Return to the APA
Home PageThe American Philosophical Association
Newsletter on
Philosophy and Law
Rex Martin, editor
Issue no. 95:1 Fall 1995
Editor's Preface
The membership of the APA Committee on Philosophy and Law for 1995-96 has changed in several particulars. My three-year term as Chair and Newsletter Editor terminated on 1 July 1995. Two new members have been added, as of 1 July 1995: James W. Nickel (Philosophy, Colorado) will serve a three-year term as the new Chair of the Committee, and Richard Nunan (Philosophy, College of Charleston) will serve a five-year term as the Newsletter Editor and ex officio member of the Committee. In years past the Committee on Philosophy and Law has relied on its Chair to serve as Newsletter Editor. It is thus an innovation for the Committee to designate a person to serve as Newsletter Editor (though this has been standard practice for most other Committee Newsletters published in this issue). Richard Nunan will, I am sure, fill this new role with the Committee on Philosophy and Law with distinction. The next issue of this Newsletter will be the first under his editorship. I look forward to it.
One final note regarding Committee membership. Committee member Norman Gillespie is leaving the law firm he has been with (Davis Polk and Wardwell, New York City) and joining the law faculty at George Mason University. Committee membership otherwise remains unchanged: Robert Ladenson (Humanities, Illinois Institute of Technology), John Kleinig (Law and Police Science, John Jay College and the Graduate Center, CUNY), Patricia Smith (Philosophy, Kentucky), and Stephen Griffin (Law, Tulane).
The substantive material in this issue of the Newsletter concerns the distinction between public and private institutions. Robert Ladenson served as special guest editor for this issue and the substantive material herein appears as a result of his efforts. After a brief introduction by Robert Ladenson, the reader will find three articles. The first is by Richard Epstein, "The Public Private Distinction: A Search for the Middle Political Ground." The second is by Harold Krent, "Some Skeptical Thoughts About the Growing Convergence of Public and Private Institutions." And the third is by Richard Lippke, "Rewarding Whistleblowers: An Analysis of the Amended False Claims Act."
This issue of the Newsletter also contains several items of general interest including News and Notes, Abstracts of Recent Law Review Articles of Interest, and Recent Books of Interest.
The next issue of this Newsletter (Spring 1996) will concern itself with "Constitutional Theory from the Law School Perspective." Stephen Griffin will serve as special guest editor.
As he has done for the last three years, David Reidy (J.D., Indiana-Bloomington; Ph.D. candidate, Kansas), associate editor of the Newsletter, supervised production of this issue. And as he has done for the last two years, Stephen Mathis (M.A., Duke; philosophy graduate student, Kansas) assisted by writing the law review abstracts and gathering information on recent books of interest.
I wish to thank all those named above for their contributions both to this issue and to the Committee generally. And I want specially to thank David Reidy for his assistance during my tenure as Committee Chair. And so, with sincere appreciation for the efforts of my colleagues on the Committee and of my two assistants at Kansas, I sign off as Chair.
Rex Martin (Philosophy, Kansas).
News and Notes
American Association of Law Schools-AALS.
The 1996 AALS Annual Meeting will take place January 3-7, 1996, in San Antonio, Texas. The theme of the meeting will be "Legal Educators in a Learning Society."
The AALS will also sponsor a Workshop on Jurisprudence October 12-14, 1995, in Los Angeles, California. The Chair of the Planning Committee is Mary Becker (Chicago, Law).
For further information regarding AALS events and membership, contact AALS, 1201 Connecticut Ave., N.W., Suite 800, Washington, D.C. 20036-2605.
American Society for Political and Legal Philosophy-ASPLP.
The 40th annual meeting of the ASPLP will be held in New York with the APA on December 27-28, 1995. The meeting theme is "Integrity and Conscience," and the program chair is Robert Adams (Philosophy, Yale). Three sessions will be held as follows:
Session I Speaker: Cass Sunstein (Law/Pol. Sci., Chicago)
Comments: Ronald Dworkin (Law/Phil., NYU)
Comments: Joshua Cohen (Phil./Pol.Sci., MIT)
Session II Speaker: Thomas Hill (Phil., UNC)
Comments: Nomi Stolzenberg (Law, USC)
Comments: Elizabeth Kiss (Politics, Princeton)
Session III Speaker: John Kane (Politics, Griffith U.)
Comments: Karen Jones (Phil., Cornell)
Comments: David Dyzenhaus (Law, Toronto)
For further information, contact Kenneth Winston, Knapton Hall, Wheaton College, Norton, MA 02766.
International Association for the Semiotics of Law-IASL.
The 11th International Colloquium took place June 11-15, 1995, in Portugal. The theme was "Multiculturalism and the Semiotics of Law."
The 10th Round Table on Law and Semiotics will take place April 18-21, 1996, at the University of Massachusetts, Amherst. The general topic is "States, Citizens and Questions of Significance." Paper abstracts are due by October 30, 1995. For further information, contact John Brigham and/or Roberta Kevelson, Philosophy, Penn State-Berks, Reading, PA 19610-6009 (tel: 610.755.3389; fax: 610.320.4912).
Law and Society Association-LSA.
The 1996 meeting will take place in Glasgow, Scotland. The Call for Participation had not been issued by the time this publication went into production, but it will be issued sometime in the fall of 1995. For further information, please contact Ron Pipkin, Department of Legal Studies, University of Massachusetts-Amherst (ph: 413.545.2603; fax: 413.545.1640; e-mail: pipkin@legal. umass.edu).
North American Society for Social Philosophy-NASSP.
For information on NASSP events, membership, or publications, please contact Alison Jaggar, University of Colorado, or Mary Mahowald, University of Chicago Medical Center.
Society for Philosophy and Public Affairs-SPPA
The Society will sponsor at the APA Eastern Division Meeting a session entitled "Deconstructing and Reconstructing Families: The Ethics of Divorce and Child Custody." Speakers: James and Linda Hildemann, Nelson and Elise Robinson, and Laura Purdy. Commenters: Hugh LaFollette and Margaret Little. The moderator will be William Aiken.
APA Newsletter on Philosophy and Law
The Newsletter invites submission of short essays concerning the work of H.L.A. Hart to be considered for inclusion in the Fall 1996 issue. Submissions and requests for further information should be directed to Richard Nunan, Editor, APA Newsletter on Philosophy and Law, Department of Philosophy, College of Charleston, Charleston, SC 29424.
Articles
Public and Private Institutions
Robert F. Ladenson
Illinois Institute of Technology
The topic of public and private institutions is timely, important, and much in need of further philosophical exploration. The topic has special significance at this time in light of the accelerating interest in privatization and contracting out of services by governmental bodies on the national, state, and local levels. This interest, spurred dramatically in the past year by the momentum in Congress behind initiatives to reduce the federal deficit, predates the Republican Congressional victories of 1994. Not long after his inauguration, President Clinton called for increased privatization and out-sourcing by the federal government. Historically such measures have been common on the level of local government in the areas of transportation, waste removal, garbage collection, and other services. Since the mid-1980's, however, the trend toward privatization and contracting out has expanded even further to encompass other essential services, traditionally provided by public entities, including the adjudication of legal controversies involving claims of statutory rights, and the operation of prisons.1
What are the critical factors appropriately taken into account in deciding who should provide a particular service-whether it should be a public body, a private organization, or a mixed entity with both public and private dimensions? Are there constraints, limitations, or requirements from the standpoint of political morality with respect to such decisions? If so, what are they, and, why? If not, then why not? The writings of philosophers and legal theorists that discuss the public-private distinction, for the most part, do not explicitly address the above kinds of issues, and determining the implications of these writings for the issues would seem to require much further exploration.2
Each of the following articles explores an important dimension of the complex and multi-faceted topic of public and private institutions. Discussions of the pros and cons of privatization in specific circumstances often focus on issues of economic efficiency. In the first article, Richard Epstein generalizes from this focus to propose an account which views questions of how to draw the line between public and private, in the context of institutional design, as cost minimization problems. Professor Epstein suggests that if one takes the right to exclude as central to the private realm, and the need to govern, or to coordinate, as essential to the public domain, then one may state the problem of how to draw the public-private distinction as follows: Pick those institutional arrangements that minimize the respective costs of exclusion and coordination. Professor Epstein illustrates this proposal through the example of a hospital's obligations with respect to indigent persons in serious medical distress.
The second article, by Harold Krent, contains an analysis of the doctrine of sovereign immunity, as it relates to lawsuits for negligence and breach of contract. This doctrine has been attacked often as an indefensible anachronism. What possible reason can exist, ask the critics of sovereign immunity, to shield governments from lawsuits when they act in ways that would create liability for negligence or breach of contract on the part of a private organization? Professor Krent suggests an answer to this question that links the doctrine of sovereign immunity to basic constitutional concerns in regard to the separation of governmental powers, and to broader concerns of political morality about the legislative function. Professor Krent also discusses how questions about the decisions of a government concerning disposition of its assets can implicate issues of basic governmental responsibilities that cannot arise for private organizations.
