Quid Pro No: When Rolexes, Ferraris, and Ball Gowns Are Not Political Currency – Note by Daniel Brovman

From Volume 92, Number 1 (November 2018)
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Quid Pro No:
When Rolexes, Ferraris, and Ball Gowns Are Not Political Currency

Daniel Brovman[*]

TABLE OF CONTENTS

INTRODUCTION

I. Factual and Procedural Background

II. The Supreme Court’s Decision in
McDonnell v. United States and its
Misguided Theories

III. The Court Erred: Why, How, and What This
Means for its Democracy-Reinforcing Role

A. Why the Court’s View on Access Is Incorrect

B. Why Contradictory Public Opinion Problematizes
the Court’s Holding

C. How the Amici Blinded the Court to Public Opinion

D. How the Court’s Actions Relate to the
Usefulness (or Lack Thereof) of Amicus Briefs

E. In Deferring to Amici and Neglecting
Inequalities and Public Opinion, the Court
Failed to Reinforce Democracy

IV. Possible Solutions

A. Rectifying the Court’s Failure to Reinforce
Democracy

B. Rectifying the Court’s Reliance on Amicus Briefs

C. Rectifying the Basis of the Court’s Failure:
A Statute Ill-Equipped to Tackle Corruption

Conclusion

 

INTRODUCTION

The misfortune of a republic is when intrigues are at an end; which happens when the people are gained by bribery and corruption: in this case they grow indifferent to public affairs, and avarice becomes their predominant passion. Unconcerned about the government and everything belonging to it, they quietly wait for their hire.[1]

In its recent decision in McDonnell v. United States, a case concerning corruption charges against the former Governor of Virginia, Robert McDonnell, the Supreme Court faced a seemingly simple question of statutory interpretation: what constituted an “official act” for the purposes of the bribery statute, 18 U.S.C. § 201(a)(3).[2] In reality, not only did it answer a question far more complicated, but also, it provided far more than a simple answer.

In its attempt to reinforce democracy, the Court failed. Instead, it validated a pernicious definition of access, in which paid-for access, pay-to-play schemes, and bribery are the norm. Specifically, in claiming that this maligned form of access was necessary for a functioning democracy, the Court endorsed political norms that are, in fact, corrosive to society: stratified access to politicians and by association, democratic institutions. The Court ignored the reality of pervasive and systemic inequalityranging from political, economic, social, and racialin contemporary American society and the effect that inequality has on access. However, the Court did not arrive there alonethe many amici filing on behalf of the petitioner blinded itat least partiallyto the aforementioned realities and public opinion.

In short, in McDonnell, the Court claimed that its concern was not with the “tawdry tales” of a pay-to-play political culture in which Ferraris, Rolexes, and ball gowns carry political currency, but rather “with the broader legal implications of the Government’s boundless interpretation of the federal bribery statute.”[3] However, while so claiming, the Court narrowed not only the definition of what could constitute an “official act,” but also overturned hundreds of years of jurisprudence on corruption law to democracy’s and the public’s detriments.[4] Although a valid exercise of statutory interpretation, the Court nonetheless acted with ignorance to the realities of political bribery.

Part I of this Note provides a brief explanation of the instant case, including a discussion of its factual background and procedural history, as well as a brief discussion on the bribery statute used in the Eastern District of Virginia’s prosecution of McDonnell.

Part II then focuses on the Supreme Court’s analysis of the case. Although briefly reviewing the Court’s interpretation of the bribery statute, this Part focuses primarily on the dicta in the Court’s opinion. Here, I argue that the Court relied heavily on amici, implicitly assumed an equal playing field regarding access to politicians, and predicated its opinion on that equality, thus preserving that access. In this section of its opinion, the Court espoused a number of fears regarding the lower courts’ interpretation of what constituted an “official act,” almost all of which Governor McDonnell and other amici also discussed. Since statutory interpretation is an inexact science, the dicta showcases the Court’s real motivation behind its decisionmaking.

Part III then discusses where, why, and how the Court’s reasoning went wrong. First, I argue that the Court failed to consider social, political, and economic inequalities, all of which result in unequal access to politicians and public servants. Next, I argue that public opinion supports this notion that stratified access exists and ascribes a number of reasons for it, including, for example, campaign finance issues. Because that public opinion exists, I also argue that the Court could have examined stratified access in its opinion. After problematizing the Court’s perception of what constitutes access, I examine why the Court ultimately decided the way it did, arguing that amici blinded the Court to public opinion. Therefore, as a result, I contend that the Court attempted, but failed, to reinforce democracy by discussing access in dicta after having already established what constituted an “official act” earlier in its opinion. In summary, in attempting to promote democracy and reinforce it, the Court failed. Instead, it promoted something inherently corrosive to democracy.

Part IV of this Note suggests possible solutions. It suggests remedies to rectify what this Note problematizes in Parts II and III: the Court’s failure to reinforce democracy; the Court’s overreliance on amici and more generally, the problem of amicus briefs in Supreme Court jurisprudence; and finally, the problematic and limiting wording of the bribery statute used to prosecute Governor McDonnell. First, this Note suggests a limited rapprochement between the Court and public opinion, suggesting various methods for the Court to assess public opinion and prevent walling itself off as an elite institution. Second, this Note also suggests a number of remedies related to the role of amicus briefs in Supreme Court jurisprudence, including, but not limited to, limiting the actual number of amici that may file, while also providing rules and guidelines for ensuring novel arguments from amici. Finally, this Note suggests various ways that Congress could amend the bribery statute to mirror public sentiment by tracking ethics and public corruption reforms in New York as a baseline for nationwide reform efforts.

Beyond providing valuable insight into how the Supreme Court interacts with amici and amicus briefs and how those interactions may affect the Court’s role as a democracy-reinforcing institution, the instant case also provides an interesting outlook on the current state of public corruption prosecutions. In the Southern District of New York (“S.D.N.Y.”), where the U.S. Attorney’s Office has relentlessly tackled public corruption in the state capital and elsewhere, numerous convictionsmost notably, those of Dean Skelos,[5] the former Majority Leader of the New York State Senate and Sheldon Silver,[6] the former Speaker of the New York State Assemblyhave been overturned. Although the Second Circuit maintained that sufficient evidence existed to prove that both defendants committed the crimes alleged, it was still was forced to overturn the respective convictions because of the erroneous jury instructions.[7] The U.S. Attorney’s Office for S.D.N.Y. later retried these cases, winning convictions on both of them.[8] The McDonnell decision has also affected other corruption cases, like that of U.S. Senator Robert Menendez (D-N.J.),[9] in which the judge declared a mistrial.[10] The Supreme Court’s actions have had real consequences as the Court “has slowly eroded the country’s body of corruption laws” and resulted in a prosecutorial inability to challenge public corruption.[11] Therefore, the Court’s decision may not only affect the public, but also prosecutorsboth to their respective detriments.

As a result of the rising public opinion viewing government as inefficacious or corrupt,[12] coupled with pervasive and systemic inequality in the United States and the possible harmful effects the Court’s decision may have on democratic institutions, examining McDonnell and the Court’s underlying reasoning behind its decision is extremely valuable.

I.  Factual and Procedural Background

On January 21, 2014, the United States Attorney’s Office for the Eastern District of Virginia indicted Virginia’s Governor, Robert McDonnell,[13] along with his wife, First Lady Maureen G. McDonnell, for their alleged roles in a “scheme to violate federal public corruption laws.”[14] The U.S. Attorney’s Office charged the couple with one count of conspiracy to commit honest-services wire fraud, six counts of obtaining property under color of official right, three counts of honest-services wire fraud, one count of conspiracy to obtain property under color of official right, and one count of making false statements to a federal credit union.[15]

The core of the indictment related to a relationship the couple had with the Chief Executive Officer (“CEO”) of a major pharmaceutical firm conducting business with the state, Star Scientific.[16] Prior to McDonnell’s election in 2010 and over the course of his campaign, Star Scientific’s CEO, Jonnie Williams Sr. (“JW”), and McDonnell and his wife developed an amicable relationship, meeting numerous times over the course of his campaign.[17] McDonnell and JW became friendlier, as McDonnell even began using JW’s private planes to shuttle between political events.[18] At one point, their relationship began to lay the foundation for the charged offenses, slowly discussing the “potential health benefits of anatabine and the need for scientific studies of these potential health benefits,” with McDonnell then placing JW in contact with other politicians and administrative officials.[19]

Even though McDonnell was elected governor in 2010, he continued to aid Star Scientific and received personal financial benefits from April 2011 until March 2013.[20] McDonnell received numerous forms of financial benefits, including luxury shopping trips, in return for arranging meetings for Star Scientific’s CEO with various high-ranking Virginian administrative officials and politicians, hosting events for the company as a means of promoting its products to Virginia state universities so that those universities would study the products and eventually refer new patients to those products.[21] Over the course of their relationship, McDonnell received at least $135,000, including shopping trips ($10,999 at Oscar de la Renta, $5,685 at Louis Vuitton, and $2,604 at Bergdorf Goodman),[22] loans for his daughter’s wedding (approximately $50,000 at an exceedingly low interest rate),[23] wedding gifts (approximately $15,000),[24] golf trips (at which McDonnell and his family charged approximately $2,380 to JW’s account),[25] and other forms of enrichment.[26] Not only did McDonnell receive that money, but also, he received it after he helped JW.[27] In return for all of the gifts McDonnell and his wife received, prosecutors argued that McDonnell arranged meetings and other opportunities for JW to market his company and products to other government officials.[28] The indictment also alleged numerous other instances of a seemingly quid pro quo relationship.[29]

On September 4, 2014, after a fiveweek trial and merely three days of jury deliberations, a unanimous jury, believing the law to be clear on the issues, found McDonnell guilty of extortion under color of official right, obtaining property under color of official right, and honest services wire fraud.[30] The jury also found his wife guilty of honest services wire fraud, extortion under color of official right, obtaining property under color of right, and obstruction of a federal proceeding.[31] In total, the jury found McDonnell guilty on eleven of the thirteen charges and his wife guilty on nine of the thirteen.[32]

McDonnell appealed his decision to the Fourth Circuit Court of Appeals.[33] The appeal centered on the definition of official act. The trial court had used the government’s proposed jury instruction and defined an official act accordingly:

The term official action means any decision or action on any question, matter, cause, suit, proceeding, or controversy, which may at any time be pending, or which may by law be brought before any public official, in such public official’s official capacity. Official action as I just defined it includes those actions that have been clearly established by settled practice as part of a public official’s position, even if the action was not taken pursuant to responsibilities explicitly assigned by law. In other words, official actions may include acts that a public official customarily performs, even if those actions are not described in any law, rule, or job description. And a public official need not have actual or final authority over the end result sought by a bribe payor so long as the alleged bribe payor reasonably believes that the public official had influence, power or authority over a means to the end sought by the bribe payor. In addition, official action can include actions taken in furtherance of longer-term goals, and an official action is no less official because it is one in a series of steps to exercise influence or achieve an end.[34]

McDonnell argued to the Fourth Circuit that these jury instructions were in error,[35] claiming “the court’s definition was overbroad, to the point that it would seem to encompass virtually any action a public official might take while in office.”[36] According to McDonnell, the definition in the jury instructions would result in the inclusion of all acts of governance as “official acts,” because “[f]or public figures such as a governor, who interact with constituents, donors, and business leaders as a matter of custom and necessity, these activities might include such routine functions as attending a luncheon, arranging a meeting, or posing for a photograph.”[37] Essentially, McDonnell argued that the possible deleterious effects of the district court’s decision should drive the decisionmaking of the court of appeals.[38]

The court of appeals affirmed the jury verdict.[39] In arriving at that decision, the court of appeals reviewed and focused on McDonnell’s claims regarding the jury instructions on what constituted an “official act” for the purposes of the federal bribery statute,[40] which both sides agreed defined the “official act” or “official action” for the purposes of the honest services wire fraud statute and the Hobbs Act, respectively.[41] The court affirmed the lower court’s instructions to the jury that an “official act” constituted “any decision or action on any question, matter, cause, suit, proceeding or controversy, which may at any time be pending, or which may by law be brought before any public official, in such official’s official capacity, or in such official’s place of trust or profit.”[42] The court also emphatically rejected McDonnell’s arguments and fears associated with an expansive definition of “official act.”

The court refused to acknowledge McDonnell’s argument that the district court’s decision would have a harmful effect on politics and democratic institutions, and even rejected his proposed jury instructions, believing them either to misstate the law or to subject the jury through jury instructions to the defendant’s core legal arguments.[43] Finally, the court even entertained broadening the scope of what constituted an “official act” in spite of McDonnell’s plea to narrow it, thus firmly denying McDonnell’s argument.[44]

Taking his appeal to the Supreme Court, McDonnell again challenged the definition of an “official act”arguing it should be limited to exercising some form of government power or struck down as unconstitutional for being overly broad.[45] In that petition, McDonnell argued the Supreme Court had never defined “official acts” in such a broad manner.[46] To the contrary, McDonnell argued,

[n]ot only has this Court held that actions like a visit, speech, or meeting are not, standing alone, official acts, it has even held that paying for such access—through campaign contributions or independent expenditures—is constitutionally protected. While the government can forbid true corruption—i.e., the direct exchange of an official act for money—it may not target . . . the political access such [financial] support may afford.”[47]

According to McDonnell, paying for access—the ability to get a call answered or a meeting scheduled—is constitutionally protected and an intrinsic part of our political system.[48] Paying for access, therefore, constituted politics as usual and a fundamental part of the democratic system, which is protected much like other aspects of our democratic institutions such as voting and campaign finance.

The United States rejected McDonnell’s fears and reaffirmed its position that such quid pro quo agreements are unlawful poses no threat to legitimate political activity.”[49] It also noted that affecting a specific part of governmentor having a determinative effect on governmental policy or administrative outcomewas unnecessary for the purpose of applying the statute.[50]

II.  The Supreme Court’s Decision in McDonnell v. United States and its Misguided Theories

After McDonnell filed his Petition for Writ of Certiorari, eleven amici filed briefs in support of it.[51] On January 15, 2016, the Supreme Court granted McDonnell’s petition.[52] Shortly after the grant, the same amici filed again as did a number of others on behalf of McDonnell. Five amici eventually filed in support of the United States.[53] A mere six months later, on July 29, 2016, in a unanimous opinion, the Court vacated McDonnell’s conviction and remanded it to the district court.[54]

In that decision, the Court overturned the district court and court of appeal’s view on what constituted an “official act” and instead held that it “is a decision or action on a question, matter, cause, suit, proceeding or controversy.[55] The aforementioned question or matter “must involve a formal exercise of governmental power,” and “must also be something specific and focused that is ‘pending’ or ‘may by law be brought’ before a public official.”[56] In arriving at its decision, the Court analyzed the bribery statute, employing a quintessential form of statutory interpretation.[57] The Court first “examined the bribery statute’s text” and “next turned to § 201(a)(3)’s requirement of a decision or action.[58] As such, the Court used statutory interpretation to narrow what constituted an “official act” and to side with McDonnell’s interpretation rather than the Fourth Circuit’s. Finally, in deciding which definition applied, the Court also employed a familiar canon in Supreme Court jurisprudence: “a word is known by the company it keeps.”[59]

However, the Court also devoted a significant portion of its opinion to discussing, much like McDonnell did in his appeal and petition, the adverse effect on politics as usual if it were to support the government’s position and endorse the opinion of the lower courts.[60] Such commentary was provided in dicta[61]as discussed, the Court had already provided, through statutory interpretation, its belief that the court of appeals and the district court had erroneously defined what constituted an “official act.”

However, since “statutory interpretation is not a science but an art,”[62] understanding the Court’s motivations provides some clarity into what is otherwise an opaque analysis. Further, the Court discussed its concerns with the lower courts’ perspective on what constituted an “official act” only after using statutory interpretation to determine its definition and exploring that issue in fourteen pages of text.[63] For this reason and because “unlike mathematical symbols, the phrasing of a document, especially a complicated enactment, seldom attains more than approximate precision,” examining the background of a decision involving statutes is especially important.[64] The presence of that dicta in McDonnell can therefore reveal the Court’s reasoning in how it extracted precision from the relevant statute or with what motivations it undertook that task.

The Court embraced McDonnell’s discussion on the deleterious effects of the court of appeal’s assessment of what constituted an “official act” in three interconnected fears in dicta.[65] In doing so, the Court examined its desires to promote democracy by promoting access to politicians and allowing constituents and public servants to interact, to provide clear guidelines for politicians and public servants to avoid corrupt behavior, and finally, to preserve democracy by limiting the ability of overzealous prosecutors to target all public servants.

In discussing these fears and desires, the Court explicitly stressed the underlying importance of access to politicians in any democracy. So much so, it argued that access and interactions with public servants constituted a “basic compact underlying representative government” that assumed that “public officials will hear from their constituents and act appropriately on their concernswhether it is the union official worried about a plant closing or the homeowners who wonder why it took five days to restore power to their neighborhood after a storm.”[66] Therefore, JW’s access to McDonnellperhaps aboard his private jetwas necessary for democracy to operate effectively or at least with some marginal forms of representation. Accordingly, the Court validated paying for audiences with elected officials.[67] However, implicitly, the Court also granted those with the ability to pay for those audiences greater visibility with those that wield political power, out of a perceived necessity.[68]

In discussing its first fearof halting democracythe Court discussed the deleterious effects the lower courts’ decisions would have on governance and on any interactions constituents would have with their representatives. In discussing how the public engages their public officials, the Court noted that, “conscientious public officials arrange meetings for constituents, contact other officials on their behalf, and include them in events all the time.”[69] Regardless of socioeconomic status, race, or other statuses, the Court believed that politiciansas fundamental to their roleorganize and work on behalf of their constituents, which sometimes requires arrangements like the one in McDonnell. More importantly, the Court believed that these public officials would always respond to the calls and requests to meet with any of their constituents. Thus, the Court wanted to avoid a situation in which “citizens with legitimate concerns might shrink from participating in democratic discourse.”[70] Without the aforementioned access or interactions being possible, the Court feared that democracy would falter.

The Supreme Court espoused a second concern: that the lower courts decisions would create vagueness and difficult guidelines for politicians and public officials to follow. Specifically, in discussing this secondary concern, the Court noted, “under the Government’s interpretation, the term official act is not defined with sufficient definiteness that ordinary people can understand what conduct is prohibited, or in a manner that does not encourage arbitrary and discriminatory enforcement.[71] Such vagueness would occur because it would not be clear which conduct was legal and which conduct could result in an overly eager prosecutor in a U.S. Attorney’s Office taking note of a politician’s supposedly benign actions and subsequently issuing an indictment.[72] According to the Court, people in generaland not just politicianswould be unclear as to what constituted legal interactions with governing officials. This possibility could also feed into the Court’s first fear, namely, that the vagueness would have a chilling effect on governance.

The Court espoused a third fear as well. Along with the aforementioned theme of emboldening prosecutors, the Court also feared that supporting the court of appeals’ holding would bestow an unrivaled power on the government against defendants in criminal public corruption cases. The Court espoused this final fear, noting that “[u]nder the standardless sweep of the Government’s reading . . . public officials could be subject to prosecution, without fair notice, for the most prosaic interactions.”[73] As a result of the vagueness created by the lower courts reading of the statute, the Court adamantly believed that prosecutors would exploit the now broadened statute to target behavior that may or may not be corrupt. Despite the system of checks that exists for any public corruption prosecution, which requires numerous forms of approval from various Department of Justice officials,[74] the Court feared that federal prosecutors may, on the faintest trace of information suggesting corruption, prosecute with wild abandon.[75]

Accordingly, the Court perceived itself as a democracy-reinforcing institution because it believed that by upholding the trial courts decision, democracy would suffer. Specifically, upholding that decision would wreak havoc on the ability of government to function, perhaps bringing democracy to a screeching halt. Even in doing so, however, the Court did find the instant facts of McDonnell’s case problematic or even troublesome. It admitted that it condoned a maligned form of access acknowledging that the “governor’s activities were distasteful and crass and dishonest.[76] The Court even acknowledged that, at minimum, McDonnell provided JW with repeated access to governmental decisionmakers crucial to his business interests.[77] Thus, even though it interpreted statutes and applied dictionary definitions in that process, the Court still expressed some opinions regarding the facts of the case. Therefore, examining how the Court arrived at a point of both awareness that it promoted a disparaged concept of access while still voicing and premising its decision on the deleterious effects of that concept of access is of value.

III.  The Court Erred: Why, How, and What This Means for its Democracy-Reinforcing Role

Although the Court used statutory interpretation to decide the instant case, it discussed its motivating factors in dicta shortly after interpreting the relevant statutes. In doing so, it made implicit assumptions regarding political access, as indicated via the discussion in Part II. However, it is extremely worrying that the Court disregarded certain inequalities in the United States. First, in neglecting the pervasive inequalities that permeate American society, the Court also disregarded the widespread public opinion regarding public corruption and unequal access to politicians. Second, the Court overemphasized both the role of the amici and their voices. Its error here is especially problematic, as those amici did not expressly represent public opinion but rather emphasized and reemphasized McDonnell’s fears of the possible deleterious effects the lower courts decision may have on democratic institutions. These amici therefore provided a biased view on the issue. Finally, as a result of the above, the Court failed to reinforce democracy, one of its keystone roles.

