When regulators retaliate

by Walter Olson on July 26, 2012

The uproar continues, and quite properly so (earlier here and here), over the threats of Boston Mayor Thomas Menino and Chicago alderman Proco (“Joe”) Moreno to exclude the Chick-Fil-A fast-food chain because they disagree (as do I) with some of the views of its owner. Among the latest commentary, the impeccably liberal Boston Globe has sided with the company in an editorial (“which part of the First Amendment does Menino not understand?…A city in which business owners must pass a political litmus test is the antithesis of what the Freedom Trail represents”), as has my libertarian colleague Tom Palmer at Cato (“Mayor Menino is no friend of human rights.”)

The spectacle of a national business being threatened with denial of local licenses because of its views on a national controversy is bad enough. But “don’t offend well-organized groups” is only Rule #2 for a business that regularly needs licenses, approvals and permissions. Rule #1 is “don’t criticize the officials in charge of granting the permissions.” Can you imagine if Mr. Dan Cathy had been quoted in an interview as saying “Boston has a mediocre if not incompetent Mayor, and the Chicago Board of Aldermen is an ethics scandal in continuous session.” How long do you think it would take for his construction permits to get approved then?

Thus it is that relatively few businesses are willing to criticize the agencies that regulate them in any outspoken way (see, e.g.: FDA and pharmaceutical industry, the), or to side with pro-business groups that seriously antagonize many wielders of political power (see, e.g., the recent exodus of corporate members from the American Legislative Exchange Council).

A few weeks ago I noted the case of Maryland’s South Mountain Creamery, which contends through an attorney (though the U.S. Attorney for Maryland denies it) that it was offered less favorable terms in a plea deal because it had talked to the press in statements that wound up garnering bad publicity for the prosecutors. After that item, reader Robert V. wrote in as follows:

Your recent article about the [U.S. Attorney for Maryland] going after the dairy farmers reminded me a case in New York state where the Health Department closed down a nursing home in Rochester. They claim is was because of poor care, the owner claims it was because he spoke out against the DOH.

The state just lost a lawsuit where the jury found the DOH targeted the nursing home operator because he spoke out against them.

According to Democrat and Chronicle reporters Gary Craig and Steve Orr, the jury found state health officials had engaged in a “vendetta” against the nursing home owner:

Beechwood attorneys maintained that an email and document trail showed that Department of Health officials singled out Chambery for retribution because he had sparred with them in the past over regulatory issues. The lawsuit hinged on a Constitutional argument — namely that the state violated Chambery’s First Amendment rights by targeting him for his challenges to their operation.

The Second Circuit panel opinion in 2006 permitting Chambery/ Beechwood’s retaliation claim to go forward is here. It took an extremely long time for the nursing home operators to get their case to a jury; the state closed them down in 1999 and the facility was sold at public auction in 2002.

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{ 4 comments }

1 Ebenezer Scrooge 07.26.12 at 2:43 pm

But of course, no citizen should have any recourse against frisky regulators because that would involve going to court . . .

2 Chris Hoey 07.26.12 at 3:57 pm

One learns as far back as school years that you should never question or apparently challenge a bureaucrat, whether that individual is a teacher, a lunch room aid, school bus driver, etc., as your life becomes a living hell as long as you are stuck in that person’s line of authority. This continues through your adult life, whether you anger a building or health inspector, a clerk in Motor Vehicles, a cop “controlling” crowds, etc. Unfortunately, it gets worse when you are in a business world situation. Question the authority of an NLRB agent, challenge a position of a minion of the Department of Labor, or, heavens forbid, contest a claim from a savior of the world from the EPA, and you or your client can end up, as did the nursing home owners, in economic disasters, even though you succeed in proving you were right all along. Such are the horrors of life in the most free society on this planet, and we have no one to blame but ourselves by our surrendering of our freedoms to the insatiable maws of governmental regulators.

3 Rliyen 07.27.12 at 11:59 am

Now the SF mayor has gotten in on the act. It’s feel good rhetoric and it may bite them on the ass if the company is inclined to sue.

4 Rick DUnn 07.27.12 at 5:39 pm

Coercion. Should be unconstitional.

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