Gale Encyclopedia Of American Law 3Rd Edition Volume 2 P22 potx

President Reagan announced his intent to permit the bill to become law without his signature. The bill became automatically effec- tive at midnight, August 3, 1988. The law requires employers with one hundred or more employees to provide their workers with sixty days’ layoff notice when fifty or more workers at a single site will lose their jobs and when affected workers will constitute at least one-third of that site’s work force. If 500 or more employees are laid off, however, such notice is required regardless of the percentage of site workers involved. Companies failing to provide the requisite warning face penalties of compensating each dismissed employee for wages and fringe benefits for every day the notice should have been given. Additionally, a $500 payment per day, up to a maximum of $30,000, must be made to local communities when the act’s provisions have not been met . Analogous requirements exist in 38 other countries and in five states. At least twenty other states have proposed such legislation. According to the federal government’s GENERAL ACCOUNTING OFFICE (GAO) survey, prior to this legislation, the national median length of advance notice for the closing of large establishments was seven days. White collar and union blue collar workers averaged as much as fourteen days’ termination notice while non-union blue collar workers only received two days’ notice. Since 1981 more than five million Americans have lost their jobs because plants were shut down or their positions were eliminated. Along lines similar to President Reagan’s reservations, NATIONAL ASSOCIATION OF MANUFAC- TURERS president Alexander B. Trowbridge maintained that the legislation “damages the flexibility essential to run a successful business.” Moreover, Trowbridge noted that advance notice was not always possible as financially troubled businesses may not be able to predict their status with the precision that the legisla- tion required. To salvage their troubled busi- nesses, these companies might find themselves in the midst of difficult debt financing, merging with another company, selling off assets, or bidding on a major contract, all of which could be hampered by the new law’s requirements. He claimed that the required closing notices would discourage customers and jeopardize credit arrangements. A report compiled by the Congressional Office of Technology Assessment titled “Plant Closing: Advance Notice and Rapid Response” (DTA-ITE-321) found contentions such as Trowbridge’s to be highly exaggerated because financial emergencies are rarely a factor in plant closings. Other critics of the legislation cited an R. Nathan Associates study which claimed that the total annual costs for notification would run as high as $1.8 billion, due to lost profits, penalties, and additional administrative costs. The Nathan study found further that about 460,000 lost jobs would be triggered by unnecessary closings as a direct result of the act. The GAO, however, seriously questioned the Nathan report on the basis of what it claimed was inadequate and flawed analysis and methodology. The DEPARTMENT OF LABOR al so stated in 1986 that “many of the fears regarding advance notification have not been realized in practice.” The National Science Foundation claimed to have found proof that, in most labor groups, advance notice significantly shortens joblessness, which in turn translates into better earnings for displaced workers and substantial savings in unemployment insurance. Labor unions, such as the AFL-CIO, uniformly acclaimed the Worker Adjustment and Retrain- ing Notification Act, 29 U.S.C.A. § 2101 et seq., claiming that when advance notice is combined with SEVERANCE pay, it improves morale and actually increases worker productivity. CROSS REFERENCES Corporations; Employment Law; Labor Law; Unemploy- ment Compensation. BUSINESS JUDGMENT RULE A legal principle that makes officers, directors, managers, and other agents of a corporation immune from liability to the corporation for loss incurred in corporate transactions that are within their authority and power to make when suff icient evidence demonstrates that the transactions were made in good faith. The directors and officers of a corporation are responsible for managing and directing the business and affairs of the corporation. They often face difficult questions concerning wheth- er to acquire other businesses, sell assets, expand into other areas of busines s, or issue stocks and dividends. They may also face potential hostile takeovers by other businesses. To help directors and officers meet these GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION 198 BUSINESS JUDGMENT RULE challenges witho ut fear of LIABILITY, courts have given substantial deference to the decisions the directors and officers must make. Under the business judgment rule, the officers and direc- tors of a corporation are immune from liability to the corporation for losses incurred in corporate transactions within their authority, so long as the transactions are made in GOOD FAITH and with reasonable skill and prudence. The rule originated in Otis & Co. v. Pennsyl- vania R. Co., 61 F. Supp. 905 (D.C. Pa. 1945). In Otis, a shareholder’s DERIVATIVE ACTION alleged that corporate directors failed to obtain the best price available in the sale of securities by dealing with only one investment house and by generally neglecting to “shop around” for the best possible price, resulting in a loss of nearly half a million dollars. The federal district court ruled that although the directors chose the wrong course of action, they acted in good faith and therefore were not liable to the share- holders. The court reasone d that “ mistakes or errors in the exercise of hones t business judgment do not subject the officers and directors to liability for NEGLIGENCE in the discharge of their appointed duties.” Subsequently, the business judgment rule was applied to directors ’ actions when corpora- tions were faced with a hostile TAKEOVER.In Unocal Corp. v. Mesa Petroleum Co., 493 A.2d 946 (Del. Super. 