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John Roberts: A Record of Opposition to Corporate Accountability

By Maud Schaafsma and Charlie Cray

August 25, 2005

John Roberts, President Bush’s nominee to the U.S. Supreme Court, has authored multiple judicial decisions during his term on the D.C. Circuit Court of Appeals, and argued dozens of cases before the U.S. Supreme Court as both a corporate lawyer and U.S. Solicitor in the U.S. Department of Justice.

An analysis of specific decisions and arguments authored by Judge Roberts reveals a record of attacking federal laws used to deter corporate corruption, monopolistic market abuses and environmental harm.

In different cases, Roberts:

• Blocked the Federal Energy Regulatory Commission (FERC) from enforcing rules to control anti-competitive rates for natural gas transport.
• Helped undermine the “piercing the corporate veil” doctrine traditionally used by courts to penetrate complicated corporate structures that disguise potential fraud.
• Limited the reach of the federal False Claims Act, a key federal contractor accountability law.
• Ignored the intent of Congress to place limits on commercial activities for the purpose of protecting wildlife habitats and preserving the environment.
• Opposed citizen advocacy groups’ challenges to federal regulations.

These judicial actions show a decided tilt in favor of corporate abuses.

Ignoring Corporate Collaboration in Anti-Competitive Rate Setting

In Williams Gas Processing et al. v. FERC Judge Roberts refused to allow the FERC to control anti-competitive rates charged by a natural gas pipe-line company, WFS, operating in the North Padre Islands off the coast of Texas. The FERC found that two subsidiaries of the parent Williams Companies -- Transco and Williams Field Services (WFS) -- collaborated to charge exorbitant transporting rates (3 times market rates) in this region where they had a monopoly on pipeline access to the mainland.

Judge Roberts reversed the FERC’s finding of fact on collaboration and found that as separate entities these subsidiary corporations did not collaborate to fix natural gas transport rates. The decision is deeply problematic because Roberts implicitly finds that where two subsidiaries of a parent corporation operate together, one entity cannot be held liable for the wrongdoing of another. This reasoning, if used in tort liability or environmental litigation, would undermine the legal doctrine of “piercing the corporate veil.” The concept of “veil piercing” enables courts to hold shareholders liable for the wrongdoing of and judgments against corporations they invest in. In large, complex enterprises, such shareholders are frequently other corporations. The ability of courts to consider the facts about corporate governance, corporate relationships and interdependences in order to “pierce the corporate” illusion of separateness and broaden the financial base for liability is critically important to holding corporations accountable for the consequences of their behavior and activities.[1]

Weakening the Federal False Claims Act

In Totten v. Bombardier Corporation and Envirovac Inc. Judge Roberts prevented an individual claimant from bringing an action under the federal False Claims Act (31 U.S.C. Sec. 3729). Totten argued that Bombardier (a French aerospace and high speed rail transportation company) and Envirovac (which sells toilets to the aerospace and train transportation industries) failed to comply with contract requirements in manufacturing new railroad cars for Amtrak. As a result, the two contractors’ claims for payment amounted to “false and fraudulent” demands for money from the federal government. The government owns all of Amtrak’s preferred stock and provides it substantial subsidies. Yet Judge Roberts refused to allow the claim to go forward because the demand for payment had been made to Amtrak, a quasi-governmental entity, and not made directly to the federal government. This decision, based on a technicality, ignores the intent of Congress under the Act and curtails the effectiveness of the False Claims Act as a tool to prevent fraudulent practices by corporations in their contracts with governmental entities.

The focal issue in Judge Roberts decision became whether the demand for payment by Bombardier and Envirovac under the contracts with Amtrak were “presentments to the federal government,” given that the invoices would be paid out of federal grant monies. The legislative history, which Roberts ignored in his interpretation of the language of the statute, provides for a broad reading of the rule of “presentment.” In the legislative history Congress intended the Act to include claims such as this: “a false claim is actionable although the claims or false statements were made to a party other than the Government, if the payment thereon would ultimately result in a [financial] loss to the United States.” (See pp. 17-18 in the Totten v. Bombardier decision).

