How Will Markets React if the Executive Branch Refuses to Comply with Court Orders

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In the NYT essay I wrote with Trevor Morrison on the tools courts have to deal with executive defiance of court orders, we concluded by noting that a major confrontation between the two branches might have significant effects on financial markets. These markets could provide a form of checks and balances in a world in which strong partisan attachments make Congress less likely to perform the role the Constitution’s designers imagined it would play.

The Financial Times quotes an analysis of this issue from Evercore ISI (no link to that report). Here’s the FT lead-in, then an excerpt from Evercore’s analysis:

Evercore’s broad conclusion is that the underlying case will affect whether and how much markets immediately react to the chaos, but that the real long-term danger is an insidious “erosion of market perceptions of US stability and safety”:

For example, if Trump defies courts in using the Alien Enemies Act of 1798 to deport suspected gang members without full due process protections, markets may not react. The issue at play is not fundamentally economic in nature, and while stripping of due process protections will certainly cause concerns, the Administration’s actions here will have been done on a relatively small scale and — the Administration would argue — only in response to the unprecedented circumstances of millions of excess immigration inflows relative to trend.

In contrast, if Trump defies a court order on a fundamentally economic or commercial issue — refusing a court order to pay a government contractor for work already completed, for instance markets might care more.

Even as certain norms around democracy and the rule of law have faced challenges in recent years, the U.S. judicial system has continued to function as an effective and independent mediator of economic and commercial disputes, providing an essential backbone to our free market system. Open defiance of a court order around payments or contracts would suggest that the U.S. government is no longer subject to the economic rule of law.

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9th Circuit will go en banc to reconsider Arizona voter registration decision

court decisions, voter registration

Back in September, I noted the sharply divided panel decision in Arizona Alliance for Retired Americans v. Mayes on whether the plaintiffs had standing to challenge parts of an Arizona voter registration law. The majority concluded that the plaintiff organization could not allege a “diversion of resources” theory after the Supreme Court’s June decision in FDA v. AHM as a basis for claiming an injury that would allow the plaintiff to sue and challenge the law. In doing so, the majority brushed aside a stretch of Ninth Circuit precedent it deemed inconsistent with the Supreme Court’s recent decision.

Back then, I wrote, “It would not surprise me, given Judge Nguyen’s dissent, to see this case go en banc or some effort to get the Supreme Court’s attention.” My prediction was right, as the Ninth Circuit just announced it would go en banc to reconsider the case.

Let me go one step further. This case already starts to resemble Brnovich v. DNC (although, of course, there are material differences!). There, a Ninth Circuit decision found against the plaintiffs in an election law case. There, the case when en banc, and the panel decision was reversed–reversed in such a fashion to capture the Supreme Court’s attention. The Supreme Court, in turn, swept aside the lower court decision in a fairly significant way, significant enough to truncate similar claims in the future. That’s how this case is starting to feel in the aftermath of FDA v. AHM.

Of course, there are other plaintiffs who could establish standing in cases like these–but the decision of the Ninth Circuit threatens a kind of plaintiff who might bring such cases, and there is an interest in that kind of plaintiff trying to preserve the opportunity to sue. That has resulted in an en banc petition strategy that focuses on standing for groups like the plaintiffs here to bring the challenge.

But in doing so–if the Ninth Circuit is interested (perhaps it is not!) in bucking the Supreme Court’s very clear messaging in FDA v. AHM about the standing that organizational plaintiffs have in cases like these–the plaintiffs risk attracting, once again, the Supreme Court’s attention.

Perhaps I’m wrong, and perhaps after more fulsome briefing the case is entirely distinguishable from what was pushed aside in FDA v. AHM. Or perhaps the 9th Circuit decision does not attract Supreme Court review. We shall see how this case plays out in the months ahead. But let me say, my June prediction of fallout of FDA v. AHM in election law cases was right, as was my prediction in September about this case attracting en banc attention, so we’ll see how long my streak holds….

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“Judge tosses challenge to Georgia GOP election law changes made after 2020 election”

court decisions, election administration

Courthouse News Service:

A Georgia federal judge dismissed on Tuesday a challenge to provisions of a controversial GOP-sponsored election law that went into effect soon after the 2020 election, where President Donald Trump lost the state but disputed otherwise.

U.S. District Judge J.P. Boulee rejected election integrity activists’ request to prohibit enforcement of certain provisions of Senate Bill 202 that are criminal in nature.

Pushed by Georgia’s Republican Governor Brian Kemp, the bill’s sweeping overhaul of the state’s election laws went into effect July 1, 2021. Many of the changes, which included permitting unlimited challenges to voter eligibility, shortening runoffs from nine weeks to four weeks, restricting the use of 24/7 drop boxes, and prohibiting people from passing out food and water to voters waiting in line, have been challenged in court proceedings since.

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“Georgia Supreme Court reviews overturned State Election Board vote-counting rules”

election administration

Mark Niesse at the Atlanta Journal-Constitution:

The battle over Georgia’s election rules reaches the state Supreme Court on Wednesday where the court will consider whether the State Election Board went too far last year.

The case tests whether the board’s right-wing majority had the power to require election inquiries and hand-counts of ballots, as it attempted to do in the weeks before last year’s presidential vote.

A Fulton County judge overturned the board’s rules before the election, and the Supreme Court is now considering an appeal of that decision.

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“DC Prosecutor Ed Martin Opens Election Accountability Unit”

Department of Justice

From Bloomberg Law:

Washington’s top prosecutor, who has amplified false claims of election fraud, said he’s formed a special unit to uphold US election laws that has already started one investigation.

Acting US Attorney Ed Martin announced the new unit, which he called the “Special Unit: Election Accountability,” or SUEA, in an office-wide email on Monday, viewed by Bloomberg Law.

The unit “has already begun one investigation and will continue to make sure that all the election laws of our nation are obeyed,” Martin wrote. “We have a special role at this important time.” The email doesn’t provide details on that ongoing investigation.

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