BUSINESS JUDGMENT RULE A legal principle that makes officers, directors, managers, and other agents of a corporation immune from liability to the corporation for loss incurred in corpora
Trang 1President Reagan announced his intent to permit the bill to become law without his signature The bill became automatically effec-tive at midnight, August 3, 1988
The law requires employers with one hundred or more employees to provide their workers with sixty days’ layoff notice when fifty
or more workers at a single site will lose their jobs and when affected workers will constitute
at least one-third of that site’s work force If 500
or more employees are laid off, however, such notice is required regardless of the percentage of site workers involved Companies failing to provide the requisite warning face penalties of compensating each dismissed employee for wages and fringe benefits for every day the notice should have been given Additionally, a
$500 payment per day, up to a maximum of
$30,000, must be made to local communities when the act’s provisions have not been met
Analogous requirements exist in 38 other countries and in five states At least twenty other states have proposed such legislation According
to the federal government’sGENERAL ACCOUNTING
the national median length of advance notice for the closing of large establishments was seven days White collar and union blue collar workers averaged as much as fourteen days’ termination notice while non-union blue collar workers only received two days’ notice Since 1981 more than five million Americans have lost their jobs because plants were shut down or their positions were eliminated
Along lines similar to President Reagan’s reservations, NATIONAL ASSOCIATION OF
maintained that the legislation “damages the flexibility essential to run a successful business.”
Moreover, Trowbridge noted that advance notice was not always possible as financially troubled businesses may not be able to predict their status with the precision that the legisla-tion required To salvage their troubled busi-nesses, these companies might find themselves
in the midst of difficult debt financing, merging with another company, selling off assets, or bidding on a major contract, all of which could
be hampered by the new law’s requirements
He claimed that the required closing notices would discourage customers and jeopardize credit arrangements A report compiled by the Congressional Office of Technology Assessment
titled“Plant Closing: Advance Notice and Rapid Response” (DTA-ITE-321) found contentions such as Trowbridge’s to be highly exaggerated because financial emergencies are rarely a factor
in plant closings
Other critics of the legislation cited an R Nathan Associates study which claimed that the total annual costs for notification would run as high as $1.8 billion, due to lost profits, penalties, and additional administrative costs The Nathan study found further that about 460,000 lost jobs would be triggered by unnecessary closings as a direct result of the act
The GAO, however, seriously questioned the Nathan report on the basis of what it claimed was inadequate and flawed analysis and methodology The DEPARTMENT OF LABOR also stated in 1986 that“many of the fears regarding advance notification have not been realized in practice.” The National Science Foundation claimed to have found proof that, in most labor groups, advance notice significantly shortens joblessness, which in turn translates into better earnings for displaced workers and substantial savings in unemployment insurance Labor unions, such as the AFL-CIO, uniformly acclaimed the Worker Adjustment and Retrain-ing Notification Act, 29 U.S.C.A § 2101 et seq., claiming that when advance notice is combined
actually increases worker productivity
CROSS REFERENCES Corporations; Employment Law; Labor Law; Unemploy-ment Compensation.
BUSINESS JUDGMENT RULE
A legal principle that makes officers, directors, managers, and other agents of a corporation immune from liability to the corporation for loss incurred in corporate transactions that are within their authority and power to make when sufficient evidence demonstrates that the transactions were made in good faith
The directors and officers of a corporation are responsible for managing and directing the business and affairs of the corporation They often face difficult questions concerning
wheth-er to acquire othwheth-er businesses, sell assets, expand into other areas of business, or issue stocks and dividends They may also face potential hostile takeovers by other businesses
To help directors and officers meet these
198 BUSINESS JUDGMENT RULE
Trang 2challenges without fear ofLIABILITY, courts have
given substantial deference to the decisions the
directors and officers must make Under the
business judgment rule, the officers and
direc-tors of a corporation are immune from liability
to the corporation for losses incurred in
corporate transactions within their authority,
so long as the transactions are made in GOOD
The rule originated in Otis & Co v
Pennsyl-vania R Co., 61 F Supp 905 (D.C Pa 1945) In
Otis, a shareholder’s DERIVATIVE ACTION alleged
that corporate directors failed to obtain the best
price available in the sale of securities by dealing
with only one investment house and by
generally neglecting to “shop around” for the
best possible price, resulting in a loss of nearly
half a million dollars The federal district court
ruled that although the directors chose the
wrong course of action, they acted in good faith
and therefore were not liable to the
share-holders The court reasoned that “mistakes or
errors in the exercise of honest business
judgment do not subject the officers and
directors to liability for NEGLIGENCE in the
discharge of their appointed duties.”