1985), the Delaware Supreme Court upheld the defensive actions taken by a board of directors during a takeover struggle with a minority shareholder. In this case Mesa Petroleum Company made an offer that would have made it the majority shareholder in Unocal Corporation. Under the offer, shareholders who sold their Unocal stock would receive $54 a share until Mesa acquired the 37 percent it sought and then would receive highly specula- tive Mesa securities instead of cash for any stock sold beyond that 37 percent. To counteract the takeover bid Unocal’s directors announced that if Mesa obtained 51 percent of its shares, Unocal would purchase the remaining 49 per- cent for an exchange of debt securities (securi- ties reflected as debt on the books of the corporation) with an aggregate par (or face) value of $72 a share, but the offer would not be extended to the 51 percent of stock held by Mesa. Mesa filed suit, allegin g that the directors had violated their FIDUCIARY duty by excluding Mesa from the exchange. The court concluded that the directors’ actions were protected by the business judgment rule. The court recognized that in responding to hostile takeover bids the directors of a corporation can face a conflict between their own interests and the interests of the corporation and its shareholders. The court stated that the Unocal directors had reasonable grounds to believe that a danger to the corporation existed because of Mesa’s actions and that the defensive actions they took were reasonable in relation to the threat they “rationally and reasonably” believed the offer posed. Despite the seemingly broad scope of the business judgment rule, corporate directors have not always been able to rely upon it as a way to escape liability for their actions. In Smith v. Van Gorkom, 488 A.2d 858 (Del. 1985), the Supreme Court of Delaware held that the directors of a corporation failed to exerci se informed business judgment and instead acted in a grossly negligent manner by agreeing to sell the company for only $55 a share. The court looked to evidence indicating that the directors reached their decision to sell at that price after hearing only a 20-minute oral presentation concerning the sale. The court also noted that the directors had received no documentation indicating that the sale price was adequate and had not requested a study to help them determine whether the price was fair. Although the directors were not accused of acting in BAD FAITH , the court stated that the directors’ fiduciary duty toward their shareholders re- quired more than merely an absence of bad faith. The directors, according to the court, had an affirmative duty to protect the shareholders by obtaining and reviewing information neces- sary to help the directors make sound business decisions. By failing to inform themselves they were therefore liable to the shareholders for their bad business decision. Even when a corporation faces a hostile takeover, the business judgment rule may not insulate its directors from liabili ty. In Revlon v. MacAndrews & Forbes Holdings, 506 A.2d 173 (Del. 1985), the company attempting a takeover sought a PRELIMINARY INJUNCTION to prevent the corporation that was the target of the takeover from granting a LOCKUP option, which gives a friendly THIRD PARTY the right to purchase part of the target company to help thwart a takeover. The Delaware Supreme Court held that the GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION BUSINESS JUDGMENT RULE 199 directors failed to fulfill their duty to preserve the company by not maximizing the sale value of the company for the benefit of its share- holders. According to the court, by instituting the lockup option and halting the bidding, the directors allowed “considerations other than the maximization of shareholder profits to affect their judgment” and thus acted to the detriment of the shareholders. Once the directors deter- mined to sell the corporation, the court held, their role changed from that of “defenders of the corporate bastion to auctioneers charged with getting the best pric e for the stockholders at the sale of the company.” As a result, the court held that the directors were not entitled to the protection of the business judgment rule. Courts have further held that the business judgment rule will cover the actions of directors only when the directors are disinterested and independent with respect to the action that is at issue. A director is independent when she or he is “in a position to base [ her or his] decision on the merits of the issue rather than being governed by extraneous considerations or influences”; conversely, a director is considered to be interested if she or he appears to be on both sides of a transaction or expects to derive personal financial benefit from it, as opposed to a benefit to be realized by the corporation or all shareholders generally (Aronson v. Lewis, 473 A.2d 805 [Del. 1984]). Thus, if one director stands to receive a substantial financial benefit from the issuance of stock nonetheless designed to counteract a takeover threat, the business judgment rule may not apply to the board of directors’ actions. Such allegations of bias, lack of independence, or disinterest must be sup- ported by TANGIBLE evidence. FURTHER READINGS Balotti, R. Franklin, and Jesse A. Finkelstein. 