The securities laws and the mechanics of legal change

Virginia Law Review

Volumn 95, Issue 4, 2009, Pages 927-939

  Cushman, Barry ^a,b  

^a Department of Law ^*

^b UNIVERSITY OF VIRGINIA   (United States)

Author keywords

[No Author keywords available]

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EID: 69249127984     PISSN: 00426601     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Review

References (104)

1. Robert A. Dahl, Decision-MaKing in a Democracy: The supreme Court as a National Policy-Maker, 6 J. Pub. L. 279, 284-88, 291, 293-94 (1957). For examples of work in this tradition, see Walter Dean Burnham, Critical Elections and the Mainsprings of American Politics 10 (1970);
2. John B. Gates, The Supreme Court and Partisan Change: Contravening, Provoking, and Diffusing Partisan Conflict, in The Supreme Court in American Politics: New Institutionalist Interpretations 98 (Howard Gillman & Cornell Clayton eds., 1999);
3. Howard Gillman, The Waite Court (18741888): The Collapse of Reconstruction and the Transition to Conservative Constitutionalism, in The United States Supreme Court: The Pursuit of Justice 124, 128, 145 (Christopher Tomlins ed., 2005);
4. Sheldon Goldman, Picking Federal Judges: Lower Court Selection from Roosevelt Through Reagan (1997);
5. Terri Jennings Peretti, In Defense of a Political Court 133 (1999);
6. Robert Scigliano, The Supreme Court and the Presidency (1971);
7. Martin Shapiro, Chief Justice Rehnquist and the Future of the Supreme Court, in An Essential Safeguard: Essays on the United States Supreme Court and Its Justices 145 (D. Grier Stephenson, Jr. ed., 1991);
8. Martin Shapiro, The Supreme Court: From Warren to Burger, in The New American Political System 179 (Anthony King ed., 1978);
9. Mark Tushnet, The Supreme Court and the National Political Order: Collaboration and Confrontation, in The Supreme Court and American Political Development 117, 129 (Ronald Kahn & Ken I. Kersch eds., 2006);
10. Richard Funston, The Supreme Court and Critical Elections, 69 Am. Pol. Sci. Rev. 795 (1975);
11. Howard Gillman, First Amendment Doctrine as Regime Politics, 14 The Good Soc'y 59 (2005);
12. Howard Gillman, How Political Parties Can Use the Courts to Advance Their Agendas: Federal Courts in the United States, 1875-1891, 96 Am. Pol. Sci. Rev. 511, 517 (2002);
13. Howard Gillman, Regime Politics, Jurisprudential Regimes, and Unenumerated Rights, 9 U. Pa. J. Const. L. 107 (2006);
14. William E. Hulbary & Thomas G. Walker, The Supreme Court Selection Process: Presidential Motivations and Judicial Performance, 33 W. Pol. Q. 185 (1980);
15. Kevin J. McMahon, Constitutional Vision and Supreme Court Decisions: Reconsidering Roosevelt on Race, 14 Stud. Am. Pol. Dev. 20,24,28 (2000).
16. Barry Cushman, Rethinking the New Deal Court: The Structure of a Constitutional Revolution (1998) [hereinafter Cushman, Rethinking];
17. G. Edward White, The Constitution and the New Deal (2000);
18. Barry Cushman, Lost Fidelities [hereinafter Cushman, Lost Fidelities], 41 Wm. & Mary L. Rev. 95 (1999);
19. Barry Cushman, Some Varieties and Vicissitudes of Lochnerism [hereinafter Cushman, Varieties and Vicissitudes], 85 B.U. L. Rev. 881, 982-98 (2005);
20. Richard Friedman, Switching Time and Other Thought Experiments: The Hughes Court and Constitutional Transformation, 142 U. Pa. L. Rev. 1891 (1994).
21. Jack M. Balkin & Sanford Levinson, The Processes of Constitutional Change: From Partisan Entrenchment to the National Surveillance State, 75 Fordham L. Rev. 489, 489-502, 533-35 (2006);
22. Jack M. Balkin & Sanford Levinson, Understanding the Constitutional Revolution, 87 Va. L. Rev. 1045, 1066-68, 1073-76, 1082-83, 1092 (2001).
23. A.C. Pritchard & Robert B. Thompson, Securities Law and the New Deal Justices, 95 Va. L. Rev. 841, 873 (2009).