Evading Environmental Protection

In two cases, one brought by The Sierra Club, and the other brought by private landowners on a lake created under the licensing authority of the FERC, Roberts ignored the goals Congress set out to control commercial activities in order to improve the quality of air and the environment. In Sierra Club v. EPA, Roberts disregarded the intent of Congress to endorse the most effective means of eliminating hazardous air emissions under the Clean Air Act and in Brady v. FERC he allowed the FERC to ignore a Congressional mandate to enhance habitats of wildlife and preserve environmental quality in hydro-electrical projects licensed under the Federal Power Act. Roberts read the statutory language in a strict way in order to defeat the goals of Congress under both of these federal statutes.

Roberts rejected The Sierra Club’s challenge to EPA emissions standards for hazardous air pollutants (HAPs) from copper smelters, enacted under the Clean Air Act (42 USC Sec. 7412). In Sierra Club v. EPA, the environmental group established that the copper industry’s best practice for eliminating fine lead and arsenic particulate emissions includes a pollution prevention approach involving the selection of cleaner copper ore for smelting. The Clean Air Act (CAA) had been amended by Congress in 1990 to create a new process of air pollution controls “based on the maximum reduction in emissions which can be achieved by application of the best available control technology.” (MACT) The amended CAA specifically included “substitution of materials” as a means of reducing pollution. Under the CAA, methods that reach beyond technology to reduce emissions must be “achievable” -- i.e. cost effective, energy efficient and without creating new substantial negative impacts on health or the environment.

Roberts found when it came to setting copper smelting emissions standards EPA did not evaluate an alternative method of pollution control that would rely upon changing the quality of in-put ore. While acknowledging the EPA’s failure to even consider an alternative that was endorsed by Congress under the CAA, as well as the agency’s failure to evaluate the relative cost, energy requirements or other factors involved, Roberts nevertheless rejected the Sierra Club’s showing that purer ore in-puts would create the “maximum achievable” reduction of emissions in the copper smelting industry.

In Brady v. FERC, landowners on a lake created by the Pensacola Dam in northeast Oklahoma objected to a ruling by the FERC that allowed new commercial development on the lake. The Federal Power Act (FPA) (16 USC Sec. 797 (e)) controls the FERC’s licensing authority for this hydro-electric project. The Act requires that the state agency involved – the Grand River Dam Authority – and stakeholders on the lake develop a comprehensive plan for improving and developing the waterway. Under the Act, a comprehensive development plan is a tool to assure that licensees make decisions that enhance wildlife habitats and preserve the natural environment of the lake.

The Grand River Dam Authority granted a petition by a marina on Duck Creek Cove to add moorings for 64 large boats. The FERC approved the marina expansion without requiring a comprehensive development plan for the lake and without making any findings of fact concerning any impacts that the new development might have on wildlife or environmental preservation. Landowners and the Department of Interior objected, arguing that the FERC’s decision did not meet the requirements of the Federal Power Act.

In his decision Roberts ruled that the FERC “did not fail to consider non-development public uses” in reaching its decision to allow commercial development at the marina. But the record described in the decision itself belies this assertion. Not one finding of fact was made by the FERC about impacts on the wildlife of the lake or its natural environment from this commercial activity. The language of the FPA requires that the FERC and the projects it licenses adopt an active sense of responsibility to the environment. But Roberts allowed the state agency and commercial enterprise in the Pensacola Dam case to completely avoid this public responsibility mandated by Congress.

