Revolving Door Project | More Revolvers Join The Fight Against The Regulatory State

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The regulatory authority of the executive branch is under attack, and BigLaw firms stacked with revolvers are on the front lines leading the assault. I’ve previously written about former FTC Commissioner Christine Varney challenging the legitimacy of her former employer on behalf of pharma company Illumina. Lawyers at Latham & Watkins, a firm stacked with revolvers from executive branch agencies, are before the Supreme Court challenging the Chevron Doctrine, which defers to executive agencies’ interpretations when legislative statutes are unclear. The Securities and Exchange Commission’s ability to hold administrative proceedings hangs in the balance as we await the Supreme Court’s decision in SEC v. Jarkesy, where the Fifth Circuit’s ruling decimated the agency’s authority.

In a new attack, revolvers on the labor/management relations team at Morgan Lewis & Bockius have their sights set on the plutocrats’ latest target: the National Labor Relations Board.

Morgan Lewis is representing Trader Joe’s in its cases before the NLRB against the burgeoning Trader Joe’s United union. The union has won elections at four stores since 2022, but have been stymied by bad faith negotiations and retaliations by the company. In December, The New Republic spoke with members of the unions bargaining team who described the Morgan Lewis lawyers as disrespectful and belittling, refusing to come to agreements on basic issues of minimum wage and sick days. Apparently, these classic union busting tactics were not sufficient.

In addition to bad faith bargaining, Trader Joe’s stands accused of wrongfully terminating an employee in retaliation for joining Trader Joe’s United. In a recent hearing, rather than merely defending Trader Joe’s on the facts of the case, Morgan Lewis decided to introduce a broader argument attacking the regulatory power of the federal government itself: “The structure and organization of the National Labor Relations Board and the agency’s administrative law judges is unconstitutional.” The firm employed similar arguments earlier this month in its representation of Elon Musk’s SpaceX. Aside from the fact that the NLRB’s constitutionality was upheld in 1937, this argument is especially absurd coming from Morgan Lewis, as no fewer than three of its highest profile attorneys previously held seats on the Board.

Though now challenging its legitimacy, Morgan Lewis has happily boasted about its NLRB alumni to increase its own credibility as a leading firm in labor disputes. Last year, John Ring returned to the Morgan Lewis labor/management team following a four year stint sitting on NLRB. The firm celebrated Ring’s return as “strengthening Morgan Lewis’s long tradition as the trusted advisor to employers” because he can give clients “unparalleled insight and guidance.” Shockingly, Ring never challenged the Board’s constitutionality while collecting a paycheck for serving on the board, though he did spend his term supporting every effort to undermine workers’ rights.

Ring joined two other former NLRB members at Morgan Lewis: Phil Miscimarra and Harry Johnson. Both Johnson and Miscimarra were the Republican appointees during the Obama administration, and Johnson now co-leads the firm’s labor/management relations team. All three are presumably instrumental in tailoring the broad strategies and legal arguments that the firm pursues in labor disputes, and Johnson himself has explicitly signed off challenging the NLRB’s constitutionality.

Johnson is one of the lead attorneys representing SpaceX before the NLRB against accusations that the company fired eight employees for being critical of Elon Musk and asking for better policies protecting against harassment. The company made headlines for responding to these by filing a complaint that challenged the Board’s constitutionality, repeatedly citing the Fifth Circuit ruling in Jarkesy. Johnson refused to respond to requests for comment by Reuters, but it hardly matters. He signed the complaint, meaning he is fully on board with the arguments therein.

By lending their reputations to these contentions, Ring, Miscimarra, and Johnson have chosen to forfeit the little credibility they had in order to protect corporations from accountability in labor disputes. We can only hope that the Courts recognize the absurdity of these arguments and the hypocrisy of its purveyors by rejecting these attacks on regulatory authority.

Antitrust Enforcers Keep Winning

In spite of legal attacks from revolvers and hit pieces from New York Magazine and the Wall Street Journal, the FTC and their counterparts at the DOJ just keep on winning. Last December, a federal court agreed with the FTC’s arguments that Illumina’s acquisition of biotech company Grail was anticompetitive, blocking the $7.1 acquisition. It’s worth remembering that critics of Khan had spoken too soon—touting the Illumina case as an example of an overzealous FTC when the agency lost in initial proceedings. While the business press celebrated, the FTC continued to the judicial process and ultimately succeeded.

Apart from winning in court, the Illumina case is illustrative of the cooling effect on mergers of Khan’s type of leadership. Corporations and their BigLaw representatives pay attention to these cases. They see how the FTC is not discouraged by an initial loss but continues to exhaust every possible option to prevent a merger that it sees as anticompetitive. This intense scrutiny means longer, more costly litigation for firms pursuing mergers. Yahoo Finance spoke with several top private sector antitrust attorneys who said these factors can lead to companies “walking away from potential deals.”

Even when the FTC has lost in court, we still see the merits of their challenge (and judges with conflicts of interest). Although the appeal is still pending, the FTC lost its bid for a preliminary injunction to block Microsoft’s acquisition of video game company Activision Blizzard. The agency’s challenge focused on competition concerns, but Microsoft quickly reminded us that mergers hurt workers as well as consumers, laying off 1,900 just months after the injunction was denied.

It’s a similar story at the DOJ, where regulators have succeeded in blocking airline consolidation, namely JetBlue and American northeast partnership and a merger between JetBlue and Spirit. They are expected to take on a proposed Alaska and Hawaiian Airline merger as well. It’s a refreshing change of pace from previous administrations that oversaw the decades-long increase in concentration. There are only 5 major airlines as the competition has been steadily bought up by bigger fish, leading to higher baggage fees, more delays, and of course record corporate profits.

With an executive branch that is finally wielding its power to effectively protect consumers, competition, and workers, it’s no surprise that corporate interests are now hell-bent on dismantling its authority.

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