2006. The Delaware Law of Corporations and Business Organiza- tions. Frederick, MD: Wolters Kluwer Law & Business. Baynes, Leonard M. 2003. “Racial Stereotypes, BroaD.C.ast Corporations, and the Business Judgment Rule.” Univ. of Richmond Law Review 37, no. 3 (March). Branson, Douglas M. 2002. “The Rule That Isn’t a Rule— The Business Judgment Rule.” Valparaiso Univ. Law Review 36 (summer). Brown, Meredith M., and William D. Regner. 2003. “What’s Happening to the Business Judgment Rule?” Insights: The Corporate & Securities Law Advisor 17, no. 8 (August). Clark, Frank, G. W. Dean, and K. G. Oliver. 1997. Corporate Collapse: Regulatory, Accounting, and Ethical Failure. New York: Cambridge Univ. Press. Gervurtz, Franklin A. 1994. “The Business Judgment Rule: Meaningless Verbiage or Misguided Notion?” Southern California Law Review 67. Velasquez, Manuel G. 2005. Business Ethics: Concepts and Cases. 6th ed. Upper Saddle River, NJ: Pearson/ Prentice-Hall. CROSS REFERENCES Immunity; Negligence. BUSINESS RECORD EXCEPTION A rule of evidence that allows routine entries made customarily in financial records, or business logs or files kept in the regular course of business, to be introduced as proof in a lawsuit when the person who made such notations is not available to testify. This rule, also called the business entry rule, is an exception to the HEARSAY rule. Business records are considered to have a greater degree of reliability and trustworthiness than personal records because of the regular and systematic way in which they are kept and the reliance that a business places on them. State and FEDERAL RULES OF EVIDENCE specify what records qualify for this exception to the hearsay rule. BUSINESS ROUNDTABLE The Business Roundtable is an association of chief executive officers (CEOs) representing the top corporations in the United States, joined together to examine and advocate for PUBLIC POLICY that will “foster vigorous economic growth and a dynamic global economy.” Established in 1972 by 200 leading executives from major U.S. cor porations, the Roundta ble was founded upon the idea that business executives should take an increased role in public policy that affects the economics of Americans. The belief is that the basic interests of business closely parallel the interests of average citizens, who are directly involved in the economy as employees, investors, suppliers, and consumers. Thus, business leaders have a responsibility to actively influence the economic wellbeing of the country. The Business Roundtable is an association whose members are the chief executive officers (CEOs) of those U.S. companies with more than $5 trillion in yearly revenues. The member companies make up almost one-third of the value of the U.S. stock markets. As the Round- table sees it, one of its principal strengths “is the GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION 200 BUSINESS RECORD EXCEPTION extent of participation by the chief executive officers of the member companies.” CEOs work in task forces on specific topics and issues that currently impact the social and economic well- being of the United States. For example, in 2003 task forces were in place to focus on such issues as civil justice reform, the digital economy, the environment, and security. Each task force is headed by a chief executive and is assisted by a support staff composed of employees from task force member companies who are experts in the field. Task force members conduct research, craft policy recommendations, and create action plans. They also draft position papers on major issues, which are used in a variety of ways, including congressional testimony. Activities of the task forces are reviewed by the Roundtable Policy Committee, which is the governing body of the organization. The Policy Committee is composed of all Roundtable CEOs. At the helm of the Roundtable is a chief executive who serves as chairman. The chair- man is elected for a one-year term. He or she is assisted by two to four co-chairpersons. These executive chairmen, combi ned with the task force chairmen make up the Planning Commit- tee for the organization. The Planning Com- mittee provides general strategy and guidance. In an effort to ensure that a broad base of information is represented in all decision making, membership in the organization is diversified. Thus, CEOs come from all areas of business and all areas of the United States. Such diversity ensures a cross section of thinking on national issues. Roundtable members also have a continuing liaison with other organizations that are directly involved with the concerns at hand. Since 2000, the Roundtable has carried out significant LOBBYING efforts before the U.S. Congress for passage of the presidential trade negotiating authority (2001); proposed to the GEORGE W. BUSH administration a $300 billion incentive package for economic growth (2002); and announced an unprecedented Climate RESOLVE initiative calling for voluntary action by all businesses to reduce greenhouse gas emissions (2003). It also supported the Senate’s Initiative to End lawsuit Abuse (2005) and, in 2009, filed an amicus brief with the U.S. Supreme Court supporting deferential treat- ment for company ERISA plan administrators who must interpret plan provisions to the maximum benefit of all plan participants (Conkright v. Frommert, No.08-810). FURTHER READINGS Business Roundtable. Available online at http://www. businessroundtabletable.org/ (accessed August 19, 2009). Business Roundtable. 