McCulloch at 200

March 6, 2019 marked the 200th anniversary of the Supreme Court’s issuance of its decision in McCulloch v. Maryland, upholding the constitutionality of the Second Bank of the United States, the successor to Alexander Hamilton’s national bank. McCulloch v. Maryland involved a constitutional challenge by the Second Bank of the United States to a Maryland tax on the banknotes issued by the Bank’s Baltimore branch. The tax was probably designed to raise the Second Bank’s cost of issuing loans and thereby disadvantage it relative to Maryland’s own state-chartered banks. Marshall’s opinion famously rejected the Jeffersonian strict-constructionist argument that implied powers are limited to those legislative means that are indispensably necessary to the viability of the enumerated power. Instead, Marshall concluded, Congress must have discretion to choose among any means convenient or well-adapted to implementing the government’s granted powers. After concluding that Congress had the power to create the Second Bank, the McCulloch opinion turned to the question of whether Maryland could tax it. Reasoning that the essence of federal supremacy is to remove all obstacles to federal government action within its sphere, Marshall concluded that states cannot tax operations of the federal government

Correcting Federalism Mistakes in Statutory Interpretation: The Supreme Court and the Federal Arbitration Act

The current judicial treatment of the Federal Arbitration Act is an embarrassment to a Supreme Court whose majority is supposed to be leading a federalism revival, if not a federalism revolution. In 1984, in Southland Corp. v. Keating, the Court held that the FAA is substantive federal law that preempts state laws regulating arbitration agreements. The Court thereby transformed a quaint, 60-year-old procedural statute into a permanent, unauthorized eviction of state-court power to adjudicate a potentially large class of disputes, as well as an eviction of state lawmaking power over the traditional state domain of contract law. Even worse, Southland preempts this area of traditional state regulation without the justification of any strong federal interest

Defying McCulloch? Jackson’s Bank Veto Reconsidered

On July 10, 1832, President Andrew Jackson issued the most famous and controversial veto in United States history. The bill in question was “to modify and continue” the 1816 “act to incorporate the subscribers to the Bank of the United States. This was to recharter of the Second Bank of the United States whose constitutionality was famously upheld in McCulloch v. Maryland. The bill was passed by Congress and presented to Jackson on July 4. Six days later, Jackson vetoed the bill. Jackson’s veto mortally wounded the Second Bank, which would forever close its doors four years later at the expiration of its original 20-year charter in 1836. The veto launched Jackson’s 1832 presidential campaign, symbolized his boldness – the Bank’s supporters believed the veto would be sufficiently unpopular as to cost Jackson the election – and created the signature issue of his second term, as he dismantled the Bank’s role as financier to the federal government

Claim-Suppressing Arbitration: The New Rules

Binding, pre-dispute arbitration imposed on the weaker party in an adhesion contract—so-called “mandatory arbitration”—should be recognized for what it truly is: claim-suppressing arbitration. Arguments that such arbitration processes promote access to dispute resolution have been refuted and should not continue to be made without credible empirical support. Drafters of such arbitration clauses are motivated to reduce their liability exposure and, in particular, to eliminate class claims against themselves. Furthermore, claim-suppressing arbitration violates two fundamental principles of due process: it allows one party to the dispute to make the disputing rules; and it gives the adjudicative role to a decision maker with a financial stake in the outcome of key jurisdictional decisions—that is to say, arbitrators have authority to decide their own power to decide the merits—a question in which they have a financial stake. The Supreme Court has facilitated this doctrine through a series of poorly reasoned decisions in which the Court’s liberal wing has been particularly inept at seeing the stakes for consumer and employee plaintiffs. Exploiting Justice Breyer’s incoherent line of majority opinions attempting to identify “gateway” issues, the conservative Court majority has recently insulated all questions of enforceability of arbitration clauses from judicial review and is on the verge of allowing corporate defendants to immunize themselves from class actions through the use of arbitration clauses. Labor and Employment Law Under the Obama Administration: A Time for Hope and Change? Symposium held November 12-13, 2010, Indiana University Maurer School of Law, Bloomington, Indiana

Mandatory Arbitration and Fairness

Until recently, it was understood that mandatory arbitration was “do-it-yourself tort reform”: corporate defendants could reduce their liability in consumer and employment disputes through an adhesion contract clause requiring predispute arbitration. But now that there is a significant possibility that Congress will amend the Federal Arbitration Act to make predispute arbitration clauses unenforceable, critics have been stymied by the reemergence of an argument that mandatory arbitration is “fairer” than litigation. Mandatory arbitration supporters argue that (1) critics have failed to make an empirical case against mandatory arbitration, because existing studies seem to show that plaintiffs do at least as well in arbitration as in court;and (2) mandatory arbitration is a more egalitarian forum than litigation because it is more accessible to smaller claims and claimants. This argument for mandatory arbitration\u27s “fairness” has effectively tabled the discussion of whether tort reform through mandatory arbitration is justified, and whether an adhesion contract, rather than legislation, should be the vehicle for creating a “fair” dispute resolution system. This Article argues there is no “fairness” justification for imposing a dispute resolution system through adhesion contracts. The economic incentives of the mandatory arbitration system only work by reducing the prospects of plaintiffs with high-cost/high-stakes cases. And while shifting the empirical “burden of proof” onto critics is clever rhetorical strategy, in fact it is the egalitarian argument for mandatory arbitration that is empirically unfounded as well as illogical. Reprinted by permission of the publisher

McCulloch\u27s Perpetually Arising Questions

I’m truly honored to have my book be the subject of a symposium on Balkinization, and I’m deeply grateful to Jack Balkin and John Mikhail for organizing and hosting it. Among its many gratifications for me personally, the symposium guaranteed that at least eight people would read the book. That these readers have engaged with it so closely and insightfully is icing on the cake. My first article on McCulloch four years ago, which became the basis for a couple of the early chapters in the book, insisted that McCulloch was properly interpreted as far less nationalistic than we were taught to think.1 But Sandy Levinson persuaded me that I was mistaken in asserting that there was one true interpretation of the case. The more I thought about it, the more my interpretation of McCulloch, like the arc of federalism history, would bend toward nationalism. The case is highly—probably studiedly—ambiguous, and the logic of its theory of implied powers is so decidedly nationalistic that the “aggressive nationalism” interpretation I take issue with is not exactly wrong. By the time I completed the book, I had come around to the view that Marshall tried to mask, and later actually retreated from, the nationalistic logic of his own McCulloch opinion, and that the Supreme Court has never consistently embraced that logic

Framing the Framer: A Commentary on Treanor’s Gouverneur Morris as “Dishonest Scrivener”

Dean William Treanor’s masterful article, The Case of the Dishonest Scrivener: Gouverneur Morris and the Creation of the Federalist Constitution, makes a major contribution to scholarship on the founding, one that will have a profound impact on how we read and understand the Constitution. Treanor’s keen analyses and his presentation of important-but-overlooked historical details support the article’s central and historically significant arguments. Treanor’s research is at the forefront of emerging scholarship seeking to recover “the Federalist Constitution,” a body of constitutional interpretations favored by those Framers who advocated a strong national government. These nationalist interpretations were subsequently emphasized by the Federalist Party in the early decades of politics and policy under the Constitution. But many of these interpretations have been washed away or buried, as the political triumph of Jeffersonian-Madisonian Republicanism after 1800 settled into constitutional orthodoxy. Treanor’s work is thus a crucial contribution to the excavation of ideas whose appreciation is essential to a thorough understanding of our Constitution