This transcript has been auto generated
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Gregg Sofer
Ever wonder what is going on behind the scenes as the government investigates criminal cases? Are you interested in the strategies the government employs when bringing prosecutions? I'm your host, Gregg Sofer, and along with my colleagues in Husch Blackwell's White Collar, Internal Investigations and Compliance Team, we will bring to bear over 200 years of experience inside the government to provide you and your business thought provoking and topical legal analysis.
00;00;28;09 - 00;00;53;17
Gregg Sofer
As we discuss some of the country's most interesting criminal cases and issues related to compliance and internal investigations. Welcome to the latest edition of The Justice Insiders. Joining us today for the third time, fortunately for us, is Professor Richard Epstein, a scholar, a professor and author who has weighed in previously on this case that the Supreme Court recently decided.
00;00;54;02 - 00;01;14;18
Gregg Sofer
We've struggled very much on the name of it, and we've called it Jarkesy. I was told earlier today that the actual pronunciation is Jarkesy and that was used by Mr. Jarkesy's lawyer during the course of the argument in this case the matter of the name, it's had a big impact and we're very lucky to have the good professor with us today.
00;01;14;27 - 00;01;42;22
Gregg Sofer
And I'm also joined by my colleague and friend Steve Renau, who's the head of thought leadership here at Husch Blackwell. Professor Epstein, you guessed it, on our last episode regarding the Georgia case that the court would go this way, that it would likely break down the way that you'd described in a prior episode 6 to 3, and that it would be decided on narrower grounds than some of the grounds that were available to the court and cited by the Fifth Circuit.
00;01;43;12 - 00;02;00;27
Gregg Sofer
Let me just throw a couple interesting headlines at you. Many people are looking at this as the end of the world, making all kinds of arguments about how it's going to destroy the government. I'll just read a few of the headlines and see if when we start talking about this, whether you think this is right, we'll call it Jarkesy
00;02;00;29 - 00;02;30;21
Gregg Sofer
case strips enforcers of in-house expertize, speed supreme courts right wing delivers gift to corporate criminals. Supreme Court just lit a match and tossed it into dozens of federal agencies. Wall Street's Supreme Court win could slow energy enforcement. The Supreme Court won't stop dismantling the government's power. The campaign to gut Washington's power over corporate America and the Supreme Court's latest power grab regulatory oversight.
00;02;31;05 - 00;02;33;21
Gregg Sofer
Are these headlines right or are they wrong?
00;02;34;09 - 00;03;04;10
Richard Epstein
Let's try and saying this is the kind of thing that says, well, you know what? The greatest threat to democracy in his name is Donald Trump. And this is essentially the same page. Given that the efforts to try to tame the administrative state, that always starts to deal with questions of high power hyperbole. The first thing I guess one wants to know is that we had a very robust system of enforcement of the FCC, including some very strong opinions in favor of both IT and the other side.
00;03;04;22 - 00;03;26;12
Richard Epstein
Long before the Dodd-Frank Act of 2010, which was the statute in the name of jealous reform, made the first fundamental violation of the principles the separation of powers. What it did is it managed to concentrate the power to prosecute, the power to decide in the power to enforce the hands of a single agency. That is the definition of tyranny.
00;03;26;12 - 00;03;52;25
Richard Epstein
To go back as far as James Madison about how it is that government ought not to act. There's nobody to check anything that those characters wanted to do. So to say that this is sort of the end of the world means that you think that there's a very simple model, which is whatever Lola wants, whatever Lola gets, is that every time the CC wants to bring a prosecution, it's fully justified, fully meritorious, fully respectable.
00;03;53;00 - 00;04;13;04
Richard Epstein
And so therefore everybody else wants to get out of the way and let them do what they want to do in these cases. And what happens is the people are always most pious about the necessity of their actions. Turn out to the people who are most systematically deviant with respect to the norms and behaviors that they follow. There is an old Roman maxim which these people seem to forget.
00;04;13;13 - 00;04;33;11
Richard Epstein
Cullinane wrote, You and KAOS is Sewer, which means that nobody should be a judge in his own cause. That not only applies to private individuals with the obvious danger of bias, but it also applies to government agencies. And it turns out you are Jacuzzi, or however you pronounce it, is not the only case or earlier cases like Lucy and so forth.
00;04;33;16 - 00;04;56;16
Richard Epstein
In this particular alarm where the FCC basically got a full head of steam and decided to go after individual people, it decided to pick the administrative judges that it wanted. It didn't do it by rotation the way it is when you go to federal court. What happened is they pick their favorite characters with conviction rates sometimes was virtually 100% on all cases with maximum sentences.