The third article, by Richard Lippke, discusses the amendments enacted by Congress in 1986 to the False Claims Act of 1863. The amended False Claims Act makes it possible for employees of private companies doing business with the federal government to file lawsuits charging their companies with fraud, and entitled employees who succeed in such lawsuits to receive a substantial portion of the damages the government recovers. This controversial piece of legislation raises difficult issues concerning the desirability or appropriateness of measures designed to encourage individuals in a private employment relationship to assume law enforcement functions traditionally viewed as lying within the public domain. Professor Lippke contends that a just, humane, and socially beneficial approach to the problems of employees who become whistleblowers will require major changes in the prevailing legal structure of both the public and private sector employment relationships to expand the rights of freedom of expression and conscience in the workplace.
Endnotes
1. See, Martin H. Malin and Robert F. Ladenson, "Privatizing Justice: A Jurisprudential Perspective on Labor and Employment Arbitration from the Steelworkers Trilogy to Gilmer," 44 Hastings Law Journal 1187 (1993); see also, John O'Leary, "Private Involvement in Public Corrections: Profits, Pros, Cons, and Convicts," 12(2) Perspectives on the Professions 2 (1993).
2. Philosophical writing on the public-private distinction has tended to focus upon the problem stated by John Stuart Mill in chapter four of On Liberty of "how much of human life should be assigned to individuality and how much to society?" Legal theorists, in the United States, have analyzed the public-private distinction, for the most part, in the context of commenting upon the problem of "state action," that is, the circumstances under which a private organization must be treated as if it were a public entity, for purposes of constitutional analysis.
The Public Private Distinction: A Search for the
Middle Political Ground1
Richard A. Epstein
University of Chicago, School of Law
The Public and the Private Sphere. One of the common tenets of liberal faith-and it is one that I share-is that there is an important conceptual distinction between the public and the private spheres. The latter is regarded as an area within some protected "perimeter of rights" in which individual choice is regarded to hold sway, and the former is an area in which persons are allowed to act only if they can give good and sufficient reasons for their conduct, whenever their decisions are challenged by another. The major work in this area is therefore to figure out why the boundary between public and private should be drawn at all, where that boundary should be located, and what kinds of reasons and constraints are needed either to explain why certain public actions are justified or why certain kinds of public actions are prohibited. As with all important philosophical questions, the articulation of general principles does not necessarily solve particular cases. Yet conversely, the absence of general principles guarantees that particular cases will fester unsolved, or will be solved in the wrong way. Getting the basic points correct therefore may not get us to the ideal practical decision, but it may do something to avoid the shipwrecks that too often take place under the name of public policy.
The distinction between the public and private spheres is hardly new. The phrase republican, which refers to things which are properly public affairs, dates from Roman times, and the impulse in that direction is earlier than its Roman roots suggest. To start with the consequences first, it seems clear that one, perhaps the, central idea behind the public/private line concerns the question of the right to exclude the rest of the world. The full definition of private property often goes further than this and speaks of the right and ability to use the things from which others can be excluded, and to alienate-sell, give, bequeath, mortgage, lease-the things that are thus owned. But exclusion is the one indisputable attribute of private property. If others can enter land at will, or use one's things as if they were his own, then in some sense it is property that is held in common: perhaps the stranger cannot exclude the owner, but the world is transformed if the owner cannot exclude the stranger.
When strangers share with owners, then definitions no longer matter: all property becomes public in fact, even if not in name. It is, however, not just simply the right to exclude others that marks property as private: it is also the fact that the exclusion in question is one that can be done ordinarily without reasons being required in law. Taken to its extreme form the right to exclude is thought to survive even when it is exercised in ways that are detrimental or self- destructive to the party who happens to have it, and notwithstanding its adverse consequences on third parties. The defenders of private property and the right to exclude, therefore, are often driven to heroic statements about the magnitude and the importance of the right. One stock example is the ability to exclude a good Samaritan passing by the way who wishes to give aid to a person who has been struck by lightning and lies just inside the boundary owner of the diligent property owner who has no desire to aid the victim, but every right to exclude those benevolent souls who are inclined to do so. If the right to exclude is as absolute as the defenders of private property complain, then access to it without consent in times of emergency will have to fall by the wayside. The point is familiar in philosophical circles because so many of the familiar examples about the limitations of private property instinctively appeal to these necessity cases, as in the famous example of the man dying of thirst in the desert who cannot obtain water from a settler's well. Nor does the problem disappear in modern times under less fanciful circumstances: modern law requires that all hospitals admit patients who are in active labor or in conditions of immediate distress, and treat them as appropriate, wholly without regard to their ability to pay. Dealing with these necessity cases is critical to understanding the relationship between private and public property, and I shall return to them toward the end of this essay.
At this point, however, the initial task is to make clear in polar terms the opposite of private property: public property, where all have equal access, and where none of the persons who have access to that public property have the right to convert it into private property by unilateral action. Throughout the history of western civilization, these forms of public property have been recognized: the seas and the seashores; the rivers and their banks; and, of course, various forms of public property created by the state: highways, public buildings and parks. And no one should forget the city walls and gates of ancient times.
The question then emerges as to whether there is any coherence to the distinction. There is one line of argument, which has overtones in Locke, which is deeply troubled by this. The argument on this view is that all things start out as being owned in common, and the object of a sound legal system is to reduce them to the possession of individual owners as quickly and expeditiously as is possible. The basic view of the world is that common property should be treated as some form of aberration, while private property is treated as the object and end of the legal system, and has a stability that none can deny.
It is within this framework that all of Locke's distinctions on the use and limitations of property are made. Thus in Chapter V, Of Property, of the Second Treatise of Government, he basically presents us with two models. In the first, all goods are held in common, and those who remove them are unable to barter or to sell them to other individuals. In this world, he concludes that individuals must leave as much and as good for others; nor can they take things from the common that will rot or perish for want of consumption and use. The situation thus demands a certain modification of individual desires, but the conditions are impossible to satisfy: the question of whether enough and as good is left over is far too stringent, for so long as the selection by the first taker is not random, then the best (including the cheapest to find) goes first, making the lot of all who follow marginally more difficult than before. Yet by the same token, the second condition is idle: if trade is not possible, no one will want to take more than they use, for they have no self- interested reason for taking things from the common at their own cost when they have no use for it. (The most difficult cases are probabilistic: i.e., where something is removed which has a chance of being used and one of being wasted, but Locke does not address those cases.) In his second world, when trade is possible, these constraints vanish. Strangers now are less concerned with the depletion of the commons because they may be able to buy from the present owner. So any losses in the common are more than compensated for by the gains from trade. And the problem of waste disappears because perishables can be traded for durables, leaving everyone the better off.
Locke's discussion is an important early analysis of tradable and nontradable goods, but for these purposes his focus on extraction from the common forces him to miss an essential element of the public/private distinction. The actual legal tradition has long been at variance from Locke's insistence about the remorseless reduction of public to private property. The forms of public property were stable and recognized from the early days-the seashore did not just ache to be privatized; and these remain so today, even as other forms of public property have been added to the list, often with little justification. The question then is why have these proved so durable given the strong ideology (to which I plead guilty) of defending and supporting a system of private property. I think that the best way in which to understand this situation is to ask about the advantages and disadvantages of these two rival institutions, understood globally in light of their generic characteristics. The cost of private property is implicit in its definition: the inconveniences of exclusion, which are borne by third parties who then have to make, if they can, other accommodations for themselves. These costs are often positive, and in some cases at least they can clearly exceed the gains to the owner from keeping the property private and to himself.
It should not be inferred, however, that because we can identify costs to a system of private property, that we have delivered a knockout blow against the institution. The creation of systems of public or common property have their costs as well; and these are best expressed, if a single phrase could do the job, as the costs of governance or coordination. Once there is no right to exclude, questions about the use and deployment of the property surge to the fore: if many can enter, what happens when there are disagreements among the users about how the property should be used? Think of what the world would look like if all property were held just like a vacation home left by doting parents to fighting siblings.
The Public-Private Equilibrium. We can now frame the choice as a minimization problem: pick that form of property which minimizes the (sum of) the costs of exclusion and coordination. These tend to move in opposite directions, so that there is no way in which the total can be reduced to zero. Accordingly, it follows that one cannot establish a preference for one form of property or another simply by showing that there is some inconvenience that is attendant to the adoption of the rival system. Instead the inquiry is always a bit longer, for it is necessary to run through the full set of consequences, positive and negative, before some judgments can be made. So how is that done?
Let us look at a couple of cases of standard public property to see why they are such: suppose that running water could be reduced to private ownership in the manner that Locke suggests: by diverting it into large private containers, or by flooding private lands. Gone instantly are the values of recreation, transportation, fishing and esthetics. The value of a river as a "going concern" is far greater than its value as water that is contained in a cistern, so that the first task has to be to preserve those common values when and where they exist. But it turns out that some limited private use of the water does have value greater than its cost, so that systems of water are in reality mixed public and private, where the relative values depend on the costs and benefits at the margin of instream and outstream uses (e.g., drinking and agriculture). But total privatization is not a solution for many rivers and lakes. In these contexts the task of coordination is accomplished at least in part by establishing rules of the road for navigation, and by allowing limited access for fishing and bathing and the like. But open access for navigation does not mean that all persons have to explain why they wish to use the waters; they just have to comply with the rules of the road. Or to put it otherwise, the coordination tasks are relatively easily monitored because there is no effort to convert the users of this common property into partners for a common business or enterprise. It is not as though you are joint venturers with other persons who navigate the road. And so we can see this relationship: where the property is public, the relationships between users of the property tend to be limited and impersonal. Partnership or fiduciary obligations are not expected or even encouraged.
