Biden's Bad Judges

The Supreme Court is a problem. But Joe Biden just nominated a Google attorney to sit on the second highest court in the land. And he's putting too many corporate lawyers on the lower courts. Why?

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Today I’m writing about judges. We’ve heard a lot about the Supreme Court of late, and the conservative majority making highly consequential decisions in a host of areas. But who is Joe Biden nominating? I’m going to look at the most recent slate of judicial nominees that the Democrats are putting forward for lifetime appointments.

The Governing Style

Ronald Reagan’s administration did many things, but the best way to understand Reagan’s governing style was to look at one particular incident - how he fired striking air traffic controllers upon taking office. That moment, in which he crushed a constituency of organized government workers, illustrated, more than any policy document, what Reagan was about.

If I had to pick an incident that characterizes Joe Biden’s White House, I’d choose the administration’s March, 2022 executive order on cryptocurrencies. Most people don’t remember this order, because it didn’t actually do anything. And to the extent anyone does remember it, five months after crypto blew up, it is embarrassing. (‘Where were the regulators?’ asks Paul Krugman today.) And that’s why I think it reflects the governing style of the Biden administration - a sort of consistent paralyzing inaction.

In this case, Gary Gensler, the Chair of the Securities and Exchange Commission thinks crypto is a scam, whereas bank regular Michael Hsu at the Office of the Comptroller of the Currency sees crypto as an inevitable part of the banking system. Normally, when officials disagree, the decision is elevated to the President, who makes a decision. But Biden, and this is his style, does not like making decisions on economic policy questions. So the order didn’t do anything, because no one could agree on what should be done.

According to former aide Jeff Connaughton, on economic questions Biden is a procrastinator. It doesn’t matter the issue - student debt, China tariffs, crypto, trade agreements, pharmaceutical pricing, et al - Biden tends to avoid choices. As his team is full of people who disagree with each other on core economic questions, the result is incoherence.

Such is the case for antitrust and competition policy. Biden took office in 2021, and the consensus was that we need more aggressive antitrust enforcement. His appointments reflected that consensus, and the policy results are starting to look meaningful. Bank mergers are way down, largely because of bank regulator Rohit Chopra. So too are mergers in the government contracting space, which is a result of Deputy Secretary of Defense Kathleen H. Hicks and Federal Trade Commission Chair Lina Khan. Furthermore, a year ago, Biden issued an executive order on competition, which has led to actions on right to repair, potential actions on hearing aids, and a nascent crackdown on private equity.

But Biden also appointed Pete Buttigieg to the Department of Transportation and Tom Vilsack to the Department of Agriculture, and they have thwarted action in places the public might notice, like food or airlines. More importantly, all competition-related policy choices are going to be litigated in the courts, and some of them will likely run up against judges that Biden has nominated. And as it turns out, the economic philosophy of many of the judges that Joe Biden is nominating for lifetime appointments may contravene what some of his competition policy enforcers are trying to achieve.

Brad Garcia: Google’s Man on the D.C. Circuit Court

While the social issues get much of the attention, judicial rulings on market power and fair competition are an essential fulcrum for understanding how politics work. And in that area, despite swings on social issues, the courts have been aggressively narrowing the scope of antitrust law since 1977, at the behest of both Republicans and Democrats. It’s well-known that conservative judges led the attack on antitrust, most notably at the behest of D.C. Circuit Court judge Robert Bork, who created the notion of a ‘consumer welfare standard’ as a means of rewriting antitrust law without going through Congress.

But while Republicans, situated in what is know as the Chicago School, get a lot of the blame, Democrats, who came from the ‘post-Chicago School’ or ‘Harvard School’ were just as important. Stephen Breyer, for instance, helped Antonin Scalia eliminate monopolization law. And Ruth Bader Ginsburg, until late in her career, ruled on intellectual property rights, the big business lobby and monopoly power in a manner indistinguishable from her conservative colleagues. RBG laid down the template for the elite liberal legal establishment, which is to do something important and meaningful on left-wing social questions, and rule for business where few but big money are noticing. It’s why she was endorsed by the U.S. Chamber of Commerce for the Supreme Court.

It’s not just the Supreme Court. Democratic judges have been important partners in the project of destroying antitrust at lower levels. In 2019, it was Clinton nominated judge Victor Marrero who allowed the Sprint-T-Mobile merger to go through. Last year, Obama-nominated judge James Boasberg snottily dismissed both New York state and the Federal Trade Commission’s antitrust complaint against Facebook. And earlier this year, a Bill Clinton judge dismissed the D.C. Attorney General Karl Racine’s complaint against Amazon.

In other words, while enforcers have started to change their thinking around antitrust, judges on both sides of the aisle have not. If Biden had a coherent philosophy, to complement assertive enforcers like Khan and Kanter he would also be nominating candidates for judicial slots that oppose narrow views of antitrust law. That is, in reverse, how Reagan eroded the law, by both putting enforcers like James Miller and Bill Baxter at the agencies, and by nominating people like Bork to the judiciary.