Subsequently, the business judgment rule
was applied to directors’ actions when
corpora-tions were faced with a hostile TAKEOVER In
Unocal Corp v Mesa Petroleum Co., 493 A.2d
946 (Del Super 1985), the Delaware Supreme
Court upheld the defensive actions taken by a
board of directors during a takeover struggle
with a minority shareholder In this case Mesa
Petroleum Company made an offer that would
have made it the majority shareholder in Unocal
Corporation Under the offer, shareholders who
sold their Unocal stock would receive $54 a
share until Mesa acquired the 37 percent it
sought and then would receive highly
specula-tive Mesa securities instead of cash for any stock
sold beyond that 37 percent To counteract the
takeover bid Unocal’s directors announced that
if Mesa obtained 51 percent of its shares,
Unocal would purchase the remaining 49
per-cent for an exchange of debt securities
(securi-ties reflected as debt on the books of the
corporation) with an aggregate par (or face)
value of $72 a share, but the offer would not be
extended to the 51 percent of stock held by
Mesa Mesa filed suit, alleging that the directors
had violated their FIDUCIARY duty by excluding
Mesa from the exchange The court concluded
that the directors’ actions were protected by the business judgment rule The court recognized that in responding to hostile takeover bids the directors of a corporation can face a conflict between their own interests and the interests of the corporation and its shareholders The court stated that the Unocal directors had reasonable grounds to believe that a danger to the corporation existed because of Mesa’s actions and that the defensive actions they took were reasonable in relation to the threat they
“rationally and reasonably” believed the offer posed
Despite the seemingly broad scope of the business judgment rule, corporate directors have not always been able to rely upon it as a way to escape liability for their actions In Smith
v Van Gorkom, 488 A.2d 858 (Del 1985), the Supreme Court of Delaware held that the directors of a corporation failed to exercise informed business judgment and instead acted
in a grossly negligent manner by agreeing to sell the company for only $55 a share The court looked to evidence indicating that the directors reached their decision to sell at that price after hearing only a 20-minute oral presentation concerning the sale The court also noted that the directors had received no documentation indicating that the sale price was adequate and had not requested a study to help them determine whether the price was fair Although the directors were not accused of acting in BAD
fiduciary duty toward their shareholders re-quired more than merely an absence of bad faith The directors, according to the court, had
an affirmative duty to protect the shareholders
by obtaining and reviewing information neces-sary to help the directors make sound business decisions By failing to inform themselves they were therefore liable to the shareholders for their bad business decision
Even when a corporation faces a hostile takeover, the business judgment rule may not insulate its directors from liability In Revlon v
MacAndrews & Forbes Holdings, 506 A.2d 173 (Del 1985), the company attempting a takeover sought a PRELIMINARY INJUNCTIONto prevent the corporation that was the target of the takeover from granting a LOCKUP option, which gives a friendlyTHIRD PARTYthe right to purchase part of the target company to help thwart a takeover
The Delaware Supreme Court held that the
BUSINESS JUDGMENT RULE 199
Trang 3directors failed to fulfill their duty to preserve the company by not maximizing the sale value
of the company for the benefit of its share-holders According to the court, by instituting the lockup option and halting the bidding, the directors allowed“considerations other than the maximization of shareholder profits to affect their judgment” and thus acted to the detriment
of the shareholders Once the directors deter-mined to sell the corporation, the court held, their role changed from that of“defenders of the corporate bastion to auctioneers charged with getting the best price for the stockholders at the sale of the company.” As a result, the court held that the directors were not entitled to the protection of the business judgment rule
Courts have further held that the business judgment rule will cover the actions of directors only when the directors are disinterested and independent with respect to the action that is at issue A director is independent when she or he
is“in a position to base [her or his] decision on the merits of the issue rather than being governed by extraneous considerations or influences”; conversely, a director is considered
to be interested if she or he appears to be on both sides of a transaction or expects to derive personal financial benefit from it, as opposed to
a benefit to be realized by the corporation or all shareholders generally (Aronson v Lewis, 473 A.2d 805 [Del 1984]) Thus, if one director stands to receive a substantial financial benefit from the issuance of stock nonetheless designed
to counteract a takeover threat, the business judgment rule may not apply to the board of directors’ actions Such allegations of bias, lack
of independence, or disinterest must be sup-ported byTANGIBLEevidence
FURTHER READINGS Balotti, R Franklin, and Jesse A Finkelstein 2006 The Delaware Law of Corporations and Business Organiza-tions Frederick, MD: Wolters Kluwer Law & Business.