There is another feature about public property: the costs of exclusion tend to be very high because there are no close substitutes. If I could shut you out of the interstate highway system that is a far greater cost to you than being unable to camp out in my dining room against my consent. The point here is that public properties tend to have network features which create a form of monopoly requiring at a minimum that individuals be able to enter on nondiscriminatory terms, the antithesis of a system of private property, or so it might appear. Generally speaking, we have a system of private property where we think that the irrational forms of individual decisions can be countered by new entry from other individuals which is what the network of highway capabilities preclude. So there is now an answer to those who say that private property and the right to exclusion is costly: there are many cheap alternatives available. These coupled with the individual self- interest of the owners of private property will create a situation where the costs of exclusion can be mitigated, without having to incur the massive costs of coordination that come from making these forms of property wholly public.
Monopoly: The Tertium Quid. Yet there is also a third case, perhaps the most difficult case, that falls squarely in the middle. It hearkens back to the necessity cases considered earlier and the monopoly issue just broached. The impulse behind the case is that which was given above: can I exclude X from my land if he wishes to enter in order to rescue a victim stricken there? It is important to note that the traditional common law rules on this (which predate Locke, who in any event did not refer to them) never took the position that since there was no individual duty to rescue (itself a contested point today, especially in the medical context) the property owner retained a right to exclude as well. The basic principle at common law was that necessity suspended private property rights. The entry could take place, although compensation had to be made to the owner of the land, not for the value of the rescue to the victim, but to the collateral costs to the property, if any, that resulted from that "privileged" entry. The point here is that when the costs of exclusion, which are normally low, shoot up, then the right is suspended. Yet since this property is not normally or generically public, the compensation is used to vindicate the interests of the owner who has been forced unilaterally to accept a temporary diminution in status.
The question of exclusion also arises in institutional as well as individual contexts, most notably, with those persons who enjoy, either through law or through location, monopoly power, which leaves them in the envious position of a sole supplier. Now with the monopolist, the law cannot adopt the solutions that were used for some sorts of common property, like water, because the monopolist in effect has to produce goods and has cost inputs that have to be satisfied in some fashion or another. So he has to charge prices for services rendered, and the task here is to prevent discrimination across consumers and to limit the rate of return to that which is achieved by firms operating in competitive industries, where the former constraint is more easily enforced than the latter. So when we look at the first obligation we discover that the quid pro quo for the monopoly power is the loss of the right to exclude. But by the same token the right is preserved insofar as it relates to the obligation of payment under the regulated system, and insofar as the use of the common carrier facilities, for example, has to be protected for other individuals. Thus, in regard to the latter, a monopolist can exclude for cause, as with cases of raucous behavior.
Now in many ways the best way to understand the proper role
of government is as a glorified common carrier. It may not run the rails, but it is supposed to have the monopoly of force, and thus is subject to the two correlative obligations of the ordinary common carrier. It forfeits its right to discriminate at will among its passengers, which reflects the fact that they do not have any other place where they can easily go. And its own rate of return on its investment-read taxes-is to be limited, so that it cannot play the extraction game ("a million dollars and you can dock your boat to escape the storm") that is denied to ordinary owners under conditions of necessity, and it cannot get more than a competitive rate of return on the investment of its assets. The surpluses that it creates are left to citizens, just as those created for uses of the common carriers are left to citizens. Most of the key action lies in this third category, where there is power to charge, and need for regulation and restraint.
There is a third piece to this puzzle that has to be incorporated. The adoption of systems of regulation to counter the risks of monopoly are not schemes of redistribution. It is for this reason that these schemes all have payment or compensation obligations that are attached to them. They are schemes to improve the efficiency and output of the institutions in question. Similarly the older forms of public property such as water and air were public not to secure redistribution of wealth across citizens but only to obviate the coordination and governance problems. The question of redistribution within this framework was very unclear, as was that of charitable obligations. The basic instinct was that these were "natural obligations" enforceable by conscience and social sanction, but not by direct legal action by an aggrieved person against someone who could help him. The suspension of a power to exclude always carried with it the correlative obligation of just compensation-the antithesis of redistribution.
A Medical Illustration. The differences between redistribution and the provision of public goods is thus critical to understanding the role of government, but it is one that is frequently obviated by common protestations that assistance to those in need is a government function of the highest public importance. Those institutions, such as hospitals, which provide critical services are often said to be "affected with the public interest" which makes it appropriate, as noted earlier, to require them to treat at their own expense indigent persons in serious medical distress, often as a condition for obtaining licenses to operate.
In dealing with these special obligations, the law still shows some uneasiness about imposing them on individual persons. But the willingness to do so on institutions is far greater because the element of individual coercion is nowhere to be found. The legal obligations attach only on those who have decided to enter certain murky waters, and the institution can buffer individual persons from taking care of those who they do not want. You can sign up for a tour of duty in Vietnam, and so too you can sign up for a tour of duty in your local emergency room. Yet this difference was not regarded as decisive under nineteenth century legal conceptions, where the general view was that a charitable institution, just like a charitable individual could choose the persons whom it wished to aid, and the amount of assistance that it wished to give them. Of moral obligations there might be many; and political and reputational consequences could be severe. But of legal obligations there were none.
The modern view decisively rejects that position, and argues that redistribution calls as much for a social obligation as monopoly. But if what has been said above is correct, then both philosophy and law have started down a wrong path. The instant impulse to do good remains, but the long term consequences are not as good as the intentions behind them. (I will pass for the moment on all public choice explanations.) And the explanation is clear: the obligation to provide medical service is not softened by a provision of public money raised from general taxation. It falls on the individual institution itself. The better the institution, the greater the number of individuals who will flock to its emergency rooms. The more the institution improves, the greater its public burden. In that environment only two outcomes are possible in the long run. The first is that the institution goes belly up, or has to severely contract its services to paying patients. But no government edict can pay the salaries of the workers in charitable institutions, most of whom cannot work for free.
The second response is to curtail the amount of services that are made available. The government program presupposes that all available services be used to aid the poor in distress. It cannot command that resources be made available. So emergency rooms can be reduced in size, or rendered less accessible, to virtuous and
nonvirtuous alike. But at least the budget crunch will be averted so that the institution can limp along with reduced effectiveness over the long haul. But ironically the reduction in size could lead to more deaths under the new regime than occurred under the old. The important point to remember is that the public/private distinction is important because of what it tells us about the obligation of governments to give reasons and to be impartial, and for what it tells us about the efficient deployment of certain assets (water, air) and the management and pricing of others (common carriers and public utilities). But there is little to be gained of using very broad definitions of the public interest to convert many traditional private forms of property into public ones. There is an intermediate position between the naive view that says that everything should be private and all private rights should be exclusive and the broad view that says everything is public so that the government may regulate and tax as it pleases. And finding that middle path is critical to our collective institutional endeavors to maintain a sound balance between the private and public spheres.
Endnotes
1. This article is a revised version of an address delivered in the fall of 1994 at a conference on medical ethics at the McClean Center for Medical Ethics of the University of Chicago.
Some Skeptical Thoughts About the Growing
Convergence of Public and Private Institutions
Harold J. Krent
Chicago-Kent College of Law
Increasingly, politicians (as well as academics) have proposed market-based solutions to remedy perceived political failure. To foster more reliance on the private sector, President Clinton and Republican leaders in Congress have called for privatizing and contracting out significant functions to the private sector.1 To make remaining governmental operations more responsive to market-like forces, they have sought greater use of voucher systems to introduce more competition in the production of government services,2 and they have advocated greater utilization of both cost-benefit analysis and market-based incentives as ways of minimizing oppressive government regulation.3 Some Republican leaders, in fact, have recommended expanding the government's liability for oppressive regulatory actions as an additional means of deterring wasteful regulation.4 These proposals reflect a common effort to favor market rather than political control over the production of goods and services.
Indeed, there is no apparent reason why entities in the private sector cannot provide many, if not most, of the services now provided by the government. Why should the government build buildings or manage financial portfolios when private institutions can and have discharged those same functions more efficiently? Because of the discipline imposed by the profit motive, private entities arguably can produce goods and perform services in a more streamlined fashion. Private entities have demonstrated the ability to fulfill roles long thought to be inherently governmental, from inspecting food to running prisons.
Efficiency, however, is not the sole governmental objective. Despite possible inefficiencies, the government pursues a variety of other goals as well. For example, the government has furthered environmental objectives (maintaining national parks and wilderness areas); national security objectives (stockpiling oil and other minerals); and social objectives of encouraging disadvantaged citizens to obtain a stake in the economy (according preferences for minorities or small businesses in contracting out). In light of goals other than efficiency, the government will in all likelihood continue to perform countless tasks that could have been more efficiently undertaken by the private sector, even if many of the recent reforms are heeded. For the foreseeable future, therefore, public institutions will still duplicate the efforts of private entities to some (even if a dwindling) extent.
That overlap brings to the fore a related and potentially pressing issue: should the government be protected by special rules when performing tasks that can be discharged by private entities? The recent calls for reform have advocated refashioning politics in the mold of markets. From that vantage point, special rules like sovereign immunity-immunizing the government absent its consent from the contract and tort liability faced by entities in the private sector-appear antiquated, if not perverse. Indeed, the government might retain functions in-house only to take advantage of favorable rules. Eliminating immunity and other special rules might thus promote greater efficiency by preventing a misallocation of functions between the public and private sectors.