2003. “The Business Roundtable Announces Its Resolve to Voluntarily Control Green- house Gas Emissions.” Press Release, February 12, 2003. Business Roundtable. 2002. “The Business Roundtable Calls for $300 Billion Growth Package.” Press Release, November 21, 2002. Koffer, Keith. 2001. “BRT Mobilizes Lobbyists, Funds for Trade Negotiating Authority.” CongressDaily AM (May 9). BUSINESS TRUST An unincorporated business organization created by a legal document, a declaration of trust, and used in place of a corporation or partnership for the transaction of various kinds of business with limited liability. The use of a business trust, also called a MASSACHUSETTS TRUST or a COMMON-LAW TRUST, originated years ago to circumvent restrictions imposed upon corporate acquisition and devel- opment of REAL ESTATE while achieving the limited LIABILITY aspect of a corporation. A business trust differs from a corporation in that it does not receive a charter from the state giving it legal recognition; it derives its status from the volun- tary action of the individuals who form it. Its use has been expanded to include the purchase of securities and commodities. A business trust is similar to a traditional trust in that its trustees are given LEGAL TITLE to the trust property to administer it for the advantage of its beneficiaries who hold equitable title to it. A written DECLARATION OF TRUST specifying the terms of the trust, its duration, the powers and duties of the trustees, and the interests of the beneficiaries is essential for the creation of a business trust. The beneficiaries receive certificates of BENEFICIAL INTEREST as evidence of their interest in the trust, which is freely transferable. In some states, a business trust is subject to the laws of trusts while, in others, the laws of corporations or partn erships govern its exis- tence. The laws of each state in which a business trust is i nvolved in transactions must be consulted to ensure that the trust is treate d as an entity whose members have limited liability. GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION BUSINESS TRUST 201 If the laws of a particular state consider a business trust to be a partnership, the bene- ficiaries may be fully liable for any judgments rendered against it. The trustees of a business trust are liable to third parties who deal with the trust unless there is a contract provision to the contrary, since they hold legal title to the trust property and may sue and be sued in actions involving the trust. They may, however, seek INDEMNITY from the trust property and possibly from the beneficiaries. The property of a business trust is managed and controlled by trustees who have a FIDUCIARY duty to the beneficiaries to act in their best interests. In many states, the participation of the beneficiaries in the management of the property destroys their limited liability, and the arrange- ment will usually be treated as a partnership. Profits and losses resulting from the use and investment of the trust property are shared proportionally by the beneficiaries according to their interests in the trusts. A business trust is considered a corporation for purposes of federal INCOME TAX and similarly under various state income tax laws. BUSING See SCHOOL DESEGREGATION. “BUT FOR” RULE In the law of negligence, a principle that provides that the defendant’s conduct is not the cause of an injury to the plaintiff, unless that injury would not have occurred except for (“but for”) the defen- dant’s conduct. In order to be liable in NEGLIGENCE,the defendant’s conduct must constitute the PROXI- MATE CAUSE , or direct cause, of the plaintiff’s injury. The concept of proximate cause encom- passes both LEGAL CAUSE and factual cause, and the “but for” rule pertains to the latter. It is also referred to as the SINE QUA NON rule, which means “without which not,” or an indispensable requirement or condition. The “but for” rule is a rule of exclusion, in that the defendant’s conduct is not a cause of the event, if the event would have occurred without it. The “but for” rule explains most cases when limited solely to the issue of causation, but it does not resolve one type of situation: if two causes concur to bring about an event, and either one of them, operating independently, would have been sufficient to cause the identical result, some other test is required. This situation arises, for example, when the DEFENDANT sets a fire that unites with a fire from some other source, and the combined fires burn the plaintiff’s property, although either fire alone would have been sufficient to do so. In such cases, each cause has actually played so signifi- cant a role in achieving the result that responsibility must attach to it. Neither may be relieved from that