A.  Why the Court’s View on Access Is Incorrect

As indicated above, preserving access to politicians motivated the Court’s decisionmaking.[78] Embracing a theory of participatory democracy, the Court believed that by promoting access to politicians and public servants, it advocated allowing constituents to play a role in the laws that govern society.[79] However, issues relating to inequality pervade American society, propounding a view to the contrary: the Court subscribed to a utopian democracy absent in American society.[80] The translation of a lack of access to democratic institutions into powerlessness, subsequently exacerbated by socioeconomic, racial, and economic inequalities, brings the Court’s aforementioned implicit assumptions into question. Access to politicians constitutes power, but when highly unequal access permeates any society, that inequality is corrosive to democracyand the Court’s decision ultimately perpetuated that highly unequal access.[81]

Inequality translates across the American political experience, from political inequalities that limit the ability for certain individuals to vote to economic inequalities limiting access to higher education and other social goods. All told, far from being a society in which all men are created equal, the American experience is one of harsh and pervasive inequality.[82] Although an inequality in access to politicians exists between donors to campaigns and non-donor constituents,[83] a review of other inequalities and how those inequalities translate to political experiences is of value when examining how extensive inequality is in modern America. However, despite numerous distinguishing and confounding factors that affect minority group experiences in the United States, the general experience is that “[g]roups that are ‘anonymous and diffuse’ . . . are systematically disadvantaged in a pluralist democracy.”[84] These systemic inequalities also can affect the success or lack thereof of specific groups in advancing their political agendas, again questioning the image of access the Court implicitly referenced.[85]

The Court also disregarded the role racial inequality may play in political access. Racial discrimination occurs in a wide variety of settings, including, but not limited to, financial lending and housing,[86] employment,[87] within the criminal justice system,[88] and education.[89] Alarmingly, these instances of discrimination are not limited to a purely non-political sphere, but rather pervade society. In testing the responsiveness rate of politicians to constituents based on varying the race of the constituent, researchers found that “U.S. state legislators were less responsive to requests from blacks than from whites for help with registering to vote when no signal about partisanship was given.”[90] In other instances and at a different level of government, the tone in response communications for public housing requests revealed “racial differences,” with “Hispanic housing applicants were 20 percentage points less likely to be greeted by name than were their black and white counterparts.”[91] At varying levels of governance and for differing requests, race plays a role in the contemporary American political experience, harming some while benefitting others. Despite the harmfulness of the possibility of race having a role in service provision, it is but one of the many factors that affects access.

Beyond the perniciousness of racial inequalities, economic inequality also affects access to politics and democracy in contemporary American society. At base, “[c]ampaign donations buy access to politicians” and “politicians themselves have admitted that big donors get special treatment.”[92] However, even removed from the explicit instances involving campaign donations, money, wealth, or income all have an effect on one’s role within American democracy. As wealthier individuals are more likely to vote, “[e]conomic inequality also feeds the political kind, driving everything from the actions of our political representatives to the quality and quantity of civic engagement.”[93] Beyond wealth having a positive effect on participation, economic inequalities also drive down the participation of those who are less advantaged, limiting access to those stricken by poverty.[94] Specifically, such inequalities result in “[d]eclining political interest,” which in turn suggests that “issues on which a consensus exists among richer individuals . . . become increasingly unlikely even to be debated within the political process regardless of whether poorer citizens would care to raise them.”[95] Accordingly, even with a desire to participate, some individuals lack the ability to do so because their financial statuses have already foreclosed any access to certain aspects of democracy.

Finally, other aspects of basic political inequalities that inherently stratify access exist as well, like felon voter disenfranchisement and voter identification laws. These forms of inequality directly limit certain individuals’ ability to participate in democracy by outlawing basic aspects of their participation in democratic systems. Although “the days of outright exclusion from the voting process are mostly behind us in the United States, there remains a steady stream of initiatives to limit participation.”[96] These methods include “inadequate voter outreach to poor or immigrant neighborhoods, poorly staffing polling places, [and] preventing some felons from voting,” thus almost eliminating the line between “neglect” and “willful disenfranchisement.”[97] Voter identification laws have a similar effect, at least inasmuch as the “laws skew democracy toward those on the political right” and “have a differentially negative impact on the turnout of racial and ethnic minorities in primaries and general elections.[98] Therefore, voter disenfranchisement limits an essential aspect of access to democratic institutions: the right to vote.[99] Regardless of the methods deployed to limit accessand if they are direct disenfranchisement or identification lawsthe effect is the same, as “the voices of some citizens are not heard” and lessens the “long-accepted principle that all citizens have effective access.”[100] In such instances, political access is not limited, but rather absent, with some individuals missing some of the essential forms of participating in a democracy.

In summary, a number of variables affect political access, all limiting the access of specific minorities or those with certain socioeconomic backgrounds. This inequality, of course, exists even without delving into the significant intersectionality of race, socioeconomic status, and other factors in contemporary American societythe reality that for certain groups, the intersection of minority status only serves to multiply their powerlessness.[101] The Court failed to consider the role of stratified access in the United States, as it simply validated the necessity of access without qualifying who actually has access and who does not. Although the reality of stratified access should be sufficient in showing the Court erred, public opinion indicating disapprobation towards that reality further underscores that the Court erred.

B.  Why Contradictory Public Opinion Problematizes the Court’s Holding

Inasmuch as the Court felt it reinforced democracy, it did so erroneously. The Court embraced a concept of access it believed to be crucial to a thriving democracy, but one that the public abhorred. Widespread public opinion regarding campaign finance reform, money in politics, and finally government corruption questions the theory of access the Court espoused. It further indicates that the Court may have been cognizant of how the public would perceive its theory regarding access, especially considering that the Court often responds to public opinion.[102] Yet in no place in its McDonnell opinion did it discuss public opinion.

Public opinion regarding government corruption indicates that, from the perspective of the general public, some inequality of access exists. Recent polling suggests that as much as 75% of Americans view their government as corrupt, and that “[t]his alarming figure has held steady since 2010, up from 66% in 2009.”[103] When presented with an option to choose between the federal government, the news media, banks and financial institutions, the police, and organized religions, a plurality of 38% of respondents chose the federal government as the most corrupt institution in the United States (leading the news media, which placed second, by more than 20 points).[104] Not only is the opinion that public corruption exists prominent in the United States, but also, it exists at a much higher percentage than in other Western countries, like the United Kingdom (46%), Canada (44%), Germany (38%), and Sweden (14%).[105]

The public’s perspective on campaign finance reform indicates that the public generally views disdainfully how politicians and administrative officials fundraise, and subsequently, the access afforded to the wealthy by politicians and administrative officials alike. Although the Court claimed that donating to campaigns in return for access does not constitute a quid pro quo relationship,[106] public opinion rejects that view. A poll from the Pew Research Center found that 76% of Americans believe that money has a greater influence on politics now than it has before, running across party lines.[107] Similarly, Americans, in a N.Y. TimesCBS News survey, viewed the political system as requiring change85% believed that a change to the way political campaigns are funded is necessary, with 46% also saying that a complete rebuild is necessary.[108] Such results are common across several research agencies and are hardly limited to specific individualsrather, this perspective is shared by almost all Americans who participated in the polls.[109] Of course, such perspectives also assume or implicitly imply another factor: money has an effect on political access.

Even though the Court dismissed discussing the aforementioned widespread opinion, further probing the source of that opinion indicates that a majority of Americans believe that an inequality of access to politicians, administrative officials, and public servants contributes to its perception as a legitimate issue. Access is stratified, in the opinion of many Americans, as 66% claim that the wealthy have more access, compared to 31% who believe equal access to politicians exists.[110] This belief that the wealthy have more access exists beyond an abstract notion of access and contributions: 85% of Americans believe that “candidates who win public office promote policies that directly help the people and groups who donated money to their campaigns.”[111]

These beliefs are bipartisan as well, given that “[l]arge majorities of Americans believe that members of Congress will favor the interests of those who donate to Super PACs over those who do not—and that Super PAC donors can pressure elected officials to alter their votes.”[112] When moneyed interests and the interests of an electorate diverge, “[m]ore than three-quarters of all respondents—77%—agreed that members of Congress are more likely to act in the interest of a group that spent millions to elect them than to act in the public interest.”[113] Bipartisan support exists for that claim too79% of Democrats compared to 81% of Republicans polled believed in that divergence.[114]

Americansregardless of political affiliationbelieve that their government is corrupt, more corrupt than other countries, and that this corruption is on the rise. They also believe that bought-for access constitutes a basis, or at least is partially responsible, for that perception. Therefore, at least from the public’s perspective, a general corruption pervades government, subverting a major theory that the Court used in arriving at its decision. These studies showing that American society is plagued by systemic and pervasive social inequalities, coupled with the public opinion indicating that the Court erred, problematize the Court’s perception of what constitutes politics as usual.

Yet in the face of overwhelming and inundating public opinion decrying the status quo of the contemporary American political system, the Court held that a maligned access is a required factor for any democracy and vindicated McDonnell’s actions on that theory. But as is shown, that is rarely the casestratified access exists according to a majority of Americans, and Americans believe that contributions or donations result in access. Although the Court implicitly supported a theory of equality of parity of access, it did not arrive there alone. Rather, it was aided by the flood of amicimost of whom were in fact, politicians, administrative officials, or public servantswho all supported McDonnell’s position and shared his fears.[115]

C.  How the Amici Blinded the Court to Public Opinion

The Court erred because instead of acknowledging the aforementioned public opinion and inequality, it deferred to the opinion of the amici writing on behalf of the Governor, as is evident by its almost rote repetition of the fears espoused by those amici as well as the fears espoused by the former Governor. Numerous amici wrote to the Court, mostly supporting the petitioner, McDonnell.[116] These amici all decried the supposedly deleterious effects of the court of appeals’ ruling, supporting McDonnell’s claims.[117] This Section focuses on the role some of those amici played, with an understanding that a caveat may exist in discussing their importance because they wrote or filed against the United States.

The Republican Governors Public Policy Committee’s (the “Committee”) amicus brief reinforced the centrality of access in any functioning democracy. First, the Committee noted that “facilitating ‘access’ is a central part of any modern elected official’s job” and then cited to instances by former Governor of Florida Jeb Bush, former Secretary of State Hillary Clinton, and former President of the United States Barack Obama that could be seen as corrupt or engaging money for influence under the court of appeals’ definition of an “official act” that the United States sought to affirm, mirroring the fear that the Court later expressed in their opinion—that the lower court decisions would punish normal acts of governance.[118] The Committee also believed that the decision would embolden prosecutors, much like the Court feared as well. Elucidating that argument, the Committee pivoted and reinforced the harmful ramifications on democracy of affirming the conviction, noting that “if other courts adopted this understanding of official act, potentially every elected official in the nation would be in danger of indictment by an overzealous federal prosecutor. To be sure, the prosecutor would be required to show the existence of a quid pro quo to obtain a conviction.”[119] As no public official or public servant would know if his or her conduct was lawful, he or she would fear acting at all, and ultimately, according to the Committee, democracy would suffer.

In addition, a group of Former Virginia Attorneys General strongly supported the Court’s first fear, namely, that the decision could harm governance and possibly weaken democracy. Citing to their vast experience, “including providing legal advice,”[120] these Former Virginia Attorneys General notedin line with both the Court’s eventual opinion and McDonnell“[t]he overly-expansive interpretation of official action in the decision below will disrupt the public life of Virginia and the other states within the Fourth Circuit, and it would create a different rule for participatory democracy in the Fourth Circuit than the one that applies in other circuits.[121] According to these amici, upholding the lower courts’ perspective on what constituted an “official act” would strike such a strong blow to public life as to disrupt it. Not only did these amici reinforce the argument of the possibly deleterious effects of the lower court’s decision, but also, much like the Court itself did, they discussed the necessity of access in a democracy.

Other politicians supported the aforementioned theory of access and the Court’s fears. Sixty Former State Attorneys General from states other than Virginia also supported McDonnell, and argued (in an exercise of hyperbole meriting mention) the deleterious effect of defining an “official act” as the court of appeals did.[122] Those former Attorneys General even noted that “it could chill the delivery of those services altogether,” and that even other individuals connected to governors and public officials would refrain from discussing political or policy issues out of fear of prosecution.[123] In this instance, the former State Attorneys General supported the Court’s first fear, but instead focused on the possibility that constituents would hesitate becoming politically involved.

In summary, amici, writing on behalf of McDonnell, flooded the Court with briefs, all indicating similar issuesthe overall deleterious effects of the court of appeals’ ruling. These amici hardly hid their stake or interest in the litigation, as well, directly indicating that they feared prosecution, again implicitly referencing that such conduct is politics as usual.[124] Referring back to the Court’s opinion, it becomes clear that the Court had these individuals in mindrather than the plethora of public opinionin arriving at its decision. Given that the Court then discussed those effects in its decision,[125] despite having already used statutory interpretation to arrive at its decision, an examination of the role the amici played in the Court’s decision is of value.

D.  How the Court’s Actions Relate to the Usefulness (or Lack Thereof) of Amicus Briefs

The Court’s use of amici provides insight into the possibly pernicious role that amicus briefs can play when they fail to represent public opinion or do not adequately represent both sides in any given case before the Supreme Court. Such a result indicates a general problem of elevating concentrated interests at the expense of diffuse ones and having an inability to protect minority groups or those without strong political voices.

Perhaps the possibility of amici providing a biased understanding of the issue in any case before the Court is unsurprising, given the rise in the role of amici over the past century in Supreme Court jurisprudence.[126] Not only have amici submitted more briefs, but also “[t]here is no question . . . that the frequency of such references [to amici] has been increasing over time.”[127] In many instances, the Court utilizes amici as a means of gaining insight into a specific matter before it, either providing alternative views on issues, “important technical or background information,” or at times, simply reinforcing the perspectives of the already existing parties.[128] Undoubtedly, therefore, amicus briefs are “an institutional part of U.S. court systems.”[129] However, they can also have a destructive effect of either misrepresenting or failing to represent parties in a Supreme Court decision.[130] For example, these briefs sometimes provide no value to the Court, instead reiterating what has already been argued and, therefore, providing no new information.[131] Regardless, these briefs have become so common“[i]ndeed. . . . so common that some judges are looking for ways to limit them”that a brief review of their limitations is of use.[132]

The Court can fall victim to a flood of one-sided amicus briefs, either due to the lack of proponents on one side of an issue or because of an inability to convey the opinions of one side effectively. Justice Scalia referred to this possibility in his dissent in Jaffee v. Redmond, in which, despite the adversarial nature of the American court system and the possibility of having multiple amici file on behalf of both parties, “[n]ot a single amicus brief was filed in support of petitioner.”[133] That was no surprise, according to Scalia, because “[t]here is no self-interested organization out there devoted to pursuit of the truth in the federal courts.”[134] A similar situation is at play in McDonnell, as few vehicles exist for the representation of public opinion in the form of amicus briefs beyond the non-profit organizations and think tanks that participated as amici and then Justices being cognizant of general public opinion. Here, much like in Jaffee, individuals could not represent themselves in a fashion similar to public officials. Although no formal organization existed to represent public opinion, the Court nonetheless could have considered that information, either because the Justices are “social beings confronted with the plethora of stimuli emanating from American culture, media and politics,”[135] or out of concern “about their legitimacy in the short and long-terms.”[136]

Beyond the plausibility of few organizations existing to actively represent public opinion before the Court,[137] the Court was also inundated with more than a dozen amicus briefs on behalf of McDonnell from the time he filed his Petition for a Writ of Certiorari to when he argued before the Court.[138] Only five organizations filed in support of the respondents, and all were filed only after the petition had been granted.[139] Regardless of whether that stark difference is due to the role the United States played as the respondent, “[i]n order to maximize their own public reputations or the reputation of the Court, the Justices need information about public opinion.”[140] In many instances, public opinion is unavailable on an issue before the court.[141] However, as discussed in Section III.B, that was not the case in McDonnell. Rather, the “groups most affected by [the] decision . . . likely [had] very pronounced views about how these issues should be resolved as a policy matter”[142] that contradicted the Court’s holding.

Accordingly, in McDonnell, the amici failed to provide the Supreme Court with an adequate representation of public opinion, instead blinding the Court to what the public truly believed. Rather than referring to the interests of all parties and the public, as Justice Scalia suggested in Jaffee was the interest “that this Court will have . . . prominentlyindeed, primarilyin mind,[143] the Court abrogated that responsibility. Although amicus briefs can play “an important role in the democratic process, . . . not just as an element of interest group lobbying in today’s society . . . but rather as an integral part of participatory democracy,”[144] public opinion did not factor into the voices of the amici.[145] Therefore, Justices were unable to look to “amicus briefs as a barometer of opinion on both sides of the issue;[146] instead, they were only presented one side. As a result, the voice of the one-sided amici overpowered the general American public’s collective voice.

E.  In Deferring to Amici and Neglecting Inequalities and Public Opinion, the Court Failed to Reinforce Democracy

As a result of the stark contrast between public opinion and the opinions presented to the Court by the amici as well as the Court’s heavy reliance on the opinions of the amici, the Supreme Court falsely believed it was acting as a democracy-reinforcing institution and actually promoted something wholly corrosive to democracy. Beyond the fact that it deferred to the voice of amici over the voice of the public, the Court failed to act as a democracy-reinforcing institution because of the plausibility or likelihood that its decision will actually hurt democracy and the public.

The concept of the Court acting as a democracy-reinforcing institution is best described by John Ely’s Democracy and Distrust.[147] Ely, in a particularly trite comment, referenced the role of the Supreme Court in contemporary society, noting, “[t]he Constitution may follow the flag, but is it really supposed to keep up with the New York Review of Books?”[148] This view is particularly valuable for understanding the role of the Court: specifically, as an adaptive branch of government that can respond to contemporary ideals, opinions, or sentiments, while still keeping with the general theme of the Constitution.[149] Here, academic opinion agrees that Ely proposes “a notion of representation which . . . forms the general theory of our entire constitution” and that the Supreme Court, in construing the more open-ended provisions of the constitution, should solely concern itself with preserving the ideal of representation . . . .”[150] In this sense, Ely’s theories uphold or describe a basic tenet that the Court should reinforce democracy by protecting minority populations while still upholding the importance of majority government.[151] The primary role of the Supreme Court, then, has been to protect “geographical outsiders,” the “literally voteless,” and the “functionally powerless.”[152] Here, the Court neglected that duty.

The Court failed to intervene in support of public opinion or represent the public’s interests, instead kowtowing to the voices of the elite few who submitted briefs as friends of the Court. The Court did not act in support of a neglected population, even though it should have intervened because the “market [was] malfunctioning.”[153] The market malfunctioned not solely because of an unideal outcome, but rather, because “the in’s [were] choking off the channels of political change to ensure they will stay in and the out’s will stay out . . . .[154] Here, individuals, already ingratiated with public servants as a result of their wealth, gained better and considerably more access. Further, the Court yielded to the voice of the few (the amici, who predominantly were past public servants either from Virginia or elsewhere) instead of the general public. As a result of yielding to a distinct and already empowered voice, a limited interestand not the public interestguided the Court’s decisionmaking.

Finally, the Court failed to act as a democracy-reinforcing institution because of the harmful effects of the Court’s decision on the general public. Although the Court’s actions may be largely invisible to most people, its “rulings have enormous impact on people in the most important, and sometimes the most intimate, aspect of their lives.”[155] The scourge of public corruption affects the very functioning of any democracy, including adversely affecting investment projects, causing a diminution of economic activity, encouraging inefficiency, contributing to a misallocation of human resources, creating uncertainty, and generally adversely affecting the poor more so than the rich.[156] Because public corruption has such a broad and injurious effect on democracies, the public stands to suffer from the Court’s decision.[157] Therefore, by supporting those firmly entrenched in government and those already benefitted, the Court acted “at the expense of individuals whom the Constitution is designed to protect.”[158]

The Court abrogated its role as a democracy-reinforcing institution not only because it acted against public opinion, but also, because as a result of its decision, the public stands to suffer. As a result of the Court supporting a specific (and already powerful) subset of the population and not the majority, as well as the plausibility of those actions actually harming both democracy and the general public, the Court failed in its role as a democracy-reinforcing institution.

IV.  Possible Solutions

This Note has explored a number of divergent areas where the Court erred in its McDonnell decision, including, but not limited to, its neglect of pervasive public opinion regarding government corruption and the reality of systemic inequalities (political and otherwise) in the United States, its overreliance on biased amici, and finally, an analysis of the bribery statute that, at base, is ill-equipped to handle contemporary prosecutions of public corruption. This Part assesses possible solutions for each one of those areas and is divided into three broader categories: (1) the Court’s failure to reinforce democracy resulting from its failure to recognize those inequalities and public opinion; (2) the Court’s reliance on amici briefs; and (3) the statute of concern in McDonnell.

These solutions not only tackle the issues at hand in McDonnellspecifically, how the Court failed as an institutionbut also attempt to remedy general issues surrounding contemporary public corruption law. With regards to the changes to the Court’s operations, this Note advocates enhancing certain democratic features of the Supreme Court and ensuring that the voice of the public heard throughout its halls, albeit with a deference to the Court’s inception as a politically insulated branch of government.

Further, policy remedies are necessary, as the McDonnell decision has already impacted prosecution strategy and other corruption cases across the Countrythis is far from a settled issue. As mentioned earlier, the U.S. Attorney’s Office for S.D.N.Y. retried Sheldon Silver and Dean Skelos. Elsewhere in the hallowed Chambers of the Thurgood Marshall Courthouse, the trial of Joe Percocoa top aide to New York Governor Andrew Cuomo, another subject of ethics investigationswas affected by the changes resulting from McDonnell.[159] Seemingly, this decision has not affected this particular office significantly given successful retrials and convictions.[160] However, just across the Hudson River, the decision has had negative effects: the District of New Jersey U.S. Attorney’s Office, having faced a mistrial, now dismissed all charges against Senator Robert Menendez.[161] This is far from a Northeastern problem, either. Across the country, prosecutors at all levels of government tackle corruption, regardless of the level of government at which it occurs or the type of illicit acts engaged in.[162] As a direct result of the McDonnell decision, prosecutors have strategized and developed new theories of prosecution, but not all of them have been successful. Therefore, the policy changes proposed here are necessary to empower prosecutors across the Country to battle the scourge of public corruption and restore efficacious governance.

A.  Rectifying the Court’s Failure to Reinforce Democracy

As established above, the Supreme Court failed to reinforce democracy by ignoring widespread public opinion that sees extensive government corruption in addition to ignoring societal and political inequalities. The source of such failures could arise from a number of areas, like the Court’s role as an elite institution or its self-perception as such, or even from the rules governing amici briefs.

In writing that “[i]t is emphatically the province and duty of the judicial department to say what the law is,”[163] Justice John Marshall ensured that the Court would be the final arbiter of executive and legislative actions.[164] The Supreme Court, therefore, can act as an institution designed to ensure majority rule while still safeguarding the rights of minority groups. Some take this theory to an extreme, arguing that the Court best analyzes the law when assessing legal questions with close scrutiny of public opinion.[165] Judges undertake emphatically democratic tasks, creating new law through their interpretation of statutes or prior common law.[166] How exactly the Supreme Court should actor under what mechanismsin order to validate public opinion in its decisionmaking is still a valuable question worth exploring.