However politically attractive, the temptation to assimilate public institutions into the mold of their private counterparts should be resisted. Similarities in the capacity to act should not cause us to lose sight of several fundamental distinctions between public and private institutions: our historical traditions establishing, if not exalting, political as opposed to market legitimacy; the varying effectiveness of political rather than market checks on organizational behavior; and a distinction between profit maximization and other goals sought by public institutions. These differences suggest the necessity for a contextual examination of whether special rules should in fact protect the government when acting in a capacity analogous to entities in the private sector. I will present some preliminary views by sketching three areas (though there are of course others) in which the government currently is subject to different constraints than private entities engaged in the same conduct: tort liability, contractual liability, and sale of assets. I will then briefly inquire whether any distinction between public and private institutions justifies the differential treatment.
Tort Liability. The doctrine of sovereign immunity, which shields the government from tort liability absent its consent, has been subject to near unanimous condemnation from commentators. Many have rejected the underlying theory that the "King can do no wrong" as oddly out of place in our republican government, and they have criticized application of the theory, which has resulted in uncompensated victims and insufficient deterrence of repeated careless or even invidious conduct by government officials. Nonetheless, because of concerns for political legitimacy and because of political process constraints, continuing immunity can in part be understood as turning on structural principles of sound governance.5
Congress has never waived its own immunity from liability in tort. Congress may act in an unreasonable manner or fail to act reasonably and escape any judicial scrutiny. Under our system of separated powers, the result could hardly be otherwise. If judges on their own volition could assess damages against Congress as a whole or members of Congress individually, their influence over national policy would rise exponentially. The savings and loan fiasco of the 1980's is a case in point. Members of Congress may well have acted negligently (if not worse) in failing to take steps to curtail the crisis earlier, and some of the initial steps Congress did take conceivably worsened the crisis. For judges to award damages based on that negligence, however, not only might precipitate a fiscal nightmare but, more to the point, might allow judges to second-guess the wisdom and timeliness of congressional efforts. Challenges to legislative omissions or failures to act would permit reviewing courts even greater leeway to second-guess legislative priorities. Congress would need to cater to the individual policy preferences of judges to avoid possible liability.
Moreover, imposing damages either directly upon Congress or its members-without Congress' consent-might have an untoward chilling effect upon future legislative conduct. For fear of incurring liability, Congress might pursue only the most cautious steps in fashioning public policy, since more bold steps might result in subsequent liability, or Congress might leave some areas unregulated. To be sure, judicial review would not at times frustrate policymaking. For instance, suit predicated upon failure to process private bills might not overdeter future congressional efforts or afford the judiciary too much influence in legislative affairs. And some judicial review might unquestionably spur Congress to more conscientious efforts. But those instances are probably the exception, and the costs of allowing judges to carve out those exceptions too high.
Congress, of course, has delegated a considerable degree of its own power to agencies within the executive branch. Agencies, however, no less than Congress, fashion policy binding the nation. Permitting judicial oversight over executive branch policy decisions through a tort suit could likewise frustrate agency policymaking. Some judges, for instance, might find the FDIC's regulation of particular thrifts to be "unreasonable," and that prospect may readily chill or overdeter government enforcement efforts. And, review of administrative action through tort is likely to be biased because of the presence of a concrete injury which predisposes the decisionmaker to finding the action wrongful. In the absence of sovereign immunity, the costs and course of agency deliberations might change considerably. Thus, even if Ford can be second-guessed in tort for designing the Pinto, the Army Corps of Engineers' design of a dam remains immune from tort liability.
Immunizing legislative acts from negligence challenges can thus plausibly be explained as an effort to preserve political legitimacy. The dominant justification for sovereign immunity must be that we trust Congress, unlike entities in the private sector, to set the rules of the game. We have more concern for upholding the integrity of political as opposed to market decisions. Furthermore, judicial review arguably threatens political more than market integrity. Judicial review of private conduct in tort (or contract) actions can at times be a means of reinforcing market behavior. Judicial resolution of conversion or fraud claims encourage efficient market transactions, even if some review of open-ended negligence claims impinges on business judgment. Tort liability in the private sector may therefore comport to some extent with market norms, while liability in the public sector more directly threatens norms of political legitimacy.
Although Congress may not always judiciously decide when to waive the government's retained immunity, the waiver decision is checked by the political process, just like any other legislative policy decision. Trade associations or citizen groups (e.g., those living near military bases) can marshal their influence to compel Congress to waive immunity, and such groups have achieved some success.6 In other words, a political avenue, though imperfect, exists to compel a congressional waiver. In addition, there are also process checks at the agency level. Much agency policy, unlike that formulated by private entities, has been shaped by the political process. Even in the absence of notice and comment rulemaking, agency "policy"-consisting either in rules of general applicability or in deliberative decisions made by senior agency officials-is only set after considerable debate within an agency and after future ramifications are considered. Its status as policy ensures a certain visibility which leads to some oversight by Congress and sniping by interested private parties. In contrast, shareholders either lack the means to monitor the conduct of corporate officials, or have the financial incentive to overlook (if not welcome) negligent conduct that inures to the corporation's financial benefit.
In short, Congress' decision not to waive governmental immunity from most tort suits implicating government-wide policy7 helps preserve political legitimacy by safeguarding majoritarian politics from judicial second-guessing. Despite the lack of a damages check, government policy is constrained by the political and administrative process which minimizes the potential for arbitrary government conduct. The possible harm to majoritarian policymaking from damage actions at times outweighs the benefits in added deterrence of tortious conduct by the government, and more equitable compensation of injured parties. This is not to argue against some of the recent proposals encouraging smaller government, but merely to suggest that different rules should apply to the functions that the government ultimately keeps in-house, even if those functions can be performed by private entities.
Immunity from Contract Damages. The Constitution generally immunizes the federal government from contract claims as well as from claims sounding in tort. As Alexander Hamilton explained, "[c]ontracts between a Nation and an individual are only binding on the conscience of the sovereign and . . . confer no right of action independent of the sovereign will."8 Absent a congressional waiver, private contracting parties have no recourse against Congress or its delegates in the executive branch for any breach. Sovereign immunity allows each Congress to determine whether to honor an agreement with a prior legislature or agent, free in most instances from the threat of damages or injunctive relief. Only the Takings Clause constrains Congress' otherwise unfettered discretion to walk away from or unilaterally modify contractual obligations.9
The consequences of continuing immunity are manifest. Private contractors face uncertainty in carrying out contracts with the government. Government officials, for instance-unlike private parties-need not pay full expectation damages when changing their mind and abandoning a construction project. Reliance damages suffice.10 Similarly, private parties cannot compel the government through the doctrine of specific performance to complete prior contractual commitments, whether in construction or weapons procurement.11 In light of these special rules, the private contractor will likely respond by charging more for its services to self-insure for the possibility that full contract performance will not occur.
At the same time, an immunity rule prevents Congress from fully precommitting to long-term contractual relationships. Unlike a private party, Congress cannot pledge to stay its course in the future. a waiver of immunity cannot bind future Congresses, just as one Congress cannot commit its successors to retain particular regulatory programs. All laws, in other words, are subject to change irrespective of the wishes of the enacting legislature. As a result, the government has less flexibility in contracting, and must, at least in theory, pay more for the goods and services it requires. Persistence of sovereign immunity in the contract setting therefore seemingly impedes the government's ability to contract out goods and services to the private sector.
Despite the disadvantages, however, immunity can plausibly be justified by a concern for political legitimacy-the overriding need to preserve the ability of future generations to fashion policy responsive to contemporary majoritarian concerns. Permitting full damages might give too much power to current members of Congress and the executive to lock in government policy through contractual arrangements at the expense of future flexibility. Congress of course influences the future with every step that it takes, whether in domestic or foreign policy, as the current budget deficit all too plainly attests. Yet, by providing liquidated damages in case of a governmental change in policy (or providing for specific performance), government leaders could much more effectively dictate future policy. The temptation to commit the country to a course that the outgoing policymakers favor might be too strong to resist. We are simply not as concerned about preserving the flexibility (or legitimacy) of current directors or shareholders of a private corporation. Indeed, the greater exposure to liability in the private sector may aid the market by providing an incentive to private parties to honor their deals or negotiate a settlement.
As in the tort context, the absence of a damages remedy does not leave the congressional decision to breach unchecked. There are two principal constraints, which operate more effectively in public than in private institutions. First, any congressional change must be preceded by bicameralism and presentment, and any change in executive branch policy may be molded by the administrative process. Those who stand to lose from the change may utilize political channels to alter the government's course, just as can the targets of any governmental regulation. Unlike in the private sector, contracting partners have a direct say in the other party's (the government's) decision whether to breach. Although contemporary majorities may find it all too expedient to renege upon prior obligations, at times the political process constrains such actions. Second, with each decision to breach, Congress must confront the likely consequences of increased prices for goods and services in the future, as well as face increased difficulty before entering into long-term contracts in the future. Private parties, whether because of impending bankruptcy or a decision to dissolve, may be less concerned about future ramifications. Internal constraints, therefore, are likely to induce Congress to make judicious use of its power to breach contracts.
