Putin Tells Erdogan Russia Will Rejoin Grain Deal If Sanctions Eased, SWIFT Reconnected

Putin Tells Erdogan Russia Will Rejoin Grain Deal If Sanctions Eased, SWIFT Reconnected

Monday’s meeting between Russian President Vladimir Putin and Turkish President Recep Tayyip Erdogan appeared to produce little of significant substance, but Putin took the opportunity to make his demands known as Turkey is attempting to restore the original UN-backed Black Sea Grain Initiative deal.

Putin laid out that his country would would be fine with returning to the deal if sanctions against Russia’s agricultural industry are lifted. “I would like to confirm again our position of principle: we will be ready to consider the opportunity of reviving the grain deal. I told [Erdogan] today again, and will do this immediately after all arrangements set in it on lifting of restrictions on Russian agricultural exports are fulfilled,” Putin said following dialogue with the Turkish leader in Sochi.

Image via AP

He stressed Russia’s return is contingent on the West signing a memorandum to facilitate Russian food and fertilizer exports. “We will do this as soon as all the agreements on lifting restrictions on the export of Russian agricultural products are fully implemented.”

Crucial to this, and key to the demand, is to have the Russian Agricultural Bank (Rosselkhozbank) reconnected to the SWIFT payment system. This was mentioned days ago when it was revealed there’s a new UN proposed package on the table, still under negotiation.

Sources in Turkey’s Anadolu said among the most important elements of the package include “the connection of the European subsidiary of the Russian Agricultural Bank (Rosselkhozbank) to the SWIFT system and the unblocking of frozen assets of Russian companies producing fertilizers in Europe.” This would also involve the necessary of lifting of restrictions on ship insurance and access to currently banned ports.

Russian Foreign Ministry spokesperson Maria Zakharova issued a weekend statement saying, “The new package of UN proposals regarding the ‘grain initiative’ provides for the reconnection of Rosselkhozbank to SWIFT and the unfreezing of assets of Russian companies… Earlier, all this was also ‘conditional’, but it never came into effect.”

But all of the above, particularly easing SWIFT restrictions, would require definitive action on the part of the United States and its allies, which is unlikely in the wake of Russia’s now weekly bombings of Ukrainian ports and oil and grain storage facilities, particularly on the Danube near NATO-member Romania. Additionally, America is helping Kiev to set up alternate shipping of exports, chiefly through the maritime territory of nearby Romania and Bulgaria.

Still, Erdogan sounded optimistic coming out of the talks with Putin in Sochi, telling the media he expects a resolution soon. “As Turkey, we believe that we will reach a solution that will meet the expectations in a short time.”

The two sides did appear to reach a limited short-term deal for Russia to send one million tons of grain to Turkey for processing and export to poorer nations. Putin said he would given this grain to needy populations for free.

Tyler Durden
Tue, 09/05/2023 – 10:35

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When Even Germany’s Chancellor Looks Like Blofeld

When Even Germany’s Chancellor Looks Like Blofeld

By Michael Every of Rabobank

The market quietly digested US labour market data for most of yesterday’s holiday-thinned session. Some worried the labor market is still too hot, with nominal wage growth of 5% y-o-y (and the UAW asking for 46%) vs. productivity growth that’s negative. Others worried everything is too cold, with a weaker revised payrolls trend and a rise in labour force participation rates to where they were 20 years ago – which happens both when savings are depleted (i.e., immiseration) and when wage growth is strong (i.e., remuneration.) For many, however, it was a Gold-manSachs-ilocks release that said asset markets were just right to keep going up.

Except so did oil: Brent is now close to $90 despite recession looming and the labor market softening. Indeed, throw in that Chinese manufacturing is still expanding even if the Caixin services PMI today slumped back to51.8 from 54.1, and it’s far from clear that the usual narratives of ‘rates fall soon!’ or ‘stocks keep rising!’ still apply. The risk is instead of supply-side stagflation.

Russia and Turkey just failed to thrash out a new Black Sea grain deal; the Financial Times suggests the EU is “poised for a giant leap towards further integration” – and yet also expensive expansion; Indonesia rejected an offer to join the BRICS11, and said it wants to join the OECD; the US looks to sign a comprehensive strategic partnership with Vietnam, adding to renewed ties with the Philippines, and between South Korea and Japan; and China’s Xi won’t attend the G-20 in India, nor perhaps the APEC summit in the US – so much for the good will efforts. Meanwhile, we see that ‘China to Set Up New Agency to Promote Private Sector Growth’ and this “Bureau will track and analyze the state of private business”; and, of course, the state will then allow private businesses to do whatever they decide to, privately(!)

Yes, the Black Sea aside, none of those headlines translate to a direct move in stocks, bond yields, or commodity prices. However, the collective picture suggests structural shifts that carry fat tail risks for markets, as has been made abundantly clear of late (i.e., Brexit, Ukraine, China’s ‘common prosperity’).

Sometimes a picture speaks a thousand words. Mild-mannered, liberal-world-order, green-transition-loving German Chancellor Scholz just appeared with an eyepatch and scars that make him look like Blofeld from Bond, Number One from Austin Powers, Moshe Dayan from 1967, or Space Commander Travis from Blakes’ Seven. All Scholz needs is a white cat and a swivel chair: that might help him grasp the spectrum of conflated challenges he faces, as warnings rain down of threats to Germany’s auto sector, and as wind farms are dug up to mine coal, while imports of Russian LNG surge, due to a refusal to use nuclear power.

Sometimes a chart also speaks a thousand words too. While people argue about whether 2-year US Treasuries are a “screaming buy” or not ‘because rates will be cut soon’, or 10s are the same ‘because rates won’t be cut soon, but need to be”, look at the 30-year. It is now at 4.31%, when it started 2023 at 3.96%, 2022 at 2.02%, 2021 at 1.66%, and 2020 at 2.33% (i.e., pre-Covid).