Baynes, Leonard M 2003 “Racial Stereotypes, BroaD.C.ast Corporations, and the Business Judgment Rule ” Univ.
of Richmond Law Review 37, no 3 (March).
Branson, Douglas M 2002 “The Rule That Isn’t a Rule—
The Business Judgment Rule ” Valparaiso Univ Law Review 36 (summer).
Brown, Meredith M., and William D Regner 2003 “What’s Happening to the Business Judgment Rule? ” Insights:
The Corporate & Securities Law Advisor 17, no 8 (August).
Clark, Frank, G W Dean, and K G Oliver 1997 Corporate Collapse: Regulatory, Accounting, and Ethical Failure.
New York: Cambridge Univ Press.
Gervurtz, Franklin A 1994 “The Business Judgment Rule: Meaningless Verbiage or Misguided Notion? ” Southern California Law Review 67.
Velasquez, Manuel G 2005 Business Ethics: Concepts and Cases 6th ed Upper Saddle River, NJ: Pearson/ Prentice-Hall.
CROSS REFERENCES Immunity; Negligence.
BUSINESS RECORD EXCEPTION
A rule of evidence that allows routine entries made customarily in financial records, or business logs or files kept in the regular course of business,
to be introduced as proof in a lawsuit when the person who made such notations is not available
to testify
This rule, also called the business entry rule,
is an exception to the HEARSAY rule Business records are considered to have a greater degree
of reliability and trustworthiness than personal records because of the regular and systematic way in which they are kept and the reliance that
a business places on them State and FEDERAL
for this exception to the hearsay rule
BUSINESS ROUNDTABLE The Business Roundtable is an association of chief executive officers (CEOs) representing the top corporations in the United States, joined together to examine and advocate for PUBLIC
growth and a dynamic global economy.” Established in 1972 by 200 leading executives from major U.S corporations, the Roundtable was founded upon the idea that business executives should take an increased role in public policy that affects the economics of Americans The belief is that the basic interests
of business closely parallel the interests of average citizens, who are directly involved in the economy as employees, investors, suppliers, and consumers Thus, business leaders have a responsibility to actively influence the economic wellbeing of the country
The Business Roundtable is an association whose members are the chief executive officers (CEOs) of those U.S companies with more than $5 trillion in yearly revenues The member companies make up almost one-third of the value of the U.S stock markets As the Round-table sees it, one of its principal strengths“is the
200 BUSINESS RECORD EXCEPTION
Trang 4extent of participation by the chief executive
officers of the member companies.” CEOs work
in task forces on specific topics and issues that
currently impact the social and economic
well-being of the United States For example, in 2003
task forces were in place to focus on such issues
as civil justice reform, the digital economy, the
environment, and security Each task force is
headed by a chief executive and is assisted by a
support staff composed of employees from task
force member companies who are experts in the
field Task force members conduct research,
craft policy recommendations, and create action
plans They also draft position papers on major
issues, which are used in a variety of ways,
including congressional testimony
Activities of the task forces are reviewed by
the Roundtable Policy Committee, which is the
governing body of the organization The Policy
Committee is composed of all Roundtable
CEOs At the helm of the Roundtable is a chief
executive who serves as chairman The
chair-man is elected for a one-year term He or she is
assisted by two to four co-chairpersons These
executive chairmen, combined with the task
force chairmen make up the Planning
Commit-tee for the organization The Planning
Com-mittee provides general strategy and guidance
In an effort to ensure that a broad base of
information is represented in all decision
making, membership in the organization is
diversified Thus, CEOs come from all areas of
business and all areas of the United States Such
diversity ensures a cross section of thinking on
national issues Roundtable members also have
a continuing liaison with other organizations
that are directly involved with the concerns
at hand
Since 2000, the Roundtable has carried out
significant LOBBYING efforts before the U.S
Congress for passage of the presidential trade
negotiating authority (2001); proposed to the
incentive package for economic growth (2002);
and announced an unprecedented Climate
RESOLVE initiative calling for voluntary action
by all businesses to reduce greenhouse gas
emissions (2003) It also supported the Senate’s
Initiative to End lawsuit Abuse (2005) and, in
2009, filed an amicus brief with the U.S
Supreme Court supporting deferential
treat-ment for company ERISA plan administrators
who must interpret plan provisions to the
maximum benefit of all plan participants (Conkright v Frommert, No.08-810)
FURTHER READINGS Business Roundtable Available online at http://www.
businessroundtabletable.org/ (accessed August 19, 2009).