24. The exemplar is William E. Leuchtenburg, The Supreme Court Reborn: The Constitutional Revolution in the Age of Roosevelt (1995). For citations to many other instances of this view, see Cushman, Rethinking, supra note 2, at 227-28 nn.l, 8, 9, & 17.
25. - 298 U.S. 1(1936).
26. Pritchard & Thompson, supra note 4, at 876.
27. - 299 U.S. 248 (1936).
28. See id. at 249-53.
29. Pritchard & Thompson, supra note 4, at 880-81.
30. See Landis, 299 U.S. at 256-59.
31. Pritchard & Thompson, supra note 4, at 880-81.
32. Jack L. White, Recent Decision, 35 Mich. L. Rev. 996,997 (1937).
33. Justice McReynolds concurred in the result, and Justice Stone did not participate. See Landis, 299 U.S. at 259.
34. See, e.g., NLRB v. Jones & Laughlin Steel Corp., 301 U.S. 1, 76-103 (1937) (McReynolds, Van Devanter, Sutherland, Butler, JJ., dissenting from opinion upholding National Labor Relations Act);
35. Steward Machine Co. v. Davis, 301 U.S. 548, 598609 (1937) (McReynolds, J., dissenting from decision upholding Social Security Act); id. at 609-16 (Sutherland & Van Devanter, JJ., dissenting); id. at 616-18 (Butler, J., dissenting).
36. See 298 U.S. 1, 29-33 (1936) (Cardozo, J., dissenting).
37. Pritchard & Thompson, supra note 4, at 881.
38. See Nebbia v. New York, 291 U.S. 502 (1934).
39. See Home Bldg. & Loan Ass'n v. Blaisdell, 290 U.S. 398 (1934).
40. See Norman v. Balt. & Ohio R.R. Co., 294 U.S. 240 (1935);
41. Nortz v. United States, 294 U.S. 317 (1935).
42. See Ashwander v. Tenn. Valley Auth., 297 U.S. 288 (1936).
43. See W.H.H. Chamberlin, Inc. v. Andrews, 299 U.S. 515 (1936) (per curiam).
44. See Caldwell v. Sioux Falls Stock Yards Co., 242 U.S. 559 (1917);
45. Hall v. GeigerJones Co., 242 U.S. 539 (1917);
46. Merrick v. N.W. Halsey & Co., 242 U.S. 568 (1917).
47. See infra notes 48-51.
48. - 303 U.S. 419 (1938)
49. Pritchard & Thompson, supra note 4, at 882.
50. - 300 U.S. 379 (1937).
51. Pritchard & Thompson, Securities Law and the New Deal Justices, 40 n.178 (Sept. 9, 2008) (unpublished conference paper, on file with the Virginia Law Review Association). In the revised version of their paper published here, the authors have gracefully receded from this contention, now recognizing that Roberts cast his vote in Parrish well before he knew of the Court-packing plan, that his vote was "probably wrongly" characterized as a switch, and that Frankfurter only believed that "the switch was transparent" "[a]t the time." Pritchard & Thompson, supra note 4, at 882 n.188.
52. Pritchard & Thompson, supra note 4, at 882 n.188 (quoting Letter from Felix Frankfurter to Franklin D. Roosevelt (Mar. 30, 1937) (on file with the Felix Frankfurter Collection, Harvard Law School Library, Reel 155)).
53. See generally Cushman, Rethinking, supra note 2.
54. See Merlo J. Pusey, 2 Charles Evans Hughes 757 (1951). Two contemporary journalists were aware as early as 1938 that the Parrish vote had taken place before the announcement of the Court-packing plan, though they believed that the vote had taken place in January of 1937 rather than in December of 1936. See Joseph AIsop & Turner Catledge,The 168 Days 140 (1938).
55. See William E. Leuchtenburg, The Origins of Franklin D. Roosevelt's "CourtPacking" Plan, 1966 Sup. Ct. Rev. 347.
56. See, e.g., Leuchtenburg, supra note 5, at 213-36.
57. William E. Leuchtenburg, Franklin D. Roosevelt and the New Deal 236 n.20 (1963).
58. See Cushman, Lost Fidelities, supra note 2, at 97-99.
59. Letter from Justice Felix Frankfurter to Paul Freund, Professor, Harvard Law Sch. (Oct. 18, 1953) (on file with the Felix Frankfurter Collection, Harvard Law School Library, Part 3, Reel 15), quoted in Michael Ariens, A Thrice-Told Tale, or Felix the Cat, 107 Harv. L. Rev. 620,633 n.78 (1994).
60. See Felix Frankfurter, Mr. Justice Roberts, 104 U. Pa. L. Rev. 311 (1955). The "switch-in-time" thesis was similarly rejected in another article, published in the same issue, by Dean Erwin N. Griswold. See Owen J. Roberts as a Judge, 104 U. Pa. L. Rev. 332, 340-44 (1955).