There are two takeaways from that.

  • First, barring a sudden collapse in US data, this could indeed be a third consecutive year of losses for those long bonds, which some have recently pointed out has not happened to the US Treasury market in general since the American Revolution. Talk about usual models not applying!
  • Second, the bond market is saying long-term US growth is going to be higher ahead with low inflation; or growth will be the same as now or lower, but with higher inflation; or what-we-can’t-explain-so-call term premiums have risen due to “uncertainty”… like the UAW asking for a 46% pay rise, the US running a massive fiscal deficit even before the onset of recession and a need to rearm again, and worrying shifts in the geopolitical and geoeconomic architecture.

In short, put on an eyepatch like Scholz and squint at the US 30-year if you want an idea of the future.

This is the backdrop for the last policy meeting for RBA Governor Philip Lowe today. Before heading off into the staggeringly well-remunerated sunset –because he isn’t going to go build low-income housing– he is widely expected to keep things as they are at 4.1%, though our AU/NZ strategist Ben Picton expects another 25bp hike to 4.35% later in the year. As such, Lowe will depart with the rare accolade (for now, but not for long!) of having left with higher policy rates than he started with, so his monetary policy was not eponymous after all.

When Dr. Phil joined the RBA in September 2016, Australia was already in the New Normal following the end of the China commodity boom – which the RBA had not seen coming despite warnings from yours truly. The overnight cash rate was already at just 1.5%, and Lowe left it there for almost three years, before cutting to 1.25% in June 2019, to 1.0% in July 2019, to 0.75% in October 2019, all pre-Covid, and then to 0.50% and immediately to 0.25% in March 2020, and again to 0.1% in October 2020 once the virus struck. Then we got pointless QE, pointless yield curve control, and the infamous “Rates won’t rise until 2024” promise. Which ended up with the RBA on the government’s Naughty Step.

The RBA’s subsequent review will see fewer rate meetings under new Governor Bullock, who was along for the whole ride so far as Deputy Governor, and: “A clearer monetary policy framework; stronger monetary policy decision making and accountability; an open and dynamic RBA, with a more agile and empowering culture; more robust corporate governance; and steps to ensure RBA leaders drive institutional and cultural change.”

Sadly, however, the only thing that may actually change is the wallpaper. The intellectual theme song at the RBA will likely remain “I’m housing, housing, housing, housing. I’m housing, housing, housing, housing all night.”

To have really changed in a way that would allow it to not focus solely on assets as growth drivers, and to avoid future shocks when assets eventually, inevitably become unaffordable, as in China; or external shocks have like the mid-2010s, or the inflation return of 2021-22, would require a far broader spectrum of thinkers to enter the Reserve Bank than is the case so far. It would require experts on geoeconomics; on the supply side, not the demand side; on shadow banking; on national security; and those who grasp Kaleckian political-economy, not just economics.

Absent those, we probably won’t get an ‘eyepatch’ view from the RBA, just a lilac-scented eye-mask that lulls the naïve to sleep.

As such, ignore what they say, because they are going to be far more wrong than right, and keep looking at the 30-year US yield and international news headlines instead. And go buy yourself a white cat and swivel chair.

Tyler Durden
Tue, 09/05/2023 – 10:21

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US Factory Orders Tumbled In July, Transports Heavy

US Factory Orders Tumbled In July, Transports Heavy

After its large (2.3% MoM) jump in June, US factory orders were expected to see a major decline in July (down 2.5% MoM)> The decline was sizable – down 2.1% MoM – but less than expected.

Source: Bloomberg

That is still the biggest MoM drop since Nov ’22 and left the YoY orders 0.7% lower.

Transportation was clearly a drag since Core Factory orders rose 0.8% MoM – best since January – well above expectations…

Source: Bloomberg

Overall Durable Goods Orders plunged 5.2% MoM (thanks to a 43.6% collapse in non-defense aircraft and parts orders), but that final print is the same as the preliminary print.

Tyler Durden
Tue, 09/05/2023 – 10:07

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“Dangerous”: Law Professor Sounds Alarm On Attempts To Disqualify Trump

“Dangerous”: Law Professor Sounds Alarm On Attempts To Disqualify Trump

Authored by Jack Phillips via The Epoch Times,

An attempt to disqualify former President Donald Trump from appearing on 2024 presidential ballots based on a theory derived from the Constitution’s 14th Amendment was dismissed by a prominent law professor on Tuesday.

A theory that has recently been floated in the media claims that the former president could be blocked from ballots under Section 3 of the 14th Amendment via the Disqualifications Clause, which states that individuals who “have engaged in insurrection or rebellion” cannot hold office. Proponents of the claim say that President Trump engaged in “insurrection” during the Jan. 6, 2021, Capitol breach.

But George Washington University law professor Jonathan Turley stated that the new theory is “not simply dubious but dangerous.”

“The amendment was written to deal with those who engage in an actual rebellion causing hundreds of thousands of deaths,” Mr. Turley told Fox News.

“Advocates would extend the reference to ‘insurrection or rebellion’ to include unsupported claims and challenges involving election fraud.”

The professor, who had served as an expert impeachment witness in favor of Republicans defending President Trump, said he didn’t favor the former president’s speech on Jan. 6. However, he said that the Jan. 6 incident was merely “a protest that became a riot” and not an insurrection against the United States.

“According to these advocates, Trump can be barred from the ballot without any charge, let alone a conviction, of insurrection or rebellion,” Mr. Turley said.

Mr. Turley added that he views that some people who proposed the theory also “argue that there is no action needed from Congress” and that “state and federal judges could just bar those who are deemed as supporting rebellion through their election challenges and claims.”