00;04;56;24 - 00;05;14;03
Richard Epstein
Put them loose, told them to enter into a general opinion. Then what they did is they ratified that opinion from the Commission. So you've already gone through three or four years and then you have to go into federal court to see if that upset what's going on. And one of the things that's so clear, the Supreme Court has made this clear.
00;05;14;03 - 00;05;38;06
Richard Epstein
In other cases, if you can challenge the jurisdiction of a particular body at the outset of a hearing, then in effect is necessarily lost because they could put you through the ringer for two or three years before you get into a court and then it's God knows what is going to happen. And when it comes to the way in which the enforcement scope and so the FCC is notorious for bankrupting people who have successful runs against it.
00;05;38;06 - 00;05;56;23
Richard Epstein
In the course of that, they could not fight. There was one case in which what they said the remedy was, oh, you appointed the actual judges in these cases in a way that violated the appointments course. And so we have to start over. Now, what they then did is they looked at what would be the right way to set the appointments, that is, to put them through the head of the agency.
00;05;56;27 - 00;06;16;24
Richard Epstein
They do that, and then they started the same game all over again. What you really needed in that case, that what you really need and most of this case is a general notion that due process, not just the questions about right to jury, but all sorts of collateral rights, including those that justice Gorsuch talked about, is that opinions are, in fact, going to be put into place.
00;06;17;02 - 00;06;41;22
Richard Epstein
So you can't get this kind of massive concentration of power against a single individual. And they started to talk about corporate America going through this was a two bit guy. Well, you have $24 million in stake in his particular plan. I mean, if you're trying to figure out where that stands on the power grab. I'm not a real expert on all this stuff, but I would assume that this guy would not be in the top 10,000 people working in financial markets.
00;06;42;04 - 00;07;06;20
Richard Epstein
This set of industrial concentration ratios would be so small that nobody could find them. Now, what you really have here is not a situation of mighty people getting all you have, a situation in which very arrogant people on this side, the SCC, have rather tenuous cases. And what they then do is they pick on some weak link inside the private sector in order to, shall we say, shape their lives and to pose a threat to everybody else.
00;07;06;26 - 00;07;29;23
Richard Epstein
So far from this being good justice, this is the worst kind of behavior imaginable. And the Supreme Court was right to stop it down in this particular case. What they should have done is to make it even larger. The correct rule in each and every one of these cases involving an agency enforcement is you may bring the case, but you have to bring it before an independent tribunal, a judicial tribunal.
00;07;29;28 - 00;07;54;17
Richard Epstein
There are two kinds of flavors with judicial tribunals. One is in Article three court, the standard court. It turns out these courts are actually in disfavor today because they're ponderous and they have lifetime tenure. There's a long history of Article one court associated with the rise of what they call public rights. And if you look right now, the bankruptcy court, the tax code or Article one courts, the 15 year terms, they have a good deal of independence.
00;07;54;23 - 00;08;13;27
Richard Epstein
That's what they should do in this particular case. Put it in the court, give some neutral official to do this, and you won't see this kind of outrage taking place where it turns out here or with the PTA be the Patent Trial and Appeal Board. What you do is you get the head of the agency deciding on an ad hoc basis who it is that they want to judge a particular case.
00;08;14;02 - 00;08;30;04
Richard Epstein
And then if they don't even like the outcome, they could basically change the panels in order to dictate a different result, including one which puts them in the final driver's seat. All of this stuff goes underneath the mirror, but the idea that somebody would want to say that what's going on here is corporate America is ripping off the government.
00;08;30;15 - 00;09;02;24
Richard Epstein
It shows in the fact that the lessons of public choice is not Route one, that just as private firms to take advantage of the government. So it is that the government could take advantage of private firms. Then you have to actually look at the facts. And on this particular case, it's not close. This was an outrage. We haven't brought the entire thing to an end, but it's an important move in the correct direction of making sure that the administrative state does not simply run unregulated in ways that abusive are really as threatening to ordinary individuals, to ordinary businesses and to ordinary liberties.
00;09;03;08 - 00;09;29;12
Gregg Sofer
What about the argument, Professor, though, that Justice Sotomayor brings up, which is that you already have Dorrie Decisis, you already have a precedent for doing exactly this kind of thing. Seemed like the majority. And the and Justice Roberts and Justice Sotomayor argued about. What did the precedent that was in place relating to these issues actually mean? I guess my question is we have two very different interpretations.
00;09;29;12 - 00;09;53;00
Gregg Sofer
I notice that in the opinion itself, Justice Roberts says that the court's opinions governing this exception and we're talking about the public rights exception here, upon which the opinion was based, have not always spoken in precise terms. And so you get this big argument between the majority and the dissent about whether or not the precedent in this area supports their positions.
00;09;53;03 - 00;09;54;05
Gregg Sofer
What are your thoughts on that?