Business Roundtable 2003 “The Business Roundtable Announces Its Resolve to Voluntarily Control Green-house Gas Emissions ” Press Release, February 12, 2003.
Business Roundtable 2002 “The Business Roundtable Calls for $300 Billion Growth Package.” Press Release, November 21, 2002.
Koffer, Keith 2001 “BRT Mobilizes Lobbyists, Funds for Trade Negotiating Authority ” CongressDaily AM (May 9).
BUSINESS TRUST
An unincorporated business organization created
by a legal document, a declaration of trust, and used in place of a corporation or partnership for the transaction of various kinds of business with limited liability
The use of a business trust, also called a
originated years ago to circumvent restrictions imposed upon corporate acquisition and devel-opment ofREAL ESTATEwhile achieving the limited
LIABILITYaspect of a corporation A business trust differs from a corporation in that it does not receive a charter from the state giving it legal recognition; it derives its status from the volun-tary action of the individuals who form it Its use has been expanded to include the purchase
of securities and commodities
A business trust is similar to a traditional trust in that its trustees are givenLEGAL TITLEto the trust property to administer it for the advantage of its beneficiaries who hold equitable title to it A written DECLARATION OF TRUST
specifying the terms of the trust, its duration, the powers and duties of the trustees, and the interests of the beneficiaries is essential for the creation of a business trust The beneficiaries receive certificates of BENEFICIAL INTEREST as evidence of their interest in the trust, which is freely transferable
In some states, a business trust is subject to the laws of trusts while, in others, the laws of corporations or partnerships govern its exis-tence The laws of each state in which a business trust is involved in transactions must be consulted to ensure that the trust is treated as
an entity whose members have limited liability
BUSINESS TRUST 201
Trang 5If the laws of a particular state consider a business trust to be a partnership, the bene-ficiaries may be fully liable for any judgments rendered against it The trustees of a business trust are liable to third parties who deal with the trust unless there is a contract provision to the contrary, since they hold legal title to the trust property and may sue and be sued in actions involving the trust They may, however, seek
from the beneficiaries
The property of a business trust is managed and controlled by trustees who have aFIDUCIARY
duty to the beneficiaries to act in their best interests In many states, the participation of the beneficiaries in the management of the property destroys their limited liability, and the arrange-ment will usually be treated as a partnership
Profits and losses resulting from the use and investment of the trust property are shared proportionally by the beneficiaries according to their interests in the trusts
A business trust is considered a corporation for purposes of federalINCOME TAXand similarly under various state income tax laws
BUSING
“BUT FOR” RULE
In the law of negligence, a principle that provides that the defendant’s conduct is not the cause of an injury to the plaintiff, unless that injury would not have occurred except for (“but for”) the defen-dant’s conduct
In order to be liable in NEGLIGENCE, the defendant’s conduct must constitute the
injury The concept of proximate cause encom-passes bothLEGAL CAUSE and factual cause, and the“but for” rule pertains to the latter It is also referred to as the SINE QUA NON rule, which means“without which not,” or an indispensable requirement or condition The“but for” rule is
a rule of exclusion, in that the defendant’s conduct is not a cause of the event, if the event would have occurred without it
The“but for” rule explains most cases when limited solely to the issue of causation, but it does not resolve one type of situation: if two causes concur to bring about an event, and either one of them, operating independently,
would have been sufficient to cause the identical result, some other test is required This situation arises, for example, when the DEFENDANT sets a fire that unites with a fire from some other source, and the combined fires burn the plaintiff’s property, although either fire alone would have been sufficient to do so In such cases, each cause has actually played so signifi-cant a role in achieving the result that responsibility must attach to it Neither may
be relieved from that responsibility on the basis that identical harm would have occurred without it, or noLIABILITYat all would ensue
In order to rectify the frequently problem-atic application of the “but for” rule, some jurisdictions have applied a broader rule, which provides that the defendant’s conduct is a cause
of the event if it was a material element and a substantial factor in bringing about the event The jury ascertains whether such conduct constitutes a substantial factor, unless the issue
is so unambiguous that it is appropriate for judicial determination The prevailing view is that“substantial factor” is a phrase sufficiently comprehensible to the layperson to supply an adequate guide in instructions to the jury, and that it is neither possible nor beneficial to simplify it
In addition to resolving the aforementioned case, the substantial factor test resolves two other types of situations that have proved troublesome, where a similar, but not identical, result would have followed the defendant’s act