Over the weekend, Sen. Tim Kaine (D-Va.), a former Democratic vice presidential candidate, stated that there was a “powerful argument” for barring President Trump under the 14th Amendment.

“The language (of the amendment) is specific: If you give aid and comfort to those who engage in an insurrection against the Constitution of the United States—it doesn’t say against the United States, it says against the Constitution. In my view, the attack on the Capitol that day was designed for a particular purpose … and that was to disrupt the peaceful transfer of power as is laid out in the Constitution,” he told ABC News.

The former president has long denied Democrat allegations that he initiated a riot or insurrection at the Capitol. He has often pointed to a portion of his speech on Jan. 6 where he called on rally attendees to “peacefully and patriotically” protest.

Former President Donald Trump boards his private airplane, also known as Trump Force One, as he departs Atlanta Hartsfield-Jackson International Airport after being booked at the Fulton County jail in Atlanta, Ga., on Aug. 24, 2023. (Joe Raedle/Getty Images)

Also, Rep. Adam Schiff (D-Calif.), who had promoted often false claims that the former president colluded with the Russian government during his administration, also said that the disqualification theory “fits Donald Trump to a T” during a recent MSNBC interview. He also cited the incident at the Capitol on Jan. 6, again claiming it was an insurrection led by President Trump.

Some Democrats, including state officials, have said that the theory likely doesn’t hold water.

Among them, Arizona Secretary of State Adrian Fontes told a podcast several days ago that the Arizona Supreme Court ruled that there is “no statutory process in federal law to enforce Section 3 of the 14th amendment” and that “you can’t just enforce it.”

“That’s what the Arizona Supreme Court said, so that’s the state of the law in Arizona. Now, do I agree with that? No, that’s stupid,” Mr. Fontes said, saying that he disagrees with the ruling but would follow the law in that case.

Other than Mr. Turley’s comment to Fox News, another constitutional scholar and political science professor told ABC News that the 14th Amendment theory faces an uphill battle.

“The challenge here is that the 14th Amendment isn’t necessarily self-executing. In other words, it doesn’t just automatically happen and there is some question about what it means to be engaged in insurrection or rebellion and how that is defined. The challenge for us is that historically, it hasn’t been well-defined,” Kevin Wagner, a professor at Florida Atlantic University, told the outlet.

Mr. Wagner also noted that many “have suggested that this was a protest that may have gotten out of hand” during Jan. 6 and “didn’t rise to a level of a rebellion or an insurrection.”  Elaborating, he said that the provision in the 14th Amendment also “really turns on how it is that we assess what happened.”

Previously, a Trump campaign spokesperson called the possible use of the 14th Amendment to disqualify the former president as election interference ahead of the 2024 contest.

“What these undemocratic organizations are doing is blatant election interference and tampering,” Trump campaign spokesman Steven Cheung told the Washington Post last month. “They are not even trying to hide it anymore and it is sad they want to deprive the American people of choosing Donald Trump—the overwhelming front-runner by far—as their President. History will not judge them kindly.”

Tyler Durden
Tue, 09/05/2023 – 09:50

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Prof. Todd Henderson (Chicago) on Arizona v. Navajo Nation

I’m delighted to report that we’ll have two items on this June 2023 Supreme Court case today, both from people who know a great deal about Indian law; unfortunately, I know very little about the subject, but I know it’s important, and I’m glad to have a chance to pass along these items. First, from Prof. Todd Henderson (Chicago):

Although it did not garner as much attention as the decision in the Indian Child Welfare Act case, the Supreme Court’s recent decision in a water dispute in Arizona is potentially more significant. In Arizona v. Navajo Nation, the Court held that despite being a “trustee” for the Navajo Nation and despite having promised the Navajo water sufficient to make its lands productive, the United States does not have an obligation to help the Navajo obtain that water.

The decision is the latest in a series of rulings that effectively gut the affirmative duties necessary under the trust obligation, absent explicit congressional command. Like many aspects of Indian law, the modern Court has flipped the script.

The old rule was the Court would interpret legal texts in favor of tribal interests, absent explicit congressional instructions to abrogate those rights—generally, the tie went to the Indian. Today, the opposite is increasingly true, with the Court looking for specific intent from Congress to give, rather than looking for specific intent to take away. Changing the default rule here, as elsewhere in law, has enormous implications.

The scope of the federal government’s trust obligation is the subject of centuries-old dispute, starting with the fact that the Supreme Court just made it up out of whole cloth. It started with a murder.

In 1830, George Corn Tassel, a Cherokee, killed Sanders Talking Rock Ford, another Cherokee, within the boundaries of the Cherokee Nation, in what is now Georgia. Georgia prosecuted Corn Tassel, and a jury of twelve non-natives convicted him. Represented by former Attorney General of the United States, William Wirt, the Cherokee appealed to the Supreme Court, which issued a stay pending appeal.

On Christmas Eve, Georgia defied the Court and hanged Corn Tassel. In the face of Georgia’s defiance, the Supreme Court took up the question of whether it had original jurisdiction to hear a challenge by the Cherokee Nation against the enforcement of the laws of Georgia on Cherokee land.

Answering in the negative in Cherokee Nation v. Georgia, Chief Justice Marshall declared the Cherokee Nation not a foreign nation, which would thus bring disputes between it and a state within the Court’s original jurisdiction, but rather a “domestic dependent nation.” Going unnecessarily further, Marshall baldly declared Indian tribes to be “in a state of pupilage” and describing “their relation to the United States” as “a ward to his guardian.” This is the origin of the “trust” obligation, which is the animating force behind two centuries of Indian policy and is the touchstone of all actions by the federal government today.

The federal government has been a lousy trustee. The history is replete with abuses by Indian agents charged with implementing federal policies to fulfill its trust responsibility, which led to starvation, murder, war, and expropriation of land and other resources.

