As the new Rehnquist Court debuts this month in Washington, it is probably only natural for American business to heave a sigh of relief. After all, a doctrinaire Republican conservative with heavy-gauge intellectual firepower will now sit at the top of the nation's judicial system. His is only one vote on a court of nine. But over time, with the help of strong new allies like Justice Antonin Scalia, Chief Justice Rehnquist might well be expected to put a pro-business spin on American commercial law for the balance of the century.
The fault lines of the law, however, do not always follow the fault lines of politics. And William Hubbs Rehnquist, it turns out, is not so much a country club conservative as he is a legal conservative. He is less interested in curbing the initiatives of legislatures and regulators than he is in restraining the initiatives of judges. And he is less interested in preserving the status quo than in restoring the status quo antebellum. Indeed, one critic describes Rehnquist and his new colleague, Scalia, as "two of the finest nineteenth-century minds in America."
"His conservatism does not necessarily correspond with the way a businessman might define conservatism," explains Laurence Tribe, the leading Supreme Court watcher at Harvard Law School.
Thus Rehnquist's elevation is something of a mixed blessing for business.The good news is that the new chief justice can be expected to be staunch in his support of business in legal battles against employees and consumers. The bad news is that business may receive little help in its campaign against government regulation and restrictions. Remember that Rehnquist came to Washington to be the government's lawyer, as an assistant attorney general in the first Nixon Administration. Now, even after 15 years on the bench, he is still every bit the "government man" he was back in 1969.
It is 15 years of Rehnquist opinions and dissents that gives us this window onto his future as chief justice:
* He nearly always votes against union power, whether pitted against management or individual employees.
* He embraces property rights protected by patent, copyright, and trade secrets. Had his opinion prevailed in the famous Betamax case in 1984, for instance, it would be illegal to videotape a television show on your home recorder.
* He consistently votes to reduce the reach of antitrust and securities laws.
* He is reluctant to invalidate government regulations affecting business, but takes a dim view of citizens' suits seeking to force regulators to be more aggressive.
* He defers to state government over federal, executive branch over legislative, and both branches over the judiciary.
As clear and simple as those principles may appear, the cases that reach the Supreme Court are rarely so neat or clear-cut that they can be decided merely by applying one of them. And it is in cases where those principles conflict that Rehnquist has had to set his conservative priorities -- and then not always in favor of business interests.
Above all else, Rehnquist is an old-style federalist who would bow to state sovereignty, or states' rights, almost as it was understood before the Civil War. "Federalism is the central organizing theme of his jurisprudence," says H. Jefferson Powell, a professor at the University of Iowa College of Law who scrutinized Rehnquist's writing in a 1982 article for The Yale Law Journal. "He wants to protect the local or state decision maker against federal intrusion, even if the intrusion goes the way he wants it to."
The University of Chicago's Richard Epstein argues that the federalist sword cuts two ways as far as business is concerned. If the federalist concept is extended to new areas of the law, a company doing business nationwide might have to deal with 50 different sets of state regulations instead of a single federal code. On the other hand, if federal law or regulation is oppressive, companies might prefer the balkanization of government oversight.
Rehnquist doesn't worry much about consistency of regulatory policy so much as consistency of constitutional interpretation. In a 1981 case, for example, he sided with the state of Iowa, which, in the interest of safety, had attempted to ban 65-foot double trucks from its state roads and interstate highways. Lawyers for Consolidated Freightways Corp., which had a fleet of the larger trucks, convinced a majority of the Court that Iowa's restrictions violated the commerce clause of the U.S. Constitution, which reserves to Congress the right to regulate interstate commerce. But Rehnquist, ignoring a long line of Supreme Court cases, dissented.
For Rehnquist, states' rights are to be protected even at the expense of another cherished conservative principle, property rights. Several years ago, the state of Hawaii used its powers of eminent domain to seize land owned by some of the state's largest landowners, divide it, and redistribute it to less affluent citizens. The islands' land barons, naturally, considered this an unconstitutional taking of private property, even though they were "justly compensated." But Rehnquist, as part of the Court majority, turned a deaf ear to their pleas.
"That was a major loss for protection of private property," says Washington lawyer Peter Ferrara. "This case means you are subject to the power of eminent domain almost at the whim of the state."
Along the same lines was the case of PruneYard Shopping Center v. Robins, which dealt with the rights of a group of students to collect petition signatures in a privately owned shopping mall. The California courts had ruled that the free speech provisions of California's Constitution protected the students' rights. And in an opinion written by Rehnquist, the U.S. Supreme Court affirmed, declaring that there was nothing in prior Court decisions to limit "the authority of the state to exercise its . . . sovereign right to adopt, in its own constitution individual liberties more expansive than those conferred by the federal Constitution."