00;09;54;18 - 00;10;22;21
Richard Epstein
The Justice Sotomayor opposition simply doesn't understand the origin of the scope or the explanation as to why this weird doctrine started to work. So do I have to do is go back to the beginning and the situation having to do with Murray against the city of Hoboken, a case that was decided in 1856 by the Supreme Court. And what you had there was a small time was centrally managed to at least millions well, a very large number of dollars out of the Customs Office.
00;10;22;26 - 00;10;42;03
Richard Epstein
And these guys wanted to go back and to get that kind of money. And so what they did is they started to do, as everybody had done, those procedures in the body that had been set up to try these cases by the Customs Authority. Now, how did this body start to get its own independence? It was not authorized by the Constitution.
00;10;42;18 - 00;11;04;04
Richard Epstein
What happened is back around 1810 or so, you had a large amount of cases that were disputed as to whether or not some kind of tax revenue payment ought to be imposed on private individuals. And you get one office in Baltimore and another office in New York coming out with the opposite conclusion. To some, it says, hey, we better find out somebody higher in the administrative structure.
00;11;04;12 - 00;11;24;20
Richard Epstein
Look inside which of these two guys are right. And it turns out that starts off versus a kind of a radical and fragmentary practice. But by the middle of the 19th century, with the latest mess, 18, 20 and so forth, it has solidified the internal to the Customs Europe. There was some guy who was essentially sat there and acted as a adjudicator of these claims.
00;11;24;29 - 00;11;46;02
Richard Epstein
And it was understood that he was not supposed to just be in a collection agency, but to decide whether these things were right or wrong. And this thing went on happily for about 30 years. And nobody doubted the constitutionality of these courts because it just seemed to work. And then you get this particular case and already somebody comes along and he says, you know, this is illegal.
00;11;46;07 - 00;12;07;25
Richard Epstein
There are no such things as Article one courts. An oxymoron. And so the Supreme Court justices were faced with a very great difficulty. They can say, you're right, we're originalists. We look at the text. And the only kind of judicial bodies that you can create are those that go through Article three. And these guys don't do that. By the way, the appointment and the jurisdiction and the term of office or anything of that sort.
00;12;08;05 - 00;12;33;27
Richard Epstein
So what you then do is you wipe out 40 years of administrative work that had taken place and leave everybody in limbo by the Supreme Court. Did not want to do that. And this was, in effect, in respect of stare decisis, in the sense there's a long, coherent tradition going on without any real evidence of abuse. And so they had to do is to figure out a way in which they could keep this stuff alive without putting an end to everything associated with Article three.
00;12;34;13 - 00;12;56;17
Richard Epstein
And what they did is they hit upon this term of what counts as a public right. And the original definition, which is the correct definition that always followed, is a public right is something where it is in effect that the government has a claim against some particular individual who has kept money from it under situations associated, for example, with the padlocks and so forth.
00;12;56;23 - 00;13;19;06
Richard Epstein
So what they're doing is they're suing that under general legislation, but they're suing in order to collect the kinds of things that have been collected in these courts from the beginning of time. And it was essentially an ad hoc exception designed to respect past practice. Now, we've done it elsewhere. Very recently, there is a cases about whether or not you can appeal a judgment in the military courts to the Supreme Court.
00;13;19;11 - 00;13;42;27
Richard Epstein
And they are not constituted under Article three. And with Justice Kagan said, although she got a deal, what we've been doing this for 60 years. I don't want somebody telling me that we can't do it no matter what the argument is. We're just not going to change that. And so that was an extremely elegant article written by my former student friend, Amitabh Boxer, who showed, in fact, that these practices were not in conformity with the initial constitutional law.
00;13;43;07 - 00;14;10;13
Richard Epstein
And the response of everybody is, if it goes on long enough and consistently enough, then in effect, we can do this particular thing and we're talking 50 years and we're talking about a situation where there was no evidence of partiality, of bias with respect to the adjudication. None of those conditions were satisfied here. And so Justice Sotomayor does is she said, I think a public right involves anything that is passed by a statute of Congress.
00;14;10;28 - 00;14;31;23
Richard Epstein
But, oh, my God, if that's the definition of a public rights, then everything a public right. Because you start passing all sorts of comprehensive statutory legislation and so forth. And then in the legislation you said you are not allowed to go into an Article three court to try this particular case. Since it's a public right, you have to go into this mare's nest and have you a lot before this.
00;14;32;14 - 00;14;52;13
Richard Epstein
Well, I think the separation of powers is a doctrine which is designed to constrain Congress, to restrain the court, to restrain itself in the executive. And if you say, in effect, that Congress can simply get rid of judicial situation by designating this as cases that have to go before the initial panel, they can do it with criminal law, can do with everything.