On balance, those checks provide relatively powerful reasons to prefer the political process culminating in breach to that underlying the original agreement. Because our political system tends to submerge future interests, Congress may decide to conclude a long-term contract without sufficient regard for the future. Constituents are generally more interested in their own welfare than in future generations, and they may discount considerations for future welfare because of their inability to determine who in fact will be in power a generation hence. For their part, politicians hope to be reelected by responding (or appearing to respond) to constituents' current needs. Even if a Congress fully wished to take into account future interests, it likely could not, due to unforeseeable future events. To be sure, Congress' repudiation of a prior agreement may discount future interests in enhanced bargaining power, but that repudiation compromises Congress' own ability to enter into long-term agreements, and comes at the political expense of alienating affected contracting partners. The doctrine of sovereign immunity, therefore, presupposes that we trust the process culminating in the decision to repudiate more than the past process that led to the original agreement. Put another way, the current legislature commands greater political legitimacy.
In sum, immunity from contract suit may be vital to preserve the discretion of the policymaking branches in formulating national policy, and Congress has thus refused to tie its own hands by opening itself, and its delegates, to market rules for breach of contract. And, although Congress can waive the government's immunity in the short run, it cannot, unlike entities in the private sector, precommit successors to abide by its own waiver decisions. By shielding government policy from damage assessments, retained immunity plausibly prevents current governments from excessively tying the hands of governments to follow, even if creating an obstacle in the path to contracting out more goods and services. Rules exonerating the government from tort and contract liability thus arguably should be maintained (at least to some extent) both because of concerns for political legitimacy, and because of the alternative check of the political process.
Disposition of Government Assets. My third example does not involve sovereign immunity. The issue is whether the government should abide by the same principles followed by private parties when disposing of assets. The government sells and leases billions of dollars of assets each year, from the FBI's sales of personal and real property forfeited in drug raids to the FCC's recent auction of licenses for communication devices. Governmental efforts to reap top dollar for its assets, however, have not been consistent. At the same time that the Resolution Trust Corporation has attempted (somewhat ineffectively) to maximize sales of assets from acquired thrifts, other governmental agencies have practically donated valuable governmental property. The Comptroller of the Currency provides legal advice to banks without charge, and the Bureau of Land Management oversees a virtual give away of valuable mining rights on federal land. The extent of government largesse in some contexts is nothing short of shocking.
For instance, under an 1872 Mining Law, any individual or corporation engaged in mining significant mineral deposits on federal land can buy the land at prices between $2.50 and $5.00 an acre.12 Congress evidently fashioned the law to provide incentive for individual prospectors to develop mining and possibly to encourage internal migration West. Any justification for such incentives, however, has long passed. Thus, in a recently publicized case, a Canadian corporation purchased in 1994 almost two thousand acres of Nevada land containing gold deposits for $9,765. The projected value of the gold, when mined, approximates eighteen billion dollars.13 Although not as dramatic, the government has also assigned oil lease rights on certain federal lands, worth millions of dollars, by lottery.14
Despite the rent-seeking that has occurred, a sale or lease of assets may reflect policymaking as well as the effort to maximize profits that one would expect in the private sector. Government acts, in other words, cannot merely be evaluated through a lens of market objectives. First, the government may wish to effect distributional goals in divesting its assets. To that end, the FCC has granted an increasingly steep preference to minorities, women and small businesses to aid them in acquiring a stake in the free market system. In the recent series of auctions, companies that are predominantly owned by minorities or women received a forty percent credit in bidding on the licenses for information technology systems.15 Similarly, subsidizing grazing rights on federal land may be seen as a way (though perhaps myopic) to protect the lifestyle of small ranchers. Second, a sale of assets may affect the market itself. One of the principal functions of the Federal Open Market Committee is to calibrate the sale of government securities to adjust the money supply, and hence inflationary or recessionary pressures. The mining law, at least from the perspective of lawmakers in 1872, can be viewed in a similar vein-providing an incentive to increase the supply of valuable minerals, which may be in the nation's long-term interest. Third, the government may have programmatic concerns in selling or leasing assets not shared by entities in the private sector. For instance, the FCC arguably should be concerned with the ultimate service provided by those holding radio broadcast licenses. Even in the recent auction of licenses, the government conceivably may be concerned that victorious companies not become financially strapped by the purchase to avoid dampening further technological initiatives. Because of the government's interest in how assets are managed after the sale, a sale or lease of some governmental assets may resemble a contracting-out decision more than a traditional sale in the private sector.
So far, I have suggested that policy goals might and have distinguished the government from actors in the private sector when selling or leasing assets. Yet, in comparison to sales in the private sector, there may be fewer checks protecting against hasty or unreflective disposition of government assets. The market exerts a potent check on managers selling assets in the private sector. A company's net worth turns in part on the income generated from the sale of such assets, and the price of shares reflects that worth. In contrast, collective action problems make the prospect of monitoring governmental sales of assets by the electorate unlikely, at best. If Congress directs a particular divestiture scheme, as under the Mining Act of 1872, then the political process-with all of its warts-serves as something of a safeguard, just as it does in preventing graft in regulation of the thrifts. But decisions as to who qualifies for the minority preference in bidding, and what kind of programming in radio broadcasts is preferable, may be reached in a far less visible manner. In comparison to the tort and contract contexts, therefore, more checks should constrain public than private institutions selling assets due to the absence of the private market check on inefficiency. Additional internal governmental checks on the sale or lease of assets, as well perhaps as expanded external review of the actual sale, may be warranted.
* * * * *
In sum, even when acting analogously to a private party in contracting, building, or selling, the government legitimately pursues goals other than profit maximization. Evaluation of public institutions accordingly must take into account those different goals to ensure, for instance, that governmental loans, governmental construction of a dam, or the government's sale of particular wilderness lands are in the public interest. Different rules of conduct should apply to the government's discharge of those tasks it retains in house. As an example, external monitoring of governmental conduct may conflict with a norm of political legitimacy deeply embedded within our nation's fabric. We should be more chary of authorizing courts to second-guess governmental than private actions, despite the potential for rent-seeking. A preference for majoritarian governance shapes governmental activities even when resembling those undertaken in the private sector. In addition, political checks in some contexts operate to prevent or correct careless actions by public entities more effectively than the market constrains careless or opportunistic behavior in the private sector. But when the political process is likely to be less effective than the market in constraining government behavior-as with the sale of assets-then additional checks on governmental action may be required. Thus, although many of the current reform proposals may go far in reducing governmental waste, differences remain between markets and politics that should temper as well as guide calls for reform.
Endnotes
1. See, e.g., Andrew Stark, Gore and Gingrich-Men in a Mirror, N.Y. Times, [[section]] 4 at 17 (Feb. 5, 1995); Donald Devine, Merit Pay Moat Confronting Gore, Wash. Times, F3 (Aug. 10, 1993).
2. See, e.g., John P. Sears, An Uneasy Alliance, St. Louis Post-Dispatch 3B (May 28, 1995).
3. See, e.g., Executive Order No. 12866, 58 Fed. Reg. 51,735 (1993); Risk Assessment and Cost-Benefit Act, H.R. 1022, 104th Cong., 1st Sess. (1995).
4. Omnibus Property Rights Act of 1995, S. 605, 104th Cong., 1st Sess. (1995).
5. For a more extended discussion of my views on sovereign immunity, see Reconceptualizing Sovereign Immunity, 45 Vand. L. Rev. 1529 (1992).
6. See, e.g., 31 U.S.C. [[section]][[section]] 3701-3702 (1988) (waiving immunity for property damage sustained by military personnel); Texas City Disaster Relief Act, 69 Stat. 707 (1955) (waiving immunity for those injured by massive wave of explosions triggered in part by the government's negligence).
7. Under the Federal Tort Claims Act, 28 U.S.C. [[section]][[section]] 2671-2680, Congress retained immunity for "discretionary functions" of government, 28 U.S.C. [[section]] 2680(a), while waiving immunity for more garden variety torts such as traffic accidents and medical malpractice.
8. The Federalist No. 81 at 488 (Alexander Hamilton) (Clinton Rossiter ed., 1961).
9. The Supreme Court has suggested that, in extremely rare cases, the Takings Clause may prevent the government from repudiating a prior pledge without paying compensation. See, e.g., Bowen v. Public Agencies Opposed to Social Security Entrapment, 477 U.S. 41, 55 (1986).
10. See, e.g., J. Cibinic & R. Nash, Administration of Government Contracts 817-30 (G.W. 1986).
11. See, e.g., Larson v. Domestic and Foreign Commerce Corp., 337 U.S. 682 (1949).
12. 17 Stat. 91.
13. See Tom Kenworthy, A Court-Ordered Goldheist: Babbitt Uses Federal Land Transfer to Urge Reform of 1872 Mining Act, Wash. Post, A5 (May 17, 1994).
14. Stephen L. McDonald, The Leasing of Federal Lands for Fossil Fuels Production 73-75 (Johns Hopkins 1979).
15. Ian Ayres & Peter Cramton, Viewpoint, N.Y. Times, [[section]] 3, at 13 (May 21, 1995). The FCC recently discontinued use of the preferences in light of constitutional objections. See Court Action Imminent; Omnipoint Seeks Stay of Entrepreneurs' Block Auction Rules, Communications Daily, July 27, 1995, at 2.