The Bureau of Indian Affairs has also tried to stamp out Indian culture through the years, from the trivial, such as banning long hair and certain dances, to the monumental, such as the kidnapping of Indian children to have them (re)educated at boarding schools.

Lest one think this is all in the past, consider the litigation about the government’s management of accounts for individual Indians, whose property was leased out by the federal government. Under the trust obligation, Indians are not generally permitted to sell, rent, or lease their property without the permission of the federal government. Accordingly, the Bureau of Indian Affairs, as trustee, will enter into contracts with companies wishing to exploit the resources of Indian lands, such as timber or oil interests, holding any lease payments in individual accounts.

This was the trustee’s promise. For decades, bureaucrats held the monies in these accounts hostage, requiring Indians to beg for disbursements to buy basic items. Trustees embezzled the money or overcharged Indians, receiving kickbacks from in-cahoots retailers. Many millions went missing and Indians were infantilized.

Frustration eventually led to litigation—in 1996, Eloise Cobell, treasurer of the Blackfeet tribe, sued for an accounting of so-called Individual Indian Money Accounts. If you want to see government at its most inept, read Judge Royce Lamberth’s 1999 decision in Cobell v. Babbitt, in which he stated that “[i]t would be difficult to find a more historically mismanaged federal program than the Individual Indian Money (IIM) trust.”

The litigation dragged on for fourteen years. The government could not produce any coherent records for over 300,000 IIM accounts. Multiple Interior secretaries were held in contempt for failure to comply with court orders to produce records and to stop destroying evidence. Congress eventually settled the case for $3.4 billion, making the case the biggest ever won against the federal government.

The Supreme Court created this mess, but it has been reluctant to try to fix it. The tribes have come to the Court on occasion pressing claims that the federal government has been a lousy trustee.

For instance, in a 2009 case, United States v. Navajo Nation, the claim was that a lease to mine coal on Navajo lands entered into on their behalf by the Secretary of the Interior was corrupt. The initial royalty rate negotiated with the Peabody Coal Company in 1964 was too low and when it was renegotiated in 1984, the bargaining was allegedly influenced by ex parte contacts between Peabody and President Reagan’s administration.

The Navajo sought $600 million in damages. The Court, via Justice Scalia, rejected the claim. The Court declared that the general trust obligation, which started in Cherokee Nation and had been federal policy ever since, was not sufficient in the abstract to create legally cognizable claims under the Indian Tucker Act.

Rather, the government’s obligations to pay damages would be defined by the explicit text of statutes—miasmas based on history or the like wouldn’t cut the mustard. The Court would “train on specific rights-creating or duty-imposing statutory or regulatory prescriptions.”

Under this approach, the plaintiff must identify language that “bears the hallmarks of a conventional fiduciary relationship” in order for trust principles to lead to damages. The Court reviewed various statutes that authorized and regulated coal leasing by the Secretary on behalf of Indians and found them bereft of such hallmarks. The Navajo lost.

The upshot of this state of affairs is a kind of trust purgatory for Indians. Under New Deal-era statutes, individual Indians do not own their land, rather it is held on their behalf by the United States as trustee. This presents a tradeoff. Government oversight can protect Indians against abuse, but it also raises costs and presents opportunities for mismanagement and graft.

Terry Anderson and others have demonstrated the economic inefficiency of this arrangement. See, e.g., https://digitalcommons.law.lsu.edu/cgi/viewcontent.cgi?article=1048&context=jelr.

But, to make matters worse, the trusteeship is not something that the government must take seriously, since it is generally unenforceable in court. In other words, the Supreme Court created the trust obligation but does not give it teeth in a way that would make its potential realizable.

Congress can, of course, provide the teeth, and perhaps as a matter of institutional competence this is the right general approach. It depends on assumptions about what is politically possible and creates space in which the gap between promise and on-the-ground results is wide.

In the absence of congressional attention on Indian matters and consensus on the scope of the government’s duties, the other corner solution—freeing the Indians from the burdens of the trust relationship—might be preferable to keeping them under it but not living up to it’s potential.

Arizona v. Navajo Nation, the latest case in this area, reinforced this recent line of cases paring back the trust duty. It did so in the specific context of water disputes, which are central to many tribes. The result, keeps tribes in trust purgatory, as the government is bound to them as ward to guardian, to use Chief Justice Marshall’s phrase, but can’t be held to account in court when it fails to fulfill this sacred duty.

In a companion piece, Harriet McConnell Retford delves into the details of this case and what it says about the wisdom of the trust obligation.

The post Prof. Todd Henderson (Chicago) on <i>Arizona v. Navajo Nation</i> appeared first on Reason.com.

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May a Judge Sanction Lawyers by Requiring Them to Get Remedial Training from a Particular Ideological Organization?

This is one of many interesting free speech questions raised in Carter v. Transport Workers Union of Am. & Southwest Airlines Co. (N.D. Tex.). Let me discuss those questions in turn.

[1.] We begin with the employer’s punishment of employee speech that led to the case in the first place:

In 2017, a flock of Southwest flight attendants descended upon Washington, D.C. for the so-called “Women’s March” protesting President Donald J. Trump. Those flight attendants were also Local 556 members, and one—Audrey Stone—was the union’s president. During the march, they carried signage emblazoned with Southwest’s logo. Carter, a pro-life Christian, objected to the flight attendants’ purported representation of Local 556, Southwest, and, by extension, herself—especially given Planned Parenthood’s sponsorship of the protest. To voice her objection, Carter sent Stone several private Facebook messages, some of which contained videos of aborted babies. In one of those messages, Carter said, “[t]his is what you supported during your Paid Leave with others at the Women’s MARCH.”

