Regulatory Retaliation, Round Two [UPDATED]

Some of you may recall a couple of years ago when some big city politicians announced that they would block Chik-Fil-E from opening up a store in their cities:

The uproar continues, and quite properly so (earlier here and here), over the threats of Boston Mayor Thomas Menino and Chicago alderman Proco (“Joe”) Moreno to exclude the Chick-Fil-A fast-food chain because they disagree (as do I) with some of the views of its owner. Among the latest commentary, the impeccably liberal Boston Globe has sided with the company in an editorial (“which part of the First Amendment does Menino not understand?…A city in which business owners must pass a political litmus test is the antithesis of what the Freedom Trail represents”), as has my libertarian colleague Tom Palmer at Cato (“Mayor Menino is no friend of human rights.”)

The spectacle of a national business being threatened with denial of local licenses because of its views on a national controversy is bad enough. But “don’t offend well-organized groups” is only Rule #2 for a business that regularly needs licenses, approvals and permissions. Rule #1 is “don’t criticize the officials in charge of granting the permissions.” Can you imagine if Mr. Dan Cathy had been quoted in an interview as saying “Boston has a mediocre if not incompetent Mayor, and the Chicago Board of Aldermen is an ethics scandal in continuous session.” How long do you think it would take for his construction permits to get approved then?

Given the amount of pushback they got, I had somewhat naively thought that we might not be going there again. As it turns out, though, that is not to be. The newest target is one Donald J Trump. In New York City:

New York City Mayor Bill de Blasio said Monday that his city may not be able to break its business contracts with Donald Trump but will avoid future deals with the 2016 GOP contender.

“My impression is that unless there has been some breaking of a contract or something that gives us a legal opportunity to act, I’m not sure we have a specific course of action,” the Democratic mayor told reporters Monday, according to CNN and Capital New York.

“But we’re certainly not looking to do any business with him going forward,” de Blasio added.

And Washington DC:

A pair of Democratic lawmakers are petitioning the Obama administration to block GOP presidential candidate Donald Trump from showcasing his name on the businessman’s new hotel in Washington, D.C.

In a letter to the Department of Interior and General Services Administration (GSA), Reps. Ruben Gallego (D-Ariz.) and Tony Cárdenas (D-Calif.) requested that Trump be prevented from having his name “prominently displayed” on the newly refurbished Old Post Office building on Pennsylvania Avenue, blocks from the White House.

“Trump’s recent and repeated remarks disparaging women, Mexican-Americans, and other Latinos are hateful, divisive and completely inaccurate,” the pair wrote to Interior Secretary Sally Jewell and recently confirmed GSA Administrator Denise Turner Roth in a letter dated Aug. 13.

And, once again, in Boston:

Donald Trump, a reality TV star currently yelling crazy shit on his way through a Republican presidential primary while sporting a sad trombone haircut, is not welcome in Boston.

Boston Mayor Marty Walsh told the Boston Herald Monday that Trump would have to apologize to immigrants for his inflammatory comments.

“I think his comments are inappropriate. And if he wanted to build a hotel here, he’d have to make some apologies to people in this country,” said Walsh, the son of immigrants from Galway.

Each of these cases differ slightly from the others. But as much as I am not a fan of Donald Trump, city contracts and business arrangements really should not depend on such things. I mean, really shouldn’t. We should at least be able to agree on that.

Given the givens, I have little issue with NBC using its pocketbook to cancel The Apprentice, or Macy’s to sever there relationship. But it does get different once we’re starting to talk about governments – even local ones – using their purse strings and regulatory levers to favor some people over others in such a fashion. Are there some circumstances in which I could imagine being okay with it? I don’t know… maybe? But not really. If their views are repugnant enough, there ought to be something behavioral that you can hang your hat upon.

Which doesn’t really work for Trump, of course, because as much as he hates illegal immigrants, one thing he doesn’t do is refuse to hire them.

This is pretty unlikely to be much of a slippery slope. First, because it’s unclear that they can even do what they’re talking about doing. It mostly looks like chest-thumping. But slope or so, this is the sort of thing that should be discouraged and opposed right out of the gate. Even if the “victim” is Donald Trump.

Photo by @KevinCase

Addendum: DENVER!

This one actually goes back to CFA, but Denver wants to keep them out of the Denver airport. From that link to another link, Eugene Volokh discusses things relevant to the De Blasio issue:

But denying a private business permits because of such speech by its owner is a blatant First Amendment violation. Even when it comes to government contracting — where the government is choosing how to spend government money — the government generally may not discriminate based on the contractor’s speech, see Board of County Commissioners v. Umbehr (1996). It is even clearer that the government may not make decisions about how people will be allowed to use their own property based on the speaker’s past speech.