00;14;52;24 - 00;15;13;00
Richard Epstein
And so with Justice Roberts, it is you can't do it. Now, there was an earlier case for oil states against green, which was a terrible attended by Justice Thomas, who just didn't get it right. Notice he switched sides in this case when they did exactly the same thing with power. They said, you won't get to litigate this patent case in federal court, district court.
00;15;13;03 - 00;15;31;16
Richard Epstein
You have to come before us. And who's going to be the judges? Well, I'll tell you when I get to it. And they literally had rules in which they could appoint a panel of three at up. Not my rotation. If they didn't like the judge, they'd expand the panel to five. And in this case, they expanded it to seven with the two guys in charge of the agency, went on there to make sure they won by 4 to 3
00;15;31;16 - 00;15;53;06
Richard Epstein
verdict. And this stuff is not even kosher. It's not even close to kosher. And I just simply do not understand why she put such faith in that. When they're talking about a particular case in which the guys who are most vulnerable to this kind of abuse are a little guys like Lucier and Jacuzzi, whatever his name. And these guys get beaten up to a pulp.
00;15;53;15 - 00;16;19;25
Richard Epstein
The largest fellows basically don't get one hour because they've exhausted by administrative remedy. They have. Well. So this is an abstract attack on the little man. The dissent was very responsible in the way in which it dealt with this situation. It was a sad day. I think an American jurisprudence where somebody could be so enamored of the administrative state that the most elementary procedural violations, the real piling on that you saw in this kind of case.
00;16;19;25 - 00;16;41;20
Richard Epstein
Yes. And applause instead of a condemnation. The criticism that one makes of the Jacuzzi decision, at least by us, by the chief justice, is one that always is made if this decision is something of a constitutional minimalist. So go back to the case. Having to do with the insurrection charge is right. There were so many reasons why those particular lawsuits were wrong.
00;16;42;02 - 00;17;01;25
Richard Epstein
And what did the chief justice do? He found a ground in which to throw them out on which everybody could agree because he did not want to get into the definitional question of what counts as an insurrection, who counts as an officer of the United States. He said either Congress authorizes these actions or the guys in Colorado and Maine can't bring them on their own.
00;17;02;08 - 00;17;25;00
Richard Epstein
And he likes that sort of stuff. What it does is it gets you out of big trouble and it leads you to fight the grander issues on some later date. Now, I'm much more of a, shall we say, a judicial maximalist. I'm willing to go the whole hog, but I understand why it is that when you're facing with this injustice, to pull his punches when the case and wait for another day to get it plain.
00;17;25;12 - 00;17;43;08
Gregg Sofer
Is this opinion then? As you point out, it's constitutional minimalism, or at least not trying to upset the entire applecart. Is this the first of a chipping away where eventually will get all the way there? Or do you think this is as far as the majority's willing to go?
00;17;43;19 - 00;18;08;25
Richard Epstein
No, I don't think it is as far as it going to go. And I think there's a reason you go back. You have to look at what the Seventh Amendment said and it talks about actions of common law and then the Geostrophic case or whatever its called out there in which what Justice Roberts said is if you are in a bankruptcy situation and there's a question of water in the floor, it has to be tried by a jury and not before a bankruptcy tribunal.
00;18;09;09 - 00;18;32;09
Richard Epstein
And so that is now let's change it a little bit. Drop the argument that we want to get neutral for now. What we want to do is now two basically bad news on the profession for the next ten years. That's not a jury question. That's an injunction. And the injunctions don't go get common law, actually. And so what the FCC does the next time is that we're going to forget the fine.
00;18;32;15 - 00;19;00;02
Richard Epstein
We just want to keep you out of business. And that's a serious attack on somebody's livelihood. And they say, we don't have to give you a jury trial because there's no fact issues of common law. Well, at that point, the due process issues has to be raised in connection with the courts of equity. And somebody is going to have to sit there and say, can you go to a quarterback and basically throw somebody out of his profession for the next ten years without giving him the kind of protection that he needs and would get in a federal court?
00;19;00;03 - 00;19;20;05
Richard Epstein
The answer to that question would be no. One of the things that was made in a lot of these briefs, some of them brought by the new Civil Liberties Union, including a truly superb reason by my friend and former student Jonathan Mitchell, in which they start to talk about the way in which when you come before these bodies, it's not that you just lose.
00;19;20;05 - 00;19;39;20
Richard Epstein
The jury trial is all sorts of discovery. Advantages that you would otherwise have are going to be stripped and taken from you. And those things really matter. And so I don't think that they can stop here. What's going to happen is it's going to be the usual game of legal ping pong. The is going to look at this saying we don't want to give up on these guys because, you know, we're out there with God's mission.