61. Pritchard & Thompson, supra note 4, at 882-83.
62. See, e.g., Cushman, Lost Fidelities, supra note 2, at 129-45; Cushman, Varieties and Vicissitudes, supra note 2, at 982-98.
63. Pritchard & Thompson, supra note 4, at 883.
64. See Elec. Bond & Share Co. v. SEC, 303 U.S. 419, 443 (1938) (McReynolds, J., dissenting without opinion).
65. See West Coast Hotel Co. v. Parrish, 300 U.S. 379, 400-14 (1937) (Sutherland, Van Devanter, McReynolds & Butler, JJ., dissenting).
66. See NLRB v. Jones & Laughlin Steel Corp., 301 U.S. 1, 76-103 (1937) (McReynolds, Van Devanter, Sutherland & Butler, JJ., dissenting).
67. See Steward Machine Co. v. Davis, 301 U.S. 548, 616-18 (1937) (Butler, J., dissenting).
68. See Cushman, Rethinking, supra note 2, at 30-31.
69. Leuchtenburg, supra note 34, at 251.
70. Pritchard & Thompson, supra note 4, at 873 (quoting Joseph L. Rauh, Jr., Clerks of the Court on the Justices, in The Making of the New Deal: The Insiders Speak 55, 57 (Katie Louchheim ed., 1983)). From his remarks in a separate interview for the book, it appears that Rauh believed that the Court would have invalidated the registration provisions of PUHCA in 1935 and 1936. In describing Ben Cohen's efforts to avoid a constitutional challenge to the registration provisions of the statute, Rauh opined that "[t]he Supreme Court of 1935-36 was a very conservative Court, which would have held the Holding Company Act unconstitutional." Jospeh L. Rauh, Jr., The Draftsmen, in The Making of the New Deal, supra, at 111. After recounting Cohen's success in persuading the Court not to grant certiorari in a 1935 case from the Fourth Circuit, Rauh reports that "[t]he Electric Bond and Share case got there a couple of years later. The Court had changed by then and Ben won." Id. at 112.
71. Compare Comment, Federal Regulation of Holding Companies: The Public Utility Act of 1935, 45 Yale L.J. 468, 485-89 (1936), with Note, The Constitutionality of the Public Utility Holding Company Act of 1935, 23 Va. L. Rev. 678, 692 (1937) (expressing doubt that the Act could be constitutionally applied to companies other than those "whose chief business is the interstate sale of gas and electricity," but holding out the prospect that a Court made "more liberal... through a change in its personnel" might find a "vital connection" between holding companies and interstate commerce).
72. Recent Cases, 4 Geo. Wash. L. Rev. 532,535-36 (1936).
73. See George J. Feldman, The New Federal Securities Act, 14 B.U. L. Rev. 1,6 n.26 (1934) ("There seems little doubt that the Act, based on the Congressional power over interstate commerce and the mails, is, in almost all its provisions, well beyond constitutional interdict."); Legislation, The Securities Act of 1933, 33 Colum. L. Rev. 1220, 1221-23 (1933) (expressing confidence in the Act's constitutionality);
74. Deneen A. Watson, The Illinois and Federal Securities Acts, 29 111. L. Rev. 41, 45 (1934) (inclining to view the Act as constitutional);
75. Herman Goralnik, Note, Securities As Subjects of Interstate Commerce, 19 St. Louis L. Rev. 69, 74-76 (1933) ("[I]t seems that the sale, offer to sell, or transportation of securities among the states... is interstate commerce subject to federal regulation- [T]he court, if it so desires, would find no difficulty in affirming the Act as being within the power of Congress to regulate commerce among the states....[Cases supporting this view] should prevail over [older cases suggesting a contrary result because the latter] have been distinguished on other grounds."). But cf. Nathan Isaacs, The Securities Act and the Constitution, 43 Yale L.J. 218 (1933) (expressing doubt); Comment, 32 Mich. L. Rev. 811 (1934) (expressing uncertainty).