Stone filed a complaint against Carter with Southwest. After a hearing, Southwest fired Carter, saying that when Carter messaged Stone, she was “identifiable as a Southwest Airlines Employee and represented our Company in a manner that is disparaging to Southwest Flight Attendants.”

Carter sued, alleging that (1) Local 556 had breached its duty of fair representation, (2) Southwest and Local 556 had retaliated against Carter for exercising her protected rights under the Railway Labor Act …, and (3) Southwest and Local 556 had discriminated against Carter for her religious beliefs and practices under Title VII. A jury found for Carter on each claim ….

Title VII of the Civil Rights Act, among other things, requires employers not to discriminate against employees because of the employees’ religious beliefs or religious practices. That means that the employers have to “reasonably accommodate” (so long as they can do so without “undue hardship”) employees’ religious behavior such as wearing religious headgear, taking their Sabbath off, and the like: Even when a generally applicable, religiously neutral work rule prohibits such behavior (for instance, by setting a dress code or requiring people to work weekends), the employees are entitled to exemptions from that work rule. But the same applies when the religious practice consists of speech; see PDF p. 7 of this article for some examples. The judge therefore allowed Carter’s Title VII case to go forward (a decision that eventually led to the jury verdict mentioned above):

Plaintiff alleges that her “religious beliefs require her to share with others that abortion is the taking of a human life.” According to Plaintiff, she “discovered that Local 556, the exclusive labor representative of all Southwest flight attendants, participated in the Women’s March and supported pro-abortion activities, using Southwest logos on their signs.” “In accordance with her religious beliefs and practices, [Plaintiff] posted videos to her personal Facebook page opposing abortion and sent President Stone videos opposing abortion and comments critical of Local 556’s support for abortion.” Plaintiff alleges that before her termination at her fact-finding meeting, she notified Southwest of her religious beliefs and explained why she sent the Facebook messages to Stone.

Plaintiff contends, “Southwest violated Title VII’s anti-discrimination provisions when the [C]ompany terminated [Plaintiff] for her religious beliefs and for engaging in the religious practice of sharing religious beliefs on abortion with the [U]nion president and on her personal Facebook page.” According to Plaintiff, “Title VII required Southwest’s policies to give way to the need for an accommodation of [Plaintiff’s] religious beliefs and practices.” Plaintiff further alleges that Southwest violated Title VII “by failing to attempt any accommodation to [Plaintiff’s] religious beliefs and practices, including when [Southwest] applied the Social Media Policies to [Plaintiff’s] communications on her personal Facebook page and to the [U]nion president.”

Accepting all well-pleaded facts as true and viewing them in the light most favorable to the Plaintiff, the Court finds that Plaintiff has stated a plausible Title VII claim for religious discrimination against Southwest. Plaintiff has established “more than a sheer possibility” that her religious beliefs and practice were a factor in Southwest’s decision to terminate her. Whether accommodating Plaintiff’s religious beliefs would have imposed an undue hardship on Southwest is a fact-intensive inquiry that may be addressed at the summary judgment stage or at trial….

This in effect means that religiously motivated speech—which likely also includes speech that stems from “moral or ethical beliefs as to what is right and wrong which are sincerely held with the strength of traditional religious views” (PDF p. 8)—is treated more favorably by the law than is other speech, such as political commentary that stems from pragmatic concerns. (I discuss a related issue as to RFRAs here.) One can argue that this itself violates the First Amendment. Or one can view this as a reason to narrow Title VII’s duty of religious accommodation, to exclude claims of protection for religious speech on moral or political matters, or to broaden Title VII to protect employee speech more broadly. But so far, the court’s analysis is well within the mainstream of currently existing Title VII law.

[2.] Now let’s turn to a speech compulsion imposed as a result on the employer. After the verdict, the judge issued an injunction ordering Southwest and the union not to violate Title VII’s religion-related provisions (more at PDF pp. 27-28 here on why it thought such a broad injunction was proper), and also required the defendants to notify employees about this:

Accordingly, the Court ORDERS Local 556 to post the jury’s verdict and the accompanying Final Judgment in conspicuous places at the union hall for a 60-day period and issue them electronically to all union members.

The Court likewise ORDERS Southwest to post the jury’s verdict and the accompanying Final Judgment on company bulletin boards for a 60-day period and issue them electronically to all Southwest flight attendants.

The Court ORDERS Southwest and Local 556 to inform Southwest flight attendants that, under Title VII, they may not discriminate against Southwest flight attendants for their religious practices and beliefs, including—but not limited to—those expressed on social media and those concerning abortion.

This is of course compelling the union and Southwest to speak, as a consequence of their adjudicated past violation of the law. In principle, one could argue that this should be seen as violating the First Amendment. But such orders are fairly common and are generally seen as constitutional, I believe, in labor law cases, and are sometimes issued in Title VII cases as well. Rightly or wrongly, employers are often required to post various sorts of information related to employment law, whether general information about employees’ rights or specific information about adjudicated violations by the employer.

[3.] Finally, we get to a compulsion to listen, imposed on Southwest’s lawyers. Southwest appealed the injunction, but expressly said it “does not seek a stay of the Court’s reinstatement order or its orders regarding injunctive relief.” It was thus bound by the injunction, and here’s what it wrote to its employees:­­­

The judge concluded this was inconsistent with the injunction, because it said that “Southwest does not discriminate” rather than that Title VII provides that Southwest “may not discriminate”:

Southwest’s notice failed to mention Title VII, that the federal law known as Title VII contains a prohibition, and that that prohibition forbids Southwest from discriminating against flight attendants for their religious beliefs. Instead, Southwest’s notice communicated that there’s nothing to see here—aside from the Court’s bequeathing Southwest a badge of honor for not discriminating (which the Court did not do).