But Biden is not doing that. This is not obvious if you just look at his one Supreme Court nominee, Ketanji Brown Jackson, who is not a corporate lawyer and will likely have a reasonable posture on market power questions. Below the surface, however, there are a lot of questionable picks. For instance, Biden just nominated to D.C. Circuit a 35 year-old Google lawyer named Brad Garcia. Garcia is a former Elena Kagan clerk from the monopoly friendly big law firm O’Melveny, and aside from Google, he has also represented Ford, Fidelity, and China Agritech in cases that fortify corporate power. Like most corporate lawyers with political ambitions, Garcia has done a bunch of pro bono cases - in this instance for prisoners and immigration - but his paying work was on behalf of dominant firms. This choice is a big deal - the most important regulatory court outside of the Supreme Court is the D.C. circuit.

It’s not just Garcia, of course. For a Minnesota district court slot, Biden picked a lawyer named Jerry Blackwell. Blackwell’s liberal credentials are impeccable, as he was retained as a special prosecutor for the George Floyd murder trial. But in his paying practice, he specializes in class action defense, representing ConAgra, 3M, Exxon, and numerous medical device companies. His career has been dedicated not just to laudable liberal social causes, but also to stopping people from being able to sue big corporations, which is at the heart of how judges have killed antitrust law.

For the Ninth Circuit, Biden chose Roopali H. Desai, who represented the Arizona Secretary of State in dealing with election challenges, and helped the ACLU in a case relating to child welfare placement. She also defended the Arizona Hospital and Healthcare Association in antitrust class action brought by nurses alleging coordinated wage suppression, and defended GE Money in a Fair housing case.

Biden also nominated to the 5th Circuit Dana M. Douglas, a Liskow & Lewis partner specializing in energy work, whose clients included Exxon, Shell, and BP. Finally, for Puerto Rican district courts, Biden nominated three separate district judicial nominees, each of whom came from a defense firm.

I don’t want to overstate the problem, Biden doesn’t only pick corporate lawyers, he often promotes lower court judges up a rank. And it isn’t inevitable that the judges he picks will rule poorly in antitrust cases. Garcia, for instance, specializes in patents, not antitrust. He’s young, and could be interested in different ways of thinking about the law. But Biden is not choosing lawyers known for taking on corporate power for these slots. And generally speaking, nominating as judges those who do pro bono work on high profile social issue advocacy but make their bread by empowering large corporations hasn’t been a successful model for organizing a democracy.

In other words, the politics around antitrust is changing fast, but it’s still a very incomplete revolution.

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What I’m Reading

Anger in Canada as Rogers Lawyer Ends CBC Interview Over 'Monopoly' Question Following Nationwide Outage, The Rational National A good news clip about a huge monopoly scandal in Canada where the internet for nearly the whole country basically went out…

Shippers Argue Inter-Alliance Shared Services Concentrate Markets, The Maritime Executive

How Foreign Private Equity Hooked New England’s Fishing Industry, ProPublica A really terrific story on how environmentalists and libertarians consolidated the fishing industry into the hands of European billionaire private equity barons.

Can a corporation "own" a color? The Hustle T-Mobile has tried to trademark the color magenta.

Crypto Crash Halts Plans by Statehouses to Accept Bitcoin Tax Payments, Bloomberg

American Factories Are Making Stuff Again as CEOs Take Production Out of China, Bloomberg

Military briefing: is the west running out of ammunition to supply Ukraine?, Financial Times. This is a useful article on how a “decades-long emphasis on lean manufacturing, financial efficiency and industrial consolidation” has led to the inability to ramp up the production of ammunition. “In the US, the Pentagon works with just five main defense contractors; in the 1990s, the number was 51.” Zoink.

The changing antitrust climate for contractors, Washington Technology. It turns out defense and government contractors are having trouble merging, because of toughened enforcement.

Shipping needs greater regulatory intervention: ITF, Journal of Commerce This article goes over a report from the International Transport Forum on the ocean shipping industry. The ITF argues that policy has led to tremendous consolidation of ocean carriers, and then cartel behavior as these giants coordinate how much capacity to idle during down periods. Going forward, the big shipping lines are using their immense new cash reserves to buy rivals and become dominant end-to-end logistics providers. And it has charts!

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Thanks for reading. Send me tips on weird monopolies, stories I’ve missed, or comments by clicking on the title of this newsletter. And if you liked this issue of BIG, you can sign up here for more issues of BIG, a newsletter on how to restore fair commerce, innovation and democracy. If you really liked it, read my book, Goliath: The 100-Year War Between Monopoly Power and Democracy.

cheers,

Matt Stoller