or where one defendant has made an obvious but insignificant contribution to the result The application of the two rules can achieve the same result in some instances, because, except
as indicated, no case has been encountered where the defendant’s act could be deemed a substantial factor when the event would have transpired without it In addition, cases seldom arise where the defendant’s conduct would not
be such a substantial factor yet was so indispensable a cause that the result would not have ensued without it
If the defendant’s conduct was a substantial factor in causing the plaintiff’s injury, he or she will not be absolved from liability simply because other causes have contributed to the result, because such causes are always present However, a defendant is not necessarily relieved
of liability because the negligence of another person is also a contributing cause, and that
202 BUSING
Trang 6person, too, is to be held liable for the harm
inflicted The principle of joint tortfeasors is
based primarily upon recognition of the fact
that each of two or more causes may be charged
with a single result
vBUTLER, BENJAMIN FRANKLIN
(1795–1858)
Benjamin Franklin Butler was born December
14, 1795, in Kinderhook Landing, New York
He was admitted to the New York bar in 1817,
and established a legal practice withMARTIN VAN
Butler performed the duties of district attorney
for Albany County
Butler entered politics in 1827, serving in
the New York State Legislature for six years He
subsequently acted as U.S attorney general
from 1833 to 1838; during this time he also
fulfilled the duties of secretary of war from 1836
to 1837
In 1838, Butler returned to New York and
served as U.S district attorney from 1838 to
1841 and from 1845 to 1848
Butler died November 8, 1858, in Paris,
France
vBUTLER, BENJAMIN FRANKLIN
(1818–93)
Benjamin Franklin Butler achieved prominence
as a politician and military officer
Butler was born November 5, 1818, in
Deerfield, New Hampshire After graduating in
1838 from Waterbury College, now known as
Colby College, Butler was admitted to the
Massachusetts bar in 1840 Elected to the
Massachusetts House of Representatives in 1853 and the Massachusetts Senate in 1859, he also served a tour of military duty during the Civil War
At the outbreak of the war, Butler entered the Massachusetts militia as a brigadier general
He participated in the capture of Baltimore, Maryland, in 1861 and led forces against New Orleans, Louisiana, in 1862 After the conquest
of New Orleans, Butler became military gover-nor of that city, but his administration was charged with severity, corruption, and graft
After six months, Butler was reassigned to the Eastern Virginia-North Carolina area and commanded the Army of the James in 1863
Butler acted as administrator for the return
of prisoners in 1864, and was assigned to New
1795 Born, Kinderhook Landing, N.Y.
◆
1817 Established legal practice with Martin Van Buren in Albany
1833 Appointed U.S attorney general by President Jackson 1821–24 Served as district
attorney of Albany County
1827–33 Member of New York state legislature
1836 Martin Van Buren elected president
1838 Appointed U.S district attorney in New York
1845 Reappointed to U.S district attorney post by President Polk 1841
Returned
to private practice
1848 Retired from public service
1858 Died, Paris, France
1861–65 U.S Civil War
◆
Benjamin Franklin Butler (the younger) BRADY NATIONAL PHOTOGRAPHIC ART GALLERY, LIBRARY OF CONGRESS
ABOVE IT [BECAUSE]
AN OFFICER IS A
—B ENJAMIN F RANKLIN
B UTLER ( B 1818)
Trang 7York to enforce order during the election held
in that same year
After the war, Butler served in the federal government, representing Massachusetts in the U.S House of Representatives from 1867 to
1875, and from 1877 to 1879 He returned to Massachusetts in 1882 to perform the duties of governor and in 1884 was an unsuccessful nominee for the U.S presidency, representing two independent parties—the Anti-Monopoly party and the Greenback party
Butler died January 11, 1893, in Washington, D.C
vBUTLER, CHARLES HENRY Charles Henry Butler served as the Supreme Court reporter of decisions from 1902 to 1916
Butler was born June 18, 1859, in New York City He was the son of William Allen Butler, a lawyer, and the grandson ofBENJAMIN F.BUTLER, U.S attorney general during the administration
University but left school before graduating He then studied law in his father’s New York office
for several years, and often accompanied his father to Washington, D.C., when the elder Butler appeared before the U.S Supreme Court
to argue cases Butler was admitted to the New York state bar in 1882 and subsequently practiced law in New York City In 1898 he served as the legal expert for the Fairbanks-Herschell Commission, which was convened to adjust the boundary of Alaska and Canada
In December 1902 Butler left thePRACTICE OF LAW to accept an appointment as reporter of decisions for the U.S Supreme Court, a position created by Congress in 1816 In the early days of the Court, the reporter had been primarily responsible for editing, publishing, and distrib-uting the Court’s opinions; beginning in 1874, however, Congress provided money for the government to publish the Court’s opinions, and thus by the time Butler became reporter, his role was limited to editorial tasks
While reporter, Butler edited and published volumes 187 to 241 of the United States Reports, the official publication of the opinions of the U.S Supreme Court During his tenure with the Court, he also was a delegate to the Hague Peace
