Published on 01/18/12
By now, others have well documented the extraordinary nature of President Obama's appointments to fill the National Labor Relations Board and head the new Consumer Financial Protection Bureau -- purportedly exercising authority under the Constitution's Recess Appointments Clause, but almost certainly acting outside the constitutional provision's scope.
But beyond the constitutional issues, the political and policy implications of the president's action has drawn insufficient attention. The president has, in an election year and without congressional oversight, assumed sweeping and virtually unilateral authority to make policy that will generate windfalls for his two most financially crucial campaign constituencies -- organized labor and the plaintiffs' bar. Just how important are trial lawyers and labor unions to the president's election? In the 2008 election, lawyers and law firms funneled over $45 million into Obama's campaign, more than twice as much as any other industry.
The Service Employees International Union spent over $31 million in independent expenditures to aid the president's campaign -- again, more than twice as much as any other outside group.
The organized plaintiffs' bar and various labor unions constituted a staggering 19 of the top 20 political-action committees' spending on behalf of Democrats in the 2008 campaign, doling out between $1.7 million and $3.2 million each.
Since assuming office, Obama has worked to repay these campaign benefactors. The auto-company bailouts propped up unions by undercutting the clear legal rights of secured debt holders, and much of the "stimulus" spending was designed to protect public-sector unions by shielding them from budget cuts made by strapped state and local governments.
Trial lawyers avoided any serious tort reform in Obamacare, and they got legislation that gutted statutes of limitation for employment-discrimination lawsuits and expanded the scope of private litigation against government contractors.
That said, Congress has frustrated the president's most ambitious plans to help labor and lawyers. Even with large majorities in both houses of Congress, Obama was unable to muster support for the Employee Free Choice Act -- the deceptively labeled "card check" bill that would have allowed unions to form without secret-ballot elections and empowered federal bureaucrats to make sweeping changes to private labor contracts.
Similarly, the most sweeping reform bills on the tort bar's wish list also never came to pass, including legislation designed to make it easier to file baseless claims in federal court; a bill to expand securities litigation by allowing lawyers to sue customers and suppliers for companies' alleged frauds; and a trial-lawyer tax break that would have allowed plaintiffs' lawyers to treat contingency-fee loans as immediate expenses.
With his recess appointments, however, Obama is now in a position to avoid such congressional obstacles and help unions and lawyers through fiat. With three of the five NLRB members slipped into power in the dead of night -- and two of these three were nominated only two days before the Senate's Christmas break, hardly stalled by congressional inaction -- the president's labor-friendly cronies will be well-positioned to make rulings advantageous to unions.
Expect to see more along the lines of the Obama NLRB's extraordinary effort to thwart a Boeing plant's construction in right-to-work South Carolina. As CFPB director, Cordray will be positioned to green-light state tort litigation previously blocked by federal regulation and to "delegate" enforcement to state attorneys general, who in turn will farm out lawsuits to the plaintiffs' bar.
Cordray himself leveraged the Ohio state attorney general's office into a powerful campaign fundraising mechanism, when his election pulled in over $800,000 from out-of-state plaintiffs' law firms and he then hired many of those same firms to sue on the state's behalf.
The president's NLRB and CFPB appointments should be understood not only as an affront to the Constitution's system of checks and balances, but also as an aggressive move to energize his deepest-pocket electoral supporters. Sadly, American law and policy will be the likely casualty of this Chicago-style campaign gambit.