And this is so even if there is no statutory right to a particular kind of building permit (and I don’t know what the rule is under Illinois law). Even if the government may deny permits to people based on various reasons, it may not deny permits to people based on their exercise of his First Amendment rights. It doesn’t matter if the applicant expresses speech that doesn’t share the government officials’ values, or even the values of the majority of local citizens. It doesn’t matter if the applicant’s speech is seen as “disrespect[ful]” of certain groups. The First Amendment generally protects people’s rights to express such views without worrying that the government will deny them business permits as a result. That’s basic First Amendment law — but Alderman Moreno, Mayor Menino, and, apparently, Mayor Emanuel (if his statement is quoted in context), seem to either not know or not care about the law.

So, according to Volokh at least, the above cases (save perhaps DC, which is not addressed) do actually fall into the same bucket, legally speaking.

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33 thoughts on “Regulatory Retaliation, Round Two [UPDATED]

  1. Has it ever not been this way? Nope.

    But if gov’t officials can deny someone a permit because they don’t like that business person’s politics, why are we arguing over gov’t officials denying gays the right to marry? Same thing. Oh wait, it’s the SIDE you’re on that’s the real issue. Of course…..

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    • The reason these aren’t quite the same thing is the way out of here.

      Issuing a marriage license, like issuing a business license or a food safety inspection certificate, is a ministerial act. The applicant demonstrates compliance with objective criteria set out in the law, and the clerk then issues the piece of paper. In theory, a robot could do it, only we hire people to do the robot’s job. That’s why the gay couple gets a marriage license and the clerk doesn’t have discretion to withhold it despite her personal preferences. That’s also why Chick-fil-A gets a business license and the clerk doesn’t have discretion to withhold it despite her personal preferences.

      That is different than the exercise of discretion to award a public contract, unless the contract selection criteria is on a strict cost-only basis. For most public contracts of any significant magnitude, selecting officials have a degree of discretion to award a contract to the best bidder, not necessarily the low bidder.

      It’s not clear to me whether these contracts between NYC and Trump’s entities are awarded after the exercise of discretion, or if they are the more ministerial, objective awards like a business or marriage license.

      If these are discretionary, then de Blasio and his appointees still must be able to articulate some legitimate reason why one bid is better than the other. “This contractor has the best records of on-time, on-budget performance” is a good one generally. “We think the CEO is a schmuck” probably isn’t good enough.

      Here, “The Trump entity is part of an umbrella of organizations that has a history of reneging on commitments and then seeking relief from the bankruptcy courts to restructure obligations, leaving creditors and customers without the services they bargained for at the prices they had bargained for,” seems like a nice way to jab a thumb in Trump’s eye to me.

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      • Question, if you’ve publicly claimed that you’re doing it because he’s a schmuck, could you respond in a lawsuit that you’re really doing it because of the bankruptcy thing?

        In some ways, it’s the announcement I object more to than the policy. If they quietly prevented Trump from getting any contracts, or gave a different reason, I find it less objectionable.

        It’s the “Saying things we don’t like means the government boycotts your business” thing that makes me believe that this is a foul ball (for a government entity).

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      • It depends upon how the RFPs are to be evaluation, obviously. It just doesn’t have to be cost, but it could also be “best value” or some such, the way the feds do it. Yes, much more wiggle room, but the criteria have to be in place prior to the bids going out and not changes post submitter, else you end up with protests of the award.

        And while I agree with your nuanced response, I’d take issue with the comments about the clerk. Isn’t that not yet decided? I’ve heard no decision from the court in the news that the county clerk has been told she has to process the marriage lisc. yet.

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  2. There’re really two things in this.
    1. There’s government saying they won’t want to do business with Trump because of his noxious views. Where we’re talking about development partnerships or similar such work I see no functional difference between this and Macy’s or NBC doing the same.
    2. There’s government saying they won’t permit the Trumpster to do business in the areas they hold regulatory control over. I’d agree with you that such behavior is not acceptable and annoyingly illiberal.

    Regardless of whether the behavior is category #1 or #2 either one redounds to Trumps benefit in the immediate term and is pointless posturing in the long term.

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    • 1. There’s government saying they won’t want to do business with Trump because of his noxious views. Where we’re talking about development partnerships or similar such work I see no functional difference between this and Macy’s or NBC doing the same.

      Well, you would see a difference between private and public universities having speech codes? I think the same dynamic applies here. Governments don’t have the same associational rights as the rest of us.

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      • Government might not have the same associative rights that a private individual or organization has but if the electorate directly or indirectly decided that government should not support various forms of bigotry than the government has a mandate not to associate with bigots to reflect the will of the electorate and the population at large.

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        • This is exactly right.