1818 Born, Deerfield, N.H.
1838 Graduated from Waterville (now Colby) College
1840 Admitted to Massachusetts bar
1852 Elected to the Mass House
of Representatives
1861–65 Served as general in the Union Army; poor performance led him to be relieved from command more than once
1877–79 Served in U.S House of Representatives 1867–75 Served
in U.S House of Representatives
1882–83 Served as governor of Mass.
1884 Ran unsuccessful presidential campaign on the Greenback and Anti–Monopoly tickets
1893 Died, Washington, D.C.
1859 Born,
New York City
◆
◆
1890 The
Voice of the Nation
published
1898 Served as legal expert for Fairbanks-Herschell Commission;
Cuba Must be Free published
1902 Appointed reporter of decisions for U.S Supreme
Court;
Treaty-Making Power of the United States
published
1916 Returned to private practice partnership with John Krantz
1914–18 World War I 1861–65
U.S Civil War
1942 A Century at the
Bar of the Supreme Court of the United States published
posthumously
1939–45 World War II
1933 Son Henry replaced John Krantz
in partnership
1940 Died, Washington, D.C.
◆
❖
COUNTRY ARE
BUT THEY ARE MORE
LOYAL TO PRINCIPLES
THAN THEY ARE TO
—C HARLES B UTLER
204 BUTLER, CHARLES HENRY
Trang 8Conference in 1907 He later authored A
Century at the Bar of the Supreme Court of the
United States (1942), a sometimes lighthearted
account of the Court’s inner workings and his
experiences as reporter In the book, published
two years after his death, Butler described his
dealings with the justices as “delightful and
congenial.” He wrote that the work was “very
interesting It was not difficult and did not take
all of my time The salary afforded me a
comfortable income.” Butler also described in
some detail the various rules and customs of the
Court, including the writ ofCERTIORARIand the
social etiquette of the Court, and shared
anecdotes about lawyers who had argued before
the Court With respect to the reporter’s
position, Butler discussed the process of
pre-paring headnotes, the paragraphs that appear at
the beginning of opinions to summarize the
major points of law contained in the opinions
During Butler’s tenure, the Court made clear
that headnotes were not to be construed as part
of the opinions and were instead only the
expressions of the reporter about the holdings
of the Court
Butler eventually found his position to be
“somewhat monotonous” and noted that
“[t]here was nothing constructive about it so
far as my part was concerned.” In addition,
Butler was frustrated by the anonymity of the
post and by frequent misunderstandings about
his role and duties; he wrote that he was once
introduced as the “Head STENOGRAPHER of the
United States Supreme Court.” As a result,
Butler resigned from the Court in October
1916, to return to private practice in
Washing-ton, D.C He also wrote extensively about
U.S relations with Spain and Cuba He died in
1940, at the age of 81
FURTHER READINGS Butler, Charles Henry 1902 The Treaty Making Power of the United States Reprint, 2008 Charleston, SC: BiblioLife.
——— 1942 A Century at the Bar of the Supreme Court of the United States New York: Putnam.
Congressional Quarterly 2004 Guide to the U.S Supreme Court 4th ed Washington, D.C.: Congressional Quarterly.