00;19;39;28 - 00;20;02;28
Richard Epstein
So we'll just frame it as a case in equity to avoid the jury. And then somebody is going to come back and say, look, the due process issue is very much alive. And that was the reason why you saw the Gorsuch concurrence. If you looked at his first sentence, he's telling you this is part of a mosaic of controls, which is part number two, turns out to be the due process clause, which essentially applies to all legal proceeding.
00;20;03;06 - 00;20;42;23
Richard Epstein
And one doesn't want to simply treat this as an institutional case, i.e. juries and no jury. You want to treat it as an individual liberty case so that you get the preconditions of a fair trial. And I do think in a second, if that case comes up, the government will lose yet again. And my hope is what they will do, either by legislation or otherwise, is establish a routine practice that they never, ever bring serious cases or anything with, you know, a suspension of a $100,000 fine or something inside the agency, inside agency deliberations should be done the way they are in some of the immigration and Social Security cases, a huge number of cases
00;20;42;29 - 00;21;02;29
Richard Epstein
on small issues that require some kind of technical expertize. And in general, if you try to run into the political and the legal system overwhelm everything, and so you do them administratively where in effect, you also series of rules that if there's any precedential effect on major implications, then you tear out of this particular system and move it somewhere else.
00;21;03;06 - 00;21;14;17
Gregg Sofer
But isn't that a that's a line drawing exercise at that point. And how do you determine which consequences fall over and which consequences fall under that line? Where does that line get drawn?
00;21;14;26 - 00;21;33;26
Richard Epstein
Well, I mean, you have to know something about the feel of what we do it all the time. Now, you don't get into federal court on diversity unless you're $75,000 amount and contrary to my view, as you actually look at the distribution of cases, you'll discover that most of the Social Security cases and so forth usually say 98%.
00;21;34;09 - 00;21;53;27
Richard Epstein
Instead of under ten or $15,000, whatever the number is. And that's where you draw the particular line. That is, you don't ask this is a philosophical question. You ask it as a pragmatic question what's the distribution of cases and what they're asking for? And as you put the line lower and lower, what you do is get more and more cases leaking into the system.
00;21;54;04 - 00;22;21;19
Richard Epstein
Are those the case that you want to go into the judicial system, don't want to keep out? And what you do is you'll get a debate in practice is $1,000 or $18,000 somewhere in that. And what you then do is decide the number and then make adjustments for inflation. If your question that you ask essentially be treated as a philosophical objection, then every effort in every legal system to decide well under $10,000 are going to small claims for over $50,000.
00;22;21;19 - 00;22;42;06
Richard Epstein
You go into this court, you can't make those distinctions anymore. What you ask about people, they pick an informed judgment so that it's not arbitrary, capricious. And let me give you another question. Okay. When is it that people are allowed to get driver's licenses or not? And so I'm going to give you two kinds of syndrome. One of them's my driver's licenses.
00;22;42;14 - 00;22;58;17
Richard Epstein
So anybody who's over six years of age to drive without a license on a public road. And so I see where that line is drawn in the first place. And there's somebody else's. I hate teenagers. Then no person is allowed to drive before the age of 25. And you want to say, that's also crazy. So what do we do?
00;22;59;00 - 00;23;15;29
Richard Epstein
In the end? The number becomes 15, 16 or 17, and the way in which driver's license we organize the transition is you get something known as a learner's permit, right? Which restricted what you can do. And then after you get your license, it tells you're 18, you can't drive at night or out of state or whatever it is.
00;23;16;14 - 00;23;36;24
Richard Epstein
So what we do is we manage the transition with some very specific kinds of rules rather than throwing up our hands and saying We don't know what to do. And Justice. Holmes was a great believer in, Oh, it's all a matter of degree. I don't understand what's going on in that case. And he was wrong every time. Let me give you this one case, which I think shows this is called right out.
00;23;36;25 - 00;23;55;07
Richard Epstein
And and what you do is you have a trade off and the trade off is having privacy by putting up a wall. And if you put the wall too high, you block everybody else's sunlight and air. And so when is the wall go now? Well, you start off with, well, let's put it in two feet. And so that's going to do no good.
00;23;55;26 - 00;24;13;04
Richard Epstein
Then somebody else is let's put it at 20 feet. And you say, well, that's kind of overkill. And so it did. Is it put the wall at 60. Now, why did they put six feet? Because it meant that people have to stand on their tippy toes to see over the wall. So it was high enough to preserve privacy and low enough to allow the free movement of air.
00;24;13;08 - 00;24;41;01
Richard Epstein
It was not a random number. And so over and over again, when you start picking particular numbers, if you know the institution or framework, they don't sound as philosophically daunting as the way in which you put it. And what you have to do is stop those cases on a retail basis. You can't do it on a wholesale basis, which that, you know, there's always going to be a line on age and it's always has to be 17 no matter what the particular purpose is, no matter why we're doing it and we can do better than that.
