Courting Corruption

Maud Schaafsma and Charlie Cray

September 01, 2005

Charlie Cray is the director of  The Center for Corporate Policy in Washington D.C., and co-author of The People's Buisness: Controlling Corporations and Restoring Democracy (Berrett-Koehler, 2004).  Maud Schaafsma is a lawyer and sociologist, living in Evanston, IL. She has had recent post-doctoral fellowships in the Senate Democratic Policy Committee and at the University of Chicago.  


The judicial philosophy of nominees to the U.S. Supreme Court is usually revealed in confirmation hearings when they are asked about specific provisions in the Constitution and their methods of judicial decision-making in prior cases. Questions about civil rights, inequality, constitutional protections, women’s rights and the environment have become established areas for questioning judicial candidates. Answers in all of these areas of the law reveal a candidate’s commitment to core American values.

But senators usually don’t grill nominees directly about their perspectives on corporate influence in the society and culture; nor do they ask them about their willingness to enforce controls and regulations that limit corporate corruption and hold corporations accountable for fraud and wrongdoing. In a post-Enron era, it is important to bring questions about corporate corruption into judicial confirmation hearings. 

In particular, the Senate Judiciary Committee should invite John Roberts to explain certain decisions he authored while on the DC Circuit Court of Appeals that involve questions of corporate accountability. These decisions reveal a disturbing tendency to privilege the interests of corporations at the expense of public interests.

Although he worked for a time in the Reagan administration, Roberts is not known among lawyers as being a conservative ideologue. Rather he has a reputation of being a nimble thinker who represented Democrats and Republicans in his years as an advocate before the Supreme Court, willing to use whatever legal strategy best served his clients. It's tempting to conclude that his record of advocacy against public interests—against environmental regulations, women’s privacy and civil rights—in cases he argued before federal courts indicates the seeds of an elitist judicial philosophy. Be that as it may, the most important part of Judge Roberts' record lies not in the arguments he made on behalf of the United States, corporations and other clients—but in the legal logic of his judicial opinions.

On the federal bench, Judge Roberts often made narrow readings of statues and played with the meanings of words. A pattern of undercutting legal means for holding corporations accountable is revealed by inconsistencies in his approaches to statutory language and interpretations of regulations and statutes. Roberts repeatedly failed to follow Congressional intent, and the end result was that he enabled corporations to evade legal accountability for anti-competitive pricing, claims of fraud and evasions of environmental goals. 

In Williams Gas Processing et al. v. FERC , for example, Judge Roberts' failed to acknowledge how corporations structure their subsidiaries to evade regulations and exposure to liability. Roberts refused to allow the Federal Energy Regulatory Commission (FERC) to control anti-competitive gas transportation rates charged by two subsidiaries of Williams—a natural gas pipeline company operating off the coast of Texas. Roberts found that where two subsidiaries of a parent corporation operate together, one entity cannot be held liable for the wrongdoings of another. His reasoning is problematic because it fails to acknowledge how large, complex enterprises structure their operations to circumvent the law.

In another case—Totten v. Bombardier Corporation and Envirovac Inc. —Judge Roberts curtailed the reach of the False Claims Act, a key statute used to hold government contractors accountable. Totten brought the action against two companies that allegedly defrauded taxpayers when they manufactured railroad cars for Amtrak.  Judge Roberts refused to allow the claim, because the demand for payment was made to a quasi-governmental entity (Amtrak), and not directly to the federal government. The technical distinction deliberately ignores a congressional directive stipulating that a false claim is actionable if the payment ultimately results in a financial loss to U.S. taxpayers.

In two other decisions, Roberts undermined the intended reach of environmental laws. In Sierra Club v. EPA , he denied the environmental group's claim that the EPA ignored a Congressional mandate to consider the most effective means of eliminating hazardous air emissions when setting air pollution standards for copper smelters under the Clean Air Act. The environmental group established that the copper industry's best practice for eliminating fine lead and arsenic particulate emissions involved the selection of cleaner copper ore for smelting. While acknowledging the EPA's failure to evaluate this pollution prevention approach, Roberts nevertheless rejected the group's challenge to the standards, even though Congress endorsed material substitution when it amended the Clean Air Act in 1990.

Roberts also did a narrow reading of provisions in the Federal Power Act intended to protect wildlife and the environment from the impacts of commercial development. In Brady v. FERC , landowners and the Department of Interior challenged a decision by the FERC and the Grand River Dam Authority to let a marina add 64 large boat moorings on an Oklahoma lake, without concern for the effect on wildlife or habitat preservation. In his decision, Roberts ruled that the FERC “did not fail to consider non-development public uses.” But the record described in the decision belies this assertion. Not one finding of fact was made by the FERC about impacts on the lake’s wildlife or natural environment from this commercial activity. Once again, Roberts allowed the regulators to completely avoid a responsibility mandated by Congress.

Although these cases may not articulate a coherent ideological philosophy, they show a pattern of deflecting arguments for corporate accountability through narrow readings of the law. Roberts' intricate uses of language and facile ability to disregard the legal reasoning used by public interest groups reflects a disturbing lack of respect for Congress’ intentions to act in the public interest. Moreover, his inconsistencies in statutory interpretations and uses of legislative history point to an underlying pattern of judicial activism that seeks to minimize the efficacy of laws enacted by Congress to control corporate wrongdoing.

In an era of corporate supremacy, where corporations as parties to litigation, corporate law firms and corporate-funded legal foundations dominate the U.S. Supreme Court docket, federal judicial candidates should be scrutinized for their ability to protect the people from broad abuses by corporations. A Supreme Court nominee's judicial philosophy should be carefully vetted with respect to its consequences for legislative and regulatory controls of corporate fraud and corporate corruption. Unfortunately, except where these issues have been important to the nominee's career (e.g., Justice Breyer and regulatory law) the Senate has rarely seen fit to prioritize an examination of Supreme Court nominees' perspectives on what President Theodore Roosevelt suggested nearly a century ago was the central challenge of government: how the people can "effectively control the mighty commercial forces which they have themselves called into being." In that respect, the country's highest court would be better served by judges who have demonstrated more respect for the importance of such controls to democratic governance than John Roberts.