Rewarding Whistleblowers: An Analysis of the
Amended False Claims Act
Richard L. Lippke
James Madison University
In 1986 the United States Congress, as part of its response to reports of widespread fraud and abuse by military contractors, amended the False Claims Act of 1863.1 The amended False Claims Act makes it possible for employees of private companies who do business with the government to file qui tam lawsuits charging their companies with defrauding the government.2 The Justice Department can elect to join in the lawsuit. Whether it does so or not, if the employee filing the suit is successful in proving that the company knowingly submitted or caused the submission of false claims, the employee is entitled to receive from 15 to 25 percent of the total damages that the government recovers. Since the law trebles the damages recoverable by the government, employees who successfully blow the whistle on company fraud may reap substantial sums of money.
Defense contractors are the primary targets of qui tam lawsuits. Not surprisingly, they are extremely unhappy with the amended Act's provisions. Already there have been a number of successful qui tam lawsuits involving large damage amounts.3 The defense industry has urged repeal of the law, insisting that contractor participation in the Defense Industry Initiative, a voluntary ethics program recommended by the Packard Commission, should instead be given sufficient time to demonstrate its efficacy in cleaning up the fraud, mismanagement, and waste that the Commission was created to investigate.4 While the evidence so far suggests that defense contractor participation in the Defense Industry Initiative is little more than window-dressing, there are those who believe that the amendments to the False Claims Act were an overreaction to a few highly visible and publicized cases of defense contractor fraud.5
My focus in this short essay will not be on whether the amended False Claims Act is good public policy with respect to addressing whatever problems exist with defense contractor fraud. Instead, I consider the ways in which the Act extends and alters the legal protections available to whistleblowers. I situate my discussion of the Act in the context of an analysis of the other sorts of legal protections available to whistleblowers, an analysis which suggests that the aims of such protections are indefensibly narrow. I have argued elsewhere that we ought to create institutional structures that secure the social conditions for freedom of speech and conscience both outside and inside the workplace.6 I will draw on those arguments in this essay though I cannot reproduce them in their entirety.
There are numerous legal provisions available to protect employees who blow the whistle on the illegal (and in some cases unethical) conduct of their employers.7 More than 30 states have enacted whistleblower protection laws. These laws vary considerably in defining the procedures whistleblowers must follow, the types of whistleblowing that receive protection, and the remedies available to whistleblowers who are retaliated against. Roughly half of these state laws cover only state government employees. The federal government has also enacted laws protecting federal workers against retaliation when they blow the whistle on waste, fraud, or abuse in their agencies. There are, in addition, protections afforded whistleblowers based on the Constitution, the National Labor Relations Act, and the Civil Service Reform Act. Nevertheless, in the words of one commentator:
The protections available for whistle blowers are piecemeal and sketchy. Those protections that do exist tend to neglect private sector employees.8
Against this backdrop, the amended False Claims Act stands out for two reasons. First, instead of seeking to protect individuals who blow the whistle on fraud from retaliation, it offers them an inducement to expose fraud. Second, the Act offers that inducement to the employees of private companies doing business with the government.9 It is hardly surprising that defense contractors are anxious about the Act, for it invites their employees to help the government police defense contractors in their dealings with the government. While it may be argued that employees always had to choose between loyalty to their companies and allegiance to the law when they suspected their employers of illegal conduct, the amended False Claims Act seems to heighten the conflict faced by employees who suspect their companies of defrauding the government.
Some who are familiar with the defense industry might challenge the preceding characterization of the Act. Leading defense companies are so dependent on government contracts and so heavily regulated in their business dealings with the government that some have questioned whether they are private companies at all.10 The line between the government and such companies already is blurred, or so it might be argued. The Act simply recognizes that defense firms are essentially arms of the federal government and offers the employees of such firms an inducement to ensure that those firms serve the taxpayers' interests as they feed at the public trough.
Suppose we admit that the line between the government and many defense firms is indistinct. There is nothing about the amended False Claims Act which limits its applicability to the defense industry.11 Also, we can imagine similar laws that might be enacted to elicit employee whistleblowing on other types of illegal conduct by private firms, conduct that winds up costing the government money. For instance, Congress could devise schemes to reward employees who expose their employers' illegal dumping of toxic wastes or their employers' violation of banking rules and regulations. The amended False Claims Act invites employees of private firms to become watchdogs of the public treasury and this does represent something new and interesting when it comes to governmental treatment of whistleblowing. Some might regard the Act as advancing the cause of whistleblowing specifically and the cause of freedom of speech and conscience in the workplace more generally. In the remainder of this discussion, I argue against both such construals of the Act.
If one takes a sober look at most of the whistleblower legal protections now in place in the U.S., one cannot help but notice that they seem based on a narrowly instrumental view of the value of work-related acts of speech and conscience. In the main, whistleblower laws protect individuals who disclose illegal conduct or conduct that clearly violates widely-held ethical standards. The laws attempt to protect whistleblowers only because of the perceived value to the public of their revelatory speech. In most other respects, the sorts of hierarchical and often authoritarian management structures that have historically been used to intimidate or marginalize employee speech are left unchallenged by such laws. Even an optimistic assessment of prevailing attitudes towards and practices regarding work-related speech must conclude that we are a long way in this country from having an adequate cultural understanding of the importance of truly open debate, discussion, and expression in the workplace. Speech or acts of conscience that directly bear on the public interest may receive some protection. But the sorts of more mundane concerns employees have about their work-its aims, character, and conditions-are best kept to themselves. This is especially true if their concerns are idiosyncratic and as such not granted much credence by prevailing custom, laws, or ideology.
A defensible account of freedom of speech and conscience on work-related matters begins with the notion of the moral powers of each individual. Briefly, the idea is that individuals are entitled to exercise their moral powers in two fundamental areas: in forming, expressing, and (within limits) acting on their views about both the nature of the good life and the nature of the just terms of social cooperation. Political, economic, and social institutions respect the moral powers of each individual to the extent that they both (a) reflect the input of each participant into the aims, activities, and governance of those institutions, and (b) permit ongoing and open discussion of those aims, activities, and governance mechanisms. Institutions that respect the moral powers of individuals in these ways come as close as is practically feasible to institutions based on the consent of the individuals who participate in them and so approach full moral legitimacy.
The social production of goods and services is laden with decisions that presuppose substantive and controversial views about the nature of the good life and the just social order. Decisions are made about what goods and services to produce, what methods and resources to use in producing them, how to respond to the effects of their production on the environment, how to organize the workplace, what are fair wages and benefits, and what political activities large corporations should engage in, just to name a few. All of these decisions and many others like them are ones about which employees might, in the exercise of their moral powers, develop and express beliefs. If work organizations are to respect the moral powers of individuals and thus achieve a modest level of moral legitimacy, they must take steps to foster and facilitate those powers. This would require not only the institutionalization of guarantees of freedom of speech and conscience on work-related matters; it would also require wholesale changes in the widespread ethos of organizational hostility to employees who openly express their views or refuse to violate their consciences when given orders they regard as unreasonable.12
Leaving aside the amended False Claims Act for the moment, whistleblower laws have done little to fundamentally alter the structural and socio-dynamic features of businesses that make them reluctant hosts to employees who attempt to exercise their moral powers. Again, whistleblower laws seem primarily aimed at protecting those relatively infrequent episodes of speech by employees that reveal legal wrongdoing by the organizations to which they belong. In most other instances, public and private employers are legally permitted to ignore or sanction employee exercises of their moral powers. Typically, employers are more than willing to do so in the name of cultivating employee loyalty and maintaining organizational cohesiveness.
Is it any wonder, then, that there is considerable social ambivalence towards whistleblowers? On the one hand, whistleblowers are held up as courageous public benefactors who resist their employers' attempts to silence them. On the other hand, whistleblowers are portrayed by those steeped in prevailing corporate custom and ideology as dangerous organizational misfits who betray the trust placed in them by their employers and co-workers. Unfortunately, both sides seem to agree that nothing more radical needs to be done to create economic organizations that treat work-related speech and conscience as worthy of recognition and protection for reasons that go beyond those concerned with obvious public benefit. Businesses and many other organizations remain largely "private" in the sense that the sorts of institutional checks and safeguards we insist on in the civil realm-among them that the State's actions be subject to open public scrutiny, debate, and criticism by those it directly affects-are conspicuously absent from the workplace.
Laws designed simply to protect whistleblowers against retaliation rely on whistleblowers themselves having sufficient motivation to come forward. We need not naively believe that whistleblowers come forward only from the most admirable moral motives. Many, no doubt, have mixed motives, but laws that attempt to protect them rely on their having some such motives. In some cases it is clear that whistleblowers stand to gain little and that they are genuinely moved by a concern to protect the public or promote its welfare.
The amended False Claims Act introduces a motive for whistleblowing that was previously unlikely to be operative. The Act offers potential whistleblowers the prospect of financial rewards that in some cases may turn out to be tantalizingly large. By doing so, the Act makes it more likely that some employees of private firms will reveal what they believe is legal wrongdoing. But, the Act may also further cloud public perceptions of the motives of those employees who speak out. The Act may make it easier for opponents of whistleblowing to argue that employees who exercise their moral powers, even in the quite limited ways currently available to them, lack estimable motives for doing so. Such employees will be cast by opponents of whistleblowing as disloyal trouble-makers and bounty hunters. In short, the Act makes it more difficult to distinguish whistleblowers from stool pigeons.13
In the context of legal institutions and cultural practices that already suggest there is something illicit about employees speaking out about their work, the amended False Claims Act may engender greater social ambivalence towards whistleblowers. If this is its effect, the Act undermines what little progress has been made in convincing the public that employees who seek to exercise their moral powers in the workplace are worthy of more extensive sympathy and support. While the Act may prove a boon to taxpayers, it may work against the cause of rendering businesses and other organizations more responsive to and reflective of the moral powers of their employees.