00;24;41;08 - 00;24;59;01
Richard Epstein
And if we actually look at the way these systems work, if there are large numbers of repetitive cases, that gives you a distribution. Generally speaking, we do far better than random one. We come up with one of these so called lines. They're not all arbitrary. It doesn't mean that you can't draw an arbitrary line. I'm just giving you all sorts of arbitrary line.
00;24;59;07 - 00;25;26;14
Richard Epstein
We simply don't respect. One of the other issues when you're always trying to do, when you have two incommensurate values, is to figure out on some kind of moral calculus where the marginal benefits of one start to be exceeded to by the marginal cost of the other. And you have to pick a number because it turns out you cannot essentially in most cases where you have M.S. litigate the benefit cost line on an individual case basis is too costly.
00;25;26;22 - 00;25;31;21
Richard Epstein
So you do is you get the economy rules with a thoughtful rule and nobody should strike that that.
00;25;32;19 - 00;25;55;21
Steve Renau
Professor, you've talked about in the past, how this case that we're talking about, as well as others, they seem to be decided on purely administrative law grounds with where the judges or justices don't seem particularly interested in the substantive law beneath it. And you've criticized that it's it strikes me that what you're talking about here is an instance of that where arbitrary and capricious can mean certain things or different things.
00;25;55;21 - 00;25;59;01
Steve Renau
If you have a converse, that's what that substance of law.
00;25;59;01 - 00;26;28;29
Richard Epstein
Yeah, I mean, absolutely correct. What we have to do is you have to understand something. So this is my general difference in orientation between myself and both liberals and conservatives on the Supreme Court. I became a constitutional lawyer, an administrative lawyer out of abject necessity rather than conscious choice. My original educational background was from beginning one, and in 1964 when I studied law, my first legal assignment was And you do not have to come in on it.
00;26;29;07 - 00;26;51;20
Richard Epstein
Trace the origins of the contract of stipulate there from the time of the 12 tables to Justinian that's close to a thousand years. And the key on it was something written by a man named Barry Nichols on the meaning of the word absolutist in Latin. Does it mean, for instance, right. Or does it mean only the, you know, that that was where I started and I was a private lawyer all the way through.
00;26;51;20 - 00;27;11;18
Richard Epstein
I did a lot of stuff on medieval property law, American law, and it stood me in very good stead because every time I looked at a problem, I looked at it first is a private lawyer. And it was only when I got back to our old halls of the law school in 1966 that all this stuff about the Constitution and the administrative state started to hit me.
00;27;12;04 - 00;27;38;14
Richard Epstein
But what happens is people do not know enough of the organic statutes that is the private law stuff. And so what they do is they're very indifferent to insensitive to the way in which these distinctions are made. And what they then do is they miss the very important ways in which these legal systems can improve. One sense or not, to take something as simple as what's the definition of private property, no sane person would ever say property is just the right to exclude.
00;27;38;25 - 00;27;58;18
Richard Epstein
There are many cases, for example, of property in commons where nobody has the right to a little bit. People have a right to enter by getting into a public river. And then you have to ask how is that going to be modified to qualify? And then when there is the right to exclude, if I were to tell you a right in property is to exclude everybody else and then added Oh, by the way, you're not allowed to enter the property yourself.
00;27;58;24 - 00;28;13;15
Richard Epstein
You would say that's a very strange definition of property, right? The ability to exclude, but not the ability to use. And then you say, well, of course you can use it. And the next thing you do is you create a royal nuisance, the one kind of that's not what we meant at all. And then you say, Well, what's a nuisance?
00;28;13;21 - 00;28;36;28
Richard Epstein
And you have to start figuring that out. And sure enough, by the time you get to some of those Supreme Court justices, they don't have the foggiest idea of how the nuisance law works or what the analogous rules are with respect to older houses, activities and stuff. And they come up with the dumbest rulings imaginable. And a lot of that stuff happened when you had a bunch of other cases in the 1980s and 1990.
00;28;37;05 - 00;29;01;22
Richard Epstein
The Queen Court just did not know the rules. And so you started to go back and look at the decisions of the state court that they were relying on. They were always misconceived. I mean, oddly, the bums on my mentioned before did this terrific paper on Chevron back in 2017, I guess, in the War Journal, talking about the way in which Justice Stevens used the idea of what was the administrative discretion to change the rules one way or another.
00;29;02;05 - 00;29;21;10
Richard Epstein
And what Justice Stevens did is he said, well, you give a lot of discretion to administrative court. And what he meant by that was if they decide to flip a rule over no notice, you take the slip and accept it. You go back and read every single page that he cited and they stand for exactly the opposite direction.