76. See Jacob Lippman, Constitutionality of the Securities Exchange Act of 1934, 9 St. John's L. Rev. 1,23 (1934) (concluding that "the powers entrusted to the Commission are valid in all respects");
77. Milward W. Martin, Constitutionality of the Securities Exchange Act of 1934, 21 A.B.A. J. 811, 815-17 (1935) (concluding that many of the Act's provisions are constitutional exercises of the commerce power);
78. Jess Halsted, Securities and Exchange Act of 1934 Regulating Stock Exchanges, Trading in Securities, Etc. Under Administration of the Securities and Exchange Commission, 2 J. Marshall L.Q. 145,149 (1936) (agreeing with Martin);
79. see also Legislation, Delegation of Power Under the Securities Exchange Act of 1934, 36 Colum. L. Rev. 974, 992 (1936) (rejecting contention that the Act violates the nondelegation doctrine). But cf. Legislation, The Securities Exchange Act of 1934, 83 U. Pa. L. Rev. 255, 255-58 (1934) (expressing uncertainty concerning Act's constitutionality);
80. John Hanna, The Securities Exchange Act of 1934, 23 Cal. L. Rev. 1, 23-29 (1934) (expressing uncertainty concerning the Act's constitutionality).
81. Pritchard & Thompson, supra note 4, at 881-82.
82. See Harold Chase et al., Biographical Dictionary of the Federal Judiciary 172 (1976).
83. SEC v. Elec. Bond & Share Co., 18 F. Supp. 131 (S.D.N.Y. 1937). The Second Circuit affirmed that November. See 92 F.2d 580 (2d Cir. 1937). Compare Electric Bond & Share, 92 F.2d 580, with In re American States Public Service Co., 12 F. Supp. 667 (D. Md. 1935) and Bureo, Inc. v. Whitworth, 81 F.2d 721, 740 (4th Cir. 1936), holding unconstitutional the application of the Act to debtors in bankruptcy not engaged in interstate commerce.
84. See Gerald L. Stoetzer, Comment, 36 Mich. L. Rev. 1324,1332-36 (1938); Recent Case, 12 Temp. L.Q. 400, 400-02 (1938); Recent Decision, Constitutional LawValidity of Registration Provisions of Public Utility Holding Company Act, 24 Va. L. Rev. 328, 329 (1938).
85. See Chase et al., supra note 53, at 208-09.
86. SEC v. Wickham, 12 F. Supp. 245, 249 (D. Minn. 1935).
87. - 295 U.S. 495 (1935).
88. United States v. Bogy, 16 F. Supp. 407, 411-13 (W.D. Tenn. 1936).
89. SEC v. Crude Oil Corp., 17F. Supp. 164, 167 (W.D. Wis. 1936), aff'd, 93 F.2d 844 (7th Cir. 1937).
90. See Chase et al., supra note 53, at 301.
91. See id. at 98-99, 115.
92. Coplin v. United States, 88 F.2d 652, 657 (9th Cir. 1937).
93. See Chase et al., supra note 53, at 216.
94. SEC v. Torr, 15 F. Supp. 315, 319 (S.D.N.Y. 1936), rev'd on other grounds, 87 F.2d 446 (2d Cir. 1937). See also McMann v. Engel, 16 F. Supp. 446, 447 (S.D.N.Y. 1936), in which Judge Patterson upheld the 1934 Act against a nondelegation challenge on August 5,1936.
95. See Chase et al., supra note 53, at 40.
96. SEC v. Jones, 12 F. Supp. 210, 213 (S.D.N.Y. 1935). See also SEC v. Torr, 15 F. Supp. 144, 145 (S.D.N.Y. 1936), where Judge Caffey rejected the contention that the denial to defendants of copies of testimony they had given during an investigation carried on by a representative of the SEC deprived them of due process.
97. Jones v. SEC, 79 F.2d 617, 621 (2d Cir. 1935).
98. The two Coolidge appointees were Learned and Augustus Hand. See Chase et al., supra note 53, at 114-15. See also Newfield v. Ryan, 91 F.2d 700, 704-05 (5th Cir. 1937), in which a panel comprised by Coolidge appointee Rufus Foster and Hoover appointees Samuel Sibley and Joseph Hutcheson upheld provisions of both the 1933 and 1934 Acts. See Chase et al., supra note 53, at 94, 135, 252.
99. - 310 U.S. 434 (1940).
100. See id. at 461-69 (Roberts, J., Hughes, C.J., & McReynolds, J., dissenting).
101. William O. Douglas, Diary (May 27, 1940) (on file with the William O. Douglas Collection, Library of Congress, Box 1780), quoted in Pritchard & Thompson, supra note 4, at 885.
102. See N. Am. Co. v. SEC, 327 U.S. 686, 707-10 (1946).
103. - 312 U.S. 100 (1941).
104. - 317 U.S. 111(1942).