The U.S. Supreme Court this week heard argument in DaimlerChrysler AG v. Bauman, a case arising out of the Dirty War in Argentina. The plaintiffs allege that Daimler, the German automaker, is responsible for the disappearance and torture of workers at a Mercedes-Benz plant in Argentina, because plant managers identified union leaders and others as “subversives” who were then targeted for persecution. This case is worth watching, because it could herald broad new protections for multinational corporations that enjoy the privilege of doing business in the United States.
The focus of the Supreme Court hearing, however, was not on the substance of the claims, but on whether Daimler can be sued in the United States at all. The Ninth Circuit Court of Appeals ruled that Daimler could be sued in California because its subsidiary Mercedes-Benz USA (MBUSA) does extensive business in California, and MBUSA’s activities could be attributed to Daimler. My organization, EarthRights International, submitted an amicus brief on the side of the Bauman plaintiffs, arguing that the Constitution does not require courts to treat corporations and their subsidiaries separately for jurisdictional purposes, especially where they are economically integrated.
Several justices seemed hostile to the victims of torture and disappearance, but they did not suggest a coherent rationale for dismissing the case. Few seemed to want to constitutionalize a rule of corporate separateness, but most expressed some discomfort with the case.
What’s at stake here is essentially whether Congress, or any U.S. state, has the power to tell a corporation: “If you do business here, even if it’s through a subsidiary, victims of your crimes in other countries can sue you here.” In this case, the abuses are torture and disappearance; in another case it might be selling chemical weapons. Do we really want to establish a constitutional rule that a company that sells chemical weapons to a foreign regime can exercise the privilege of doing business in the United States without submitting to justice from its victims?
by Orly Lobel, Don Weckstein Professor of Labor and Employment Law, University of San Diego School of Law
Under the radar, the monopolization of knowledge has expanded far beyond the bargain struck in Article I, Section 8 of the Constitution. The enumerated powers of Congress permit the legislature to secure “to Authors and Inventors the exclusive Right to their respective Writings and Discoveries” for a limited time “to promote the Progress of Science and useful Art.” Thomas Jefferson described the act of delineating the appropriate scope of intellectual property rights as “drawing a line between the things which are worth to the public the embarrassment of an exclusive patent, and those which are not.” Talent Wants to Be Free: Why We Should Learn to Love Leaks, Raids, and Free-Riding argues that Jefferson’s embarrassment extends beyond ownership over creations of the mind. Moreover, it extends beyond the exercise of public authority contemplated by the Constitution, and into private conduct that can exacerbate the tension Jefferson identified. The embarrassment reveals itself in full force when we focus our attention on the ways we regulate human capital – people themselves, their skills and knowledge, the social connections and the creative capacities and inventive potential that flow through the market.
Beyond our intellectual property wars, beyond the heated debates about the proper scope of patents and copyright, we’re confronting a surge in the monopolization of human potential for creativity and invention. The past decade has seen a wild expansion of business practices which attempt to control the mobility of talent and secrets. Companies big and small are using non-compete contracts, trade secret and non-disclosure agreements, prohibitions on poaching and soliciting of customers and co-workers, and the preclusion of employee ownership of patents and copyright. Take for example David Neelman, the founder of JetBlue, who was compelled to sit on imaginative ideas that would revolutionize the airline industry for five years because he had signed a non-compete with former employer Southwest. Or Nobel laureate and former Yale University professor, 87 year old John Fenn, who was sued by Yale over his patent on a method he had invented to evaluate new drugs, including the development of innovative AIDS medication in the mid-1990s. Ironically, these pervasive business practices frequently have a counter-productive effect not only on the public and employees, but also on businesses themselves.
Talent Wants to Be Free looks at how we fight over knowledge and talent in every industry, profession, and region, and considers the right balances of secrecy & sharing, carrots & sticks and freedoms & controls. We have vigorous debates about immigration reform, the patent system, labor unions and health care – all of which bear on how people and organizations innovate – but when we look at our core strategies on human capital, we’re losing out on rich potential, creativity, and drive. When it comes to fighting the war over talent, most of us react emotionally and territorially. But these are exciting times: there is fascinating new evidence from economics, psychology, sociology, management and law that reveal a vision of how to better wage the talent wars. Through interdisciplinary empirical research and insight from the industry leaders, the book reveals that more frequently than we have come to believe, corporations, individuals, industries and regions benefit more when talent is not subject to monopoly control.
Over the past several years, we have had the privilege of representing whistleblowers who have successfully pursued False Claims Act cases against some of the largest pharmaceutical manufacturers in the world. Cases against Pfizer, GlaxoSmithKline, Abbott Labs, Amgen, and most recently Wyeth which was acquired by Pfizer, resulted in the companies returning over $7 billion to government healthcare payors.
Viewed from the optics of the black letter law, these cases are about whether false or fraudulent statements cause the government to pay for drugs that doctors would not have otherwise prescribed. Yet, in human terms, these cases raise the question of whether corporate marketing goals are influencing medical decisions.
The Rooney Rule, which has helped promote diversity in the NFL coaching and managerial ranks, should also be expanded in corporate America, says Robert L. Johnson, founder of Black Entertainment Television.
The Washington Post reports that Johnson and other African-American and Latino corporate leaders are calling on more companies to “voluntarily embrace a plan to interview at least two qualified black or Hispanic candidates for every job at the vice president level or higher.”
Johnson told The Post that the business leaders have tried to get the Obama administration to help push more companies to adopt the rule and are now taking more aggressive actions on their own to influence more corporations. Johnson (pictured) said the group of business leaders would urge the U.S. Chamber of Commerce and the Business Roundtable to get behind the push for an expanded use of a Rooney-type rule in corporate America.
Luis Ramirez, president and chief executive of Global Power, told The Post, “We need people who have diverse backgrounds and experiences to add to the populations of executives and corporate board members.”
I recently had the privilege of participating in a meeting of some leading and well-respected labor attorneys and scholars. Many questions were posed. With the decline of participation in labor unions, gutting of workers’ rights through “Right to Work” state legislation, and attempts to dismantle the National Labor Relations Board, what other legal mechanisms can be employed for the benefit of workers? Specifically, how can corporate laws facilitate workers’ rights? We also deliberated many possible advocacy avenues under corporate law including the following:
Reframe the argument against Citizens United and align workers with shareholders against unchecked corporate boards and management. Citizens United v. FECrecognized free speech rights under the First Amendment for corporations, including labor unions. While some advocate that labor unions take advantage of Citizens United through increased campaign activity and spending, labor unions face an uphill battle against anti-worker groups financed by better-funded corporate interests and wealthy individuals. Rolling back Citizens United is currently part of a larger worker rights’ plan, and one way to execute that plan (and garner a broader base of support) is to align workers’ interests with shareholder interests.
The Supreme Court got Citizens United wrong by brushing aside an important corporate constituency -- shareholders. Retired Justice John Paul Stevens’ dissenting opinion was correct to argue that the majority opinion ignored the rights of shareholders. When corporations are allowed to spend unlimited treasury funds on “electioneering communications,” the corporate board chooses all aspects of the political donations -- which political groups to donate to, the timing of such donations, and whether to donate at all. Shareholders are effectively forced to contribute their money to political issues, even those that they oppose. When a shareholder invests in a corporation -- and realize that anyone in the United States whoever wants to retire must invest in corporations, whether directly or through mutual funds -- the shareholder is doing so for one purpose: to make money.