00;29;21;21 - 00;29;46;12
Richard Epstein
They stand for the profession. It is a uniform practice on the way in which we deal with railway brands, with pensions of one kind or another. You follow that and any administrative judge decides to flip it over. We don't allow it because of the ad hoc. Just so what he did is he took a rule which says follow the practice and read it all to say, do whatever you want in the individual case and nobody can challenge you on the basis of historical fact.
00;29;46;19 - 00;30;10;05
Richard Epstein
He flipped everything 100% the right, and that's why we had all this terrible problem associated with this particular case when it came up before the Supreme Court in lower right, which is to be understood in some sense, is a parallel case associated with what you see in the right, because they say you just can't do it. That's the side that puts somebody in and takes somebody out.
00;30;10;13 - 00;30;35;10
Richard Epstein
What you have to do is to figure out what the sources of these rights are, how stable they are, what the administrative structure it. And they often don't do this. I mean, I've been bounced out of court too many times and I've been bounced out by judges who simply don't understand what the public doctrine turns out to be or anything associated with the question, what is the kind of protections that are given to Independent Advisory Board?
00;30;35;20 - 00;31;01;20
Richard Epstein
I mean, the level of judicial ignorance on the part of very many distinguished judges about how these systems actually were put together. Their private law origins is not there. They are pure constitutionalists, and they sort of sound like Justice Sotomayor completely unhinged from anything out there, so that whatever she wants turns out to be some kind of moral necessity, which is why this Jacuzzi case is such a weak place.
00;31;02;01 - 00;31;24;02
Gregg Sofer
You know, we talked about this last time in our discussion about the practical effects. And I just want to go through the Justice Sotomayor when she says there were two dozen agencies that can impose civil penalties in administrative proceedings. Just to go down the list a little bit, there's a merit system protection board, the Commodities Future Board, the Trade Trade Commission.
00;31;24;02 - 00;31;51;00
Gregg Sofer
There's the Department of Agriculture, the Department of Justice, Consumer Financial Protection Bureau, Federal Energy Regulatory Commission, Department of Education, Department of Health and Human Services. Food and Drug Administration. Occupational Safety and Health Review Commission. Federal Mine Safety, etc., etc., etc.. The whole idea that this is earth shattering and it's going to open the floodgates of litigation, what do you think will happen next outside of the FCC in this specific fact set?
00;31;51;14 - 00;32;01;10
Gregg Sofer
Do you think that we're now going to see a slew of litigants in all of these other forum coming in and saying, look, gloves are off, you can't do this to me in this way.
00;32;01;28 - 00;32;10;19
Richard Epstein
Okay, let's just start. The first thing is, she gave you 26 jurisdictions. She gave you zero statutes, but she didn't give you any particular instance.
00;32;10;19 - 00;32;12;13
Gregg Sofer
So she references the statutes.
00;32;12;13 - 00;32;40;17
Richard Epstein
It doesn't a particular instance of a kind of activity that has been challenged under the statute. True. Well, you can't make those kinds of general judgments. So let's just take this. One of the most reprehensible are agency that which is associated with the Federal Trade Commission. Now, they recently issued a ruling which was completely ignorant and utterly unpersuasive, which said that you should never allow a rule of reason to apply with respect to COVID, not complete.
00;32;40;25 - 00;33;01;02
Richard Epstein
When you started to deal with present or former employee, now it turns out there are 30 or 40 million contracts of this particular store out there, or which have been judged under reason. And you start looking and I said, What do you mean by rule of reason? Nobody understand, but I'm going to give you the same answer I gave you before you start to look at the way these things deposited.
00;33;01;02 - 00;33;21;09
Richard Epstein
And this is what you discover. A rule of reason in this area has three constraints. Typically, the companies can't run for more than a year. Typically, they can only apply to the current line of business that you're working with, and typically they can only apply to the geographical market in which you are practicing your trade and anything else like that would be anti-competitive.
00;33;21;25 - 00;33;50;04
Richard Epstein
So the thing you would actually want the FTC to do was to look at these three rules and ask whether or not if you follow that, there's going to be massive dangers that are going to stop the take place. And she talked about that or does anybody not a word. The report they write is 500 pages of intellectual fools that going through every single piece of intellectual nonsense and they don't get anything right because the only thing they talk about is employer mobility.
00;33;50;04 - 00;33;52;06
Richard Epstein
Well, you know, the more things that restrict.
00;33;52;19 - 00;33;59;06
Gregg Sofer
So will we see a flood of litigation here, in your opinion, will we see a flood of litigation across all of these agencies?
00;33;59;06 - 00;34;18;29
Richard Epstein
Well, I mean, the answer is we will see more litigation across these agencies. But there's a further question, is this because we're getting rid of the intellectual rot that blew up underneath the Biden administration or is it because we have people conniving in one sort of illicit fashion to take advantage? And you just can't answer that question in the abstract.