Southwest also wrote to its employees:

The judge concluded this was inconsistent with the injunction as well, in particular as to the passage that “We have established policies and guidelines that we must all adhere to,” coupled with the statement that Southwest viewed Carter’s speech as not adhering to those policies:

Not content with merely inverting the Court’s notice, Southwest also sent a memo to its flight attendants the same day, stating that its employees must abide by the types of policies over which Southwest fired Carter and that it believed its firing of Carter was justified because of those policies.

The judge went on to reason:

Southwest also argues that it has the right to speak, just like it did with the memo to flight attendants reminding them to abide by the policies over which it unlawfully fired Carter. The Court agrees that Southwest has the right to speak. But Southwest has long harbored the view—during trial, after the verdict, and (as evinced by its memo to flight attendants) even after the judgment—that its policies on civility trump federal laws like Title VII. And if Southwest continues to represent to its flight attendants that it may discriminate against them if they violate Southwest’s civility policies, Southwest will likely find itself (yet again) on the wrong side of the Court’s order. Southwest needs to understand, when communicating with its employees, that federal protections for religious freedom override any company civility policy….

Because Southwest’s right to speak when implementing the Court’s injunction ensures a continued partnership in the future, and Southwest’s speech and actions toward employees demonstrate a chronic failure to understand the role of federal protections for religious freedom, the Court concludes that training on religious freedom for three lawyers at Southwest the Court finds responsible … is the least restrictive means of achieving compliance with the Court’s order. The Alliance Defending Freedom (“ADF”) has conducted such training in the past, and the Court deems that appropriate here.

And just this past Thursday, the judge reaffirmed the order.

Now court-ordered training of lawyers whom the judge views as responsible for improper behavior in a case before the court is also not uncommon. Indeed, the Fifth Circuit (the federal court that supervises district courts in Texas) had recently authorized requiring a lawyer to “complete 3 hours of CLE courses in ethics” as a sanction, and other courts had done similar things.

But I don’t think it’s normal to require training to be done by a specific organization, and I think there is good reason to be skeptical of this, on First Amendment grounds. The ADF is indeed, as the judge noted, highly knowledgeable about religious freedom law, and may well be experienced in training:

ADF has won multiple Supreme Court cases in recent years on the topic of religious liberties, evidencing an understanding of religious liberties. And because ADF has agreed to conduct topical trainings in the past, ADF appears well-suited to train Southwest’s lawyers on a topic with which the lawyers evidently struggle.

But at the same time, ADF is an ideological organization, with its own commitments about how the law should be understood and enforced. It’s possible that any law firm, even a less overtly ideological one than ADF, would likewise have its own set of such commitments; but it seems particularly clear for ADF. And indeed I’m not aware of any established practice of courts requiring training by a particular firm: The cases that I’ve seen ordering training leave it to the target to choose among a set of eligible providers, for instance any Continuing Legal Education provider that provides training on particular topics.

Thus, for instance, say an employer was found to have discriminated based on, say, race or gender identity, and its lawyers were sanctioned for some noncompliance with the court’s orders as to such matters, noncompliance that the judge views as stemming from a lack of knowledge of the law. The lawyers might well be ordered to take further CLE courses on the relevant legal rules. But I wouldn’t expect them to be ordered to take such classes from, say, the ACLU or Lambda Legal.

As a general matter, the government can’t bar us from speaking, can’t force us to speak, and can’t bar us from listening. I think it likewise generlaly shouldn’t be able to force us to listen (though I appreciate that courts generally haven’t spoken expressly to that).

Of course, there are exceptions, when the government is managing various government-run institutions. Government employees’ speech can be restricted significantly on the job, and the employer can of course require them to listen to training. Colleges students are restricted in what they can say in class, and of course they can be required to read the class assignments, to listen to lecturers, and to answer homework questions or exam questions or in-class questions based on those assignments and lectures.

Lawyers likewise are limited in what they can say in the courtroom and in the litigation process more generally. They can be required to say certain things. And they can be required to listen to certain things, whether by their professional obligations (a lawyer who refuses to listen to a witness’s statement, because he finds it offensive, is committing malpractice) or as a sanction for violating court orders.

But it seems to me that the First Amendment requires that these mandates be limited to what’s really necessary, and not be made potentially unduly ideological. If a lawyer has to learn about some subject, the court may order that the lawyer do so. But it shouldn’t require that the lawyer learn about the subject from a particular ideological advocacy group, which is likely—just as a matter of human nature—to impress its teachings with a particular perspective.

I’m not saying this to fault ADF: I don’t think there’s anything wrong with ADF-provided training being influenced by ADF’s views, even while it also provides an accurate summary of the law. People who voluntary go to ADF-run training programs likely expect and want it to be colored by those views. I just think that it’s likely that there will be such influence, whether on training by ADF or the ACLU or Lambda Legal, especially when nothing in the court orders requires the trainers to take extraordinary steps to make sure that their training be as neutral as possible.

Now I should note (as the judge did, in rejecting the objection to the ADF, see n. 56) that Southwest focused on training by a particular group being “unprecedented” rather than a First Amendment violation (see PDF p. 24). Nonetheless, it seems to me that judges should craft their orders to avoid needless intrusions on people’s First Amendment rights, even in the absence of an objection. And I think that requiring lawyers to take training from particular ideological groups, left, right, or otherwise—or, I’d say, even from groups that claim to be nonideological—is indeed such a needless intrusion.

The post May a Judge Sanction Lawyers by Requiring Them to Get Remedial Training from a Particular Ideological Organization? appeared first on Reason.com.

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From Prof. Richard Re: The Remarkable Discourse on 303 Creative

[This is a guest post by Prof. Richard Re (Virginia); because of a technical glitch, I have to post this series under my own byline, but all of them are written by Prof. Re.]