Endnotes
1. The original False Claims Act dates back to the Civil War, where it was used to prosecute manufacturers who substituted sawdust for gunpowder in Union army supplies. Under the old law, if federal prosecutors took over a case they had the option of removing private plaintiffs, thereby leaving whistleblowers out of any financial settlements.
2. Qui tam is Latin shorthand for "He who sues for the king as well as himself."
3. See "Teledyne to Pay Big Fine to U.S.," New York Times, April 22, 1994. The Teledyne Corporation agreed to pay $112.5 million to settle two lawsuits brought by former employees. The article goes on to mention that it is estimated that $1 billion was recovered under the amended False Claims Act in the preceding year.
4. For an analysis of the Defense Industry Initiative and its prospects for rendering the defense industry more accountable, see Nancy B. Kurland, "The Defense Industry Initiative: Ethics, Self-Regulation, and Accountability," 12 Journal of Business Ethics 137 (1993).
5. Cf. Jacques Gansler, Affording Defense (Cambridge, MA: The MIT Press, 1989). Gansler distinguishes fraud, waste, and mismanagement and suggests that the amount of actual fraud in the defense industry may be rather low. See especially pp. 195-198. He also notes that numerous independent studies show the Department of Defense to be one of the best managed of all government agencies. See p. 143.
6. See my "Speech, Conscience, and Work," 18 Social Theory and Practice 237 (1992). My analysis draws on the arguments of David A.J. Richards in Toleration and the Constitution (New York: Oxford University Press, 1986).
7. For an overview and analysis of state laws in this area, see Tim Barnett, "Overview of State Whistleblower Protection Statutes," 43 Labor Law Journal 440 (1992). For an analysis of federal laws, see Robert D. Boyle, "a Review of Whistle Blower Protections and Suggestions for Change," 12 Labor Law Journal 821 (1990).
8. Boyle, "A Review of Whistle Blower Protections and Suggestions for Change," p. 827.
9. In some cases, the courts have protected employees of private companies against retaliation for their whistleblowing because the company had extensive dealings with the government. See, for instance, Holodnak v. Avco, 514 F.2d 285 (CA-2, 1975) 76LC 10,676.
10. Cf. Gansler, Affording Defense, pp. 143-169. See also Tom Riddell, "Concentration and Inefficiency in the Defense Sector: Policy Options," 2 Journal of Economic Issues 451 (1985).
11. See Joseph Palca, "Old Law Puts a New Wrinkle in Fraud Probes," 247 Science 802 (February 1990). Palca notes that while most cases brought under the amended False Claims Act have involved defense contractors, some have involved medical care providers accused of abusing federal Medicaid funds. Also, Palca discusses the possibility that the Act might be extended to cover claims of misconduct by scientists receiving NIH grants.
12. Of course, there are limits to free speech and freedom of conscience even in the civil realm that have their analogues in the workplace. See my "Speech, Conscience, and Work," pp. 250-1.
13. Cf. Gene G. James, "In Defense of Whistleblowing," in Joseph Desjardins and John McCall, Contemporary Issues in Business Ethics (Belmont, CA: Wadsworth, 1985), pp. 300-301. James notes that stool pigeons are to be distinguished from whistleblowers because the former usually disclose wrongdoing for self-interested reasons.
Recent Law Review Articles of
Interest-Abstracts
Weinrib, E. J. "The Gains and Losses of Corrective Justice," 44 Duke Law Journal 277 (1994).
Weinrib examines the nature of correlative gain and loss in Aristotle's classic account of corrective justice. If one understands Aristotle as holding that the unjust gain of the defendant is equivalent to the plaintiff's unjust loss in corrective justice, Weinrib claims that such a notion of correlativity between gain and loss prevents Aristotle's corrective justice from applying to much of modern private law. In order to link the gainers and losers in cases of corrective justice in which there is gain without apparent loss and loss without apparent gain, Weinrib distinguishes between material and normative gains and losses and suggests that Aristotle meant the gains and losses of corrective justice to be normative and not material. Also, Weinrib points out that for Aristotle, the gains and losses of corrective justice are not conditions of liability, but are rather quantitative representations of one person's having wronged another. Weinrib recasts Aristotle's terminology of gain and loss in the Kantian terms of right and duty so that the unjust loss is best understood in terms of the violation of the rights of the loser, while the unjust gain is best understood in terms of the breach of the duties of the gainer toward the loser. Using this terminology, Weinrib defends the comprehensiveness of Aristotle's view of corrective justice, because on this interpretation the two parties are linked by the correlativity of the normative categories of right and duty, even when there is no material gain or loss involved.
Halpin, A. "New Rights for Old?" 53 Cambridge Law Journal 573 (1994).
Halpin argues that Unger's radical approach to rights is actually not so radical and in fact fails to distinguish itself from the old rights of legal formalism. Beginning with an outline of Unger's view of traditional rights, Halpin notes that Unger objects to these rights primarily because they allow for individual discretion, which provides the opportunity to oppress others. Unger's new rights, however, would not be composed of rights based upon individual discretion alone, and these other types of rights would prevent those based on individual discretion from being exercised in a way that oppresses others. Halpin takes each of these new types of rights-immunity, destabilization, market, and solidarity-and argues that each has essentially the same form as traditional rights and that each does allow the right-holder individual discretion and thus would allow for the oppression of others. Halpin claims that Unger is mistaken in his analysis of individual discretion as including any action the right-holder pleases. Instead, Halpin suggests that since the right-holder has the discretion to behave within the terms of conduct limited by the definition of the right, the opportunity to oppress lies not in the form of the right, but in its content, whether that right be traditional or one of Unger's new rights. As a result, Halpin claims that Unger's new rights are not different in form from traditional rights and therefore offer no real alternative to traditional rights-based theory.
Thomas, W. T. "Social Solidarity and the Enforcement of Morality Revisited: Some Thoughts on H.L.A. Hart's Critique of Durkheim," 32 American Criminal Law Review 49 (1994).
In light of H.L.A. Hart's criticisms of it, Thomas provides a sketch of Emile Durkheim's "disintegration thesis" of the social enforcement of morality through criminal punishment. Durkheim's disintegration thesis holds that the punishment of criminals helps maintain societal cohesion by exercising and lending credence to collective sentiments. Understood in this way, punishment acts as a kind of cement which serves to strengthen collective sentiments and therefore prevent social disintegration. Since punishment is thus necessary for social cohesion, societies will, according to Durkheim, continually redefine what constitutes criminal behavior in order to guarantee that society always has an opportunity to voice its collective sentiments. Underlying Durkheim's claims here is his view that moral and legal codes are coextensive and socially beneficial. Against this view, Hart objects that moral and legal rules may conflict and that a society's moral code need not be socially beneficial. In this way, Hart objects that law and morality cannot be conjoined in the simplistic manner that Durkheim suggests. Against these objections, Thomas points out that some actions of modern societies are actually best explained by the disintegration thesis, even though the disintegration thesis may not provide an exclusive description of the relationship between law and morality in a given society. Finally, Thomas concludes that Durkheim's work can provide us with a sort of social barometer: a social act which punishes only to promote social cohesion while being socially destructive can indicate the need for social change.
Gey, S. G. "Is Moral Relativism a Constitutional Command?" 70 Indiana Law Journal 331 (1994-1995).
Against the trend in favor of government enforcement of morals, Gey maintains that the United States Constitution requires that the government view morality as relative. The Constitution does not allow legislation the primary purpose of which is to enforce or to assert the truth of the moral beliefs of those in power (or of any others). Gey surveys the case law which seems to endorse governmental moral regulation, contrasts that case law with Supreme Court opinions on freedom of expression, privacy, and religious freedom, and concludes that the Court holds the contradictory view that moral regulation is acceptable while its implications are not. Gey claims that this contradictory view stems from a static view of democracy which emphasizes the powers of present political majorities. In contrast to such a view of democracy, Gey suggests that democracy is marked by constant political change and that it requires that the authority of present majorities be limited in order to safeguard the power of potential future majorities. Gey also argues that Constitutional moral relativism will prevent those in power from promoting their interests into the indefinite future under the guise of promoting morality and virtue. In order to prevent moral regulation by the government, Gey suggests that the prohibition against any statute based on a sectarian purpose commonly found in Estalishment Clause cases should be extended to include statutes based on any given moralist purpose. Gey concludes that despite the appearances to the contrary, individual moralities of all sorts would flourish under a morally relativistic Constitution.
Kreimer, S. F. "Does Pro-Choice Mean Pro-Kevorkian? An Essay on Roe, Casey and the Right to Die," 44 The American University Law Review 803 (1995).