responsibility on the basis that identical harm would have occurred without it, or no LIABILITY at all would ensue. In order to rectify the frequently problem- atic application of the “but for” rule, some jurisdictions have applied a broader rule, which provides that the defendant’s conduct is a cause of the event if it was a material element and a substantial factor in bringing about the event. The jury ascertains whether such conduct constitutes a substantial factor, unless the issue is so unambiguous that it is appropriate for judicial determination. The prevailing view is that “substantial factor” is a phrase sufficiently comprehensible to the layperson to supp ly an adequate guide in instructions to the jury, and that it is neither possible nor beneficial to simplify it. In addition to resolving the aforementioned case, the subst antial factor test resolves two other types of situations that have proved troublesome, where a similar, but not identical, result would have followed the defen dant’s act or where one defendant has made an obvious but insignificant contribution to the result. The application of the two rules can achieve the same result in some instances, because, except as indicated, no case has been encountered where the defendant’s act co uld be deemed a substantial factor when the event would have transpired without it. In addition, cases seldom arise where the defendant’s conduct would not be such a substantial factor yet was so indispensable a cause that the result would not have ensued without it. If the defendant’s conduct was a substantial factor in causing the plaintiff’s injury, he or she will not be absolved from liability simply because other causes have contributed to the result, because such causes are always present. However, a defendant is not necessarily relieved of liability because the negligence of another person is also a contributing cause, and that GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION 202 BUSING person, too, is to be held liable for the harm inflicted. The principle of joint tortfeasors is based primarily upon recognition of the fact that each of two or more causes may be charged with a single result. v BUTLER, BENJAMIN FRANKLIN (1795–1858) Benjamin Franklin Butler was born December 14, 1795, in Kinderhook Landing, New York. He was admitted to the New York bar in 1817, and established a legal pract ice with MARTIN VAN BUREN in Albany, New York. From 1821 to 1824 Butler performed the duties of district attorney for Albany County. Butler entered politics in 1827, serving in the New York State Legislature for six years. He subsequently acted as U.S. attorney general from 1833 to 1838; during this time he also fulfilled the duties of secretary of war from 1836 to 1837. In 1838, Butler returned to New York and served as U.S. district attorney from 1838 to 1841 and from 1845 to 1848. Butler died November 8, 1858, in Paris, France. v BUTLER, BENJAMIN FRANKLIN (1818–93) Benjamin Franklin Butler achieved prominence as a politician and military officer. Butler was born November 5, 1818, in Deerfield, New Hampshire. After graduating in 1838 from Waterbury College, now known as Colby College, Butler was admitted to the Massachusetts bar in 1840. Elected to the Massachusetts House of Representatives in 1853 and the Massachusetts Senate in 1859, he also served atour of military duty during the Civil War. At the outbreak of the war, Butler entered the Massachusetts militia as a brigadier general. He participated in the capture of Baltimore, Maryland, in 1861 and led forces against New Orleans, Louisiana, in 1862. After the conquest of New Orleans, Butler became military gover- nor of that city, but his administration was charged with severity, corruption, and graft. After six months, Butler was reassigned to the Eastern Virginia-North Carolina area and commanded the Army of the James in 1863. Butler acted as administrator for the return of prisoners in 1864, and was assigned to New Benjamin Franklin Butler 1795–1858 ❖ ❖ ◆ 1795 Born, Kinderhook Landing, N.Y. ◆ ◆ ◆ ◆ ◆ 1817 Established legal practice with Martin Van Buren in Albany 1833 Appointed U.S. attorney general by President Jackson 1821–24 Served as district attorney of Albany County 1827–33 Member of New York state legislature 1836 Martin Van Buren elected president 1838 Appointed U.S. district attorney in New York 1845 Reappointed to U.S. district attorney post by President Polk 1841 Returned to private practice 1848 Retired from public service 1858 Died, Paris, France 1861–65 U.S. Civil War ▼▼ ▼▼ 1775 1825 1850 1875 1800 ◆ Benjamin Franklin Butler (the younger). BRADY NATIONAL PHOTOGRAPHIC ART GALLERY, LIBRARY OF CONGRESS NEVER HOLD OFFICE. H OLD YOURSELF ABOVE IT [BECAUSE] AN OFFICER IS A SERVANT . —BENJAMIN FRANKLIN BUTLER (B.1818) GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION BUTLER, BENJAMIN FRANKLIN 203 York to enforce order during the election held in that same year. After the war, Butler served in the federal government, representing Massachusetts in the U.S. House of Representatives from 1867 to 1875, and from 1877 to 1879. He returned to Massachusetts in 1882 to perform the duties of governor and in 1884 was an unsuccessful nominee for the U.S. presidency, representing two independent parties—the Anti-Monopoly party and the Greenback party. Butler died January 11, 1893, in Washington, D.C. v BUTLER, CHARLES HENRY Charles Henry Butler served as the