          Town’s take votes on these types of issues all the time. Portland, ME adopted LGBT laws early on. My community has voted on supporting Keystone and tar-sands oil twice. Both times, Keystone won because we have a railroad track through the center of town and aren’t all that far from Lac-Mégantic.

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          • I have no problem requiring any presumptive contractor to sign a contractor saying that they will not discriminate against gay people in the course of their work. I don’t view that as comparable to refusing to do business with companies whose owners have said the wrong thing.

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                • It matters here what doing business means; particularly from the perspective of jurisdiction.

                  Awarding a contract to someone to build something for the city vs. an application to that city to build something private in the city seems the distinction here.

                  For the public project; the government absolutely has the right to say that statements of overt discrimination against a group of people matters; particularly if there are additional state or local laws that apply. In performing and fulfilling the details of that contract, it would put an added burden on the city to screen for that bias and unfair treatment; creating a hidden cost in awarding the contract.

                  For the private project, the city has to work within the marriage-license rules; an applicant coming before the state deserves the same recognition of their petition as any other applicant.

                  Say Trump files a permit to build a new hotel; that would be a very big planning process. That’s the jurisdiction; the city and state’s building codes, permitting process, and code enforcement process. Government does not have the right to hold his biases in statements against him here. I think the government would, in some circumstances, be within its bounds to question how those statements might reflect on employees who construct and work in the hotel. That’s because once those permits are in place and construction starts, another jurisdiction takes over; those folks who oversee labor law.

                  In this scenario, would have concerns on violating Trump’s rights in two ways: governmental roadblocks in the planning/permitting stages — which I’m sure Trump’s staff are adept at negotiating — and potential harassment from the folks who enforce labor laws.

                  But those are, pretty much, the biggest concerns I’d have here, and while I wouldn’t rule them out, I’d guess it’s more likely that those abuses won’t happen than that they will.

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                  • If Trump and his business are actively discriminating against groups that cannot be discriminated against, then that’s absolutely relevant to such decision-making. Not just the decision to do business with him, but even perhaps the decision not to allow them in your city.

                    That’s not the basis of the decision, though. The basis of the decision is that Trump said the wrong things. He has a business record of sufficient length that if discrimination is the concern, that can be investigated.

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                    • Again, it depends on which decision you’re talking about.

                      You cannot simply say decisions and make any sort of meaningful point. The decision to permit a hotel? The decision to host a build a youth center or affordable housing? To create an economic-development zone in the city’s tax base?

                      ETA: and even the ‘he can be investigated’ carries weight here; doing business with him would, as I tried to say above, create these additional costs to actually conduct those investigations.

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                      • The mayor made no such distinctions. But in each of the cases you mention, there should be a track record to look at from which you can make the decision. That’s not what happened here.

                        This is very muddy terrain. At the very least, you would need a specific threat. Such a specific threat should be able to be investigated, rather than very loudly and publicly dismissing the possibility of doing business with somebody based on something the president said.

                        While I can perhaps think of applicable situations where such a position is warranted, without indication of actual misconduct, it’s really hard to see this as something other than a punitive action based on unpopular speech.

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                        • I think Will has it right here. Trumps statements were undoubtedly awful and hateful and ugly and bigoted and racist (re: Mexicans) and sexist (re: Kelly, women in general) but they weren’t discriminately on their face.

                          If he said, “Mexicans are racist and I won’t hire them,” or, “Women are fat pigs who don’t belong in the board room,” than — even absent action — I think that would be sufficiently questionable to consider it when evaluating bids.

                          A case could be made that his statements — particularly about women — implied discrimination. His remarks about Kelly implied that he thinks women could not be trusted to do their jobs well when experiencing their period… that blood “coming out of here where ever” was the reason why she questioned him like she did. I think it would be reasonable to use that as grounds for further investigation into his hiring/promotion processes. But I think you’d need to find something actionable there.

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        • if the electorate directly or indirectly decided that government should not support various forms of bigotry [then] the government has a mandate [to not] associate with bigots to reflect the will of the electorate and the population at large.

          Does this apply to any sort of opinion or only to bigotry? Because I’m pretty sure that you don’t think that “if the electorate decides that government should not support X then the government has a mandate to not associate with people who X to reflect the will of the electorate and population at large” is true for all X, or even most X.

          I suspect that any liberal worth the name* will think that this principle, if ever true, is only true when X is an actual rights violation or involves direct corporeal harm to people. A mere verbal expression of bigotry, no matter how offensive and immoral (and indicative of horrible moral character) such an expression may be, is not a rights violation.

          *This is probably going to offend many here, but I think as a conceptual matter, this is one of the lines which you can use to separate left-wing legal moralism from liberalism** proper.