First, judges must consider that they operate within a system which requires that “[t]he rules applied to the decision of individual controversies cannot simply be isolated exercises of judicial wisdom.”[167] In turn, recognizing that one operates within a vast chain of precedent and within society as a whole requires transparency, as “[a] judiciary that discloses what it is doing and why it does it will breed understanding.”[168] The flipside of requiring transparency, of course, is a limitation of insulation from the public. The Court, operating within a transparent system, requires awareness not only of its role relative to the people it effectively governs, but also, of its role relative to other institutions within government.[169] Doing so breaks the Court’s role solely as an interlocutor between the Constitution and contemporary legal questions, but does not totally abrogate it; rather, the Court still exhibits fidelity to features within the Constitution, but does so cognizant of its role relative to other documents, institutions, and peoples.

Second, and almost as a corollary to the first rule, judges must also keep abreast of information regarding the society they effectively govern through their decisionmaking. As “one cannot bridge the gap between society and law without having reliable information about society,” judges should strive to understand public opinion.[170] In arriving at such an end, “the Court must determine the public mood, develop a mode of rhetoric that the public finds acceptable, and make decisions that the public at least tolerates.”[171] Finding “any easy method, any three-prong test, to determine which definitions of public opinion should be admitted into constitutional adjudication and how much weight those definitions should be given” is not of significant importance, but rather, public opinion “should enter the multi-factored, balancing equation” of judicial decisionmaking.[172]

Such an entente between the Court and public opinion would empower the public to see itself as a legitimate actor of change. David Cole, in Engines of Liberty, provides a clear explanation of how the public could avail itself of a democracy-reinforcing Supreme Court. Cole argues that “[m]ost of the work of constitutional law reform takes place outside the federal courts” because “[o]verlapping state, federal, and international legal systems offer multiple possibilities for doing the groundwork necessary for constitutional change, whether in city councils, state legislatures, state courts, Congress, the executive branch, or international forums.”[173] As Cole posits, the public sets democratic actions in the Supreme Court in motion. Constitutional law, therefore, is innately and intensely democratic, and the result of political processesinasmuch as constitutional principles matter, so do advocates.[174]

As a caveat, an acknowledgement of public opinion does not connote an abandonment of all precedent and other forms of interpretation.[175] Rather, “[c]onstitutional law is designed to stand above ordinary politics, and it is notand should not bedirectly responsive to political pressure in the way that legislation or executive action is.”[176] Although “[t]he justices’ role is not to represent constituents,” some obeisance towards public opinion is evident.[177] Therefore, although the Supreme Court, under this approach, makes wholly new law and must in some way be insulated from political movements and politics more generally, it can and should respond to failures of democratic institutions and democracy more generally.

The Court should return to its role as a democracy-reinforcing institution, doing so by recognizing the system in which it operates and by acknowledging public opinion. Such an acknowledgment does not require an abrogation of using other forms of analysis in its decisionmaking, but rather, requires that the Court at least exhibit an awareness to the public mood. By recognizing the importance of public opinion in its decisionmaking, or at least by exhibiting an awareness to it, the Court can reinforce democracy by, as Ely mentioned, inserting itself where the political market malfunctions and limits access to representation to some.

B.  Rectifying the Court’s Reliance on Amicus Briefs

As discussed in Sections III.C and III.D, amicus briefs form a vital part of Supreme Court decisionmaking: in short, and at their best, they provide the Court with new and innovative approaches to understanding legal issues and allow for parties interested in the litigation, but not necessarily part of it, to express opinions. As Justice Black opined, “[m]ost cases before this Court involve matters that affect far more people than the immediate record parties,”[178] and amicus briefs allow for that representation. However, as mentioned in Sections III.C and III.D, amicus briefs can often represent a distorted or impartial view of a specific issue, and as a result, some attention to how the Court handles or processes amicus briefs may be of value.

The Court has come to rely heavily on amicus briefs, as in the 20142015 term, Justices cited amicus briefs in 54% of all signed opinions.[179] Beyond a heavy reliance on amicus briefs in general, the Court also relies on a specific subset of elite lawyers to both argue before the Court and file amicus briefs.[180] Both the heavy reliance on amicus briefs and on specialized lawyers are unlikely to change, especially as the “new hunger for information outside the record” grows.[181] However, the Court can scrutinize the motivations behind amicus briefs and institute certain rules regarding their admissibility.

First, the Court could benefit from assessing the motivations of amici. For example, a recent article by Allison Orr Larsen and Neal Devins found that quite often, when amici file briefs it is not a result of a self-interest, but rather at the behest of the parties in the pending litigation.[182] Essentially, “[w]hen the Court grants certiorari (or cert), these very lawyers strategize about which voices the Court should hear and they pair these groups with other Supreme Court specialists to improve their chances with the Court.”[183] Often, as a result, what is presented before the Court is not a culmination of individual actors attempting to provide background, clarity, or innovative approaches to a complex legal question, but rather something “orchestrated and intentional” by the litigating parties.[184] Accordingly, assessing the motivations behind an amicus brief would allow the Court to contextualize the brief in its entirety, as, for example, in McDonnell, where politicians filing briefs on behalf of another politician may not provide a wholly unbiased view. Although a primary purpose behind amicus briefs is to provide a specific view on an issue, contextualizing those views may provide the Court better perspective on the legal question as a whole.

Second, the Court can institute requirements regarding what amicus briefs must provide in order to be admitted. As mentioned above, these briefs can provide a useful insight into complex legal questions, but oftentimes fall prey to simply rehashing the opinions set forth in the briefs by the respective parties. Although a non-exhaustive list of what possible remedies exist to solve this amicus problem, the Court could explore the following options. Judge Posner suggests the following possibilities and allows amicus briefs

only when (1) a party is not represented competently or not represented at all; (2) the amicus has an interest in some other case that may be affected by the decision in the case before the court; or (3) the amicus has unique information or a unique perspective that can provide assistance to the court beyond what the lawyers for the parties can provide.[185]

Although providing myriad reasons for such a limitation, Judge Posner also hesitates at allowing interest group politics to pervade the Supreme Court and distort the judicial decisionmaking process.[186]

 Amicus briefs benefit the Court greatly, but also have the possibility of manipulating the Court’s perspective on an issue and adversely affecting a party in the case. By scrutinizing this process, the Court will ensure that amicus briefs that reach it actually aid it in its decisionmaking, rather than producing an echo chamber as was the case in McDonnell, in which amici merely repeated other amici or the petitioner and provided no new insight on the legal question before the Court. These suggestions would also assuage the problem evident in McDonnell, namely that amici flooded the Court to support the petitioners and grossly outnumbered the amici on behalf of the respondents.

Further, these suggestions would prevent the aforementioned fears espoused by Justice Scalia, namely, that certain groups fundamentally interested in the outcome of a certain case, but unable to organize and present their opinions, would be absent from consideration in the decisionmaking process.

C.  Rectifying the Basis of the Court’s Failure: A Statute Ill-Equipped to Tackle Corruption

Congress should also pass legislation that would reinforce contemporary public opinion’s broad perception of what constitutes corruption, countering the Supreme Court’s actions in McDonnell. Since the Court narrowly construed what constituted an “official act” for the bribery statute, Congress should defer to public opinion and repudiate that narrow construction. Finally, in harkening back to what the framers perceived as corrupt behavior, Congress should look to New York state (and its corruption legislation) as a means of providing some guidance.

The main statute designed to target public corruption explicitly, the bribery statute18 U.S.C. § 201is limited by language, and therefore is prone to interpretation by the Court, as in McDonnell. The statute defines the quo of the quid pro quo relationship as “any decision or action on any question, matter, cause, suit, proceeding or controversy, which may at any time be pending, or which may by law be brought before any public official, in such official’s official capacity.”[187] Beyond the bribery statute, few other statutes or codes at the federal level are concerned exclusively with public corruption prosecutions. Enacted in 1946, Congress created the Hobbs Act with the intent of managing labor disputes.[188] However, the Department of Justice’s Justice Manual notes how “the extortion statute is frequently used in connection with cases involving public corruption.”[189] Beyond these statutes, the honest services fraud statute,[190] as well as the Travel Act,[191] have also been used as vehicles for prosecution. Finally, passed in 1970, with the Congressional intent of empowering prosecution of mob activity,[192] the Racketeer Influenced and Corrupt Organizations Act (“RICO”) now empowers prosecution of public corruption, assuming that a person be involved in an enterprise that operates through a pattern of racketeering activity.[193] All of the aforementioned statutes empower federal prosecutors to tackle public corruption;[194] however, none of these acts or statutes reference public corruption prosecution, as case law has illuminated that specific area of law.

Given that the federal statutes that cover public corruption rarely if ever directly refer to it, Congress should look to New York state for both clarifying the statute on what constitutes an “official act” and for determining if any new legislation could be passed that would better reflect the realities of political dealings and public opinion. In 2013, New York revisited its bribery statutes, with Governor Cuomo proposing the Public Trust Act which criminalized directly, without need for other statutes, the bribery of a public servant,[195] corrupting the government,[196] and the failure to report corruption.[197] The Public Trust Act, as ultimately enacted in 2014,[198] included the latter two proposed provisions as well as enhanced prosecutorial powers through changing the statute of limitations and evidentiary standards.[199] New York provides an opportune study, not only because of how pervasive public corruption is in the state,[200] but also because the New York statute accurately reflects public opinion on corruption and therefore is broadly worded.

Section 496 of New York’s Penal Law provides a model for public corruption legislation, providing statutes regarding what constitutes public corruption generally, and then also what constitutes corrupting the government.[201] Its bribery lawsenshrined in Section 200 of the Penal Lawalso provide some valuable guidance for possible federal laws, with Sections 200.10 through 200.12 specifically addressing quid pro quo relationships.[202] Specifically, the New York State Penal Law criminalizes bribery when any public servant receives any benefit “upon an agreement or understanding that his or her vote, opinion, judgment, action, decision or exercise of discretion as a public servant will thereby be influenced . . . .”[203] Such an open definition of what constitutes the quo in a quid pro quo (that it could be any “vote, opinion, judgment, action, decision or exercise of discretion”) better relates to the reality of contemporary American politics.

Such legislation would better reflect the realities of public corruption at the national stage, understanding how public opinion factors into how to tackle the issue while also recognizing the benefits in perceiving it as an abuse of the public’s trust. Over the past thirty years, “convictions of federal officials and employees . . . [comprised] about 56% of all convictions.”[204] The majority of these charges come under Title 18, as mentioned above, “with the most common specific charges being related to bribery, conspiracy, embezzlement, false statements, and theft.”[205] However, divided at the federal level, for the 9,101 indictments filed over the same period, the charges come from a diverse range of acts, spanning across at least four different titles of the U.S. Code.[206] Because of the wide variety of statutes used to target public corruption, the public could benefit from a singular statute harmonizing these factors and construing it as an abuse of the public trust.

Defining corruption similarly to the New York state statute would also approximate the public’s view of what constitutes corrupt behavior. Public opinion, as indicated above, regards the intent and context of the corrupt actors, rather than on whether the items exchanged actually constituted something bestowed on a politician by the virtue of the politician’s public office. Essentially, if a public servant used “his public office primarily to serve his own ends,” the servant engaged in corrupt behavior, and more importantly, “[t]his understanding of corruption focuses the discussion on the intent and context of the potentially corrupt actor (or actors).”[207] Under this approach, it was not so much the form or specific acts carried out by the politician or public servant, but rather, the simple fact that by doing so, the politician served his or her own ends and not his or her constituents.

If Congress is unable to pass new legislation concerning public corruption, it at least should support a clarification of the statute. Currently, two members of CongressTom Suozzi (D-N.Y.) and Brian Fitzpatrick (R-Pa.)have proposed bipartisan legislation to clarify the statutory defect that resulted from the Court’s decision. Suozzi, saying that “[w]e can’t allow corruption convictions to be overturned based on legal technicalities,” unveiled the Close Official Acts Loophole Act, which would borrow language from the federal conflicts of interest statutes and apply that language to what constitutes an “official act.”[208] Explaining the rationale behind the bill, Fitzpatrick, a former Supervisory Special Agent for the Federal Bureau of Investigation (“FBI”) and the national supervisor for its Public Corruption Unit, noted, “[c]orruption can and does take many different forms, and we must provide investigators and prosecutors with all the tools they need to combat [its] erosive effects . . . .”[209] The bill would elaborate what constituted the “quo” of a quid pro quo relationship, indicating that acting on “any question, matter, cause, suit, proceeding or controversy, which may at any time be pending, or which may by law be brought before any public official, in such official’s official capacity, or in such official’s place of trust or profit” in return for some pecuniary benefit would constitute bribery.[210]

Of note, passing such amendments as opposed to passing new legislation mirroring New York’s would also allay the Court’s concerns of overeager prosecutions and criminalizing all forms of governance. This list, proposed by Suozzi and Fitzpatrick, mirrors the one in New York, in some capacity, expanding what constitutes an “official act” to matters related to the discretion of the public servant.[211] However, it still draws on language from already existing statutes, which the Court passively approved in its opinion. Further, the petitioner differentiated the bribery statute from the already existing statutes on the basis of these semantic differences, but did not denigrate those specific statutes.[212]

Such legislation is necessary because it better covers the nefarious aspects of access explored by this Note. By expanding what constitutes an “official act” and bringing it line with aforementioned public opinion and certain realities of access, Congress can ensure that the public’s perspective on what constitutes corruption is enshrined in law. Further, by enshrining that definition in law, Congress will rectify the situationof a limited definition of what constitutes corruptioncreated by the Supreme Court in McDonnell.

Conclusion

A number of possible caveats exist to the arguments made in this Note. I did not explore whether the Court’s decision would ultimately benefit the publicperhaps the decision and its logical results would allow for public servants to more freely interact with their constituents with no fear of prosecutionor harm it. Beyond that, I also assumed that the presence of multiple amici on behalf of the petitioner caused an uneven playing field against the respondent, the United States, which may also not be the case. The instant case is also factually contingent on amici not representing public opinionmany instances may exist where amici do represent public opinion (and do so very well), thus questioning another argument made here. Despite these caveats, the Court’s decision has already had real effects on democracy.

As mentioned earlier, the Court’s decision, affected a number of other decisions in a small amount of time. The deleterious effect mentioned, however, by the Court, amici, and McDonnell, might be misplaced. In the wake of the decision, various courts of appeal have overturned convictions, reversing and remanding them for reconsideration in line with McDonnell. Yet the U.S. Attorney’s Office for S.D.N.Y.a powerhouse of public corruption prosecutionsand other U.S. Attorney’s Offices across the country announced they would retry them, succeeding in winning convictions.[213] In fact, at the time of reversal, the Second Circuit Court of Appeals even noted that the evidence submitted in two prominent S.D.N.Y. casesthose of Dean Skelos and Sheldon Silverwas sufficient to convict.[214] The Court’s fear of giving prosecutors a carte blanche may have been misplaced, as prosecutors continue their zealous attempt to rid statehouses, bureaucracies, and Congress of corruption.

Additionally, the writing of this Note occurred as the Special Counsel Investigation into Russia’s influence on the 2016 presidential election was underway.[215] Various public officials, non-profit organizations, and politicians raised numerous allegations regarding President Trump’s and his aides’ relationships with Russian officials and representatives. In these allegations, these public officials, non-profit organizations, and politicians accuse the President and his aides of some type of corruption.[216] In such a context, the importance of McDonnell’s outcome increases, especially as corruption became a politicized issue in the 2016 election.[217] With a limited scope on what constitutes corruption, it is possible that some acts could go unnoticed and unprosecuted.

However, even if “[a] means can be justified only by its end”[218] and the ultimate effect of the holding is limited, the Court’s process of arriving at its decision is also worrisome. That the Court deferred to amici, in spite of overwhelming public opinion opposing the views of those amici, ultimately calls into question the role of amici, or at least how the Court interacts with them and the public. A majority of those Americans surveyed, cutting across tense political lines, viewed, and still view, the Court’s reasoning as problematic, suggesting that the Court’s motivations should not go unquestioned.

A further question at play in the litigation, and one this Note touches tangentially, is how to manage the Supreme Court when it fails to police itself. Despite its design as an institution insulated from politicking, as described above, the Court must eschew devolving into an elitist institution completely unaware or ignorant to realities of contemporary social ills. Of course, the Court is not wholly insulated to public opinion. Jurisprudence on a number of legal issuesincluding privacy rights related to gay marriage, the right to contraception, school integration, and other issuesindicate the Court’s willingness to contemplate social developments and public opinion in its decisionmaking.[219] Further, the Supreme Court is often most powerful when it follows public opinion because “justices often delay or minimize their interventions” when “[s]ensitive to the possibility of backlashes. . . .[220] Given that public opinion ra              n counter to the Court’s holding, the question of what possible backlash exists emerges and further problematizes the Court’s holding.

Accordingly, from an open snub to public sentiment to an unabashed, almost sycophantic, restatement of the many amici (representing public servants, politicians, or former versions of the two) who filed on behalf of McDonnell, the Court narrowed the definition of what constituted an “official act.” By doing so, it also limited what constituted quid pro quo behavior and propagated a theory of access wholly corrosive to democracy. Finally, if doing so were not enough, the Court’s reasoning in McDonnell shows no deference to understanding (let alone assuaging) the systemic political, economic, and social inequalities in the United States, or to public opinion supporting change regarding the Court’s view on access. As a result, in its decision in McDonnell, the Court repudiated its role as a democracy-reinforcing institution.

 


[*] *..              Executive Postscript Editor, Southern California Law Review, Volume 92; J.D. Candidate, 2019, University of Southern California Gould School of Law; B.A. 2016, Columbia University. My deepest gratitude goes to Professor Sam Erman for his guidance, to Professor Judith Russell, and Alexis Grenell. Lastly, thank you to my family, my friends, and the fine editors and staff of the Southern California Law Review for their excellent work.

 [1]. Baron De Montesquieu, 1 The Spirit Of The Laws 12–13 (Thomas Nugent trans., Hafner               Press 1975) (1748).

 [2]. McDonnell v. United States, 136 S. Ct. 2355, 2361 (2016).

 [3]. Id. at 2375.

 [4].               Id.

 [5].               United States v. Skelos, 707 F. App’x 733, 735 (2d Cir. 2017) (discussing how sufficient evidence existed to convict Skelos, but that the Second Circuit had to vacate and remand the case because of the erroneous jury instructions).

Upon independent review of the record, and for the reasons principally set forth in the district court’s orders and judgments, we conclude that all of defendants’ remaining challenges to their convictions are without merit. Nevertheless, because we identify charging error on the ‘official act’ elements of the crimes and conviction, which we cannot conclude is harmless beyond a reasonable doubt, we VACATE the district court’s May 16, 2016 judgments and REMAND the case for further proceedings consistent with this order.

Id.

 [6].               United States v. Silver, 864 F.3d 102, 106 (2d Cir. 2017) (similarly discussing how sufficient evidence existed and erroneous jury instructions created by the McDonnell decision forced the court of appeals to vacate and remand).

Though we reject Silver’s sufficiency challenges, we hold that the District Court’s instructions on honest services fraud and extortion do not comport with McDonnell and are therefore in error. We further hold that this error was not harmless because it is not clear beyond a reasonable doubt that a rational jury would have reached the same conclusion if properly instructed, as is required by law for a verdict to stand.

Id.

 [7]. Id.

 [8]. Vivian Wang, Guilty, Again: Dean Skelos, Former Senate Leader, Is Convicted of Corruption in Retrial, N.Y. Times (July 17, 2018), https://nyti.ms/2JALyJw; Benjamin Weiser, Sheldon Silver Is Convicted in 2nd Corruption Trial, N.Y. Times (May 11, 2018), https://nyti.ms/2Ic83Zm.

 [9]. Matt Ford, Has the Supreme Court Legalized Public Corruption?, Atlantic (Oct. 19, 2017), https://www.theatlantic.com/politics/archive/2017/10/menendez-mcdonnell-supreme-court/543354 (discussing how the decision in McDonnell v. United States hung over the prosecutor’s case).

 [10]. Nick Corasaniti & Nate Schweber, Corruption Case Against Senator Menendez Ends in Mistrial, N.Y. Times (Nov. 16, 2017), https://nyti.ms/2hEl6a6.

 [11]. Alan Feuer, Why Are Corruption Cases Crumbling? Some Blame the Supreme Court, N.Y. Times (Nov. 17, 2017), https://nyti.ms/2hJtkhl.

 [12]. Niall McCarthy, Corruption of Government Officials Ranked Americans’ Top Fear of 2017, Forbes (Oct. 19, 2017, 8:05 AM), https://www.forbes.com/sites/niallmccarthy/2017/10/19/corruption-of-government-officials-ranked-americans-top-fear-of-2017-infographic.

 [13]. Matt Zapotosky et al., Prosecutors Will Drop Cases Against Former Va. Governor Robert McDonnell, Wife, Wash. Post (Sept. 8, 2016), http://wapo.st/2cakuAZ.

 [14]. Press Release, U.S. Att’y’s Office for the E.D. Va., Former Virginia Governor and Former First Lady Indicted on Public Corruption and Related Charges (Jan. 21, 2014) [hereinafter Press Release, Former Virginia Governor and Former First Lady Indicted], https://www.justice.gov/usao-edva/pr/former
-virginia-governor-and-former-first-lady-indicted-public-corruption-and-related.

 [15]. Id.

 [16]. Id.

 [17]. See Indictment at 4–5, United States v. McDonnell, No. 3:14-CR-12 (E.D. Va. Jan. 21, 2014), ECF No. 1.

 [18]. Id. at 6.

 [19]. Id.

 [20]. Id. at 6–7.

 [21]. Press Release, Former Virginia Governor and Former First Lady Indicted, supra note 14.

 [22]. Indictment, supra note 17, at 8.

 [23]. Id. at 26.

 [24]. Id. at 9.

 [25]. Id. at 11.

 [26]. See Indictment, supra note 17, at 7–32, for a full account of the enrichment, returns, and quid pro quo relationship between Star Scientific and Governor Bob McDonnell.

 [27]. Id.

 [28]. Id.

 [29]. United States v. McDonnell, 792 F.3d 478, 488 (4th Cir. 2015).