CROSS REFERENCE Law Reports.
vBUTLER, PIERCE Pierce Butler served as ASSOCIATE JUSTICE of the Supreme Court from 1923 to 1939 Known for his conservative views, Butler advocated a laissez-faire (French for “let [people] do [as they choose])” philosophy that sought to minimize government interference in the economy In the 1930s, when Franklin D Roosevelt’s NEW DEAL
policies sought to increase the power of govern-ment in U.S life, Butler voted against the consti-tutionality of every New Deal measure that came before the Court By the end of his tenure, Butler was one of the few conservatives on an increas-ingly liberal Supreme Court, and he became distraught by changes in the Court’s interpreta-tion of the Constituinterpreta-tion.“This is not government
by law, but by caprice,” he wrote in a 1939 dissent “Whimseys may displace deliberate action by chosen representatives and become rules of conduct To us the outcome seems wholly incompatible with the system under which we are supposed to live” (United States v
Rock Royal Co-op, 307 U.S 533, 59 S Ct 993, 83
Pierce Butler 1866–1939
1866 Born, Dakota County, Minn.
1891 Became assistant to the Ramsey County (Minn.) attorney
1893 Began first term
as Ramsey County attorney; founded law firm that became Butler, Mitchell & Dougherty
1908 Elected president of Minnesota Bar Association
1928 Wrote dissenting opinion
in Olmstead v United States
1922 Nominated
to U.S.
Supreme Court
by President Harding
1914–18 World War I
1939 Died, Washington, D.C.
1861–65 U.S Civil War
◆
1907 Began 17-year tenure on the University of Minnesota's Board of Regents
1932 Wrote dissenting
opinion in Powell v Alabama,
which overturned convictions
in the Scottsboro case
1939–45 World War II
❖
◆
1932 Franklin D.
Roosevelt elected president
BUTLER, PIERCE 205
Trang 9L Ed 1446) Butler dissented in several Supreme Court decisions that overturned laws discrimi-nating against African Americans, and he rarely supported the rights of those with dissenting or radical opinions in society He did, however, argue consistently for the rights of those accused
ofCRIMES Those who knew him commented on Butler’s stubbornness and occasional bullying, traits that often made his relations with others
on the Court less than amicable Once, after persuading all on the Court but Justice Oliver Wendell Holmes Jr., of the rightness of his opinion on a particular matter, Butler said to Holmes,“I am glad we have finally arrived at a just decision.” “Hell is paved with just deci-sions,” Holmes responded Commenting on Butler’s conservatism, Holmes characterized Butler as a“monolith” with “no seams the frost can get through.” Butler resolutely stuck to his conservative principles even in the depths of the Depression Something of those views is found
in remarks he made in 1916: “Too much paternalism, too much wet-nursing by the state,
is destructive of individual initiative and devel-opment An Athlete should not be fed on pre-digested food nor should the citizens of tomorrow be so trained that they will expect sustenance from the public‘pap.’”
Many of Butler’s later views were shaped by his frontier childhood Butler was born on
St Patrick’s Day, March 17, 1866, in a log cabin
in Dakota County, Minnesota His parents had emigrated from County Wicklow, Ireland, to escape the potato famine of 1848, and eventu-ally established their farm only a few miles from Carleton College, in Northfield, Minnesota, where Butler was admitted in 1883 To help pay his college expenses, he worked in a local dairy He graduated from Carleton in 1887 with both a bachelor of arts degree and a bachelor of science degree
After college, Butler moved to St Paul and studied law at the firm of Pinch and Twohy He passed the Minnesota bar in 1888 and estab-lished a law practice with an associate, Stan Donnelly In 1891 Butler became assistant to the county attorney for Ramsey County, and in
1893 and 1895 he was elected, as a Democrat, to the office of county attorney, the only elective public office he ever held While in office, he secured more criminal convictions than any county attorney had done before Butler ran for the state senate in 1906 but was narrowly defeated In 1908 he was elected president of the Minnesota State BAR ASSOCIATION In St Paul, Butler also met his future wife, Annie Cronin, whom he married in 1891 The couple had eight children
In 1893 Butler helped establish a St Paul law firm that evolved into Butler, Mitchell, and Doherty, one of the most successful corporate law firms of its time in what was then called the Northwest The firm had several railroads as its major clients, including those of James J Hill, one of the great rail barons During his career Butler earned a reputation as the foremost railroad lawyer in the Northwest His work in railroad litigation eventually brought him to national attention, and allowed him to become friendly with President WILLIAM HOWARD TAFT, who served on the Supreme Court as chief justice from 1921 to 1930 and was later instrumental in securing Butler’s nomination
to the Court
On November 23, 1922, PresidentWARREN G
justice WILLIAM R DAY on the Supreme Court Although Butler was a Democrat, the Republi-can Harding approved of his laissez-faire economic philosophy and conservative social views Harding also believed that it would be politically astute to nominate the Roman Catholic Butler to the Court The last Roman
Pierce Butler.
