Congress

Reasonable Doubts: Retro Style

Redefining yesterday's green light as red

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I'm no fan of the old Prohibitionists, but they're starting to look better all the time. The Anti-Saloon League inveighed mightily against the "Rum Trust" of distillers and tavern keepers. But at least it didn't propose to jail these persons or seize their businesses as punishment for having enslaved drunkards for so long before the nation turned against boozing. Instead the 18th Amendment prohibited the sale of intoxicating liquors from a certain day forward, providing an orderly period of a year in which to convert distilling assets to other uses. The endeavor, in short, proceeded with a nod to the basic rule-of-law precept that, whatever government may choose to ban as a prospective matter, it may not punish people for behavior they engaged in before it got around to enacting its law.

Their moral successors today, the anti-tobacco crusaders, have fewer scruples. They could of course push Congress to pass a huge tax increase on cigarettes or an outright ban. But instead they cheerlead for lawyers seeking punitive damages against Philip Morris, RJR, Lorillard, and Brown & Williamson, for having sold and advertised cigarettes in past decades. And it seems to matter not a whit that in 1967, 1977, and 1987 the activity of selling and advertising cigarettes was thought by nearly all relevant authorities to be perfectly legal–or that to this day neither lawmakers nor courts have provided any clear sign that it's not still so.

The idea behind retroactive application of law is simple: Remember that green light you sped through 10 years ago? We've decided it should have been red. Law must be creative, must grow and change in response to social needs, and we've found ample reasons to revise our former policy on the sequencing of traffic signals. So here's your traffic ticket; make it payable to us, please.

Trial lawyers have made this technique work again and again in the vast expansion of liability law that started in the 1950s and continues to this day. When the process starts, Defendant D has for ages been thought to owe nothing to Plaintiff P. Then lawyers float creative theories that such liability would really serve the public interest, and they convince some court somewhere. Other courts follow, and before long defendants are paying not merely compensatory but even punitive damages for conduct that was considered lawful when they acted.

Prosecutors use the same ploy. The Securities and Exchange Commission is notorious for pushing insider-trading law into novel areas by prosecuting persons whose conduct had previously not been thought covered by the law. Tellingly, in the 1980s, when defense lawyers pleaded with Congress to spell out which kinds of investment advice were lawful and which unlawful, the commission's staff actually opposed the idea.

Legislators join the game, too. In its Superfund law, Congress tagged any number of restaurants, auto repair shops, commercial painters, and dry cleaners with sky-high cleanup bills for the sin of long ago sending a few barrels of waste to a local disposal site in full accord with the law of the time. Sponsors of the Civil Rights Act of 1991 worked hard, though without ultimate success, to get penalties enhanced for employer misdeeds that occurred before the law was passed. New York retroactively yanked the right of small homeowners to move into areas of their homes that had been rented out to tenants even though some bought the homes on the understanding that they could do exactly that. Many states have reopened statutes of limitation after they have expired to allow trial lawyers to revive defunct but still lucrative injury claims.

Aren't the courts supposed to protect us from this sort of thing? In 1987, citing the Bill of Rights' ban on ex post facto laws, the Supreme Court struck down an attempt by Florida lawmakers to boost penalties retroactively for crimes already committed. But for reasons basically of historical accident, the Ex Post Facto Clause applies only to criminal and not to civil law. It was once widely accepted that the separate Due Process Clause provides defendants in civil cases as well with some protection from retroactive liability. Yet as Andrew Weiler points out in a 1993 note in the Duke Law Journal, today's Court virtually rubber-stamps retroactivity in economic legislation, reviewing such enactments under a standard so lax that it has struck down no such laws on due process grounds since the 1930s.

Even laxer–if possible–is the standard by which the Court approves retroactivity in tax cases. Thus in 1994 it unanimously OK'd the actions of Congress, which had knowingly created a tax incentive, then snatched it back after deciding it was being used too widely. (Rely on the government's promises, and get mousetrapped: In the case at hand a corporate taxpayer had entered a transaction in which it sustained a loss of $600,000, confident that by doing so it would qualify for the proffered tax benefit, which would have been worth more. When Congress reneged, it did not offer to repay the $600,000.) Another recent case allowed Congress, as a revenue-raising measure, to reach back four years to hike penalties for past tax violations. Opponents stood no real chance of getting courts to block the decision of the Clinton administration, well into 1993, to raise taxes on higher-income individuals retroactive to the first of the year.

Until lately, a cigarette executive who visited a dozen lawyers at random would almost certainly have been assured his trade was a lawful one. The Restatement (Second) of Torts, put out in 1966 and still authoritative, specifically cites tobacco, along with whiskey and artery-clogging butter, as products that may harm the user but do not on that account expose the maker to liability: "Good tobacco is not unreasonably dangerous merely because the effects of smoking may be harmful."

Now, after a long and brilliant campaign, our easily led opinion leaders and editorialists are beginning to nod approvingly at the idea of using creative or stretched legal theories not only to confiscate tobacco companies' assets but to send the executives of those companies to prison. Should those executives land in that place, they might bring as reading material Hume's classic account in Volume V of his History of England of the trial of Strafford, a powerful official under Charles I who fell out of favor when the Parliamentary faction came to power. His enemies indicted Strafford for treason, against which there was an objection: His acts, though at times reprehensible and dangerous to the public liberty, did not seem to fall under the definition of treason then on the books; additionally, they were often similar to acts engaged in by his predecessors in public office. He was charged, for example, with issuing arbitrary orders on the supposed strength of royal prerogative and instigating a doubtful court-martial prosecution as a means of ousting a rival.

"Where is the mark set upon this crime? Where the token by which I should discover it?" asked the defendant, pointing out that hazards on the Thames were marked clearly with buoys, that vessels might steer clear. "It has lain concealed, under water." Strafford's other figure of speech was one of smoke: "Where has this fire been so long buried, during so many centuries, that no smoke should appear, till it burst out at once, to consume me and my children?" Better, he said, to "live under no law at all," and "conform ourselves the best we can, to the arbitrary will of a master, than fancy we have a law on which we can rely, and find at last, that this law shall inflict a punishment precedent to the promulgation, and try us by maxims unheard of till the very moment of the prosecution." Strafford's eloquence did him no good: Subjected to a bill of attainder by the vengeful Parliament, his head fell to the executioner's axe on May 12, 1641.

If today's litigation boosters are such fans of retroactive penalties, I think it only fair that they experience some of their own. Maybe we should give voters the right to turn state attorneys general out of their posts retroactively, voiding their actions in office and, not incidentally, their pensions: Call it retroactive term limits. Trial lawyers? A loser-pays rule is long overdue in this country anyway, and many propose that attorneys themselves be put on the hook for at least some of the costs they inflict on innocent opponents. I feel certain many such prevailing opponents would be willing to step forward and demand damages from lawyers who should not have sued them through the 1960s, 1970s, and 1980s.

Finally there are those awful, bossy public-health groups. I myself refuse to donate to the American Lung Association and American Heart Association, given their willingness to undermine public liberties in quest of their mandatory health goals. (I've been giving instead to the National Kidney Foundation, whose efforts on behalf of that unglamorous but vital organ do not, so far as I know, extend to lobbying for legally mandated bathroom breaks.) But nondonation on a prospective basis may no longer be enough. So maybe disillusioned freedom-minded donors deserve a legal right to a refund of money we've laid out on Easter Seals any time within the past 40 years.

Either that, or a simpler solution: Go back to the rule of law for everyone.