Supreme Court reporter of decisions from 1902 to 1916. Butler was born June 18, 1859, in New York City. He was the son of William Allen Butler, a lawyer, and the grandson of BENJAMIN F. BUTLER, U.S. attorney general during the administration of MARTIN VAN BUREN. Butler attended Princeton University but left school before graduating. He then studied law in his father’s New York office for several years, and often accompanied his father to Washington, D.C., when the elder Butler appeared before the U.S. Supreme Court to argue cases. Butler was admitted to the New York state bar in 1882 and subsequently practiced law in New York City. In 1898 he served as the legal expert for the Fairbanks- Herschell Commission, which was convened to adjust the boundary of Alaska and Canada. In December 1902 Butler left the PRACTICE OF LAW to accept an appointment as reporter of decisions for the U.S. Supreme Court, a position created by Congress in 1816. In the early days of the Court, the reporter had been primarily responsible for editing, publishing, and distrib- uting the Court’s opinions; beginning in 1874, however, Congress provided money for the government to publish the Court’s opi nions, and thus by the time Butler became reporter, his role was limited to editorial tasks. While reporter, Butler edited and published volumes 187 to 241 of the United States Reports, the official publication of the opinions of the U.S. Supreme Court. During his tenure with the Court, he also was a delegate to the Hague Peace Benjamin Franklin Butler 1818–1893 1818 Born, Deerfield, N.H. 1838 Graduated from Waterville (now Colby) College 1840 Admitted to Massachusetts bar 1852 Elected to the Mass. House of Representatives 1861–65 Served as general in the Union Army; poor performance led him to be relieved from command more than once 1877–79 Served in U.S. House of Representatives 1867–75 Served in U.S. House of Representatives 1882–83 Served as governor of Mass. 1884 Ran unsuccessful presidential campaign on the Greenback and Anti–Monopoly tickets 1893 Died, Washington, D.C. ❖ ◆ ◆ ❖ ◆ ◆ ▼▼ ▼▼ 1800 1850 1875 1900 1825 Charles Henry Butler 1859–1940 ❖ ◆ 1859 Born, New York City ◆ ◆ 1890 The Voice of the Nation published 1898 Served as legal expert for Fairbanks- Herschell Commission; Cuba Must be Free published 1902 Appointed reporter of decisions for U.S. Supreme Court; Treaty- Making Power of the United States published 1916 Returned to private practice partnership with John Krantz 1914–18 World War I 1861–65 U.S. Civil War ◆ ◆ 1942 A Century at the Bar of the Supreme Court of the United States published posthumously 1939–45 World War II 1933 Son Henry replaced John Krantz in partnership ▼▼ ▼▼ 1850 1900 1925 1950 1875 1940 Died, Washington, D.C. ◆ ❖ CITIZENS OF THIS COUNTRY ARE ESSENTIALLY LOYAL ; BUT THEY ARE MORE LOYAL TO PRINCIPLES THAN THEY ARE TO MEN . —CHARLES BUTLER GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION 204 BUTLER, CHARLES HENRY Conference in 1907. He later authored A Century at the Bar of the Supreme Court of the United States (1942), a sometimes lighthearted account of the Court’s inner workings and his experiences as reporter. In the book, published two years after his death, Butler described his dealings with the justices as “delightful and congenial.” He wrote that the work was “very interesting. It was not difficult and did not take all of my time. The salary afforded me a comfortable income.” Butler also described in some detail the various rules and customs of the Court, including the writ of CERTIORARI and the social etiquette of the Court, and shared anecdotes about lawyers who had argued before the Court. With respect to the reporter’s position, Butler discussed the process of pre- paring headnotes, the paragraphs that appear at the beginning of opinions to summarize the major points of law contained in the opinions. During Butler’s tenure, the Court made clear that headnotes were not to be construed as part of the opinions and were instead only the expressions of the reporter ab out the holdings of the Court. Butler eventually found his position to be “somewhat monotonous” and noted that “[t]here was nothing constructive about it so far as my part was concerned.” In addition, Butler was frustrated by the anonymity of the post and by frequent misunderstandings about his role and duties; he wrote that he was once introduced as the “Head STENOGRAPHER of the United States Supreme Court.” As a result, Butler resigned from the Court in October 1916, to return to private practice in Washing- ton, D.C. He also wrote extensively about INTERNATIONAL LAW, including several works on U.S. relations with Spain and Cuba. He died in 1940, at the age of 81. FURTHER READINGS Butler, Charles Henry. 1902. The Treaty Making Power of the United States. Reprint, 2008. Charleston, SC: BiblioLife. ———. 1942. A Century at the Bar of the Supreme Court of the United States. New York: Putnam. Congressional Quarterly. 2004. Guide to the U.S. Supreme Court. 