00;34;18;29 - 00;34;44;27
Richard Epstein
You look at Lopez, right? Bright and you see somebody who's told that there's a guy in the agency who can tell you you have to pay $700 a day for somebody to sit on your boat, to watch you when you have to get two or $300 a day and it takes away 40% of your profits. But we're doing it because we don't have sufficient budgetary allocations from Congress then which the answer if you need the allocation from Congress, go to Congress and get yourself an appropriation.
00;34;45;04 - 00;35;08;06
Richard Epstein
Don't take it out of the lives of the people whom you're dealing with because you could drive them out of business. And she didn't see that there was an opinion and actually said it was clear that they could do that. My view is nothing honestly about appropriations powers looking under a statute having to do with a particular area unless you take it against the background of the specific authorization that all revenue bills have to be in the House.
00;35;08;12 - 00;35;27;17
Richard Epstein
And this is a revenue type they cannot then begin that stuff. You look at that and it turns out what you have to do is to strike it down. What happened is and this is, again, the minimalism of justice Roberts, chief justice, which I'm not a fan of. He did not say anything about the actual that you said Chevron is no longer the law.
00;35;27;23 - 00;35;48;08
Richard Epstein
That's fine. But he didn't tell you. And by the way, this is how it applies in this thing. So we now get two or three years more uncertainty when it turned out that all the information it needed to decide that case was already spread upon the record. And so what I would have done is written an opinion and say, well, I see people say it's clear that they can do it and they can't do it.
00;35;48;08 - 00;36;00;03
Richard Epstein
This is the way it comes out in this case. And it's clear that they could not do it. And that would give you much more guidance that you get in this situation. That's a case where the minimalism turns out, to my mind, the start to be bad.
00;36;00;14 - 00;36;10;25
Steve Renau
Professor, do you think that judges will come to a greater appreciation of the substance of law once these administrative law cases start to get kicked in to the Article three courts?
00;36;11;08 - 00;36;41;12
Richard Epstein
I hope so. Look, I mean, I litigate a lot in these courses and my strategy in almost every case that I deal with is to give, if I can, a coherent common law account of how a particular matter should be stopped in order to push the things that are happening elsewhere. So one of the cases that's very important on all the Medicare pricing cases, I don't know if you're familiar with them in which it turns out the government said, well, if you don't like what we're going to impose upon, you would withdraw from all of your business.
00;36;41;21 - 00;37;02;06
Richard Epstein
And these are monopolies and that. And so the basic line against them is very simple. Look at the Sherman Act and ask yourself the following question. Somebody has given a cartel price increase and they accept it. And then when they start the suit, persons well, you can't object to this because you consented to the imposition, but that's the government's position.
00;37;02;17 - 00;37;24;01
Richard Epstein
So what they're doing is they're arguing that the consent law is decisive against monopoly power, where every single antitrust case, every single regulatory body does. That can't possibly be the rule because it is, in fact, the defense. And you can never have access for cartel enforcement, territorial divisions or anything of the sort. And the government missed all of that.
00;37;24;23 - 00;37;49;14
Richard Epstein
And so my view is once you put the two things together, all of these statutes start to go. And that's a classic illustration of why you have to know what church you're in and the church of consent does not deal with monopoly power. It deals with standard cases of competitive market, where if I buy something from you in a competitive market and say, I want to get out of the contract because I don't like it, and we say, Oh, you could get out of it.
00;37;49;14 - 00;38;16;16
Richard Epstein
Then every single transaction in the competitive market is going to be undone, right? So you need to have different rules to deal with the problems of monopoly then the rules that you need to do with contractual enforcement in a competitive market. And the rules are exactly the opposite. In one case, you need strong and definite enforcement, and in the other case, you need to have essentially an equitable rule that says and anybody who's a victim of monopolization practice can challenge it in court exactly the opposite position.
00;38;16;16 - 00;38;23;02
Gregg Sofer
We really appreciate your time, really appreciate your insight. Always a lively discussion. I hope you'll come back again. Thank you so much.
00;38;23;03 - 00;38;29;29
Richard Epstein
Okay. Next year there will be another problem.
Gregg Sofer
I'm sure.
Richard Epstein
Bye bye.
Gregg Sofer
Take care.
Richard Epstein
Okay, bye bye. And thank you for having me.
Steve Renau
Take care, Professor.
Gregg Sofer
Bye bye.
00;38;29;29 - 00;38;53;25
Gregg Sofer
Thanks for joining us on The Justice Insiders. We hope you enjoyed this episode. Please go to Apple Podcasts or wherever you listen to podcasts to subscribe, rate and review the Justice Insiders. I'm your host, Gregg Sofer and until next time, be well.