 7,000 public comments and dozens of meetings with industry groups, labor unions, and “right-to-work” advocacy organizations, emerged as would have been expected: even-keeled and rather bland. Beneath the official NLRB seal and above the phrase “This is an official government poster,” it informed employees that they have the right to join or not to join a union, and that they cannot be coerced into doing either.
Still, the business community was incensed. Describing the new rule as yet another government intrusion that would do nothing more than “create unemployment,” “weaken the economy,” and cause “immediate, irreparable harm for which no adequate remedy at law exists,” a coalition of industry groups led by the U.S. Chamber of Commerce and the National Association of Manufacturers (NAM) launched a firestorm of litigation, eventually suing the agency in two federal appellate courts.
On its face, this little drama isn’t all that surprising. For the past decade or so, industry groups have made a habit of waging war in the form of endless litigation on regulatory agencies, hoping to slow the rule-making process, drain agency resources, and, when possible, get final rules thrown out. In most cases, these lawsuits play out in the weedy battleground of administrative law, where lawyers tussle over economic analyses or some minutiae within the Administrative Procedure Act. But this time was different.
This time, NAM, the biggest trade group in the country, was arguing that by forcing companies to “engage in speech they would not otherwise issue,” the government was “in violation of their rights under the First Amendment.”
And that, dear readers, is a pretty ballsy claim. For one, it’s a little like dealing with your gopher problem by firebombing the neighborhood. By claiming that the government cannot, under the Constitution, compel companies to “engage in speech they would not otherwise issue,” NAM is essentially undercutting nearly all economic regulation. “If that seems alarmist, it’s not,” wrote University of Tulsa law professor Tamara Piety, the author of Brandishing the First Amendment. In the legal context, the current definition of “speech” is famously fuzzy and could, depending on the situation, include very nearly everything a company does, from advertising and performing financial transactions to transferring data and utilizing computer algorithms. So if NAM’s claim were true, it’s very possible that the government couldn’t regulate any of those activities. “If you cannot regulate commercial speech,” Piety wrote, “you cannot regulate commerce, period.”
The other reason it’s such a ballsy claim is simply that until very recently, it would have been laughed out of court. Most jurisprudence from at least the past eighty or so years backs up the idea that the government, acting in the interest of the greater public, has the authority to force companies to convey certain non-ideological, government-mandated messages, so long as it’s clear that it’s the government “speaking,” not the company. Those messages can take the form of posters or warning labels, or those little placards in bathrooms reminding employees to wash their hands, or some other form of government-mandated “fine print” informing consumers, investors, shareholders, employees, or job seekers about risks or rights or government protections.
So with that, hold on to your socks. In September 2012, a three-judge panel of the U.S. Court of Appeals in the D.C. Circuit, made up of A. Raymond Randolph and Karen Henderson, both appointed by George H. W. Bush, and Janice Rogers Brown, a George W. Bush appointee, heard the case. And in May last year, they published their final decision, striking down the NLRB’s rule—on First Amendment and statutory free speech grounds.
It did not matter that the “speech” in question here was a non-ideological poster clearly stating U.S. law, the judges said. And it did not matter that the rule placed no other constraints on companies’ speech or on the free flow of information. (The mere act of compelling a company to “host or accommodate another speaker’s message” was enough to violate its free speech, according to the opinion.) And it did not matter that, in 2003, this same court—and the same judge, Randolph!—had confirmed the legality of President George W. Bush’s executive order requiring federal contractors to put up explicitly anti-union posters in their workplaces on the grounds that “[a]n employer’s right to silence is sharply constrained in the labor context and leaves it subject to a variety of burdens to post notices of rights and risks.”
It is tempting, of course, to simply write off this decision; to chock it up to the fact that it had to do with organized labor, an incendiary topic these days, or that it was decided by a very conservative panel on a very conservative court. After all, Republican senators repeatedly filibustered Obama nominees to precisely this court, leading Democrats last November to end filibusters for all nominees except those for the Supreme Court. And indeed, ideology was a factor. But there’s also something else going on here.
As crazy as this decision was, as ill-founded and sweeping in its implications for government regulations going forward, it’s not exactly an outlier. In the past decade, both the U.S. Supreme Court and lower federal courts have begun, with increasing frequency, to strike down rules and sometimes entire laws, on the grounds that they infringe on companies’ First Amendment rights to free speech and expression. This spring, for example, the Supreme Court will hear a case brought by the Christian-owned national craft supply chain, Hobby Lobby, claiming that the mandate in Obamacare requiring corporations to pay for some of their employees’ contraception is a violation of the company’s First Amendment right of religious expression. In another pending case, the Department of Justice filed a suit alleging that the credit rating agency Standard & Poor’s behaved fraudulently in giving high, and often AAA, ratings to toxic securities before the housing collapse. S&P is claiming that the DOJ’s case is retaliatory and therefore a violation of its First Amendment rights. As Columbia law professor Tim Wu put it in the New Republic last year, it’s tempting to call industry’s use of the First Amendment “the new nuclear option for undermining regulation, except that its deployment is shockingly routine.”
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