LIBRARY OF CONGRESS
206 BUTLER, PIERCE
Trang 10Catholic to serve on the Court had been
replaced by Taft in 1921
Butler’s nomination caused a great outcry
in liberal circles, particularly from Senators
GEORGE W.NORRISandROBERT M.LA FOLLETTE, and
senator-elect Henrik Shipstead, of Minnesota
They pointed to Butler’s ties to big business
during his legal career, claiming that these
would bias his decisions on the bench They also
objected to Butler’s actions as a regent of the
University of Minnesota, a position he held
from 1907 to 1924 Butler, they argued, had
used his influence to have several faculty
members dismissed Despite the objections of
La Follette and others, the SENATE JUDICIARY
nom-ination on December 13, 1922 On January 2,
1923, the Senate appointed Butler to the Court
by a vote of 61–8
While serving on the Court, Butler fulfilled
predictions that he would become a pillar of
conservatism Butler often voted with three other
conservatives, Justices JAMES C MCREYNOLDS,
himself a former railroad lawyer Because they
consistently voted as a conservative bloc,
obser-vers nicknamed this group the Four Horsemen
Butler’s conservatism manifested itself
par-ticularly in his emphasis on limiting the power
of government For example, he voted whenever
possible against state and federal taxes In
Coolidge v Long, 282 U.S 582, 51 S Ct 306,
75 L Ed 562 (1931), writing the Court’s
opinion, Butler argued that a state inheritance
tax was unconstitutional because it violated
the Due Process Clause of the FOURTEENTH
not deprive a person of liberty without DUE
PROCESS OF LAW
Butler also consistently argued against the
rights of government to regulate prices,
partic-ularly through his narrow interpretation of the
phrase“business affected with a public interest.”
At the time, it was common for governments,
when they sought to regulate prices charged by
businesses, to argue that certain industries had
more of the PUBLIC INTEREST involved in their
affairs than others; businesses that were affected
with a public interest could therefore be
regulated by the government In Wolff Packing
Co v Court of Industrial Relations, 262 U.S 522,
43 S Ct 630, 67 L Ed 1103 (1923), Butler
voted with the Court in deciding that the
packing industry was not affected with a public interest and therefore could not be made subject
to price-control legislation
Butler and the Court made the same decision with regard to employment agencies
in Ribnik v McBride, 277 U.S 350, 48 S Ct 545,
72 L Ed 913 (1928) In both Wolff and Ribnik, the Court found that the laws under consider-ation violated the Due Process Clause of the Fourteenth Amendment In Nebbia v New York,
291 U.S 502, 54 S Ct 505, 78 L Ed 940 (1934), when an increasingly liberal Court decided to do without the phrase“affected with
a public interest” in making its decision and ruled that the state may regulate milk prices, Butler, along with the rest of the Four Horse-men, dissented This was just one of many dissents Butler and his conservative colleagues would make during the 1930s
Butler’s opinions in the area of civil liberties are less easy to categorize He argued persua-sively for the rights of those accused of crimes, arguing in one opinion, “Abhorrence, however great, of persistent and menacing crime will not excuse transgression in the courts of the legal rights of the worst offenders.” He opposed national prohibition and criticized federal agents several times for violating the FOURTH
case involving wire tapping by Prohibition agents, OLMSTEAD V UNITED STATES, 277 U.S
438, 48 S Ct 564, 72 L Ed 944 (1928), Butler found himself in the unusual company of the more liberal justicesLOUIS D.BRANDEIS,HARLAN F
Butler argued that during the transmission of messages, the exclusive use of any wire belonged
to the persons served by it Law enforcement
search for evidence
In Aldridge v United States, 283 U.S 308, 51
S Ct 470, 75 L Ed 1054 (1931), Butler voted with the majority in holding that an African American being tried for theMURDERof a white man was entitled to have the prospective jurors asked whether they had a racial prejudice that would prevent a fair trial Butler also supported the rights of disabled persons, casting a lone dissenting vote, without opinion, inBUCK V.BELL,
274 U.S 200, 47 S Ct 584, 71 L Ed 1000 (1927), which upheld a 1924 Virginia law allowing for the sterilization of mentally handi-capped individuals
PERSISTENT AND MENACING CRIME WILL NOT EXCUSE TRANSGRESSION IN THE COURTS OF THE LEGAL RIGHTS OF THE
—P IERCE B UTLER BUTLER, PIERCE 207