          **And I’m trying to be expansive in my account of liberalism in a way that is inclusive of but not limited to views which countenance significant levels of paternalism as well as a welfare state. I’m not even going to require significantly free markets as part of my definition of liberalism. But an eschewing of legal moralism is important.

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      • Speech codes aren’t the same as business partnerships. If the city is considering bids to go in with, say, a company on a waterfront development project they are well within the right to say “This company/businessman is unpopular with our electorate and we’re not going to implicitly endorse them by partnering with them on this project. Instead we’ll pick a different company that is neutrally or favorably viewed by our electorate.”

        That is significantly different than saying “This company/businessman is unpopular with our electorate so we’re going to block their regulatory access so they cannot do business with anyone in our jurisdiction.”

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        • I think that what’s doing the work is the bigotry itself. After all, if the views expressed had been anti-racist and it had taken place somewhere in the deep south, you wouldn’t be saying the same thing. I think that some reasons are sufficient to black ball a businessman from all government contracts (for example racist employment practices) but this still strikes me as wrong.

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          • You are mistaken ; I would say that a deep south and deplorably racist municipality would be within their rights to refuse to partner with businesses that espoused civilized non-racist principles. They would not, however, be within their rights to bar said business from functioning within their jurisdiction at all.

            I would note, however, that they could get sued possibly successfully if their basis was simply that said business was operated or owned by a minority.

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      • Well, you would see a difference between private and public universities having speech codes? I think the same dynamic applies here. Governments don’t have the same associational rights as the rest of us.

        I’m not sure if the First Amendment comparison is appropriate. What’s at issue with the First Amendment is the ability for the government to interfere with the freedom for individuals to freely associate with one another.

        Contracting deals with relations of a commercial matter so I’m having a problem seeing where someone’s constitutional rights are violated by choosing to exclude an individual from bidding on a contract on the basis that a governmental body does not want to deal with that person. Governments can’t discriminate on the basis of race, gender, religion, sexual orientation, etc. (come to think of it, I don’t think private business entity can either), but they can decide not to do business with someone on the basis that the person is unpleasant.

        On a functional basis, I tend to agree with on this one.

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  3. “Given the amount of pushback they got”

    Did they get pushback from anyone who would live in their cities? vote for them? or otherwise move to their cities?

    Not that I can recall….

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  4. Yep, big difference between what a CEO says & what a company does. One is actionable, the other is not & not subject to political or electoral whim (tyranny of the majority & all that).

    That said, Trumps lawyers should have fun with this.

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  5. I agree generally but think all things being equal, a person’s character can be a tiebreaker. I would be okay with governments enacting standards for business partners provided this was done via a proper process (i.e., not the whim of the executive), were apecific enough, and did not violate existing anti-discimination law.

    Of course, action is far better evidencr of violating standards. It’d be easier for Berkeley, CA to insist on ‘green’ developers or on Louisville, KY to insust on local manufacturing than NYC or Podunk, MS to insist on “agreeableness”.

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  6. At hitcoffee, I expressed mild sympathy with the position that North takes above. And he might be right as a matter of law, at least generally speaking. And I’m not prepared to deny all discretion to the state when it makes decisions about who it does business with. (And to be clear, as far as I can see, no one here is advocating such an extreme view.)

    But I’m also concerned that a certain partisan or ideological litmus might emerge, so that one has to belong to a given party, affirm certain truths, or have a certain inside access in order to be eligible for doing business with the government. That was alleged to be a big problem in Big City until a couple of famous court decrees in the 1970s and other moves made the relationship between who held office, who got city/county jobs, and who could do business with the city subject to rules that were putatively more objective.

    I moved the goal posts a little bit by bringing up patronage jobs, which aren’t exactly the same thing as sweetheart business deals. Now I’ll move the goal posts even more. What about movements to pressure, say, public universities to divest from certain morally questionable (or at least morally questioned) investments, such as tobacco, or South Africa pre-1990? That’s not quite the same thing as a mayor announcing they will open no new contracts with a person because he/she utters unacceptable political views, but it has certain similarities.

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  7. The worst part of people going after Trump’s Old Post Office contract is that it’s probably going to fail anyway, but now he can scapegoat political enemies and play the matyr. He paid over twice as much for the rights to the project than anyone else was willing to pay. I thought when this deal was signed a couple years ago that GSA will probably have to ‘repossess’ the contract and eat the cost, allowing Trump to parchute out of there like he normally does.

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  8. Eh if it goes to court the municipalities will dredge up a variety of allowable reasons why Trump was not chosen for any of these contracts… and everyone and their dog (but not the evidence constrained court) will know that the primary driving factor was Trumps speech. That’s why even if you’re the best road contractor in the state you don’t show up at the bidding table in short-shorts and a tanktop making jokes about how hot the comptrollers wife is.

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