The Improbable Claim That EFCA Is Unconstitutional

February 4, 2009

by Michael H. Gottesman, Professor of Law, Georgetown University Law Center.

The proposed Employee Free Choice Act (EFCA) authorizes National Labor Relations Board (NLRB) certification of unions when a majority of employees have signed cards designating a union to represent them, and mandatory arbitration of the terms of a first collective bargaining agreement if the employer and union are unable to reach agreement on their own.  Richard Epstein, America’s most prominent libertarian legal scholar, authored a recent op-ed piece in the Wall Street Journal contending that EFCA, if enacted, would be unconstitutional. In his view, card check recognition abridges the employer’s right of free speech protected by the First Amendment; and mandatory arbitration, if it results in terms more expensive than the employer would have agreed to on its own, represents a “taking” violative of the Fifth Amendment.


The debate over EFCA can comfortably remain on the terrain of policy, uncomplicated by concerns of unconstitutionality. For Epstein’s imagined constitutional difficulties haven’t the remotest chance of gaining judicial acceptance.


First Amendment. As things stand presently (i.e., without EFCA) employers, during the course of an NLRB election campaign, are free to air their views about the downsides of unionization so long as they refrain from threats or coercion. Epstein grieves that employers will lose this opportunity if EFCA is enacted, as a union would be able to conduct a “clandestine organizing campaign” and produce a card majority before the employer is aware of the need to speak out in opposition. Whatever its power as a policy argument, this observation has no purchase under the First Amendment. It’s one thing to say that the government can’t muzzle an employer from expressing its views. It’s quite another to say that the government has to structure its laws to provide employers notice about when their speech might be most efficacious. Under EFCA, employers will remain free to voice their views about the downsides of unionization whenever and as often as they want. They can rail against unions on a continuing basis, so long as they refrain from threats or coercion. That’s all the First Amendment guarantees them. Epstein’s “advance notice” theory is unheard of in First Amendment jurisprudence, and would produce preposterous results. Consider just one example: Under Epstein’s theory, a court couldn’t entertain a lawsuit by an employee against her employer unless she first notified the employer of her intention to sue, so that the employer would have an opportunity to express its views about the desirability of her bringing suit.    


Takings Clause.   For decades, Epstein has argued that the Takings Clause is a full-throated embodiment of libertarianism. His thesis, expounded most fully in his 1985 book, Takings: Private Property and the Power of Eminent Domain, is that government can never take anything from a private party unless it is providing “in kind” compensation to that party of roughly equivalent value. Taxing to provide for the common defense, or for police and fire protection, are OK, as the person paying the tax receives protection of roughly equivalent value. But taxing (or otherwise imposing costs on) one person to provide non-reciprocal benefits to others is per se a violation of the Takings Clause. On the basis of this thesis, Epstein has concluded that virtually all of the New Deal programs were unconstitutional, and that all laws that require an employer to provide benefits to its employees that it wouldn’t voluntarily choose to provide are unconstitutional takings.   His book argues, for example, that minimum wage laws are unconstitutional takings (Takings, at 279 – 80), as are unemployment benefits (Id. at 309 – 12). The same principle applies to the mandate that employers contribute to Medicare and Social Security. Of course, employment is just one application of Epstein’s thesis. By like reasoning, he argues that welfare laws, zoning laws, historic preservation laws, rent control laws and many others constitute unconstitutional takings. Indeed, he declares that his thesis “invalidates much of the twentieth-century legislation.” (Id. at 281)

Plainly, Epstein’s interpretation of the Takings Clause is not, and never has been, the interpretation applied by the Supreme Court. If it were, none of the laws just mentioned would still be operative. And Epstein is quite candid in acknowledging that his view of the Takings Clause is not the Court’s; indeed, he has decried “the Court’s tepid application of the takings clause that is the source of most of our present intellectual, and institutional, difficulties.” Epstein is “quite proud” that his view of the Takings Clause “leave[s] me outside the mainstream of both the political left and right.” (And lest the casual reader misread this as Epstein claiming to be between the left and the right, he immediately clarifies that the left’s sin is that it wants to redistribute wealth, and the right’s sin is that it is too timid to champion an interpretation of the takings clause that would block that redistribution.) Epstein’s evaluation of his view as out of the mainstream is widely shared. One prominent legal scholar, Thomas C. Gray, declared Epstein’s view of the Takings Clause “a travesty of constitutional scholarship” which “belongs with the output of the constitutional lunatic fringe.” (Thomas C. Grey, The Malthusian Constitution, 41 U. Miami L. Rev. 21, 23-24, 1986.) Another, Laurence Tribe, has said that “the gaps, flawed assumptions and argumentative elisions in Epstein’s reactionary interpretation of the Fifth Amendment [are] too numerous to address fairly here.” (Laurence H. Tribe, American Constitutional Law, §9-6 at 606, n.6, 2ed., 1988.)


So what is the Supreme Court’s interpretation of the Takings Clause that so disappoints Epstein? The Court has consistently distinguished between the taking of property and the regulation of property. When the government “takes” a person’s property by exercising eminent domain, or authorizes permanent occupation of that property by others, that is per se a taking that requires compensation. But, for the most part, government regulation does not constitute a taking, even when the regulation imposes substantial non-reciprocal costs on the property owner. A couple of dramatic examples: the Court has upheld, as not takings, zoning laws in Hadachek v. Sebastian and Village of Euclid v. Ambler Realty Co., that reduced property owners’ property values by more than 75 percent; and it has upheld a historic preservation law that denied the owners of Grand Central Terminal the opportunity, worth many millions of dollars, to build a 55-story office building above the Terminal. This is not to say that a regulation can never be a taking. The Court has held that a regulation that deprives the owner of all economically beneficial use of his property is a taking (while hinting that if it deprived the property of only 95 percent of its value it might not be.) And the Court has given lip service to the idea that a regulation that fell short of eliminating all value in property might nonetheless go “too far” and thus constitute a taking. I say “lip service,” because the Court has only once found such a regulation to be a taking (in 1922), and subsequently upheld a virtually identical law as not a taking; and the Court’s general pronouncement is that “public programs adjusting the benefits and burdens of economic life to promote the common good” are unlikely candidates for “goes too far” categorization.


Epstein has sought an end-run around these principles by invoking the metaphor that property rights are a “bundle of sticks.” A minimum wage law may not take the entirety of a corporation’s property, but it takes the entirety of what it takes. Thus, the principle that a regulation is a taking if it deprives the owner of all value should apply to this stick in the bundle. This proposal, which has come to be labeled “conceptual severance,” has been explicitly rejected by the Court, which insists upon viewing property [here, the corporation] as a whole.


An arbitration award issued under EFCA requiring an employer to raise wages or provide other benefits would be analytically indistinguishable, for purposes of the Takings Clause, from minimum wage laws or other laws mandating benefits for employees. It would be a taking only if it awarded the employees 100 percent of the employer’s assets or was so draconian that it qualified for the “goes too far” condemnation not met even in the zoning and historic preservation cases described above. The chances that an arbitrator would issue an award of that dimension are nil. For one thing, the system employed by the Federal Mediation and Conciliation (FMCS) for selection of arbitrators – furnishing a list from which each party strikes names until only one name is left – virtually guarantees that the lunatic arbitrator Epstein envisions will not be chosen. For another, there is considerable experience with interest arbitration, and a track record that shows that arbitrators determine terms and conditions by reference to what other employers in the industry pay, the particular employer’s financial situation, and other criteria that are the antithesis of “going too far.”