Two days after this private dinner—on May 1, 2011—Mrs. McDonnell received an email via Williams. The email included a link to an article entitled “Star Scientific Has Home Run Potential,” which discussed Star’s research and stock. Mrs. McDonnell forwarded this email to Appellant at 12:17 p.m. Less than an hour later, Appellant texted his sister, asking for information about loans and bank options for their Mobo properties. Later that evening, Appellant emailed his daughter Cailin, asking her to send him information about the payments he still owed for her wedding.

The next day, May 2, Mrs. McDonnell and Williams met at the Governor’s Mansion to discuss Anatabloc. However, Mrs. McDonnell began explaining her family’s financial woes—thoughts about filing for bankruptcy, high-interest loans, the decline in the real estate market, and credit card debt. . . .

Three days later, on May 5 at 11 a.m., Appellant met with Secretary Hazel and Chief of Staff Martin Kent to discuss the strategic plan for the state’s health and human resources office. Shortly after the meeting, Appellant directed his assistant to forward to Hazel the article about Star that Mrs. McDonnell had earlier brought to Appellant’s attention.

Id. (footnotes omitted).

 [30]. Rosalind S. Helderman & Matt Zapotosky, Ex-Va. Governor Robert McDonnell Guilty of 11 Counts of Corruption, Wash. Post (Sept. 4, 2014), http://wapo.st/1vSbW8x (“Three jurors who spoke about the verdict said the decision was an emotional one, particularly considering Robert McDonnell’s long career of public service. But they said they believed that the facts and the law were clear and that the verdict had not, in the end, been a difficult one to reach.”); see also Press Release, U.S. Att’y’s Office for the E.D. Va., Former Virginia Governor and Former First Lady Convicted on Public Corruption Charges (Sept. 4, 2014) [hereinafter Press Release, Former Virginia Governor and Former First Lady Convicted], https://www.justice.gov/opa/pr/former-virginia-governor-and-former-first-lady-convicted-public-corruption-charges.

 [31]. Frank Green et al., Bob and Maureen McDonnell Convicted in Historic Corruption Trial, Richmond Times-Dispatch (Sept. 4, 2014), http://www.richmond.com/news/state-regional/virginia-politics/bob-mcdonnell-convicted-on-of-counts-maureen-mcdonnell-on-of/article_7b9b6118-343c-11e4-bef2-001a4bcf6878.html; see also Press Release, Former Virginia Governor and Former First Lady Convicted, supra note 30.

 [32]. Green et al., supra note 31.

 [33]. McDonnell, 792 F.3d at 486.

 [34]. Id. at 505–06.

 [35]. Id.

 [36]. Id. at 505.

 [37]. Id. at 506.

 [38]. See id.

 [39].                             Id. at 520;               Travis Fain, McDonnell Appeals Again, Stays Free for Now, Daily Press (July 24, 2015, 9:40 AM), http://www.dailypress.com/news/politics/dp-mcdonnell-appeals-again-stays-free-for-now-20150724-story.html.

 [40]. 18 U.S.C. § 201(b)(2) (2018) (bribery of public officials); id. § 201(a)(3) (“official act” definition).

 [41]. McDonnell, 792 F.3d at 504 (noting that “in their proposed instructions for honest-services wire fraud, both parties sought to import the definition of bribery set forth in 18 U.S.C. § 201(b)(2) . . . the parties [also] agreed that a charge of extortion under color of official right has four elements” one of which requires the defendant to have “‘obtained a thing of value’ . . . ‘knowing that the thing of value was given in return for official action.’”). The court of appeals affirmed the district court’s use of § 201(b)(2)’s definition of bribery in its instructions to the jury regarding the honest services wire fraud statute. The court also affirmed the lower court’s jury instructions for the charge of extortion under color of official right. Id. at 504.

 [42]. Id. (citing 18 U.S.C. § 201(a)(3)) (internal quotations omitted).

 [43]. Id. at 513 (“Even if this were so, it is not a statement of law. Rather, it seems to us a thinly veiled attempt to argue the defense’s case. . . . Taken as a whole, Appellant’s proposed instruction on the meaning of ‘official act’ failed to present the district court with a correct statement of law.”) (discussing the defendant, Governor Bob McDonnell’s jury instructions which proposed that no settled practices or routine behavior could constitute official acts for the purpose of the statutes under which he was indicted).

 [44]. Id. at 510–11 (“We further observe that an ‘official act’ may pertain to matters outside of the bribe recipient’s control. . . . [M]ere steps in furtherance of a final action or decision may constitute an ‘official act.’ . . . [There is] no difficulty recognizing that proof of a bribe payor’s subjective belief in the recipient’s power or influence over a matter will support a conviction for extortion under color of official right.”).

 [45]. Petition for Writ of Certiorari at i, McDonnell v. United States, 136 S. Ct. 2355 (2016) (No. 15-474) (discussing the primary issue of concern of the appeal).

Under the federal bribery statute, Hobbs Act, and honest-services fraud statute, 18 U.S.C. §§ 201, 1346, 1951, it is a felony to agree to take “official action” in exchange for money, campaign contributions, or any other thing of value. The question presented is whether “official action” is limited to exercising actual governmental power, threatening to exercise such power, or pressuring others to exercise such power, and whether the jury must be so instructed; or, if not so limited, whether the Hobbs Act and honest-services fraud statute are unconstitutional.

Id.

 [46]. Id. at i, 27–30.

 [47]. Id. at 14 (citing McCutcheon v. FEC, 134 S. Ct. 1434, 1441 (2014)).

 [48]. Id. (citing McCutcheon, 134 S. Ct. at 1450–51).

 [49]. Brief for Respondent at 12, McDonnell v. United States, 136 S. Ct. 2355 (2016) (No. 15-474).

 [50]. Id. at 13–14 (“It has thus been settled for more than a century that the federal bribery statute ‘cover[s] any situation in which the advice or recommendation of a Government employee would be influential,’ even if the employee does not ‘make a binding decision.’ (citations omitted)).

 [51]. The list for the Petitioner included the National Association of Criminal Defense Lawyers, the Republican Governors Public Policy Committee, a group of “Former Federal Officials,” the American Center for Law and Justice, a group of “Public Policy Advocates and Business Leaders,” a group of “Law Professors,” a group of “Former Attorneys General,” a group of sixty non-Virginian “Former State Attorneys General,” a group of “Virginia Law Professors,” members of the Virginia General Assembly, and Benjamin Todd Jealous, Delores L. McQuinn, and Algie T. Howell Jr. See McDonnell v. United States, SCOTUSblog, http://www.scotusblog.com/case-files/cases/mcdonnell-v-united-states (last visited Nov. 29, 2018) [hereinafter McDonnell v. United States, SCOTUSblog].

 [52]. Robert Barnes, Supreme Court Will Review Corruption Conviction of Former Va. Governor Robert McDonnell, Wash. Post (Jan. 15, 2016), http://wapo.st/1Zq6fsP?tid=ss_tw&utm_term=
.c9eeac23da58.

 [53]. The list for the Respondents included the Citizens for Responsibility and Ethics in Washington, the Brennan Center for Justice at N.Y.U. School of Law, Judicial Watch, Inc. and the Allied Educational Foundation, Public Citizen, Inc. and Democracy 21, and the Campaign Legal Center. See McDonnell v. United States, SCOTUSblog, supra note 51.

 [54]. McDonnell v. United States, 136 S. Ct. 2355, 2375 (2016).

 [55]. Id. at 2371.

 [56]. Id. at 2372 (emphasis added).

 [57]. Id. at 2367 (“The issue in this case is the proper interpretation of the term ‘official act.’ Section 201(a)(3) defines an ‘official act’ as ‘any decision or action on any question, matter, cause, suit, proceeding or controversy, which may at any time be pending, or which may by law be brought before any public official, in such official’s official capacity, or in such official’s place of trust or profit.’”).

 [58]. Federal Corruption Statutes—Bribery—Definition of “Official Act”—McDonnell v. United States, 130 Harv. L. Rev. 467, 470 (2016) (discussing the role of statutory interpretation in the Court’s decisionmaking).

 [59]. McDonnell, 136 S. Ct. 2368 (“To choose between those competing definitions, we look to the context in which the words appear. Under the familiar interpretive canon noscitur a sociis, ‘a word is known by the company it keeps.’” (quoting Jarecki v. G.D. Searle & Co., 367 U.S. 303, 307 (1961))); see also id. at 2368–69 (containing a review of the Court’s analysis of various dictionaries).

 [60]. Id. at 2372–73.

 [61]. Ryan S. Killian, Comment, Dicta and the Rule of Law, 2013 Pepp. L. Rev. 1, 7–8 (2013) (“Classically, dicta is regarded as any portion of the opinion that is inessential to the outcome.” (footnote omitted)) (discussing how dicta plays a role in a Court opinion, being unnecessary towards the reasoning or logic behind the actual holding).

 [62]. Jerome N. Frank, Words and Music: Some Remarks on Statutory Interpretation, 47 Colum. L. Rev. 1259, 1259 (1947); see also Justice Felix Frankfurter, Sixth Annual Benjamin N. Cardozo Lecture Delivered Before the Bar Association of the City of New York: Some Reflections on the Reading of Statutes (Mar. 18, 1947), in 2 Rec. Ass’n B. City N.Y. 213, 216–17 (1947), reprinted in 47 Colum. L. Rev. 527, 530 (1947) (similarly concluding).

 [63]. McDonnell, 136 S. Ct. at 2372–73.

 [64]. Justice Frankfurter, supra note 62, at 214, reprinted in 47 Colum. L. Rev. at 528.

 [65]. In a sense, the fears espoused by the Court in this instance were not new. In United States v. Sun-Diamond Growers, 526 U.S. 398, 407 (1999), the Court discussed the relevant “absurdities” in creating a clear-cut rule regarding corruption or quid pro quo exchanges in that case, because doing so would criminalize “a complimentary lunch for the Secretary of Agriculture.” Mark Walsh, Supreme Court Narrows Definition of “Official Acts” in Public Corruption Laws, Educ. Week (Jun. 27, 2016, 12:08 PM), http://blogs.edweek.org/edweek/school_law/2016/06/supreme_court_narrows_definiti.html. See Zephyr Teachout, Corruption in America: From Benjamin Franklin’s Snuff Box to Citizens United (2014), for a discussion of prior court precedence on the issue of public corruption and for a discussion on the role that fears of criminalizing politics as usual play in Supreme Court decisions.

 [66]. McDonnell, 136 S. Ct. at 2372.

 [67]. Tara Malloy, Symposium: Is It Bribery or “The Basic Compact Underlying Representative Government”?, SCOTUSblog (June 28, 2016, 4:03 PM), http://www.scotusblog.com/2016/06
/symposium-is-it-bribery-or-the-basic-compact-underlying-representative-government (“As all Hamilton fans know, it pays to be in ‘The Room Where It Happens.’ Taken to its logical end, the Court’s approach permits officials literally to put ‘access’ up for sale . . . .”) (analogizing how the concept of access approved or validated by the Court goes beyond a general access).

 [68]. Id.

 [69]. McDonnell, 136 S. Ct. at 2372.

 [70]. Id.

 [71]. Id. at 2373 (citing Skilling v. United States, 561 U. S. 358, 402–03 (2010)).

 [72]. Id. (“[W]e decline to ‘construe the statute in a manner that leaves its outer boundaries ambiguous and involves the Federal Government in setting standards’ of ‘good government for local and state officials.’” (quoting McNally v. United States, 483 U.S. 350, 360 (1987))).

 [73]. Id. (citing Kolender v. Lawson, 461 U. S. 352, 358 (1983)).

 [74]. U.S. Dep’t of Justice, Justice Manual § 9-85.210 (2018), https://www.justice.gov/usam
/usam-9-85000-protection-government-integrity#9-85.210.

Consultation with the Public Integrity Section of the Criminal Division is required in all federal criminal matters that focus on violations of federal or state campaign financing laws, federal patronage crimes, and . . . . These include . . . prosecutive theories that focus on election fraud or campaign fund raising violations using 18 U.S.C. §§ 1341, 1343, and 1346; 18 U.S.C. § 1952; 18 U.S.C. §§ 1956 and 1957.

Id. See generally McDonnell, 136 S. Ct. at 2355.

 [75]. From the Court’s opinion, it is unclear whether the Justices were aware of this process. However, no mention of it is made in the opinion. See generally McDonnell, 136 S. Ct at 2355.

 [76]. Malloy, supra note 67; see also McDonnell, 136 S. Ct. at 2375.

 [77]. See generally McDonnell, 136 S. Ct. at 2361–64 (describing the various engagements and events organized); Malloy, supra note 67.

 [78]. See supra Part II.

 [79]. For a discussion on what constitutes a participatory democracy, as well as for a philosophical basis on the social contract, governance, democracy more broadly, and other theories underpinning American society, see Jean Jacques Rousseau, The Social Contract & Discourses (G.D.H. Cole ed. & trans., E.P. Dutton & Co. 1913) (1782), http://lf-oll.s3.amazonaws.com/titles/638/0132_Bk.pdf.

 [80]. The reasons for such inequality are broadly discussed in this Note, but are not explored heavily.

 [81]. See Jeffrey R. Brown & Jiekun Huang, All the President’s Friends: Political Access and Firm Value, CATO Inst.: Res. Briefs in Econ. Pol’y, Aug. 2017, at 1–2, https://object.cato.org/sites/cato.org
/files/pubs/pdf/rb83.pdf (“First, political access may enable firms to secure contracts to provide goods or services to government. . . . Second, companies with direct access to politicians can seek regulatory relief and influence political decision-making. . . . Third, access to politicians may enable companies to gain an informational advantage about government policies and actions . . . .”) (discussing how access constitutes a competitive advantage and power for organizations).

 [82]. 20 Facts About U.S. Inequality that Everyone Should Know, Pathways Mag. (2011), http://inequality.stanford.edu/publications/20-facts-about-us-inequality-everyone-should-know (discussing wage inequality, CEO pay inequality, homelessness, education wage premium inequality, gender pay gaps, occupational sex segregation, racial gaps in education, racial discrimination, child poverty, residential segregation, health insurance, intragenerational income mobility, bad jobs inequality, discouraged workers, wealth inequality, intergenerational income mobility, deregulation of the labor market, job losses, immigration, and incarceration).

 [83]. Tara Siegel Bernard, A Citizen’s Guide to Buying Access, N.Y. Times (Nov. 18, 2014), https://nyti.ms/1vnwgyR (“The findings are far from shocking: Those emails that offered the prospect of a donor meeting were three times as likely to result in a meeting than those offering the prospect of a constituent meeting, [with] a far greater chance of securing meetings with more senior officials, including . . . members of Congress.”) (discussing a study that cold-called or wrote politicians with the experiment testing the different responses for active donors versus local constituents).

 [84]. See Bruce A. Ackerman, Beyond Carolene Products, 98 Harv. L. Rev. 713, 724 (1985) (discussing the role that minority status plays in access, whether it may be discrete minorities or diffuse ones).

 [85]. See, e.g., Zoltan L. Hajnal et al., Minorities and Direct Legislation: Evidence from California Ballot Proposition Elections, 64 J. Pol. 154, 174–75 (2002).

 [86]. Aaron Glantz & Emmanuel Martinez, For People of Color, Banks Are Shutting the Door to Homeownership, Reveal news (Feb. 15, 2018), https://www.revealnews.org/article/for-people-of-color
-banks-are-shutting-the-door-to-homeownership.

 [87]. Devah Pager & Hana Shepherd, The Sociology of Discrimination: Racial Discrimination in Employment, Housing, Credit, and Consumer Markets, 34 Ann. Rev. So. 181, 187 (2008).

 [88]. Ronald Weich & Carlos Angulo, Racial Disparities in the American Criminal Justice System, in Rights at Risk: Equality in an Age of Terrorism 186 (Dianne M. Piché et al. eds., 2002).

 [89]. Kim Rueben & Sheila Murray, Racial Disparities in Education Finance: Going Beyond Equal Revenues passim (Urban-Brookings Tax Policy Ctr., Paper No. 28, 2008), https://www.taxpolicycenter
.org/publications/racial-disparities-education-finance-going-beyond-equal-revenues/full.

 [90]. Daniel M. Butler & David E. Broockman, Do Politicians Racially Discriminate Against Constituents? A Field Experiment on State Legislators, 55 Am. J. Pol. Sci. 463, 472 (2011).

 [91]. Katherine Levine Einstein & David M. Glick, Does Race Affect Access to Government Services? An Experiment Exploring Street Level Bureaucrats and Access to Public Housing, 61 Am. J. Pol. Sci. 100, 100 (2017).

 [92]. Bernard, supra note 83.

 [93]. Christina Pazzanese, The Costs of Inequality: Increasingly, It’s the Rich and the Rest: Economic and Political Inequities Are Interlaced, Analysts Say, Leaving Many Americans Poor and Voiceless, Harv. Gazette (Feb. 8, 2016), https://news.harvard.edu/gazette/story/2016/02/the-costs-of-inequality-increasingly-its-the-rich-and-the-rest.

 [94]. See Frederick Solt, Economic Inequality and Democratic Political Engagement, 52 Am. J. Pol. Sci. 48, 53–58 (2008).

 [95]. Id. at 57–58.

 [96]. Joseph Stiglitz, The Price of Inequality: How Today’s Divided Society Endangers Our Future 130 (2012).

 [97]. Id.

 [98]. Zoltan Hajnal et al., Voter Identification Laws and the Suppression of Minority Votes, 79 J. Pols. 363, 363 (2017).

 [99]. Christopher Uggen et al., Felony Voting Rights and the Disenfranchisement of African Americans, 5 Souls 48 (2003).

 [100]. Stiglitz, supra note 96, at 164.

 [101]. See Kimberlé Crenshaw, Mapping the Margins: Intersectionality, Identity Politics, and Violence Against Women of Color, 43 Stan. L. Rev. 1241, 1242 (1991) (“The embrace of identity politics, however, has been in tension with dominant conceptions of social justice. Race, gender, and other identity categories are most often treated . . . as vestiges of bias or domination—that is, as intrinsically negative frameworks in which social power works to exclude or marginalize those who are different.”).

 [102]. Barry Friedman, The Will of the People: How Public Opinion Has Influenced the Supreme Court and Shaped the Meaning of the Constitution 14–15 (2009) (arguing that the Supreme Court often follows public opinion on matters deemed especially contentious).

 [103]. Jim Clifton, Explaining Trump: Widespread Government Corruption, Gallup News (Jan. 6, 2016), http://news.gallup.com/opinion/chairman/188000/explaining-trump-widespread-government-corruption.aspx.

 [104]. 60 Minutes/Vanity Fair Poll: Corruption, CBS News: 60 Minutes (June 9, 2015), https://www.cbsnews.com/news/60-minutesvanity-fair-poll-corruption.

 [105]. 75% in U.S. See Widespread Government Corruption, Gallup News (Sept. 19, 2015), http://news.gallup.com/poll/185759/widespread-government-corruption.aspx.

 [106]. See supra Part II.

 [107]. Drew DeSilver & Patrick Van Kessel, As More Money Flows into Campaigns, Americans Worry About Its Influence, Pew Res. Ctr.: Fact Tank (Dec. 7, 2015), http://www.pewresearch.org/fact-tank/2015/12/07/as-more-money-flows-into-campaigns-americans-worry-about-its-influence.

 [108]. Americans’ Views on Money in Politics, N.Y. Times (June 2, 2015), https://nyti.ms/2kajjpi; Nicholas Confessore & Megan Thee-Brenan, Poll Shows Americans Favor an Overhaul of Campaign Financing, N.Y. Times (June 2, 2015), https://nyti.ms/1HIaEhH.

 [109]. Daniel Hensel, New Poll Shows Money in Politics Is a Top Voting Concern, Issue One (June 29, 2016), https://www.issueone.org/new-poll-shows-money-in-politics-is-a-top-voting-concern.

 [110]. Americans’ Views on Money in Politics, supra note 108.

 [111]. Id.

 [112]. National Survey: Super PACs, Corruption, and Democracy, Brennan Ctr. for Just.
(Apr. 24, 2012), https://www.brennancenter.org/analysis/national-survey-super-pacs-corruption-and-democracy.

 [113]. Id.

 [114]. Id.

 [115]. See supra note 51 (listing all the amici who filed in support of McDonnell).

 [116]. Compare supra note 51 (listing groups filing amicus briefs on behalf of petitioner), with supra note 53 (listing groups filing amicus briefs on behalf of respondent).

 [117]. Brief for Am. Ctr. for Law & Justice as Amici Curiae for Petitioner, McDonnell v. United States, 136 S. Ct. 2355 (2016) (No. 15-474); Brief for Former Federal Officials as Amici Curiae for Petitioner, McDonnell v. United States, 136 S. Ct. 2355 (2016) (No. 15-474); Brief for Former Va. Atty’s Gen. as Amici Curiae for Petitioner, McDonnell v. United States, 136 S. Ct. 2355 (2016) (No. 15-474); Brief for Jealous et al. as Amici Curiae for Petitioner, McDonnell v. United States, 136 S. Ct. 2355 (2016) (No. 15-474); Brief for James Madison Ctr. for Free Speech as Amici Curiae for Petitioner, McDonnell v. United States, 136 S. Ct. 2355 (2016) (No. 15-474); Brief for Law Professors as Amici Curiae for Petitioner, McDonnell v. United States, 136 S. Ct. 2355 (2016) (No. 15-474); Brief for Members of Va. Gen. Assemb. as Amici Curiae for Petitioner, McDonnell v. United States, 136 S. Ct. 2355 (2016) (No. 15-474); Brief for Nat’l Ass’n of Crim. Def. Lawyers as Amici Curiae for Petitioner, McDonnell v. United States, 136 S. Ct. 2355 (2016) (No. 15-474); Brief for Republican Governors Pub. Policy Comm. as Amici Curiae for Petitioner, McDonnell v. United States, 136 S. Ct. 2355 (2016) (No. 15-474); Brief for Pub. Policy Advocates & Bus. Leaders as Amici Curiae for Petitioner, McDonnell v. United States, 136 S. Ct. 2355 (2016) (No. 15-474); Brief for Seventy-Seven Former State Att’ys Gen. (Non-Va.) as Amici Curiae for Petitioner, McDonnell v. United States, 136 S. Ct. 2355 (2016) (No. 15-474); Brief for U.S. Justice Found. et al. as Amici Curiae for Petitioner, McDonnell v. United States, 136 S. Ct. 2355 (2016) (No. 15-474).