Conclusion: Diminished Corporate Accountability

John Roberts' record of deflecting arguments for corporate accountability by a narrow reading of the law is clear from the four cases described here. In addition, his record in cases argued before the U.S. Supreme Court suggests he is also comfortable arguing against mainstream public interest advocates (e.g. in Helling v. McKinney (1993), where he argued against the health rights of prisoners exposed to secondary tobacco smoke, the Court ruled 7-2 against him). It is difficult to fault Roberts for making a vigorous argument on behalf of his client. But his intricate use of language and facile ability to disregard the legal reasoning used by these groups reflect a disturbing tendency.[2]

As a judge, Roberts often purports to follow the clear and unambiguous meaning of statutory language. At other times he fails to require that federal agencies follow explicit language in legislation enacted by Congress. While his methods of legal reasoning are usually strong in the cases he decides, these underlying inconsistencies reflect a pattern of judicial activism that serves to minimize the ability of federal statutes, regulatory agencies and judicial concepts to hold corporations accountable for the variety of harms they perpetrate.

The country's highest court is best served by judges who show more respect than John Roberts has for the economic, corporate, legislative and advocacy contexts of judicial decision-making. Every federal judicial candidate should be evaluated for his/her position on issues that implicate 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 examined Supreme Court nominees' perspectives on key questions concerning what President Theodore Roosevelt once described as the central challenge to democratic government: how the people can "effectively control the mighty commercial forces which they have themselves called into being."

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[1] For a description of how “enterprise principles” in corporate law are important to enabling courts to hold complex large organizations accountable to the public, see Prof. Phillip Blumberg, “The Increasing Recognition of Enterprise Principles in Determining Parent and Subsidiary Corporation Liabilities” 28 Connecticut Law Review 295 (Winter 1996) . Blumberg discusses the concept and judicial use of “veil piercing” at pages 329-334.

[2] In addition to his position against prisoner’s health rights, before the U.S. Supreme Court John Roberts argued in opposition to the National Organization of Women (NOW) in a case dealing with violence by Operation Rescue – Bray v. Alexandria Women’s Health Clinic (506 U.S. 263 (1993)); against the National Wildlife Federation in a case where Roberts narrowed the standing eligibility of advocates for preservation of wilderness lands – Lujan v. National Wildlife Federation (497 U.S. 871(1990). He argued against the interests of organized labor in two cases, both, involving the United Mine Workers (UMW). Roberts argued against enforcement of a reinstatement order made under a labor arbitration agreement with the United Mine Workers (UMW) – Eastern Associated Coal Corp. v. United Mine Workers of America (531 U.S. 57 (2000)) – and against providing the UMW a jury trial to contest a $64 million criminal contempt fine imposed by a Virginia Circuit Court judge for violations of a complex labor injunction – International Union of United Mine Workers of American v. Bagwell (512 U.S. 821 (1994)). In both of the UMW cases, the U.S. Supreme Court ruled 9-0 against the anti-labor positions Roberts advocated. Our point is that citizens advocacy groups and organized labor are important institutions that represent democratic voices in federal litigation. And John Roberts seems to have little respect for these voices.

Related Links:

Questions for Roberts
John Roberts on Trial by Ronald Dworkin, NYRB.
Ralph Nader's statement on Roberts
Roberts and the Media by the Center for Digital Democracy
"Courting Corruption," by Charlie Cray and Maud Schaafsma, TomPaine.com
Supreme Court Watch
"Uncompassionate Conservative," by Marjorie Roberts
National Association of Manufacturers

The full text of decisions written by John Roberts on the DC Circuit Court of Appeals can be found by going to the NY Times on-line web page. This link contains lists of case names and links to the full texts of judicial opinions written by John Roberts. The cases read and analyzed in this piece are listed under Business, Environmental and Federal Agencies.

Links to cases that John Roberts argued before the U.S. Supreme Court can be found in Part I and Part II of his Answers to Questionnaires to the U.S. Senate Judiciary Committee. Judge Roberts briefly describes the parties and issues in each case he argued before the Court and gives the Court’s judicial decision (at pages 18-34).

John Roberts' dossier, Washington Post

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