In that case, Rehnquist's federalism provided victories for free speech and assembly. But it doesn't always turn out that way. When the Commonwealth of Puerto Rico legislated a ban on gambling advertising aimed at island residents, Rehnquist wrote for the Court majority in upholding the curb on free speech. If the Puerto Rican legislature had the power to ban casino gambling altogether, he wrote, surely it could ban advertising aimed at promoting it.
In fact, Rehnquist seems to attach little constitutional importance to commercial free speech, especially when it is pitted against the other compelling state interests. Back in 1976, he wrote a blistering dissent when the Court majority overturned a Virginia statute prohibiting pharmacists from advertising drug prices. The majority opinion, he wrote, "elevates commercial intercourse between a seller hawking his wares and a buyer seeking to strike a bargain to the same plane as has been previously reserved for the free marketplace of ideas." On the basis of similar arguments, Rehnquist has consistently sided with states that would limit advertising by professionals such as lawyers.And one might expect that, by the same logic, he would uphold limitations on cigarette and liquor advertising, either by state or federal governments, should these ever be subject to constitutional test.
"I think commercial speech is in deep trouble with this Court," says Alan Dershowitz, a Harvard Law School professor who advocates a broad interpretation of First Amendment rights. "The irony is that all speech is really commercial speech. Some of the greatest growth companies in America have been media corporations -- CBS, NBC, the Rupert Murdoch empire. They aren't in it for charity -- that's commercial speech. So the line is a very hard one to draw."
The First Amendment is not the only constitutional amendment that Rehnquist reads rather narrowly, even when business interests are involved. Just last term, Dow Chemical Co. argued before the high court that the U.S. Environmental Protection Agency had violated the company's Fourth Amendment protection from unreasonable searches when it sent a plane equipped with a sophisticated aerial mapping camera over its plant to check for compliance with air pollution laws. But a majority of the Court, including Rehnquist, sided with the government regulators.
Rehnquist's creed is judicial restraint, not government restraint, so he is likely to defer to the judgment of executive branch officials except in the most egregious cases. That's bad news for companies that find themselves in spats with regulators. But, according to Peter Raven-Hansen, a law professor at George Washington University, it will probably "have even more of a negative effect on environmentalists and Nader-like groups" that, in the past, have used the courts to force agencies to be more aggressive in their enforcement. Rehnquist would look to block those efforts by denying those groups the standing to bring their lawsuits in the first place.
As his Senate critics have pointed out, the new chief justice views affirmative action with a jaundiced eye, be it voluntary or imposed. He dissented in the 1979 case, United Steelworkers of America v. Weber et al, a major ruling upholding voluntary private affirmative action programs. "There is perhaps no device more destructive to the notion of equality than the . . . quota," he wrote then. Likewise, Rehnquist opposed the majority decision last term in Local #28 of the Sheet Metal Workers' International v. Equal Employment Opportunity Commission. The EEOC had found that the union had persistently refused to admit blacks, and ordered it to increase its nonwhite membership to 29.2%. The Court majority backed the order, but Rehnquist sided with the Reagan Administration's contention that affirmative action programs should be used to help only those blacks who were actually discriminated against by the union.
Rehnquist surprised the civil rights community last spring, however, in ruling that sexual harassment in the workplace can be considered a violation of the Civil Rights Act of 1964. "Without question," he wrote for a unanimous Court, "when a supervisor sexually harasses a subordinate . . . that supervisor discriminates on the basis of sex. [The law] affords employees the right to work in an environment free from discriminatory intimidation, ridicule and insult."
There will be no surprises, however, from Rehnquist in cases relating to antitrust enforcement. Should a new Administration ever revive this area of the law and attempt to block or modify corporate mergers and acquisitions, Rehnquist can be expected to set aside his government sympathies and oppose the regulators. In government antitrust cases -- and private actions, too -- he clearly favors the hands-off approach to the economy favored by a group of legal scholars known as the "Chicago School." Last term, the conservative Rehnquist even found himself voting with the majority in upholding Berkeley, Calif.'s tough rent-control ordinances against a challenge brought by real estate interests, who argued that the controls were a form of illegal price fixing.
For die-hard Republicans hoping to extend the Reagan Revolution, it may come as a disappointment that their new chief justice could rule in favor of rent control and land redistribution, tough environmental regulation, and federal jurisdiction over the sexual advances of supervisors. For others, there may be some consolidation in the fact that Mr. Justice Rehnquist reads the law at least as carefully as the election returns. "It's not as though we'll have the savior of American business leading the Supreme Court from now on," concludes the University of Chicago's Epstein. "He's a judge first, and a capitalist second."
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