 [118]. Brief for Republican Governors Pub. Policy Comm. as Amici Curiae for Petitioner at 12–14, McDonnell v. United States, 136 S. Ct. 2355 (2016) (No. 15-474).

 [119].               Brief for Republican Governors Pub. Policy Comm. as Amici Curiae for Petitioner in Support of Petition for a Writ of Certiorari at 8–9, McDonnell v. United States, 136 S. Ct. 2355 (2016) (No. 15-474).

 [120]. Brief for Former Va. Att’ys Gen. as Amici Curiae for Petitioner at 2, McDonnell v. United States, 136 S. Ct. 2355 (2016) (No. 15-474).

 [121]. Id. at 4, 12–15.

 [122]. Brief for Sixty Former State Att’ys Gen. (Non-Va.) as Amici Curiae for Petitioner at 17–18, McDonnell v. United States, 136 S. Ct. 2355 (2016) (No. 15-474) (“Dangling the threat of criminal liability over every lunch with a lobbyist and every meeting with an interest group would impede the proper functioning of state and local governments.”).

 [123]. Id. at 17–20.

 [124]. Brief for Members of Va. Gen. Assemb. as Amici Curiae for Petitioner at 2, McDonnell v. United States, 136 S. Ct. 2355 (2016) (No. 15-474) (referring to the interest of amici).

The conviction of Governor Robert McDonnell on a uniquely broad interpretation of the federal corruption statutes blurs the line between honest political interactions with constituents and public corruption. It now appears that accepting gifts from a constituent—even in the absence of the legislator’s promising or undertaking an official act—may lead to federal prosecution should the constituent request even the slightest assistance from the legislator.

Id.

 [125]. See supra Part II.

 [126]. See Joseph D. Kearney & Thomas W. Merrill, The Influence of Amicus Curiae Briefs on the Supreme Court, 148 U. Pa. L. Rev. 743, 744 (2000) (“In one respect, however, there has been a major transformation in Supreme Court practice: the extent to which non-parties participate in the Court’s decision-making process through the submission of amicus curiae, or friend-of-the-court, briefs. Throughout the first century of the Court’s existence, amicus briefs were rare.”); see also Andrew Jay Koshner, Solving the Puzzle of Interest Group Litigation 7–11 (1998) (exploring the increasing role of public interest participation before the Supreme Court).

 [127]. Kearney & Merrill, supra note 126, at 757.

 [128]. Id. at 745.

 [129]. Ruben J. Garcia, A Democratic Theory of Amicus Advocacy, 35 Fl. St. U. L. Rev. 315, 319 (2008).

 [130]. See Kearney & Merrill, supra note 126, at 746–47, 784–87.

 [131]. See Ryan v. Commodity Futures Trading Comm’n, 125 F.3d 1062, 1063 (7th Cir. 1997).

After 16 years of reading amicus curiae briefs the vast majority of which have not assisted the judges, I have decided that it would be good to scrutinize these motions in a more careful, indeed a fish-eyed, fashion. The vast majority of amicus curiae briefs are filed by allies of litigants and duplicate the arguments made in the litigants’ briefs, in effect merely extending the length of the litigant’s brief. Such amicus briefs should not be allowed.

Id. (Posner, J., in chambers).

 [132]. Garcia, supra note 129, at 316.

 [133]. Jaffee v. Redmond, 518 U.S. 1, 35–36 (1996) (Scalia, J., dissenting).

 [134]. Id. at 36.

 [135]. Roy B. Flemming & B. Dan Wood, The Public and the Supreme Court: Individual Justice Responsiveness to American Policy Moods, 41 Am. J. Pol. Sci. 468, 471 (1997).

 [136]. Lee Epstein & Andrew D. Martin, Does Public Opinion Influence the Supreme Court? Possibly Yes (But We’re Not Sure Why), 13 U. Pa. J. Const. L. 263, 281 (2010).

 [137]. Although perhaps, myriad amici briefs flooding the Court in support of granting a Petition for Writ of Certiorari and again in the Court’s decision would indicate a number of stakeholders in the pending decision, and thus illustrate the importance of the issue, as mentioned throughout this Section, that flood poses problems when an imbalance exists between those filing for the petitioner and the respondent. See Jaffee v. Redmond, 518 U.S. 1, 35–36 (1996) (Scalia, J., dissenting) for a discussion on the possible effects that imbalances in amicus briefs may have on Supreme Court jurisprudence and why such imbalances ultimately pose significant problems for strong adversarial litigation. Another issue of note, but one not explored here, is the effect of amicus briefs in Supreme Court jurisprudence when one party is the United States.

 [138]. See supra note 51 (listing groups filing amicus briefs on behalf of petitioner).

 [139]. See supra note 53 (listing groups filing amicus briefs on behalf of respondent).

 [140]. Kearney & Merrill, supra note 126, at 785.

 [141]. Id.

 [142]. Id.

 [143]. Jaffee v. Redmond, 518 U.S. 1, 36 (1996) (Scalia, J., dissenting).

 [144]. Garcia, supra note 129, at 320.

 [145]. See supra note 117 (listing all amicus briefs on behalf of petitioner).

 [146]. Kearney & Merrill, supra note 126, at 786.

 [147]. See generally John Hart Ely, Democracy and Distrust: A Theory of Judicial Review (1980) (arguing for the Supreme Court’s role as reinforcer of democracy).

 [148]. Id. at 58.

 [149]. See id. at 12.

 [150]. Richard W. Burgh, John Hart Ely, Democracy and Distrust: A Theory of Judicial Review, Cambridge: Harvard University Press, 1980, Book Review 1 L. & Phil. 481, 482 (1982).

 [151]. Ely, supra note 147, at 12.

 [152]. John Hart Ely, Toward a Representation-Reinforcing Mode of Judicial Review, 37 Md. L. Rev. 451, 466 (1978).

 [153]. Id. at 486 (“A referee analogy is also not far off: the referee is to intervene only when one team is gaining unfair advantage, not because the ‘wrong’ team has scored.”) (describing another possible analogy to the political market theory, in which the Court must insert itself and rectify market inequalities or asymmetries in power to yield more beneficial outcomes, but can insert itself only when such inequalities exist).

 [154]. Id.

 [155]. Erwin Chemerinsky, The Supreme Court, Public Opinion, and the Role of the Academic Commentator, 40 S. Tx. L. Rev. 943, 955 (1999).

 [156]. Augusto Lopez-Carlos, Nine Reasons Why Corruption Is a Destroyer of Human Prosperity, World Bank (Mar. 31, 2014), http://blogs.worldbank.org/futuredevelopment/nine-reasons-why-corruption-destroyer-human-prosperity; see also Susan Rose-Ackerman, Corruption: Greed, Culture, and the State, 120 Yale L.J. Forum (2010), https://www.yalelawjournal.org/forum/corruption-greed-culture-and-the-state.

 [157]. What We Investigate: Public Corruption, Fed. Bureau of Investigation, https://www.fbi.gov/investigate/public-corruption (last visited Nov. 30, 2018).

Public corruption . . . poses a fundamental threat to our national security and way of life. It can affect everything from how well our borders are secured and our neighborhoods protected to how verdicts are handed down in courts to how public infrastructure such as roads and schools are built. It also takes a significant toll on the public’s pocketbooks by siphoning off tax dollars—it is estimated that public corruption costs the U.S. government and the public billions of dollars each year.

Id.

 [158]. Erwin Chemerinsky, The Case Against The Supreme Court 10 (2014).

 [159]. Jimmy Vielkind & Laura Nahmias, Cuomo’s Ambitions at Risk as Former Aide Goes to Trial, Politico (Jan. 22, 2018, 5:04 AM), https://www.politico.com/states/new-york/albany/story/2018/01/19
/cuomos-ambitions-at-risk-as-former-aide-goes-to-trial-199286.

 [160]. See infra notes 21314.

 [161]. Corasaniti & Schweber, supra note 10.

 [162]. E.g., Press Release, U.S. Att’y’s Office S.D. Tex., Former Webb County Commissioner Convicted (Oct. 18, 2018), https://www.justice.gov/usao-sdtx/pr/former-webb-county-commissioner-convicted; Michael R. Blood & Julie Watson, US Rep Duncan Hunter, Wife Indicted on Corruption Charges, Associated Press (Aug. 21, 2018), https://www.apnews.com
/9e63df7d58f549f5a034589a08036ee2.

 [163]. Marbury v. Madison, 5 U.S. 137, 178 (1803).

 [164]. See Robert J. Harris, Book Review, Robert McClosky. The American Supreme Court, 336 Annals Am. Acad. Pol. & Soc. Sci. 179, 179 (1961) (“In the first, from 1789 to 1860, the Court under the shrewd guidance of John Marshall, was primarily interested in devising a system of constitutional law which would establish judicial power . . . .”).

 [165]. See Barry Friedman, The Will of the People: How Public Opinion Has Influenced the Supreme Court and Shaped the Meaning of the Constitution 367–85 (2009).

 [166]. Aharon Barak, A Judge on Judging: The Role of a Supreme Court in a Democracy, 116 Harv. L. Rev. 19, 23 (2002) (“The meaning of the law before and after a judicial decision is not the same. Before the ruling, there were, in the hard cases, several possible solutions. After the ruling, the law is what the ruling says it is. The meaning of the law has changed. New law has been created.”).

 [167]. Lon L. Fuller, Anatomy of the Law 94 (Greenwood Press, Inc. 1976) (1968).

 [168]. Justice William O. Douglas, 8th Annual Benjamin N. Cardozo Lecture Delivered Before the Association of the City of New York: Stare Decisis (Apr. 12, 1949), in 4 Rec. Ass’n B. City N.Y. 152, 175–76 (1949), reprinted in 49 Colum. L. Rev. 735, 754 (1949).

 [169]. See id. at 172–76, reprinted in 49 Colum. L. Rev. at 752–55.

 [170]. Barak, supra note 166, at 33.

 [171]. James G. Wilson, The Role of Public Opinion in Constitutional Interpretation, 1993 BYU L. Rev. 1037, 1083.

 [172]. Id. at 1134.

 [173]. David Cole, Engines of Liberty 223–24 (2016).

 [174]. Id. (“The advocates featured here pursued their claims wherever they found a promising forum.”).

 [175]. See Wilson, supra note 171, at 1127–28.

 [176].               Cole, supra note 173, at 225.

 [177]. Id.

 [178]. Order Adopting Revised Rules of the Supreme Court of the United States, 346 U.S. 945, 947 (1954) (statement of Black, J.).

 [179]. Anthony J. Franze & R. Reeves Anderson, In Unusual Term, Big Year for Amicus Curiae at the Supreme Court, Law.com: Supreme Court Brief (Sept. 21, 2016), https://www.law.com
/supremecourtbrief/almID/1202767950930.

 [180]. Richard J. Lazarus, Advocacy Matters Before and Within the Supreme Court: Transforming the Court by Transforming the Bar, 96 Geo. L.J. 1487, 1487–88 (2015) (“During the past two decades, the Supreme Court has witnessed the emergence of an elite private sector group of attorneys who are dominating advocacy before the Court to an extent not witnessed since the early nineteenth century.”).

 [181]. Allison Orr Larsen & Neal Devins, The Amicus Machine, 102 Va. L. Rev. 1901, 1906 (2016).

 [182]. Id. at 1904–06.

 [183]. Id. at 1903–04.

 [184]. Id. at 1904.

 [185]. Eugene Volokh, Judicial Attitudes Towards Amicus Briefs, Volokh Conspiracy (July 23, 2009, 1:51 PM), http://volokh.com/2009/07/23/judicial-attitudes-towards-amicus-briefs.

 [186]. Voices for Choices v. Ill. Bell Tel. Co., 339 F.3d 542, 544 (7th Cir. 2003).

[J]udges have heavy caseloads and therefore need to minimize extraneous reading; amicus briefs, often solicited by parties, may be used to make an end run around court-imposed limitations on the length of parties’ briefs; the time and other resources required for the preparation and study of, and response to, amicus briefs drive up the cost of litigation; and the filing of an amicus brief is often an attempt to inject interest group politics into the federal appeals process.

Id. (emphasis added) (citing Nat’l Org. for Women, Inc. v. Scheidler, 223 F.3d 615, 616–17 (7th Cir. 2000)).

 [187]. See 18 U.S.C. § 201(a)(3) (2018) (defining “official act”).

 [188]. U.S. Dep’t of Justice, Justice Manual, Crim. Resource Manual § 2404 (2018), https://www.justice.gov/usam/criminal-resource-manual-2402-hobbs-act-generally (“[T]he Hobbs Act was enacted in 1946 to combat racketeering in labor-management disputes . . . .”).

 [189]. Id.

 [190]. 18 U.S.C. § 1346 (2018); U.S. Dep’t of Justice, Justice Manual § 9-43.100 (2018), https://www.justice.gov/usam/usam-9-43000-mail-fraud-and-wire-fraud.

 [191]. 18 U.S.C. § 1952 (2018).

 [192]. U.S. Dep’t of Justice, U.S. Dep’t of Justice, Justice Manual § 9-110.100 (2018), https://www.justice.gov/usam/usam-9-85000-protection-government-integrity.

 [193]. 18 U.S.C. § 1962(c) (2018); see also Ctr. for the Advancement of Pub. Integrity, Columbia Law Sch., A Guide to Commonly Used Federal Statutes in Public Corruption Cases: A Practitioner Toolkit 12–13 (2017) [hereinafter Commonly Used Federal Statutes in Public Corruption Cases], https://www.law.columbia.edu/sites/default/files/microsites/public-integrity/a_guide_to_commonly_used_federal_statutes_in_public_corruption_cases.pdf.

 [194]. U.S. Dep’t of Justice, Justice Manual § 9-85.000 (2018), https://www.justice.gov/usam
/usam-9-85000-protection-government-integrity. Although statutes exist that cover bribery of federal officials and interfering with the integrity of elections, few statutes have the explicit purpose of criminalizing quid pro quo activities, and most of this law has been clarified by case law. Commonly Used Federal Statutes in Public Corruption Cases, supra note 193.

 [195]. Press Release, Office of the Governor of N.Y., Governor Cuomo Proposes New Class of Public Corruption Crimes (Apr. 9, 2013), https://www.governor.ny.gov/news/governor-cuomo-proposes-new-class-public-corruption-crimes (“Under the new Public Servant Bribery provision, a prosecutor would only have to prove that the person paying the bribe intended to influence the public official or that the person receiving it intended to be so influenced . . . .”).

 [196]. Id. (“The proposed legislation would hold accountable anyone whether or not they are a public official who is found to have engaged in defrauding the government. . . . Under the new law, anybody, whether acting in concert with a public servant or not, who engages in a course of conduct to defraud a state or local government would be guilty of a crime . . . .”).

 [197]. Id. (“The proposed legislation would for the first time make it a misdemeanor for any public official or employee to fail to report bribery.”).

 [198]. Press Release, Office of the Governor of N.Y., Governor Cuomo and Legislative Leaders Announce Passage of 2014–15 Budget (Mar. 31, 2014), https://www.governor.ny.gov/news/governor-cuomo-and-legislative-leaders-announce-passage-2014-15-budget [hereinafter Press Release, 2014–2015 Budget] (“The Budget includes further reforms to ensure New Yorkers have confidence that their elected officials are serving them honestly and with transparency.”).

 [199]. N.Y. Crim. Proc. Law § 30.10 (McKinney 2016) (Statute of Limitations); N.Y. Penal Law § 200.00–.56 (McKinney 2016) (Bribery); id. §§ 496.01–07 (Corrupting the Government); see also Press Release, 2014–2015 Budget, supra note 198 (summarizing the enacted Public Trust Act provisions).

 [200]. Alan Greenblatt, Congratulations, New York, You’re #1 in Corruption, Politico (May 5, 2015), https://www.politico.com/magazine/story/2015/05/how-new-york-became-most-corrupt-state-in-america-117652 (“Other states have plenty of corruption, but it’s hard to beat New York when it comes to sheer volume . . . . New York doesn’t so much have a culture of corruption as an entire festival.”).

 [201]. N.Y. Penal Law § 496.01–.07 (McKinney 2016).

 [202]. Id. § 200.10–.12.

 [203]. Id.

 [204]. Adriana S. Cordis & Jeffrey Milyo, Measuring Public Corruption in the United States: Evidence from Administrative Records of Federal Prosecutions, 18 Pub. Integrity 127, 137 (2016).

 [205]. Id.

 [206]. See id. at 138 (including in Title 18: § 201 Bribery of Public Officials and Witnesses, § 371 Conspiracy to Commit Offense or Defraud the United States, § 641 Public Money, Property or Records, § 666 Theft or Bribery in Programs Receiving Federal Funds, § 1001 Fraud and False Statements or Entries Generally, § 1028 Fraud and Related, ID Documents, § 1341 Mail Fraud, Frauds and Swindles, § 1709 Theft or Destruction of Mail by Officers or Employees, § 1951 Hobbs Act, and § 1962 RICO Prohibited Activities; in Title 21: § 841 & § 843 Manufacture and Distribution of Drugs, § 844 Simple Possession of Drugs, and § 846 Attempt and Conspiracy; in Title 26: § 7201 Tax Evasion and § 7206 Fraud and False Statements; and in Title 42: § 408 SSDI Penalties and § 1973 Denial or Abridgement of Right to Vote).

 [207]. Zephyr Teachout, The Anti-Corruption Principle, 94 Cornell L. Rev. 341, 374 (2009).

 [208]. Kenneth Lovett, L.I. Congressman Seeks to Close Corruption Loophole with New Bill After Dean Skelos Conviction Tossed, N.Y. Daily News (Sept. 27, 2017, 11:27 PM), http://www.nydailynews.com/news/politics/congressman-unveils-bill-prosecuting-corrupt-pols-easier-article-1.3525148.

 [209]. Press Release, Office of Congressman Thomas Suozzi, Suozzi Proposes Legislation to Close “Official Acts” Loophole that Resulted in Overturned Political Corruption Convictions (Sept. 27, 2017), https://suozzi.house.gov/media/press-releases/suozzi-proposes-legislation-close-official-acts-loophole-resulted-overturned.

 [210]. Close Official Acts Loophole Act of 2017, H.R. 3843, 115th Cong. (as introduced by H. Reps. Brian K. Fitzpatrick and Thomas R. Suozzi, Sept. 26, 2017).

 [211]. Id.

 [212]. Brief of Petitioner at 13–14, 35–36, McDonnell v. United States, 136 S. Ct. 2355 (2016) (No. 15-474). Notice that the petitioner accused respondents of importing a definition from another statute, but reserved judgment as to the “better” definition. See id. at 49–55.

 [213]. See Press Release, U.S. Att’y’s Office for the S.D.N.Y., Statement on Second Circuit Decision, United States v. Sheldon Silver (July 13, 2017), https://www.justice.gov/usao-sdny/pr/statement-acting-us-attorney-joon-h-kim-second-circuit-decision-united-states-v-sheldon (“While we are disappointed by the Second Circuit’s decision, we respect it, and look forward to retrying the case. . . . Although it will be delayed, we do not expect justice to be denied.”) (statement of Acting U.S. Attorney for the Southern District of New York, Joon H. Kim, in response to the Second Circuit’s decision to overturn the conviction); see also Wang, supra note 8 (Skelos convicted); Weiser, supra note 8 (Silver convicted).

 [214]. See United States v. Skelos, 707 F. App’x 733, 739 (2d Cir. 2017); U.S. v. Silver, 864 F.3d 102, 124 (2d Cir. 2017).

[T]he evidence presented by the Government was sufficient to prove the Hobbs Act extortion and honest services fraud counts of conviction against Silver[,] . . . [and] the evidence presented by the Government was sufficient to prove the money laundering count of conviction against Silver because the Government was not required to trace criminal funds that were commingled with legitimate funds under 18 U.S.C. § 1957.

Silver, 864 F.3d at 124.

 [215]. See, e.g., Marshall Cohen et al., Tracking the Russia Investigations, CNN, https://www.cnn.com/interactive/2017/politics/russia-investigations (last visited Nov. 30, 2018); Scott Shane & Mark Mazzetti, The Plot to Subvert an Election, N.Y. Times (Sept. 20, 2018), https://nyti.ms/2NmUclP.

 [216]. See Shane & Mazzeti, supra note 215.

 [217]. See Sarah Chayes, It Was a Corruption Election. It’s Time We Realized It, Foreign Pol’y (Dec. 6, 2016, 1:02 PM), http://foreignpolicy.com/2016/12/06/it-was-a-corruption-election-its-time-we-realized-it-trump-united-states.

 [218]. Leon Trotsky, Their Morals and Ours, New Int’l, June 1938, at 163, 172.

 [219]. See Michael Klarman, Opinion, The Supreme Court Is Most Powerful When It Follows Public Opinion, N.Y. Times (July 6, 2015), https://nyti.ms/2CQ3AYL (“Rulings such as Brown v. Board of Education and Obergefell were inconceivable until enormous changes in the surrounding social and political context had first occurred.”).

 [220]. Id.

Friendly Skies or Turbulent Skies: An Evaluation of the U.S. Airline Industry and Antitrust Concerns – Note by Kevin Kinder

From Volume 91, Number 5 (July 2018)
DOWNLOAD PDF


Friendly Skies or Turbulent Skies: An Evaluation of the U.S. Airline Industry and Antitrust Concerns

Kevin Kinder[*]

TABLE OF CONTENTS

INTRODUCTION

I. United States Commercial Aviation Background

A. Deregulation: Pushback and Taxi to Today’s U.S. Airline Industry

B. Cleared for Takeoff: A Twenty-First Century Merger Mania

C. Resulting Composition and Financial Picture of the Industry

D. Capacity Discipline: Corporate Catch-22

II. Legal Framework

A. Theoretical Basis for Consolidation and Existing Literature

B. Antitrust Statutes and Regulatory Regime

C. Foreign Airline Collaboration Models and Their Significance

1. Foreign Ownership Restrictions

2. Interline Agreements

3. Alliances

4. Joint Ventures

5. Antitrust Immunity

D. ATI Regulatory Scheme

1. Competitive Analysis

2. Public Interest Considerations

III. STRIKING THE RIGHT LEVEL AND MANNER OF ANTITRUST REGULATION

A. Constrain the “Public Interest” and Emphasize Predictability in Determining ATI

B. Periodic Reviews of Immunized Alliances that Minimize the Burden on Airlines

C. Increase DOJ Involvement in ATI Competitive Analysis

D. Knock Down Barriers to Entry, While Respecting the
Tenets of Deregulation and Free Competition

Conclusion

 

INTRODUCTION

Chances are any evening news coverage lately about the commercial airline industry in the United States was not positive. Indeed, 2017 was not a banner year for U.S. airlines on the public perception front, with numerous videos showcasing conflicts between airlines and passengers. No incident garnered the attention and ubiquitous condemnation from the public better than the violent removal of Dr. David Dao from United Express Flight 3411.[1] Videos of a bloodied Dr. Dao being dragged down the aisle like a rag doll as he cried for help and fellow passengers gasped in horror saturated news networks for weeks.