4th ed. Washington, D.C.: Congressional Quarterly. CROSS REFERENCE Law Reports. v BUTLER, PIERCE Pierce Butler served as ASSOCIATE JUSTICE of the Supreme Court from 1923 to 1939. Known for his conservative views, Butler advocated a laissez- faire (French for “let [people] do [as they choose])” philosophy that sought to minimize government interference in the economy. In the 1930s, when Franklin D. Roosevelt’s NEW DEAL policies sought to increase the power of govern- ment in U.S. life, Butler voted against the consti- tutionality of every New Deal measure that came before the Court. By the end of his tenure, Butler was one of the few conservatives on an increas- ingly liberal Supreme Court, and he became distraught by changes in the Court’s interpreta- tion of the Constitution. “This is not government by law, but by caprice,” he wrote in a 1939 dissent. “Whimseys may displace deliberate action by chosen representatives and become rules of conduct. To us the outcome seems wholly incompatible with the system under which we are supposed to live” (United States v. Rock Royal Co-op, 307 U.S. 533, 59 S. Ct. 993, 83 Pierce Butler 1866–1939 ❖ ◆ 1866 Born, Dakota County, Minn. ◆ ◆ ◆ 1891 Became assistant to the Ramsey County (Minn.) attorney 1893 Began first term as Ramsey County attorney; founded law firm that became Butler, Mitchell & Dougherty 1908 Elected president of Minnesota Bar Association 1928 Wrote dissenting opinion in Olmstead v. United States 1922 Nominated to U.S. Supreme Court by President Harding 1914–18 World War I 1939 Died, Washington, D.C. 1861–65 U.S. Civil War ◆ 1907 Began 17-year tenure on the University of Minnesota's Board of Regents ◆ ◆ 1932 Wrote dissenting opinion in Powell v. Alabama, which overturned convictions in the Scottsboro case 1939–45 World War II ▼▼ ▼▼ 1900 1925 1950 1850 1875 ❖ ◆ 1932 Franklin D. Roosevelt elected president GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION BUTLER, PIERCE 205 L. Ed. 1446). Butler dissented in several Supreme Court decisions that overturned laws discrimi- nating against African Americans, and he rarely supported the rights of those with dissenting or radical opinions in society. He did, however, argue consistently for the rights of those accused of CRIMES. Those who knew him commented on Butler’s stubbornness and occasional bullying, traits that often made his relations with others on the Court less than amicable. Once, after persuading all on the Court but Justice Oliver Wendell Holmes Jr., of the rightness of his opinion on a particular matter, Butler said to Holmes, “I am glad we have finally arrived at a just decision.”“Hell is paved with just deci- sions,” Holmes responded. Commenting on Butler’s conservatism, Holmes characterized Butler as a “monolith” with “no seams the frost can get through.” Butler resolutely stuck to his conservative principles even in the depths of the Depression. Something of those views is found in remarks he made in 1916: “Too much paternalism, too much wet-nursing by the state, is destructive of individual initiative and devel- opment. An Athlete should not be fed on pre- digested food nor should the citizens of tomorrow be so trained that they will expect sustenance from the public ‘pap.’” Many of Butler’s later views were shaped by his frontier childhood. Butler was born on St. Patrick’s Day, March 17, 1866, in a log cabin in Dakota County, Minnesota. His parents had emigrated from County Wicklow, Ireland, to escape the potato famine of 1848, and eventu- ally established their farm only a few miles from Carleton College, in Northfield, Minnesota, where Butler was admitted in 1883. To help pay his college expenses, he worked in a local dairy. He graduated from Carleton in 1887 with both a bachelor of arts degre e and a bachelor of science degree. After college, Butler moved to St. Paul and studied law at the firm of Pinch and Twohy. He passed the Minnesota bar in 1888 and estab- lished a law practice with an associate, Stan Donnelly. In 1891 Butler became assistant to the county attorney for Ramsey County, and in 1893 and 1895 he was elected, as a Democrat, to the office of county attorney, the only elective public office he ever held. While in office, he secured more criminal convictions than any county attorney had done before. Butler ran for the state senate in 1906 but was narrowly defeated. In 1908 he was elected president of the Minnesota State BAR ASSOCIATION. In St. Paul, Butler also met his future wife, Annie Cronin, whom he married in 1891. The couple had eight children. In 1893 Butler helped establish a St. Paul law firm that evolved into Butler, Mitchell, and Doherty, one of the most successful corporate law firms of its time in what was then called the Northwest. The firm had several railroads as its major clients, including those of James J. Hill, one of the great rail barons. During his career Butler earned a reputation as the foremost railroad lawyer in the Northwest. His work in railroad litigation eventually brought him to national attention, and allowed him to become friendly with President WILLIAM HOWARD TAFT, who served on the Supreme Court as chief justice from 1921 to 1930 and was later instrumental in securing Butler’s nomination to the Court. On November 23, 1922, President WARREN G. HARDING nominated Butler to succeed retiring justice WILLIAM R. DAY on the Supreme Court. Although Butler was a Democrat, the Republi- can Harding approved of his laissez-faire economic philosophy and conservative social views. Harding also believed that it would be politically astute to nominate the Roman Catholic Butler to the Court. The last Roman Pierce Butler. LIBRARY OF CONGRESS GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION 206 BUTLER, PIERCE Catholic to serve on the Court had been replaced by Taft in 1921. Butler’s nomination caused a great outcry in liberal circles, particularly