Perhaps the most surprising feature of the last Supreme Court term was the extraordinary public discourse on 303 Creative LLC v. Elenis. According to many commentators, the Court decided what was really a “fake” or “made up” case brought by someone who asserted standing merely because “she worries.” As a doctrinal matter, these criticisms are unfounded.

But what makes this episode interesting is that the criticisms came from the legal left, which has long been associated with expansive principles of standing. Doubts about standing in 303 Creative may therefore portend a broader standing realignment, in which liberal justices become jurisdictionally hawkish.

In the past, justices who found themselves out of power have often tried to tighten justiciability principles. So, now that the Court has shifted decidedly rightward, it makes some sense for there to be an ideological reversal on federal court jurisdiction.

Or so I argue in a new draft paper, “Does the Discourse on 303 Creative Portend a Standing Realignment?“, forthcoming in the Notre Dame Law Review Reflection.

Eugene has kindly invited me to present portions of my paper as a series of blog posts. The first few paragraphs of this post are drawn from the paper’s abstract. Future posts will address standing, factual disputes, and, ultimately, the broader issue of realignment.

In the rest of this post, I’ll like to reproduce my basic take on 303 Creative and respond to some salient standing-based objections. Let’s start with the case’s facts:

A web designer in Colorado named Lorie Smith wanted to offer web services related to weddings. But she didn’t want to create websites supportive of same-sex marriages, which she opposes. Knowing that Colorado had viewed similar stances as unlawful discrimination on the basis of sexual orientation, Smith, through a corporation and with the aid of conservative group Alliance Defending Freedom, sued the State.

Many legal commentators have argued—via social media, podcasts, television, and press articles—that there was no standing in 303 Creative. This wave of critical commentary washed over the public in early July. As a sitting US Senator then put it on Twitter: “I have no law degree and even I know the Court cannot adjudicate a hypothetical. This is an embarrassment of a new dimension.”

According to some of these critics, the Court held that the designer had standing to bring suit simply because “she worries” about potential liability. A federal judge has even asserted as much in a judicial order, echoing left talking points on social media. This claim is incendiary because mere worries are a patently inadequate basis for standing under extant case law.

However, the premise underlying this popular criticism is plainly incorrect. True, the Court did use the phrase “she worries,” but it did so only to describe the case’s factual background. Later, the Court spent several pages approvingly recounting the standing analysis issued by the court of appeals. And that discussion applied a “credible threat” standard, consistent with settled case law.

For example, the Court stated: “To secure relief, Ms. Smith first had to establish her standing to sue. That required her to show ‘a credible threat’ existed that Colorado would, in fact, seek to compel speech from her that she did not wish to produce.”

And later: “Ms. Smith alleged that, if she enters the wedding website business to celebrate marriages she does endorse, she faces a credible threat that Colorado will seek to use [the Act] to compel her to create websites celebrating marriages she does not endorse.” …

Going further, some commentators appear to suggest that plaintiffs shouldn’t be able to bring suit until they have violated the law, thereby exposing themselves to a risk of punishment. This perspective is visible, for example, in the many critics who emphasized that there had been no denial of services in 303 Creative, much less an actual enforcement action against the designer.

Yet that view is contrary to roughly a century of settled case law. And that case law has enjoyed broad support. The idea that opposition to pre-enforcement review was at least briefly in currency on the left is among the most surprising and interesting features of the popular reaction to this case.

To give some sense of why the “credible threat” standard has so much appeal—and why any left opposition to pre-enforcement review is so startling—imagine a different and starker scenario. Let’s say that someone wants to bring a soapbox to the town square and rail against the president. But on their way there, they see someone else get on a soapbox at roughly the same place, start criticizing the president, and get dragged away by police for violating a law barring public protest. Does that person have to endure arrest or worse to bring a federal court challenge? Or can the person instead establish these events and get a protective order or injunction, ensuring that they will be able to speak in accord with their constitutional rights?

Before 303 Creative, it appeared widely agreed in U.S. legal culture that the imagined person could sue at once. Yes, the suit would be pre-enforcement, and the plaintiff wouldn’t yet have spoken in any way, much less have run afoul of the police. Maybe the new prospective speaker wouldn’t actually be bothered at all by the police – the future, after all, is necessarily somewhat speculative. Yet there would be a credible threat of enforcement, based on the government’s recent treatment of a similar individual. That is why standing would be proper, under current case law. If we took seriously some of the more extravagant objections concerning 303 Creative, however, that highly intuitive and longstanding conclusion would be called into question.

I hope this post convinces you that the discourse on 303 Creative is important and at least partly misguided. My next post will explore whether the “credible threat” standard for standing had been met.

The post From Prof. Richard Re: The Remarkable Discourse on <i>303 Creative</i> appeared first on Reason.com.

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The Sticky Spaghetti School of Constitutional Law


ednote2 | Illustration: Joanna Andreasson

“The bulk of the constitutional scholarship says that it’s not likely to pass constitutional muster” is not a sentence you want to hear from a president launching an economywide initiative that will directly impact millions of Americans. Yet President Joe Biden said exactly that in 2021 when he announced plans to continue a Trump-era Centers for Disease Control and Prevention (CDC) initiative giving public health bureaucrats control over evictions nationwide.

The Court was not amused by Biden’s brazenness, and—just as it had clearly signaled it would do when it had earlier considered the expiring eviction moratorium—it ruled that it was not, in fact, within the power of the executive to give the CDC control of the contractual arrangements between every American renter and landlord.

Biden is simply the latest to experiment with an increasingly popular governing philosophy that involves throwing laws and edicts at the wall like so much spaghetti. (As is his wont, Biden diverged from his predecessors primarily by saying the quiet part slightly louder.) This sticky spaghetti system involves knowingly attempting unconstitutional action and then waiting to see just how mad the Supreme Court gets.