While United Airlines takes the cake for most viral incident of 2017, it was certainly not the only airline to face negative publicity. The NAACP warned African Americans that flying on American Airlines could subject them to disrespectful, discriminatory or unsafe conditions” after a pattern of disturbing incidents.[2] Delta Airlines faced a spring break fiasco after severe weather hit Atlanta and forced more than 3,500 flight cancellations over five days; the incident highlighted systemic flaws in Delta’s operations and ability to recover.[3] An electrical fire at the Atlanta airport in December again tested Delta’s preparedness in flight operations, luggage handling, passenger accommodations, and so forth as it was forced to cancel 1,400 flights.[4]

Notable incidents were not confined to legacy airlines. Shortly after the Dr. Dao incident, low-cost carrier (“LCC”) Southwest Airlines had police forcibly remove a passenger after she complained of allergies to dogs in the cabin.[5] JetBlue Airways’ “cakegate” incident drew headlines after a family was removed from a flight after a dispute over where to store their child’s birthday cake.[6] Alaska Airlines suffered a slew of cancellations after falling behind on hiring and training for a new aircraft in its fleet.[7] A Spirit Airlines pilot union dispute led to more than 300 flight cancellations and a violent brawl at the Fort Lauderdale Airport between customers and employees.[8] Ultra-low cost carriers (“ULCC”) Spirit, Frontier, and Allegiant occupied three of the four worst rankings in the American Customer Satisfaction Index.[9]

A common theme—one that is likely here to stay—in the above incidents is the presence of social media, with its ability to amplify incidents by transmitting news and images in real time. On any flight with the faintest whiff of an issue brewing there might suddenly be 200 aspiring Steven Spielbergs armed with camera phones ready to catch the next viral incident. News media outlets often compound the issues by running passenger-submitted content that only captures a snippet of the incident and failing to confirm facts. Facts, unfortunately, often take a back seat to the race to be first. For instance, the Dr. Dao incident did not actually involve any United Airlines employees as it occurred on a contracted United Express carrier, Republic Airline, and the forceful escalation was initiated by Chicago Department of Aviation officers.[10] Yet United Airlines was the focus of the pervasive news coverage and became the public villain. United did not help itself by borrowing from the “WhatNottoDoinaCorporateCrisis” playbook and issued a defensive, non-apologetic statement that effectively blamed “re-accommodat[ing]” Dr. Dao because of his “disruptive” and “belligerent” behavior.[11] After the public firestorm, congressional inquiries, and sinking share prices, United’s CEO, Oscar Munoz, put out a revised statement[12] and began a TV apology circuit. But, by the time Mr. Munoz sat down on Good Morning America,[13] it was too late. United was the clear public villain, representing everything wrong with air travel.

The public discord is understandable. To many, Dr. Dao’s treatment struck a nerve and perfectly epitomized the shortcomings of all U.S. passenger airlines.[14] Flying has become increasingly unpleasant for those unable or unwilling to fly in premium cabins. Passengers feel more like cattle in a metal tube squeezed into shrinking seats on crowded flights where airlines nickel and dime every conceivable charge. An oft-cited statistic is that, following a slew of mergers, the four largest airlines now control over 80% of the U.S. domestic air transportation market.[15] This consolidation is viewed as the engine behind the industry’s newfound ability to turn profits at passengers’ expense.[16] While including a catchy number without context or deeper analysis is effective in producing a mechanical reaction, it leaves open crucial questions that lead to better answers about the level of actual competition by airlines for passenger share in existing and new markets.

This Note attempts to answer some of these questions. It is clear that the failures listed above demonstrate operating flaws and areas for improvement. But with the number of passengers and flights already at an all-time high—U.S. airlines carry more than 928 million passengers annually on over 9.7 million regularly scheduled flights,[17] and the number of people flying is increasing faster than the overall population[18]—it is also clear that unfortunate passenger incidents are the exception, not the norm.

Recent antitrust decisions and policy initiatives by both the Department of Justice (“DOJ”) and Department of Transportation (“DOT”) have shaped the current U.S. airline landscape. The consolidation trend is not unique to the U.S. domestic air transportation market. The emergence of three global airline alliancestogether accounting for around 80% of air traffic across the transatlantic, transpacific, and Europe–Asia marketshas transformed the international air transportation market as well.[19] This Note evaluates the results of the DOJ’s antitrust approach to U.S. airline mergers and reconciles these results with the DOT’s “public interest” emphasis in determining airline applications for antitrust immunity (“ATI”). Given the current domestic market, it is likely that the remaining legacy carriers will leverage their respective global alliances and seek ATI with foreign airlines for continued network growth.

Part I of this Note tracks the tumultuous history of the U.S. airline industry from deregulation to its current health. Part II presents the legal framework, including U.S. antitrust laws, that govern domestic airline mergers and international ATI. Part III proposes practical solutions for the DOT to improve the ATI regulatory process and incubate open market competition, thereby better serving passengers and airlines by edging closer to deregulation.

I.  United States Commercial Aviation Background

A.  Deregulation: Pushback and Taxi to Today’s U.S. Airline Industry

At the outset of commercial aviation in the early twentieth century, there was little to no regulation by the U.S. government. Accidents were frequent, and aviation leaders viewed federal regulation as a key to bolstering public confidence by establishing safety standards.[20] To this end, President Coolidge signed the Air Commerce Act into law in 1926, which formed an Aeronautics Branch under the Department of Commerce and vested it with authority to promulgate regulations to ensure civil air safety.[21] The Aeronautics Branch set about making and enforcing flight safety rules, licensing pilots, ensuring airworthiness of aircraft, and establishing airways.[22] In 1926, the first regulations arrived in a forty-five page document titled “Air Commerce Regulations;” by stark contrast, today’s federal aviation regulations span over 3,600 pages in four volumes of the Code of Federal Regulations.[23]

The commercial aviation industry’s next major transformation came in 1938, when the United States government began regulating domestic interstate and foreign passenger air transportation.[24] The Civil Aeronautics Board (“CAB”) regulated air transportation as a public utility, exerting control over airline hubs, routes, schedules, and fares.[25] These economic regulations were crucial in managing the rapidly growing commercial airline industry; following World War II, the industrial complex and transition to the jet age revolutionized air travel and spiked demand. Airlines found solid footing and shed existing government support such as subsidies for carrying mail.[26] However, by the 1970s, bureaucratic inefficiencies,[27] hyperinflation, and oil supply shocks sparked concern over the continued viability of the U.S. airline industry.[28]

President Carter, therefore, signed the Airline Deregulation Act of 1978 (“ADA”) into law in October 1978.[29] It was intended “to encourage, develop, and attain an air transportation system which relies on competitive market forces to determine the quality, variety, and price of air services”[30] by relaxing and eventually terminating economic controls by the government.[31] Thus the modern U.S. airline industry was born—one that “relie[s] on competition among airlines to promote affordability, innovation, and service and quality improvements.”[32]

The initial foray into economic deregulation was mixed, at best. While it benefited passengers by reducing fares and expanding service and routes, many airlines struggled to adapt and survive under evolving industry dynamics.[33] A driving theory behind deregulation is that it lowers barriers to entry, which creates a more economically efficient market when coupled with competitive market forces. There were two periods when new airlines entered the market: immediately after deregulation (19781984) and the early 1990s.[34] But these sporadic bouts of entry were dwarfed by exits and consolidation.[35]

Years of sustained operating losses, job cuts, and periodic bankruptcies forced an intense consolidation that grounded many historical carriers.[36] In 1978, fifteen legacy airlines provided interstate and/or foreign air transportation; by 1988, just ten legacies remained and 168 airlines had failed or were absorbed.[37] The Reagan Administration’s laissez-faire approach was crucial in setting the industry down a path of consolidation—seventeen of eighteen proposed airline mergers between 1985 and 1988 were approved, increasing the market share of eight major airlines from 74.1% in 1983 to 91.7% in 1988.[38] From 1978 to 2005, twenty mergers involving a legacy airline had transpired.[39] However, industry mergers pale in comparison to bankruptcies. Over 190 airline bankruptcies/reorganizations were filed between 1979 and 2012.[40] Upstart airlines were not the only casualties—legacy airlines Delta, Northwest, United, American, US Airways, and Continental all filed for Chapter 11 bankruptcy.[41] Every remaining legacy airline has declared bankruptcy since 2000.[42]

While deregulation can be judged a success in expanding networks and departure frequency, increasing airline efficiency, and improving safety, financial instability at individual airlines has triggered industry volatility, employment losses, and service quality deteriorations.[43] A common response to these issues was increased consolidation, a trend that continues today.

B.  Cleared for Takeoff: A Twenty-First Century Merger Mania

Seven legacy carriers entered the new Millennium, down from fifteen at the deregulation mark.[44] By 2014, that number was reduced to three.[45] The first to fall was TWA in 2001, with American Airlines acquiring the remaining assets of the faltering carrier that had become a shell of its former iconic self.[46] This was a small foreshadowing of what was to come.

Entering 2005, six legacy carriers and nine total major carriers remained; the four largest carriers, in terms of passengers carried, accounted for 56% of domestic traffic.[47] A series of mergers quickly altered that composition. First, America West Airlines acquired US Airways in 2005, then Delta Airlines and Northwest Airlines merged in 2008, followed by the merger of United Airlines and Continental Airlines in 2010, the acquisition of AirTran Airways by Southwest Airlines in 2011, and lastly the American Airlines and US Airways merger in 2013,[48] which created the world’s largest airline.[49] The American-US Airways merger was initially hotly contested, but the eventual settlement caught many by surprise and caused many industry observers to express stern disagreement.[50] There was a strong sense that because the DOJ had approved a “super-Delta and a super-United,” it had no choice but to permit a “super-American” to act as a counterweight and restraint on the two.[51]

The result of these mergers is a highly concentrated U.S. airline industry, in both the aggregate and certain city-pair routes. The four largest U.S. airlines account for more than 80% of domestic passenger traffic.[52] A common criticism of consolidation is that it harms passengers as airlines, in tandem, match fare increases, impose new fees, reduce or eliminate service on certain routes, and downgrade amenities.[53] Stakeholders of the airlines, however, have cheered consolidation amidst steadily improving financial health. One airline executive referred to industry consolidation as the “New Holy Grail” given that “fewer and larger competitors” allow airlines to “reap the benefits,” such as reduced capacity and increased ancillary revenue.[54]

Most recently, Alaska Airlines merged with Virgin America, receiving DOJ approval in December 2016.[55] The resulting Alaska Airlines will hold just roughly 5% of the domestic passenger market.[56] Given the current market share of the legacies and Southwest, any future mergers will likely be similar mergers of smaller airlines positioning themselves to compete with the big four.

C.  Resulting Composition and Financial Picture of the Industry

Wall Street has viewed the airline industry mergers favorably. A 2014 Goldman Sachs report cheered the American-US Airways merger as a furtherance toward “dreams of oligopoly.”[57] The report envisioned that consolidation would continue to push the industry toward “lower competitive intensity” and greater “pricing power with customers due to reduced choice.”[58] The recent wave of mergers has helped airlines exercise better capacity control and set prices significantly above marginal cost relative to prior years.[59] Stock performance of the airlines reflect this newfound pricing power: American Airline’s stock increased more than 300% after its 2013 merger compared to a roughly 90% gain in the S&P 500 index across the same time.[60] American Airlines is not the only airline stock to take off. The recent industry-wide performance caught the eye of Warren Buffet and his Berkshire Hathaway invested more than $1.4 billion into the four largest U.S. airlines in 2016.[61]

What used to be an unattractive investment (industries in which every leading company has undergone bankruptcy usually do not inspire confidence) is no longer so amidst surging profits. U.S. airlines collectively hauled in profits of approximately $15.5 billion in 2017, marking the fifth consecutive year an after-tax net profit was produced as a group.[62] Strong profitability should continue in 2018; North American airlines are projected to record net profits of close to $16.4 billion.[63]

The price of jet fuel is a major factor in the recent profitability of U.S. airlines. However, many pundits question why record low fuel prices have not had a more direct impact on airfare. Senator Chuck Schumer (D-NY) called for an investigation, writing to the DOJ, “[i]t’s hard to understand, with jet fuel prices dropping by 40 percent since last year, why ticket prices haven’t followed.”[64] Indeed, after a sustained period of high fuel costs, jet fuel prices dipped nearly 70% between 2014 and 2016, while average airfares dropped 8.6%.[65] Airlines captured gains from cheaper fuelDelta projected $2 billion in savings on fuel costs alone in 2015, while Southwest was able to nearly cut its average price per gallon of fuel in half from the fourth quarter of 2014 to the first quarter of 2015.[66]

But expecting a direct relationship between fuel costs, albeit a major marginal cost, and airfares is naïve. So too is comparing U.S. airlines’ reaction to cheaper fuel with the reaction of European airlines. While fuel is a global commodity, U.S. airlines and European airlines make business decisions in distinctly different markets.[67] European airlines “[d]runk on the profit boost served up by cheap fuel” added capacity at a greater rate than passenger demand, causing fares to dip.[68] The European airline industry’s collective financial health lately pales in comparison to the United States—two European airlines, Monarch Airlines and AirBerlin, ceased operations in 2017, and a third, Alitalia, entered bankruptcy.[69] Granted, recent terrorist attacks and Brexit have not helped matters, but the remaining European airlines have had little choice but to scale back earnings expectations and slash ticket prices in an attempt to fill seats in a high capacity environment.[70]

As jet fuel prices continue to creep upwards, the responsiveness of U.S. airlines will be tested. Every cent that fuel per gallon increases equates to roughly $200 million in U.S. airline industry fuel expenses.[71] U.S. airlines are often hit harder by rising fuel costs compared to international airlines that are more aggressive in fuel hedging.[72] The recent consolidation has allowed the U.S. airline industry to mature to a level of sustainable adaptability while Europe lags behind. While European airlines flooded the market with seats in the wake of cheaper fuel, U.S. airlines were better disciplined in capacity; this difference was no doubt due in large part to consolidation and fewer U.S. airlines with sizeable market shares when compared to Europe.

D.  Capacity Discipline: Corporate Catch-22

A common feeling is that consolidation has allowed U.S. airlines to better exercise “capacity discipline,” a key term that became the crux of a DOJ investigation and class action lawsuits. Capacity discipline refers to “restraining growth or reducing established service.”[73] A large share of customer dissatisfaction with flying can reasonably be attributed to it. Load factor, the percentage of available seats filled with revenue passengers, has increased from around 70% in the early 2000s to nearly 85% in 2015.[74] When you mix in shrinking seats—average legroom has decreased two inches in the last decade[75]—with fuller flights and an increased chance of a middle seat neighbor, it is easy to understand the perception that flying is not what it used to be.

The U.S. airlines’ affinity for capacity control caught the eyes of federal lawmakers, regulators, and passengers alike. In June 2015, Senator Richard Blumenthal (D-CT) requested that the DOJ investigate capacity control as a form of collusion and anticompetitive behavior.[76] He referenced numerous public comments by airline executives committing their respective airline to continued “capacity discipline.”[77] For example, at the 2015 annual International Air Transport Association (“IATA”) conference, chief executives from Delta, Air Canada, and American Airlines all stressed the need for capacity discipline in their public remarks.[78] Similar comments were regularly made by executives on earnings calls and other communications with securities analysts.[79]

The DOJ opened an investigation in July 2015 into possible collusion between Delta, American, United, and Southwest to limit seats and artificially inflate fares.[80] The DOJ’s investigation posed an interesting question—“whether the airline executives have talked so much publicly about discipline to appease Wall Street’s profit demands, or whether there is any smoking gun showing that airline executives have colluded privately.”[81] Effectively, the DOJ inquired whether the level and persistence of stressing discipline could be interpreted “as thinly veiled invitations to restrict capacity increases to keep ticket prices high.”[82] In rare cases, explicit communication and collaboration are easy to prove. When collusion need[s] to be inferred from statements by executives to analysts, and other signaling,” it is exponentially more difficult because something beyond circumstantial evidence must be proven.[83] The DOJ investigation shifted toward a possible nexus between airline executives and Wall Street via dominant shareholders; DOJ investigators questioned whether airlines signaled or communicated strategy with competitors through mutual large shareholders as a proxy.[84] However, by January 2017, the DOJ effectively shuttered its investigation as it concluded that the airlines’ conduct did not cross the line of an antitrust violation.[85]

Shortly after the DOJ opened its investigation in 2015, numerous class action lawsuits were filed in federal district courts based on the same capacity and price fixing concerns of the DOJ investigation.[86] The multi-district litigation (“MDL”) survived a major hurdle in November 2016 when D.C. District Judge Colleen Kollar-Kotelly denied the airlines’ motion to dismiss, finding “that plaintiffs sufficiently set forth circumstantial evidence to demonstrate a plausible claim.”[87] The MDL is currently ongoing. Southwest Airlines reached a $15 million settlement in January 2018 followed by American Airlines in June 2018 for $45 million; Delta and United remain in litigation and have pushed discovery to January 2019—more than three years after the suits were originally filed.[88]

When airlines embrace capacity discipline, they find themselves at the center of a DOJ investigation and multiple class action suits. But airlines that resist capacity discipline do so at their own peril. For years, “Wall Street analysts have browbeat airline executives to either have discipline, or they will bust their recommendations on their stock.”[89] In 2015, Southwest CEO Gary Kelly announced capacity growth plans, but was forced to roll back these plans less than two months later after facing intense Wall Street backlash and coming under fire at the abovementioned IATA conference—this conference spurred the DOJ investigation.[90] More recently, United Airlines announced plans in January 2018 to raise capacity by 4% to 6% annually over three years.[91] Investors immediately swatted the plan, and United’s shares dipped 16% over the following three days.[92] The impact of United’s capacity growth plans was felt industry wide: Delta, American, and Southwest each saw share prices decline more than 7%, and collectively the combined market of the largest four airlines fell by 9.7% from $133 billion to $120.1 billion in the immediate aftermath of the announcement.[93]

Officers and directors of corporations owe a fiduciary duty only to the corporation itself and its shareholders.[94] Thus, officers at the largest U.S. airlines have found themselves in a corporate catch-22 between DOJ investigations and multi-district class action lawsuits on the one hand, and tumbling share prices and shareholder pressures on the other hand.

II.  Legal Framework

A.  Theoretical Basis for Consolidation and Existing Literature

Mergers and acquisitions (“M&A”) are external integration strategies in which legally and financially independent companies combine to form a larger entity.[95] Consolidation motives “include increasing revenues, improving management efficiency and capital investment performance, and eliminating a competitor from the market.[96]

Two main views exist for what drives airline M&A: (1) efficiency gains in the resulting airline or (2) market power gains. The first view involves the potential to reduce costs by enhancing the “hub-and-spoke” networks of legacy airlines, while the second view perceives an improved ability to raise passenger fares.[97] Some see financial and competitive pressures as the primary driver, i.e., a solution to increase profitability and financial stability. Another view is that airline consolidation is “necessary to minimize asset devaluation to prevent a domino effect, as most major US airlines are ‘too big to fail.’”[98]

At a basic level, the goal of M&A is to increase shareholder value.[99] A number of benefits are typically touted by airlines to gain regulatory approval and justify the merger to shareholders, including, but not limited to, “increase[d] . . . revenues by extending the airlines’ network, increase[ed] market share . . . higher fares on some routes, improv[ed] network connectivity, increas[ed] frequent flyer loyalty, [and] better aircraft utilization.”[100] In reality, however, receiving unanimous approval from all stakeholders is virtually impossible as shareholders, management, employees, customers, and governments harbor competing interests. M&A failure often results from a combination of factors, among them clashing company cultures, union resistance, or other operational difficulties.[101] Three major obstacles to airline mergers include: (1) workforce integration; (2) fleet integration; and (3) information technology integration.[102]

To regulators, the airline industry is, theoretically, inherently susceptible to coordinated behavior—a few large airlines dominate the industry, each transaction is small, and most pricing by competitors is transparent and readily accessible.[103] In evaluating mergers, much of the focus has been on existing network overlap, particularly non-stop routes. “The larger the degree of overlap between the networks of the two merging carriers, the larger is the potentially anti-competitive effect of the transaction. This ‘enforcement principle’ still guides the decisions of antitrust authorities on both sides of the Atlantic.”[104] Thus, market concentration is a key factor in the regulatory authorities’ antitrust analysis.

A measure of market concentration is the Herfindahl-Hirschman Index (“HHI”), calculated as the sum of the squared market shares of all firms in a market.[105] The DOJ considers markets “highly concentrated” when HHI exceeds 2,500.[106] A 2014 study found that [n]early 97 percent of city pair markets are highly concentrated and well over half have HHIs in excess of 4,000. Some of those city pairs involve small cities.[107] Yet nearly 90% of all passengers traveled on city-pairs with HHIs above 2,500, and about 40% of city pairs have HHIs in excess of 4,000 . . . [t]he average passenger flew on a city pair with HHI of 4,202.[108]

On the surface, these HHI figures support the argument that the U.S. airline industry has become too concentrated following the recent mergers. However, as with any single statistic, the HHI has its limitations and does not account for every variable of competition.