from Senators GEORGE W. NORRIS and ROBERT M. LA FOLLETTE, and senator-elect Henrik Shipste ad, of Minnesota. They pointed to Butler’s ties to big business during his legal career, claiming that these would bias his decisions on the bench. They also objected to Butler’s actions as a regent of the University of Minnesota, a position he held from 1907 to 1924. Butler, they argued, had used his influence to have several faculty members dismissed. Despite the objections of La Fo l lette and o thers, the SENATE JUDICIARY COMMITTEE unanimously confirmed Butler’snom- ination on December 13, 19 2 2. O n January 2, 1923, the Senate appointed Butler to the Court by a vote of 61–8. While serving on the Court, Butler fulfilled predictions that he would become a pillar of conservatism. Butler often voted with three other conservatives, Justices JAMES C. MCREYNOLDS, GEORGE SUTHERLAND, and WILLIS VAN DEVANTER, himself a former railroad lawyer. Because they consistently voted as a conservative bloc, obser- vers nicknamed this group the Four Horsemen. Butler’s conservatism manifested itself par- ticularly in his emphasis on limiting the power of government. For example, he voted whenever possible against state and federal taxes . In Coolidge v. Long, 282 U.S. 582, 51 S. Ct. 306, 75 L. Ed. 562 (1931), writing the Court’s opinion, Butler argued that a state inheritance tax was unconstitutional because it violated the Due Process Clause of the FOURTEENTH AMENDMENT , which proclaims that the state shall not deprive a person of liberty without DUE PROCESS OF LAW . Butler also consistently argued against the rights of government to regulate prices, partic- ularly through his narrow in terpretation of the phrase “business affected with a public interest.” At the time, it was common for governments, when they sought to regulate prices charged by businesses, to argue that certain industries had more of the PUBLIC INTEREST involved in their affairs than others; businesses that were affected with a public interest could therefore be regulated by the government. In Wolff Packing Co. v. Court of Industrial Relations, 262 U.S. 522, 43 S. Ct. 630, 67 L. Ed. 1103 (1923), Butler voted with the Court in deciding that the packing industry was not affected with a public interest and therefore could not be made subject to price-control legislation. Butler and the Court made the same decision with regard to employment agencies in Ribnik v. McBride, 277 U.S. 350, 48 S. Ct. 545, 72 L. Ed. 913 (1928). In both Wolff and Ribnik, the Court found that the laws under consider- ation violated the Due Process Clause of the Fourteenth Amendment. In Nebbia v. New York, 291 U.S. 502, 54 S. Ct. 505, 78 L. Ed. 940 (1934), when an increasingly liberal Court decided to do without the ph rase “affected with a public interest” in making its dec ision and ruled that the state may regulate milk prices, Butler, along with the rest of the Four Horse- men, dissented. This was just one of many dissents Butler and his conservative colleagues would make during the 1930s. Butler’s opinions in the area of civil liberties are less easy to categorize. He argued persua- sively for the rights of those accused of crimes, arguing in one opinion, “Abhorrence, however great, of persistent and menacing crime will not excuse transgression in the courts of the legal rights of the worst offenders.” He opposed national prohibition and criticized federal agents several times for violating the FOURTH AMENDMENT in their searches and seizures. In a case involving wire tapping by Prohibition agents, OLMSTEAD V. UNITED STATES, 277 U.S. 438, 48 S. Ct. 564, 72 L. Ed. 944 (1928), Butler found himself in the unusual company of the more liberal justices LOUIS D. BRANDEIS, HARLAN F. STONE, and Holmes. In his dissenting opinion, Butler argued that during the transmission of messages, the exclusive use of any wire belonged to the persons served by it. Law enforcement WIRETAPPING therefore constituted an illegal search for evidence. In Aldridge v. United States, 283 U.S. 308, 51 S. Ct. 470, 75 L. Ed. 1054 (1931), Butler voted with the majority in holding that an African American being tried for the MURDER of a white man was entitled to have the prospective jurors asked whether they had a racial prejudice that would prevent a fair trial. Butler also supported the rights of disabled persons, casting a lone dissenting vote, without opinion, in BUCK V. BELL, 274 U.S. 200, 47 S. Ct. 584, 71 L. Ed. 1000 (1927), which upheld a 1924 Virginia law allowing for the sterilization of mentally handi- capped individuals. ABHORRENCE, HOWEVER GREAT, OF PERSISTENT AND MENACING CRIME WILL NOT EXCUSE TRANSGRESSION IN THE COURTS OF THE LEGAL RIGHTS OF THE WORST OFFENDERS . —PIERCE BUTLER GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION BUTLER, PIERCE 207 . almost one-third of the value of the U.S. stock markets. As the Round- table sees it, one of its principal strengths “is the GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION 20 0 BUSINESS RECORD. not necessarily relieved of liability because the negligence of another person is also a contributing cause, and that GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION 20 2 BUSING person, too, is. treate d as an entity whose members have limited liability. GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION BUSINESS TRUST 20 1 If the laws of a particular state consider a business trust to be a