The Court, it turns out, can get pretty mad.

In Biden v. Nebraska, the case that considered the president’s splashy plan to forgive $430 billion in outstanding student loan debt, Chief Justice John Roberts’ June majority opinion declared: “People think that the President of the United States has the power for debt forgiveness. He does not. He can postpone. He can delay. But he does not have that power. That has to be an act of Congress.” A clear, strong statement—and not Roberts’ own words. Roberts was quoting then–House Speaker Nancy Pelosi (D–Calif.), who was quite correct when she explained the limits of presidential power in a 2021 press conference. Biden knew better. His whole party knew better. He did it anyway.

Roberts went on to explain, this time in his own voice, what should have been obvious: “Our precedent—old and new—requires that Congress speak clearly before a Department Secretary can unilaterally alter large sections of the American economy.”

***

Unfortunately, this messy and destructive pattern repeats, with different degrees of hypocrisy and/or public acknowledgment, across administrations: Biden’s vaccine mandate, Donald Trump’s bump stock ban, Barack Obama’s unauthorized drone strikes, Trump’s funding of the border wall out of military appropriations, indeed nearly every facet of immigration policy.

Advocacy for restraint on the latter came from an unlikely quarter in 2019. “President Obama said that he did not have the right to sign DACA [the Deferred Action for Childhood Arrivals program], that it will never hold up in court,” tweeted Trump. “He signed it anyway! If the Supreme Court upholds DACA, it gives the President extraordinary powers, far greater than ever thought.”

As usual, Trump’s characterization wasn’t precisely accurate. But Obama did say in response to calls for immigration reforms in 2010: “I am not king. I can’t do these things just by myself.” And in 2012, while reserving the right to do temporary law enforcement prioritization, he denied “the notion that I can just suspend deportations through executive order.” Shortly thereafter, overly ambitious enforcement decisions by his Department of Homeland Security about those very policies were struck down by the courts.

Trump’s enthusiasm for a constrained executive was far from consistent, of course. He also claimed Article II of the Constitution gave him “the right to do whatever I want as president” and it took three drafts and three trips through the judiciary before one of his own signature immigration policies—a ban on people traveling from a list of Muslim-majority countries—managed to pass muster with the Court.

***

When the president sets the tone, other politicians follow suit in their own arena. The push to implement clearly unconstitutional restrictions on social media is a striking example. Trump debuted this particular style of pasta-toss with his quickly squelched national TikTok ban, a move the Trump-appointed U.S. District Judge Carl J. Nichols called “arbitrary and capricious.” TikTok responded to the policy by asking to be treated fairly “if not by the administration, then by the U.S. courts.”

Montana followed suit in May with its own statewide TikTok ban, which illegally targets a specific company. Meanwhile, state legislatures in Florida and elsewhere have attempted other unconstitutional intimidation, restriction, or prior restraint on what types of content social media companies choose to carry.

Congressional Republicans, including Sens. Josh Hawley (R–Mo.) and Marco Rubio (R–Fla.), have gotten in on the action as well, authoring several hastily written bills that restrict TikTok to varying degrees, introducing them in a flurry, and insisting on a vote—all while fully conceding that the specifics of the bills needed work to make them First Amendment–compliant.

Protecting the Constitution should not be the sole business of the Supreme Court. Thankfully, a few politicians still know better than to make a mess and leave the judiciary to untangle a pile of noodles.

“Which is more dangerous: Videos of teenagers dancing or the precedent of the U.S. government banning speech?” asked Sen. Rand Paul (R–Ky.) in March. “For me it’s an easy answer. I will defend the Bill of Rights against all comers, even, if need be, from members of my own party.”

The post The Sticky Spaghetti School of Constitutional Law appeared first on Reason.com.

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Oil Soars To New 2023 High After Saudis, Russia Shock With Extended, Expanded Production Cut

Oil Soars To New 2023 High After Saudis, Russia Shock With Extended, Expanded Production Cut

Just days after we said that Saudi Aramco floating to sell up to $50 billion in new stock meant that oil is about to soar much higher…

moments ago oil exploded higher after first Saudi Arabia and moments later Russia surprised markets by announcing that the recently implemented production cuts would be extended through year-end, well beyond the 1 month that was widely expected by the market.

Just after 9am ET, Saudi Arabia said it would extend the voluntary cut of 1 million b/d of for another 3 months, from October until the end of December, well beyond the expectation of just 1 more month. Saudi press agency SPA notes that the voluntary cut decision will be reviewed monthly to consider deepening the cut or increasing production. The extension of cuts is meant to reinforce the precautionary efforts made by OPEO countries with the aim of supporting the stability of the oil market.

And then, literally seconds after the Saudi decision, Russian deputy PM Novak said Russia would not only extend its reduction of oil exports until the end of the year, but also add another 300kb/d in voluntary oil cuts until December 2023. The measure is in addition to voluntary reduction previously announced by Russia in April 2023, which will last until of December 2024.

Similar to the Saudis, Russia said that the decision to reduce oil production to be reviewed monthly to consider possibility of deepening reduction or increasing production depending on situation on the world market.

Following this announcement Brent Nov’23 lifted from USD 88.50 to above $90 for the first time in 2023, while WTI Oct’23 rose from USD 85.55/bbl to USD 87.00/bbl, also the highest price of the year, and about to crush the Fed’s hopes for a decline in headline inflation.

Bottom line: we now know that a year and a half later, the OPEC+/BRIC+ reaction to Biden’s weaponized dollar is weaponized oil; may the least hopeless man win.

As for Biden, we wish him the best of luck refilling the SPR now that oil is about to hit $100 and rise above the price where the senile president sold most of the US strategic oil.

Tyler Durden
Tue, 09/05/2023 – 09:18

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