Academic literature examining airline mergers is mixed, at best. Maruna and Morrell’s investigation of eighteen mergers involving U.S. airlines between 1978 and 2005 found that only one merger could be judged a success.[109] Their review of existing literature suggested that between 50% to 80% of mergers failed to meet their stated goals.[110] A 2016 study judged the 2005 US Airways-America West merger “a success” as the emerging US Airways improved operations and cost controls, increased shareholder value, and developed long-term synergies.[111]

Post-merger studies often focus on routes in which both merging airlines previously competed, expecting any anti-competitive effects to occur most strongly on such routes.[112] Multiple studies of airline mergers prior to the recent wave beginning in 2005 generally found that the mergers resulted in loss of competition and higher fares.[113] Such effects were, surprisingly, not confined to overlap routes, but also routes in which one merged airline was only a potential competitor.[114] However, studies evaluating the recent legacy airline mergers are generally inconclusive as to the competitive impacts.[115] The 2008 Delta-Northwest merger received a healthy amount of academic attention, with most studies unable to discern any large effects other than small fare increases ranging from 1% to 4% on overlapping routes.[116] Research into the 2010 United-Continental merger is limited, but it has generally found the merger produced competitive results with reduced fares of 3% to 4% on some routes.[117] A study of the three recent legacy carrier mergers found them to be, as a whole, pro-competitive.[118] Across the three mergers, “overlap routes . . . experienced statistically significant output increases and statistically insignificant nominal fare decreases relative to non-overlap routes.”[119]

Thus, there is analytical support that the recent airline mergers and industry consolidation were not anticompetitive or bad for passengers. This Note does not seek to add to the voluminous record evaluating mergers (particularly in the domestic market) or question regulators for past decisions; rather, it seeks to explore the current regulatory approach and propose solutions for greater transparency and competition promotion moving forward.

B.  Antitrust Statutes and Regulatory Regime

The principal architect of deregulating the U.S. airline industry, Alfred E. Kahn, recognized that a deregulated industry would require vivid antitrust law enforcement to realize the potential benefits of competition it was intended to promote.[120] Two chief antitrust laws exist in the United States to protect consumers from lack of competition: the Sherman Act (1890)[121] and the Clayton Act (1914).[122] Section 1 of the Sherman Act declares “[e]very contract, combination . . . or conspiracy, in restraint of trade or commerce . . . to be illegal.[123] The Clayton Act focuses on specific types of conduct or transactions believed to threaten competition, such as mergers.[124] For example, § 7 prohibits mergers when “the effect of the acquisition may substantially lessen competition or tend to create a monopoly.”[125] The DOJ Antitrust Division and the Federal Trade Commission (“FTC”) are the primary enforcers; however, any state attorney general or individual alleging economic harm by a violation of the antitrust laws may also file suit.[126]

The Clayton Act lacks explicit definitions of prohibited activities; therefore, historical enforcement is determinative. The legislative history shows the drafters’ intent was to protect ‘competition, not competitors, and [Congress’s] desire to restrain mergers only to the extent that such combinations may tend to lessen competition.’”[127] This does not invite regulators “to thwart business efficiencies that may be achieved through the combination of two firms’ resources.”[128] Congress’ intent was to “cope with monopolistic tendencies in their incipiency and well before they have attained such effects as would justify a Sherman Act proceeding” by authorizing the review of activities that might “create, enhance, or facilitate the exercise of market power.”[129]

The Supreme Court’s approach in Brown Shoe Co. v. United States[130] set out the pattern used in modern antitrust jurisprudence:

There, the Court (1) defined the relevant product and geographic markets; (2) analyzed the probable effects of the merger by examining the market shares of the firms, the current concentration of the industry, the trend toward continued consolidation in the industry, and the statements and behavior of the individual firms; and (3) found a lack of mitigating factors that would provide procompetitive benefits from the merger.[131]

Effectively, any merger that increases market share or market concentration enough to “raise an inference” of illegality is presumed to be anticompetitive, and the merging entities carry the burden to “rebut the inherently anticompetitive tendency manifested by these percentages.”[132]

Judicial decisions concerning section 7 of the Clayton Act historically drove antitrust enforcement until the Hart-Scott-Rodino Antitrust Improvements Act of 1976[133] imposed new pre-merger notification requirements and signaled a shift of authority to enforcement agencies.[134] Prior to its passage, Merger Guidelines were drafted to assist in the movement from judicial interpretation toward agency law.[135] The Antitrust Division of the DOJ published the first Merger Guidelines in 1968 “to acquaint the business community, the legal profession, and other interested groups and individuals with the standards currently being applied.”[136] The Merger Guidelines have undergone multiple revisions as the rules guiding merger enforcement have developed;[137] The DOJ and FTC released their current version in 2010.[138] While the Merger Guidelines are not binding legal authority, their influence on the business community cannot be overstated, particularly in improving DOJ and FTC transparency.[139]

Turning to the U.S. airline industry, the DOJ Antitrust Division is responsible for reviewing airline mergers and acquisitions and enforcing controlling antitrust laws as a result of the ADA.[140] The ADA stipulated that approval of airline M&A would continue, but that jurisdiction would be transferred from the CAB (set to expire in 1984) to the DOJ.[141] However, the DOT filled this role from 1984 until the end of 1988 due to the Sunset Act of 1984,[142] modifying the deregulation transition.[143] The DOT’s authority expired, and since 1989, the DOJ has retained jurisdiction over applying the antitrust laws to airline M&A and other control relationships.[144] The DOT assists the DOJ by utilizing its expertise to advise and exert authority over slot controls and routes to remedy competitive concerns.[145]

Paradoxically, the authority to immunize foreign air services agreements between U.S. and foreign airlines from U.S. antitrust laws rests with the DOT.[146] This authority stems from the 1979 International Air Transportation Competition Act.[147] While the DOJ may submit comments during public comment periods, the DOT retains sole statutory authority to approve and immunize foreign air services agreements[148] from the same antitrust laws that the DOJ applies when evaluating domestic airline mergers and acquisitions. The DOJ, or DOT, has “no corresponding authority” to immunize domestic alliances between U.S. airlines.[149]

C.  Foreign Airline Collaboration Models and Their Significance

1.  Foreign Ownership Restrictions

Passengers today, particularly loyal and lucrative business travelers, demand seamless service from everywhere to anywhere in the world. Both U.S. and European legacy airlines have pursued business models reflecting such demands. However, few city-pairs generate enough daily demand to warrant non-stop service, and no airline could efficiently provide service with its own fleet to every destination their customers require.[150] Most businesses meet such global customer demands through cross-border mergers or the establishment of facilities abroad.[151]

Such a solution is not available for airlines; full cross-border airline mergers are restricted by long-standing government restrictions on foreign ownership and control of airlines by non-nationals.[152] Faced with these restrictions, airlines seek foreign airline partners and develop vast alliances to provide customers expanded network coverage and greater service options.[153] Global airline alliances, leveraging the “fundamentals of network economics and [the] global economy,” have prevailed as a next-best substitute[154] for airlines to realize the economic benefits of mergers and have become a dominant feature of the airline industry.[155]

Cooperation between foreign airlines first requires that “freedoms” be granted for airlines to serve foreign nations.[156] These freedoms, or rights to board and deplane passengers in a foreign country, are established in international commercial aviation agreements (bilateral or multilateral treaties between governments).[157] The terms vary as some “agreements may restrict the number of carriers that provide air service between the countries, the number of flights that they offer, and sometimes the fares that they charge for travel between the countries.”[158] The 1993 “Open Skies” agreement between the United States and Netherlands was crucial in spurring a liberalization of foreign air transportation access.[159] U.S. and Dutch airlines “no longer needed permission from either government to provide service, carry passengers, and offer particular fares between the [countries].”[160] This was just the beginning. In April 2008, the U.S.-E.U. Open Skies Agreement signaled a major culmination of the U.S. government’s push toward expanded foreign airline access.[161]

Despite providing for marked improvements in expanding access, the U.S.-E.U. agreement does not permit cabotage (the eighth and ninth “freedoms” of the air),[162] which is the right to transport passengers within the boundaries of another country, or relax foreign ownership restrictions on airlines.[163] Even the most liberal international aviation agreement in existence restricts airline operations and consolidation.[164] There are no indications these restrictions will be relaxed in the foreseeable future,[165] so cooperation among foreign airlines will continue to play a large role shaping the international air transportation market, particularly while foreign ownership and control restriction preclude higher levels of integration.

A broad spectrum of cooperation between airlines exists, ranging from arms-length interline agreements to full-fledged, highly-integrated joint ventures (“JVs”).[166] Within JVs, airlines participate on a revenue or profit-sharing basis and seek grants of ATI, the highest form of cooperation. The next section is a basic introduction to various levels of cooperation between foreign airlines. However, note that these levels are not absolute, so airlines are generally free to pursue unique and specific levels of cooperation.

2.  Interline Agreements

Simple interline agreements are at the lowest spectrum of the airline cooperation scale. When two or more airlines agree to a multilateral or bilateral agreement to accept other airlines’ passengers, travelers can then buy a single ticket itinerary with flights on two or more independent airlines.[167] An interline fare is typically less than the sum of available fares on the individual legs, resulting in a small pricing benefit and booking convenience for consumers.[168] But this arms-length level of cooperation does not approach the efficiencies and integration possible through consolidation, and the quality of the interline product may differ widely on different airlines or airports.[169] For example, travelers may face multiple check-ins, long distances between gates or terminal transfers, greater likelihood of lost luggage, and uncertainty over customer service responsibility for missed connections or related travel disruptions.[170]

3.  Alliances

Alliances depend upon agreements between airlines and can take a variety of forms. Alliance agreements typically begin as code share arrangements, with additional perks getting added over time.[171] Code share agreements are essentially enhanced marketing jointventures, whereby one airline sells and markets seats under its own designation on a flight operated independently by an alliance airline.[172] Alliances thus open new destinations and expand route networks for airlines without requiring additional aircraft.[173] Faced with foreign ownership rules and entry restrictions, airlines have increasingly joined one of three major global alliances—Star Alliance, SkyTeam, and OneWorld—to expand their route network in foreign nations.[174]

Alliance participants determine which international routes to include in the agreement. If the alliance partners are not competitors on a route, they can communicate about fares and other competitive matters without ATI.[175] If the allies are competitors on the same route, then the alliance agreement remains arms-length and the operating airline determines seat availability for the marketing partner, but each airline sets prices independently.[176] Further, alliances allow a flexibility that improves services and offers passengers a more seamless experience. Partner airlines may adjust flight schedules to coordinate connection schedules, benefit from better gate or terminal proximity, open lounge and club access with partners, and link frequent-flyer programs.[177] Airline alliances, in the absence of ATI, provide benefits to consumers relative to interline agreements by both improving networks and lowering fares through the economies of denser passenger flows.[178]

4.  Joint Ventures

A closer form of cooperation and integration between airlines is the joint venture (“JV”). Airlines agree to share revenue from JVs on specific international routes independent of which airline operates the flight.[179] JVs create an agreement that is “metal neutral” in the sense that the physical metal, or aircraft, involved in producing passenger revenue is irrelevant in determining the respective airline’s share of revenue, thereby erasing any incentive for opportunistic advantages in cooperating.[180] Metal neutrality is significant in capturing the possible pro-competitive efficiency gains from increased economies of scale.[181] Thus, under a metalneutral JV, the profits (or losses) are split equally amongst the carriers regardless even when Airline A’s flights are at capacity, but Airline B’s flights are empty. JVs are, in effect, mergers that apply to defined international routes.

5.  Antitrust Immunity

Airlines operating a revenue or profitsharing JV combined with a grant of ATI achieve the highest degree of cooperation.[182] As noted earlier, the DOT holds the statutory authority to immunize international air transportation agreements from U.S. antitrust laws.[183] However, the government of the foreign carrier’s country retains sole authority to immunize the agreement from its own antitrust laws; thus, JVs are often conditioned on receiving ATI approval from both governments. ATI effectively allows two airlines to operate as one on certain routes and jointly coordinate pricing, revenue sharing, flight schedules, marketing (such as aligning frequent flyer programs), sales, and any other competitively sensitive matters without concern that they violate antitrust laws.[184]

Some support ATI by pointing to benefits consistent with closer integration, while others criticize it as anti-competitive. Regulators are particularly concerned about consumer welfare on non-stop travel between partners’ hub cities, where overlapping services allow the trip to be taken on either airline.[185] Thus, the DOT has a longstanding policy precluding consideration of ATI until all elements of an Open Skies agreement are in place to ensure that un-aligned airlines may freely enter and compete.[186]

D.  ATI Regulatory Scheme

While jurisdiction over airline mergers was vested in the DOJ in 1988, the DOT retains exclusive authority to immunize international air transportation agreements from U.S. antitrust laws.[187] ATI applications are filed in a public docket and decided on by the Secretary of Transportation after a detailed competitive analysis.[188] Once an application is complete, the DOT allows a period of public comment and issues a written decision within six months.[189]

Applicant airlines have a high bar to meet. The DOT publicly recognizes that “the antitrust laws represent a fundamental national economic policy . . . that serves . . . travelers well” and that “immunity from [them] should be the exception, not the rule.”[190] Airlines’ applications for ATI are “strictly construed and strongly disfavored . . . to ensure that alliance partners maintain the ability and incentive to pass on the potential benefits . . . to consumers.”[191]

The DOT engages in a two-step review of air transportation agreements submitted for ATI involving both a competitive analysis and a public interest analysis.[192] First, the DOT evaluates whether approving ATI would be adverse to the public interest by “substantially [reducing] or [eliminating] competition.”[193] If the DOT makes that determination, it then decides whether ATI is nonetheless “necessary to meet a serious transportation need or to achieve important public benefits.”[194] If it makes that finding and the public benefits cannot be achieved by other “reasonably available” and “materially less anticompetitive” means, then the DOT must approve ATI pursuant to § 41309(b).[195]

Second, if the DOT concludes after its initial review that the application is not adverse to the public interest, § 41309(b) directs it to grant ATI.[196] The DOT next determines whether sufficient public benefits justify ATI under § 41308.[197] The DOT is authorized to exempt agreements from the antitrust laws “to the extent necessary to allow the [airlines] to proceed with the transaction specifically approved by the order,” provided that the public interest requires it.[198] In sum, the DOT must find that ATI would reduce or substantially eliminate competition and such harm would not be offset by consumer benefits generated by ATI to deny an application.

1.  Competitive Analysis

Because ATI results in similar commercial effects as a merger, the DOT conducts a full Clayton Act test just as when evaluating domestic airline mergers.[199] The Clayton Act test evaluates competitive implications and whether approval is likely to substantially reduce competition and “facilitate the exercise of market power.”[200] Applied to ATI applications, the DOT must determine whether approval would allow the immunized airlines “to profitably charge supra-competitive prices or reduce service or product quality below competitive levels.”[201] In determining this, the DOT evaluates: “(1) whether [ATI] would significantly increase market concentration; (2) whether [ATI] would cause potential competitive harm; and (3) whether new entry into the market would be timely, likely, and sufficient either to deter or to discipline the potential competitive harm.”[202]

The importance of defining relevant markets is not lost on enforcement agencies. The DOJ has stated that properly defining markets “could be ‘a central focus’ of the analysis and be outcome determinative.”[203] In the context of ATI requests, the DOT evaluates competitive effects at three market levels: (1) a broad network level; (2) a country-pair level; and (3) a city-pair level.[204] Because ATI diminishes competition on routes on which the airlines compete, ATI reviews have largely focused on the potential loss of competition in non-stop overlaps.[205]

Market power is “the ability to profitably raise prices above competitive levels (or reduce competition on dimensions such as [capacity]), for a significant period of time.”[206] Just as in DOJ domestic airline merger reviews, the HHI of impacted city-pairs is calculated to define the market concentration and quantify increased concentration attributable to ATI; any HHI increase of 200 points or more is presumed market power enhancing.[207] This presumption is rebuttable by airlines; Supreme Court doctrine allows parties to present evidence specific to itself or its industry to rebut statistical indicators of anticompetitive effects.[208] But rebutting statistical evidence with non-statistical defenses is difficult, often being rejected by courts.[209] While market concentration alone may not be determinative—as evidenced by the rebuttable presumptionit is influential in the analysis of other potential anticompetitive effects of ATI, such as unilateral and coordinated effects.[210]

The DOT must determine any unilateral effects of granting ATI. Unilateral effects stem from the “internalization of . . . competition” between the airlines.[211] Therefore, this determination is highly dependent on the level of competition between the airlines at the time of application and whether the respective airlines’ services can be considered close substitutes.[212]

Coordinated effects, on the other hand, consider potential impacts of ATI on how firms compete in the relevant market(s).[213] A reduction in competitors may diminish competition by encouraging coordinated interaction among fewer competing airlines. Evaluating coordinated effects is largely an offshoot of game theory, as it involves decisions by multiple airlines in which certain conduct is profitable for each of them, but only as a result of cooperative reactions by the others.[214] The DOT may also consider external factors such as infrastructure or slot constraints that act as barriers to open entry or potentially exacerbate competitive harm.

2.  Public Interest Considerations

The consideration of public benefits and mitigating factors in determining ATI is largely where the DOT’s approach diverges from the DOJ’s approach in reviewing mergers. Congress has enumerated numerous factors that the DOT may consider in its public interest evaluation, including “the availability of a variety of air service, maximum reliance on market forces, the avoidance of unreasonable industry concentration, and opportunities for the expansion of international services.”[215] While § 41308 imposes a more stringent test that ATI be “required by” the public interest, the DOT has proffered several forms of public benefits to justify approval, including reductions in double marginalization, cost and operational efficiencies, expanded networks, improved coordination and services, increased capacity, and aligned frequent flyer benefits.[216]

The expansion of international air services has undoubtedly emerged as the dominant public interest factor permitting ATI despite a competitive analysis indicating rejection, and the DOT recognizes U.S. foreign policy goals as a key public benefit.[217] Since the early 1990s, the DOT and the State Department have used ATI as an incentive and bargaining chip to induce foreign nations to enter into Open Skies agreements with the United States.[218] For instance, the first ATI grant in 1993 was a result of the U.S.-Netherlands Open Skies agreement. Recently, the DOT approved ATI proposals by both United-All Nippon Airways and American-Japan Airlines, conditioning approval on the U.S.Japan Open Skies Aviation Agreement being signed.[219] The State Department and DOT effort has succeeded as the United States currently has more than 120 open-skies partners.[220]

Occasionally, public interest considerations beyond Open Skies prove instrumental. The 2005 SkyTeam ATI application was denied because the DOT determined it was not required by the public interest given that “the carriers had not shown they could effectively reconcile” differing business practices to achieve commonality within the alliance.[221] In 2009, in the midst of a global recession and struggling airlines, the DOT approved a Star Alliance ATI request because it “[would] help Continental and the other participants manage cyclical changes in the industry to preserve existing services, with a view toward increasing capacity and enhancing competition between carriers and alliances.”[222] The DOT has justified airlines’ insistence of not proceeding with an agreement without ATI as a public benefit.[223] Lastly, OneWorld’s 2010 ATI application was approved because a OneWorld immunized JV was needed to “provide a third global network [to] better discipline the fares and services offered by the Star and SkyTeam alliances,” reasoning that “this too is a public benefit.”[224] Recall that this “competitive counterweight” line of reasoning was instrumental in the DOJ’s approval of the American-U.S. Air merger. [225]

III.  STRIKING THE RIGHT LEVEL AND MANNER OF ANTITRUST REGULATION

The 1993 Open Skies Agreement between the United States and Netherlands opened a new industry order of cooperation among foreign airlines. Northwest Airlines and KLM immediately created an alliance and eventually expanded it into a JV.[226] United Airlines seized on the newfound expansion opportunities and launched the Star Alliance in 1996; American Airlines followed suit in 1999, creating the OneWorld Alliance, and Delta finished the alliance trifecta with its SkyTeam Alliance in 2000.[227] The DOT’s willingness to approve ATI is a significant development; more than twenty-eight international alliance agreements were granted ATI by the DOT after 1993, contributing to the formation of four vast, transatlantic JVs.[228]

The proliferation of foreign air services agreements is not confined to the lucrative transatlantic market. The United States and Japan completed an Open Skies agreement in 2010, signaling a countervailing shift toward greater liberalization in the transpacific air market.[229] Since then, American Airlines-Japan Airlines, Delta-Virgin Australia, United-Air New Zealand, and United-ANA created transpacific JVs with ATI.[230] As airlines across the globe increase cooperation with foreign counterparts, international travel demand has steadily increased. Each year, over 80 million U.S. residents travel abroad.[231] Global air passenger demand increased 7.6% in 2017 compared to 2016, above the ten year average annual growth rate of 5.5%.[232] International passenger traffic increased 7.9% in 2017, slightly edging domestic traffic which increased 7%; in sum, more than 4 billion passengers took to the skies in 2017, with the Asia-Pacific and Latin America regions capturing the highest year-to-year demand gains.[233]

While U.S. airlines were undergoing a merger-fueled movement toward greater concentration that left four airlines accounting for nearly 85% of the domestic market (up from 65% in 2010),[234] a similar battle opened on the international front. Nearly every major airline worldwide has joined one of the three global alliances: (1) Star Alliance consists of twenty-eight carriers;[235] (2) SkyTeam consists of twenty carriers;[236] and (3) OneWorld consists of thirteen carriers.[237] Immunized alliances operated 41% of transatlantic capacity in 2000; by 2015, that share increased to 86%.[238] During that time, HHI increased 1,592 points, a 155% increase.[239] Since 2015, the number of independent, non-aligned transatlantic airlines has decreased, leaving four transatlantic JVs in control of more than 90% of U.S.-E.U. traffic.[240] Similarly, the three global alliances provide over 80% of capacity in both the U.S.-Asia Pacific and E.U.-Asia Pacific markets,[241] and both shares are set to rise given the relative novelty of Open Skies agreements with Asian nations. Given this backdrop, it is no surprise that ATI applications are controversial and frequently spur regulatory disputes.[242] Two recent DOT decisions fueled the flames and left interested parties pondering whether they signal a DOT policy shift or are simply anomalies.

In November 2016, the DOT tentatively blocked American Airlines and Qantas Airwayss JV application for ATI finding that the JV, which would control around 60% of the U.S.-Australia market if approved, would “substantially reduce competition and consumer choice, without producing sufficient countervailing public benefits.”[243] The DOT did not believe that there would be greater capacity growth under the JV than what it expected would happen without it; thus, it found that many of the public benefits presented by an AmericanQantas JV could be achieved through materially less anticompetitive cooperation such as codesharing.[244] American and Qantas’ application invited challenges from LCC competitors over certain “exclusivity” provisions in the joint business agreement.[245] Lastly, JetBlue Airways highlighted that American Airlines was seeking ATI, a prerequisite of which is an active Open Skies agreement, while embroiled in a nasty industry dispute concerning Open Skies and the big three Middle Eastern carriers (ME3),[246] which could have impacted the DOT’s decision.