Kreimer points out that many arguments in favor of legalizing assisted suicide have drawn upon the Supreme Court rationales given in Roe and Casey for the right to an abortion. The first rationale for abortion rights involves the right of individuals to define one's own concept of existence. Kreimer claims that this process of self-determination is different in assisted suicide because a definite human life is at stake, because we do not want to kill those who do not wish to die, because errors can be made in diagnosis, and because depression can lead one to wish death upon himself. Furthermore, Kreimer suggests that in cases of assisted suicide, the possibility of abuses and the disintegration of doctor-patient relations may both provide compelling state interests for overriding the right to self-determination. The second rationale for abortion rights involves bodily autonomy and control. Kreimer argues that with assisted suicide the moral force of the ban on actively killing another human or the practical risks of scapegoating the terminally ill within the medical community may prove to be overriding state interests. Finally, Kreimer argues that the rationale from women's equality in abortion has no real parallel in assisted suicide, because while some handicapped individuals would be disadvantaged others would be protected from lethal abuses by laws prohibiting assisted suicide. Kreimer concludes then that the rationales in Roe and Casey for abortion cannot by themselves provide a definitive answer to the debate over the legalization of assisted suicide.
Levy, R. E. "Escaping Lochner's Shadow: Toward a Coherent Jurisprudence of Economic Rights," 73 North Carolina Law Review 329 (1995).
Through a careful survey of constitutional economic rights jurisprudence, Levy outlines a pattern of "reinvigoration and retreat" with respect to the Supreme Court's economic rights decisions. Levy claims that this pattern is the result of the competing principles of deregulation and judicial restraint, which have lead the Court to seek textual and historical foundations for judicial intervention in economic rights cases, or an "originalist escape." Levy contends that this search for an originalist escape has caused the Court to separate economic rights from other individual rights, which has in turn prevented the Court from developing a comprehensive theory of individual rights and baselines that distinguishes burdens on rights from the mere denial of benefits. Advocating a modest revitalization of economic rights, Levy offers a new approach to developing a coherent economic rights jurisprudence. In order to integrate economic and other individual rights, Levy suggests that economic rights are not only fundamental to ordered liberty as well as to individual and societal well-being, but they also provide protections, as do other individual rights, against abuses in the political process. As for the baseline problem, Levy claims that baseline identification should be an interpretive process which gives meaning to constitutional provisions in the context of particular cases. Finally, after pointing out several of the implications of his alternative approach, Levy concedes that even though his theory calls for some degree of judicial activism, such activism is preferable to the present practice of restraint based upon misapplied doctrines.
Hayman, R. L., Jr. "The Color of Tradition: Critical Race Theory and Postmodern Constitutional Traditionalism," 30 Harvard Civil Rights-Civil Liberties Law Review 57 (1995).
Hayman offers an introduction to Critical Race Theory in which he outlines its four major tenets: 1) a commitment to perspectival or contextualized theories of truth, 2) a commitment to deconstruction and reconstruction of meanings in legal texts and practices, 3) the recognition of the self and the concept of "race" as politically constructed, and 4) the insistence that racial justice be not only theoretically but also practically realized. Hayman investigates the ways "tradition" has conventionally been used to guide constitutional interpretation and offers a postmodernized tradition which recognizes the rapid evolution of traditions and avoids the intolerance and uncritical stasis of conventional traditionalism. Hayman suggests that Critical Race Theory fosters the development of such a postmodern tradition by emphasizing the need for sensitivity to the counter-traditions of oppressed groups. Hayman then outlines four traditions which have emerged from recent Supreme Court cases involving race and discusses a postmodernist alternative for each. Hayman recommends 1) that the tradition favoring color-blindness be challenged by a tradition of acute race-consciousness, 2) that the tradition favoring judicial deference to other public institutions be replaced by a tradition of reliance on democratic constitutional norms, 3) that the tradition favoring private choice and free markets be mitigated by a tradition of struggle against coercion and constraint, and 4) that the tradition favoring meritocracy be replaced by the tradition of counter-culture. Finally, Hayman offers a method for reconstructing traditionalism, using the dialogue, diversity, and struggle for racial justice inherent to Critical Race Theory.
Recent Law Review Symposium
Issues of Interest
Act & Crime, 142(5) Pennsylvania Law Review (May, 1994). Contributors: George Fletcher, Samuel Freeman, F.M. Kamm, Leo Katz, Michael Corrado, Alvin Goldman, Stephen Morse, Bernard Williams, Robert Audi, Michael Bratman, Jennifer Hornsby, Michael Moore.
Divorce and Feminist Legal Theory, 82(7) Georgetown Law Journal (Sept., 1994). Contributors: Milton Regan, Jr., Reva Siegel, Richard Chused, Joan Williams, Emily Field Van Tassel, Carol Rose, Jana Singer, Margarat Brinig, Twila Perry, Martha Albertson Fineman, Barbara Bennett Woodhouse, Katharine Bartlett.
Emerging Issues in State Constitutional Law, 67(3) Temple Law Review (Fall, 1994). Contributors: Hon. Dorothy Beasley, David Abney, David Schuman, Daniel Gordon, Bill Swinford, Bruce Ledewitz, Tracey Levy, Nancy Burkoff.
Federalism's Future, 17 Vanderbilt Law Review (Oct., 1994). Contributors: A. Althouse, A.R. Amar, J.F. Blumstein,, R. Briffault, W.N. Eskridge, Jr., J. Ferejohn, D.A. Farber, R.E. Hudec, B. Friedman, L. Kramer, D.J. Merritt, S. Rose-Ackerman.
Lon Fuller, 13(3) Law and Philosophy (August, 1994). Contributors: Kenneth Winston, Jeremy Waldron, Frederick Schauer, Stanley Paulson, Gerald Postema.
Mediating Institutions: Beyond the Public/Private Distinction, 61(4) University of Chicago Law Review (Fall, 1994). Contributors: Meir Dan-Cohen, Christopher Eisgruber & Lawrence Sager, Ira Lupu, Clayton Gillette, Jonathan Macey, Steven Calabresi.
Stonewall at 25, 29(2) Harvard Civil Rights-Civil Liberties Law Review (Summer, 1994). Contributors: Jane Schacter, David Cole & William Eskridge, Jr., David Chambers, Anthony Winer, Robert Foss.
Visions of Equality: The Future of Title VII, 92(8) Michigan Law Review (August, 1994). Contributors: D. Marvin Jones, Martha Chamallas, Cass Sunstein, Richard Epstein, Kathryn Abrams, Katharine Bartlett, John Donohue III, Jerome McCristal Culp, Jr.
Recent Books of Interest
Altieri, Charles. Subjective Agency: A Theory of First Person Expressivity and its Social Implications. Blackwell Publishers. 1995. 320 pp.
Baird, Robert M. and Rosenbaum, Stuart E., eds. Punishment and the Death Penalty. Prometheus Books. 1995. 250 pp.
Cowan, Robin and Rizzo, Mario J., eds. Profits and Morality. The University of Chicago Press. 1994. 192 pp.
Daly, Kathleen. Gender, Crime & Punishment. Yale University Press. 1994. 337 pp.
Digeser, Peter. Our Politics, Our Selves?: Liberalism, Identity, and Harm. Princeton University Press. 1995. 296 pp.
Donohue, William A. Twilight of Liberty: The Legacy of the ACLU. New Brunswick: Transaction Publishers. 1994. 332 pp.
Duff, Anthony and Garland, David, eds. A Reader on Punishment. Oxford University Press. 1995. 360 pp.
Duxbury, Neil. Patterns of American Jurisprudence. Oxford University Press. 1995. 400 pp.
George, Robert P., ed. The Autonomy of Law. Oxford University Press. 1995. 388 pp.
Gorr, Michael J. and Harwood, Sterling. Crime and Punishment: Philosophic Explorations. Jones and Bartlett Publishers. 1994. 576 pp.
Holmes, Stephen. Passions and Constraint: On the Theory of Liberal Democracy. The University of Chicago Press. 1995. 325 pp.
Kevelson, Roberta, ed. Conscience, Consensus, and Crossroads in Law: 8th Roundtable on Law and Semiotics. Peter Lang Publishing. 1995. 416 pp.
Lincoln, Bruce. Authority: Construction and Corrosion. The University of Chicago Press. 1994. 228 pp.
Low-Beer, F. H. Questions of Judgment: Determining What's Right. Prometheus Books. 1995. 245 pp.
Marmor, Andrei, ed. Law and Interpretation: Essays in Legal Philosophy. Oxford University Press. 1995. 388 pp.
Murphy, Cornelius F. Beyond Feminism: Toward a Dialogue on Difference. Catholic University of America Press. 1995. 200 pp.
Rengger, N. J. Political Theory, Modernity and Postmodernity. Blackwell Publishers. 1995. 200 pp.
Roumeliotis, Michael D. A Study of Epistemology in Legal Theory. Avebury. 1994. 283 pp.
Sargent, Rose-Mary. The Diffident Naturalist: Robert Boyle and the Philosophy of Experiment. University of Chicago Press. 1995. 291 pp.
Simon, Thomas W. Democracy and Social Justice: Law, Politics, and Philosophy. Rowman and Littlefield Publishers. 1994. 320 pp.
Smith, Tara. Moral Rights and Political Freedom. Rowman and Littlefield Publishers. 1995. 248 pp.
Uniacke, Suzanne. Permissible Killing. Cambridge University Press. 1994. 244 pp.
Weinrib, Ernest J. The Idea of Private Law. Harvard University Press. 1995. 291 pp.
Wicke, Jennifer. The Politics of Feminist Theory: Mistaken Identities. Blackwell Publishers. 1995. 200 pp.