Less than a month later, the DOT approved Delta and Aeromexico’s application for an immunized JV; however, it imposed multiple conditions to address competition concerns. The DOT found that “the non-transparent slot allocation regime and infrastructure constraints at Mexico City’s Benito Juarez International Airport (MEX),” coupled with Delta and Aeromexico’s control of nearly 50% of the MEX slots, were unique constraints on the public realizing the benefits of the JV.[247] To remedy the airlines’ entrenched share at MEX and John. F. Kennedy International Airport (“JFK”) and to address the difficulty of new entrant airlines to acquire slots, the DOT conditioned approval on Delta and Aeromexico divesting twenty-four MEX slots and six JFK slots.[248] In a surprising development, the DOT also limited its ATI grant to five years.[249] After JetBlue and Hawaiian Airlines called for a three-year limit, the DOT determined a five-year limit and a de novo application to extend ATI was required by the public interest so interested parties could evaluate the effects of the slot divestures and proposals by the Mexican government to improve MEX slot allocation procedures.[250] Lastly, the DOT required Delta and Aeromexico to remove “certain anticompetitive,” or exclusivity, provisions from their JV agreement.[251]

Moving forward, the need for a clear and transparent approach to ATI by the DOT on international air travel cannot be overstated. With mergers involving U.S. legacy airlines likely off the table for the foreseeable future, these legacy airlines will continue to expand their respective alliances and favor ATI (the closest substitute to a merger facing foreign ownership restrictions) to expand their global network and capture maximum integration efficiencies. United Airlines is exploring an immunized JV with Air Canada following a shift in Canadian laws.[252] American Airlines and Qantas have reapplied for ATI with an improved application,[253] hoping for a better result under the Trump administration. The following subsections will explore practical regulatory and systematic reforms available to ensure “friendly skies” for both airlines and passengers alike. The key is a transparent and consistent approach by the DOT that allows robust free market forces (for which deregulation paved the way) to better regulate and ensure continued competition.

A.  Constrain the “Public Interest” and Emphasize Predictability in Determining ATI

The DOT justified its initial ATI approvals in the 1990s largely on the public interest factor that Congress provided it, finding that passengers would benefit from network efficiencies and increased competition “by allowing airlines with small market shares to combine their networks and become more effective in competing against larger airlines.”[254] In doing so, the DOT seemingly disregarded a fundamental principle of antitrust law—it exists to protect competition, not competitors—in its ATI approach. Indeed somewhere along the line, the public interest consideration has merged with an omnipresent “industry interest” review. And the DOT continues to tout “the benefits of creating alliances that could compete against one another, rather than against individual airlines” in granting ATI.[255]

Even after the DOT established a “heightened public benefits standard[],” which effectively required applicants to propose a metal-neutral JV for ATI approval,[256] its emphasis on competitors remained. But the recent American-Qantas and Delta-Aeromexico proceedings illustrate that how the DOT considers competitor-to-competitor effects as a public interest is anything but consistent. The DOT rejected American and Qantas’ ATI bid after it previously granted Delta-Virgin Australia and United-Air New Zealand immunity in the same U.S.-Australia market. Yet shortly after this rejection, the DOT approved ATI for Delta and Aeromexico finding it to be “required by the public interest because the proposed JV would provide . . . a third network competitor [to] the current first and second largest competitors.”[257] Interested parties, particularly airlines eying future immunized JVs, are left squinting to find the DOT’s rationale or distinction between these applications. When one compares the novelty of the U.S.-Mexico Open Skies agreement and the infrastructure/slot issues at MEX[258] to the established U.S.-Australia Open Skies agreement that led to two transpacific immunized JVs without similar concerns of barriers to entry, American Airlines and Qantas have to be left wondering how a third network in the U.S.-Australia market differs from a third network in the U.S.-Mexico network.

At the heart of its public benefits analysis, the DOT must consider “international comity and foreign policy considerations.”[259] A determinative factor in virtually every ATI approval has either been expanding the DOT and State Department’s Open Skies push or threats by airlines that they would not finalize a proposed deal without ATI.[260] Assertions of public benefits and threats of withholding agreements without immunity have accompanied airlines’ applications since the beginning.[261] It is precisely the DOT’s job to independently evaluate the anticompetitive effects and public benefits of an application and ferret out false claims or threats made by applicants from truth. Instead, the DOT’s public interest methodology has been critiqued as “nothing more than ‘copy and paste’” in accepting applicants’ claims as its justification for approval.[262] The consistent acceptance by the DOT of applicants’ claims, despite objections by the DOJ and other affected parties, has raised suggestions that the DOT is a “captured agency.”[263]

The DOT’s emphasis on expanding Open Skies should be a textbook example of foreign policy considerations. Open Skies agreements carry enormous potential to promote competition and liberalize air travel by removing barriers to entry in foreign airspace. However, when large legacy airlines hold prominent seats at the table consummating such agreements,[264] or the DOT links Open Skies to ATI with signatories’ national airlines,[265] Open Skies agreements can quickly turn to be protectionist and anticompetitive in their implementation.

The public interest is not served by entrenching incumbent national airlines’ positions and insulating them from robust competition. The three U.S. legacy carriers neither desire nor require government protection; instead, they have routinely demonstrated a willingness to compete with other legacies and LCC/ULCCs in the domestic U.S. market. There is no reason to expect anything different in the international market. Ample room exists for the DOT to reign in its public interest approach and emphasize that ATI applicants present verifiable benefits to passengers while still fulfilling its “foremost international aviation goal . . . [of] opening international markets to the forces of competition.”[266] In construing the public interest narrowly and, by default, placing greater emphasis on the competitive analysis, industry participants should experience a more transparent and uniform approach toward ATI applications. The DOT’s ability to clean up its public interest approach and improve the predictability of its evaluations would reduce the likelihood of a repeat of the two above-referenced ATI decisions—in which American and Delta highlighted the exact same public benefits of ATI as virtually every application, but American was denied while Delta was approved despite more troubling competition concerns in its applicable market. Such an approach by the DOT would provide airlines efficiency and cost improvements when evaluating whether a potential application might receive immunity. Lastly, a narrower public interest approach improves the chances that the DOT, crucially, keeps passenger welfare at the forefront of its evaluations and adheres to the fundamental principle of antitrust to protect competition, not competitors.

B.  Periodic Reviews of Immunized Alliances that Minimize the Burden on Airlines

Independent, non-aligned U.S. airlines have played an increasingly active role in recent DOT public dockets evaluating ATI applications. A consistent and vehement belief of such airlines is that approvals of immunity not be in perpetuity, but instead come with time constraints. Particularly, Southwest, JetBlue, and Hawaiian have argued for three to five-year time limitations on any new grants of ATI[267] and called for de novo reviews of existing immunized alliances.[268] Calls for periodic reviews of ATI is not a novel argument; multiple advocates have pushed for some form of mandatory review mechanism. In 2009, a House Bill by Rep. James L. Oberstar proposed to sunset ATI approvals after three years.[269] While his exact proposal may not have left the ground, it is past due for the DOT to implement a revised policy of periodic ATI reviews that reflects the present competitive dynamics of both the domestic and international markets, which have seen an unprecedented move toward greater consolidation.

The DOT’s recent five-year time limit imposed on Delta and Aeromexico was the first of its kind, yet the DOT recognizes its authority “to alter or amend its grant of ATI at any time if [it] believes a change in competitive circumstances has occurred.”[270] But the DOT’s regulations covering reviews of ATI were codified in 1985,[271] eight years before the DOT approved a single ATI application or realized the foreign policy implications of ATI in expanding Open Skies. Under § 303.06 of the DOT’s regulations, the DOT “may initiate a proceeding to review any [ATI] previously conferred . . . [and] may terminate or modify such immunity if the [DOT] finds . . . that the previously conferred immunity is not consistent with the provisions of section 414.”[272] Thus, while the DOT explicitly acknowledges its authority to amend or revoke ATI at any time, its actions reflect otherwise. In rejecting a request by JetBlue and Hawaiian to institute a de novo review of Delta and Korean Air’s ATI grant after they sought to implement a JV (fifteen years after initial ATI approval), the DOT again recognized its authority to undertake reviews at any time, but held that for it to do so “JetBlue and Hawaiian must show that a new proceeding is necessary . . . either because the existing process for reviewing the agreements is flawed or because there is a substantial basis to revisit the grant of [ATI].” [273] While the DOT may occasionally give lip service to the notion that immunity from antitrust laws is an exception, not the rule,[274] its actions fly in the face of that notion when it rejects calls for periodic review of ATI and shifts the burden of proof from those enjoying ATI to those challenging it.

At a basic level, it is difficult to accept that on the one hand the DOT categorizes ATI as an exception to the norm and only appropriate when the public interest requires it, but on the other hand approves ATI in perpetuity without an adequate regime of ex post review in place. Critics of the DOT’s current approach claim that after the initial public benefits review, ATI approval “is virtually permanent and the [airlines] are left unchecked to stifle innovation and competition in the market through coordinated pricing, scheduling, and operation functionalities, to the detriment of the travelling public.”[275] They argue that periodic reviews of five years or less in a public docket “will increase public transparency and ensure that immunized alliances remain beneficial and in the public interest, as defined not only by the immunized [airlines], but also by the public to whom they purport to bring benefits.”[276] Additionally, some studies have claimed that the pricing efficiencies and passenger benefits generated by alliances relative to interlining has not required ATI to capture such benefits.[277]

Opponents of instituting duration limits on ATI are primarily legacy airlines with portfolios of active immunized agreements. This is predictable given that any policy changes will have the largest impact on their global network strategies. They argue that a policy of ATI term limits would have a chilling effect on investment in joint operations and expanding route networks as airlines would be hesitant to make long-term investments, reducing the likelihood of reaching the level of cooperation that offers the greatest level of passenger benefits.[278] The effects of such a policy reduces the incentive to cooperate fully and creates uncertainty that diminishes consumer benefits and runs counter to the purpose of Open Skies agreements.[279] Additionally, factoring in the time constraints involved with the public docket and application process, a 3-5 year limit “would place the [DOT] and [airlines] in a state of perpetual re-application and re-review.”[280]

An optimal and practical policy that the DOT could adopt is to conduct a de novo review in a public docket of every active immunized agreement once every ten years (in the absence of unique competitive concern such as the slot/infrastructure issues at MEX). Such a policy would permit the DOT to regularly assess market conditions and verify that airlines are meeting the proposed public benefits that drove the DOT to approve their applications, while granting immunized airlines a longer horizon to entice full cooperation and investment with aligned foreign airlines and avoiding a perpetual administrative counterweight to international expansion. Current DOT regulations permit adopting such a policy via an informal, but clearly defined, case-by-case approach, thereby avoiding the difficulties of formal rulemaking or Congressional reengineering.[281] Additionally, this approach would allow the DOT to evaluate its projected docket volumes and work directly with airlines to set application and review timelines that minimize administrative burdens and facilitate quick reviews. For example, an airline may voluntarily agree to do its review after nine years if it would lead to quicker turnaround times and the DOT agrees to permit it eleven years of ATI, if approved.

It is clear that effective international JVs require significant long-term investment and advance work to facilitate optimal division of resources between airlines and maximum public benefits. The proposed policy attempts to weigh this against the reality that the DOT’s past and current approach does not grant verified and actual passenger benefits a seat at the ATI table. While it would impose a new burden on U.S. legacy airlines operating with numerous grants of ATI, it should not be considered an undue burden. These airlines already comply with numerous recurring DOT obligations such as continuing fitness reviews and renewal of certificates.[282] Further, “the vast majority of the United States’ aviation partners authorize alliances for limited periods including . . . Australia, the European Union, New Zealand and South Korea.”[283] Thus, network airlines are experienced in structuring alliances or JVs with ATI with advanced knowledge of an eventual requirement to re-apply. Lastly, airlines’ claims that ATI time limits will temper investments may carry an element of application gamesmanship with them. For example, despite teeing off on the DOT in accepting the DOT’s slot divestitures and five-year ATI limit, Delta invested more than $620 million to acquire a 49% equity stake in Aeromexico and consummated their U.S.-Mexico transborder JV.[284]

A tangential issue to ATI limits is the public release of annual ATI reports prepared by immunized airlines for DOT review. DOT has required ATI recipients to prepare annual reports on the implementation of alliance agreements and benefits resulting from ATI.[285] JetBlue has called for the public release of these reports, arguing that it “will increase transparency and promote a more robust understanding of the public benefits, if any, that are produced by . . . ATI.”[286] It claimed that both the procedural process and the substantive components are a mystery and that it was denied access to redacted versions of such annual reports.[287]

Delta responded to JetBlue’s request by highlighting that there are multiple types of reports prepared by airlines and sent to the DOT that are kept confidential that would seemingly fall under JetBlue’s push to increase transparency.[288] The DOT has sided with the airlines that prepare these annual ATI reports largely over concerns that requiring public disclosure could potentially inhibit competition and diminish airlines’ “candor with the [DOT].”[289]

The DOT’s hesitation to publicize immunized airlines’ annual reports is reasonably related to concerns with the free flow of information required to determine whether alliances are providing public benefits on a continual basis. Therefore, this Note does not suggest any changes to the DOT’s current annual review policy. Instead, the proposed periodic review and time limitations on ATI grants should adequately remedy the transparency concerns that JetBlue raises while respecting an airline’s right to confidential trade secrets and candor with the DOT.

There is no disputing the incredible difficulty antitrust regulators face in evaluating potential mergers and ATI requests. Using current and past information to project future competitive implications of corporate activities (in a constantly evolving competitive landscape) is certainly an art rather than science. To expect clairvoyance or perfection from regulatory agencies would indicate a complete lack of reality. The DOJ is tasked with the unenviable job of having to get it right on the first try in evaluating domestic airline mergers. A merged airline cannot simply be unwound ten years later if it is not delivering the expected consumer benefits. This is not the case with the DOT and its ATI role. Rather, the flexibility of ATI to account for evolving competitive landscapes of international markets is a tremendous safeguard and positive byproduct of the restrictions on foreign mergers. While there are valid concerns against imposing a firm time limit and periodic public reviews of immunized alliances, these concerns do not outweigh the DOT’s primary responsibility to promote competition to its primary constituent, the flying public, in fulfilling its antitrust responsibilities given to it by Congress. A reasonable and practical solution to balancing these interests is to establish a periodic ten-year ATI review.

C.  Increase DOJ Involvement in ATI Competitive Analysis

As previously detailed, following deregulation, the DOJ was given authority to evaluate U.S. domestic airline M&A while the DOT retained ATI authority.[290] During the short span in which the DOT held authority for both functions, it faced criticism over its performance with aviation-related antitrust issues and itself favored the transfer of M&A authority to the DOJ.[291] Since the division of antitrust roles in 1989, there have been periodic spats between the agencies and continued questions over the DOT’s fitness to perform its antitrust functions.

Given this backdrop, it is rather surprising that the DOT has often exhibited a proclivity to ignore the DOJ’s antitrust expertise. Although the DOT states that it “initially confer[s] with [the DOJ], given its experience [with] the antitrust laws,”[292] rhetoric between the two, at times, reasonably suggests otherwise. Concerns have been raised that the DOT does not give “sufficient consideration” to the impacts of ATI “on the competitive structure of the domestic airline industry.”[293] The DOT and DOJ publicly disputed the evidentiary standards used by the DOT in approving the Star Alliance-Continental (2009) and OneWorld-British Airways (2010) ATI applications. The DOJ charged that DOT’s review process was a complete abandonment of evidentiary standards because it rubber stamped the applicants’ unsubstantiated public benefits claims; some agreed with the DOJ and characterized the DOT’s “public benefits methodology [as] literally nothing more than ‘copy and paste.’”[294] The DOT claimed the DOJ attacks were “an inappropriate interference with [its] aviation policy and bilateral negotiation prerogatives.”[295]

Calls for increased DOJ involvement or even complete transfer of authority are not new. In 1998, the Transportation Research Board (“TRB”), under the Congressional direction to study government actions promoting airline industry competition, recommended that Congress shift ATI review to the DOJ; the TRB had concerns over the DOT’s policy linking consummation of Open Skies to ATI with signatories’ national airlines.[296] Others argue that the DOT is a “captured agency” as it frequently underestimates the potential anticompetitive effects of ATI because it favors the concerns of the largest shareholders of the industry it regulates.[297] Proposed solutions to the captured agency issue include retaining the initial ATI review with DOT given “its role in crafting U.S. global aviation policy,” but transferring authority to the DOJ for subsequent reviews and reapplications.[298]

This Note does not advocate for either approach. While there may be valid agency capture concerns over comingling regulatory and industry policy roles, the DOT’s authority over tangential matters such as airport slots and route certificates, expertise in the airline industry, and past successes working with the State Department to expand Open Skies make it the best agency to regulate ATI moving forward. That said, there is ample room for improvement in the ATI regulatory process. An increased role by the DOJ would facilitate many improvements. DOJ has demonstrated a tremendous ability to work with the Securities & Exchange Commission (“SEC”) and international regulators to effectively enforce the Foreign Corrupt Practices Act.[299] There is no reason that the DOT cannot similarly leverage the DOJ’s antitrust expertise in its quantitative competitive analysis of ATI applications and continuous monitoring obligations. Finally, given the interplay between the competitive situation in domestic and international markets, increased coordination will ensure that sufficient consideration is given to ATI impacts on both markets.

D.  Knock Down Barriers to Entry, While Respecting the Tenets of Deregulation and Free Competition

With most industries, high market concentration indicates an industry ripe for new entrants. The airline industry, however, contains numerous industry-specific barriers, including takeoff and landing slots (particularly at commercially-coveted airports), airport terminal/gate access, and the tremendous capital required to acquire aircraft and initiate services.[300] Additionally, the hub-and-spoke networks of legacy airlines effectively serve as operational barriers.[301] Collectively, these barriers inhibit the formation of new airlines and often create enormous difficulties for existing airlines to enter specific markets. The U.S. government should prioritize efforts to minimize barriers to entry and promote robust industry competition. However, in trying to spur competition, the government often finds itself potentially crossing a line of government intervention that deregulation was intended to leave behind in lieu of free market competition. This section steps beyond antitrust law and explores potential systematic and philosophical reforms to spur further innovation and competition in the U.S. airline industry.

Overhauling U.S. aviation infrastructure has tremendous potential to generate real economic benefits and fresh competition. The United States’ antiquated aviation infrastructure and policies carry costly effects. U.S. airports are increasingly congested as growing travel demands strain airports’ ability to keep up—72% of U.S. air passenger traffic flows through the thirty busiest airports and delays cost passengers and airlines billions annually.[302] President Trump touted improving U.S. transportation infrastructure, including U.S. airports which he referred to as “bottom of the rung” internationally, as a key policy agenda; he pushed for an investment of over $1 trillion in U.S. infrastructure improvements through public-private financing and tax incentives shortly after being elected.[303] Improving airport infrastructure is arguably just as important as easing air traffic congestion. For example, airlines without historical control of terminal space or gates at Los Angeles International (“LAX”) find lack of real estate is a huge barrier to entering or expanding service at LAX;[304] while LAX may not have the slot constraints or air space issues that the New York City airports do, the lagging infrastructure has the same practical effect in limiting the number of airlines and flights that can serve LAX. Expanding and improving U.S. airports will provide opportunities for those airlines without historical real estate holdings to enter or expand at airports that are currently space constrained.

Lastly, moving forward, the DOT should be cautious of pushing policies that position it to pick “winner and loser” airlines or overstep its regulatory authority abroad and disrupt international comity. Its approach toward “exclusivity clauses” in alliance or JV agreements applying for ATI presents a powder keg of issues moving forward. Hawaiian Airlines recently requested that the DOT require Qantas to codeshare on routes in Australia with other U.S. airlines on the same terms and availability that American Airlines would receive via their JV (thereby requiring ongoing price regulation and monitoring by the DOT).[305] While the request became moot after the DOT denied American and Qantas’ ATI bid, it offers an interesting case study. The DOT and State Department’s Open Skies objective has been to open and liberalize air travel between the U.S. and other countries; to entertain forcing foreign airlines to codeshare with U.S. airlines on flights entirely within a foreign country would seemingly undermine the entire notion of Open Skies and international comity. The DOT should be extremely hesitant to intervene in the contractual relations of private airlines, especially when foreign airlines are involved, and any DOT action may invite a reciprocal response by foreign regulators.

The DOT’s MEX slot divesture approach in granting Delta and Aeromexico ATI is also troubling and should not set a precedent moving forward. The DOT limited eligibility for the divested MEX slots to LCCs only and deemed Interjet, a Mexican LCC, ineligible because it was the second largest airline at MEX.[306] It reasoned that LCCs have the largest competitive impact in disciplining fares and that restricting slots to just LCCs would limit the total number divested.[307] The rationale behind the DOT’s decision is arguably sound; there is continued support for a “Southwest Effect”lower airfares on routes with a Southwest or other LCC/ULCC presence.[308] But its decision produced negative outcomes. The DOT should not be in the business of picking winners and losers by completely shutting out a segment of airlineslegaciesfrom even stepping to the plate and making their case. While the 80% market share of the four largest U.S. airlines is often tossed around, it fails to capture competitive realities. Legacy airlines have demonstrated a willingness to compete against both fellow legacies, by encroaching into entrenched hubs and growing nonstop service to more destinations,[309] and LCCs, by expanding product offerings such as the introduction of “basic economy” fares to reach even the most price-conscious of passengers.[310]

The MEX slot divesture also concerns matters of international comity. Interjet has challenged the DOT’s slot divestiture process in the D.C. Circuit as “arbitrary and capricious” and questioned whether the DOT “exceeded its statutory authority” in allocating slots at an airport outside the United States.[311] Moving forward, the DOT should refrain from taking similar actions that can be construed, at a minimum, as regulatory fiat, or, worse, as encroaching on the sovereignty of Open Skies agreement partners. JetBlue’s experience in trying to receive slots at MEX illustrates the “opaque [and] confusing” process: JetBlue was awarded only commercially undesirable slots before 5:00 a.m. and after 10:00 p.m.[312] Rather than unilaterally engineer a solution that arbitrarily excluded U.S. and Mexican airlines from the process, the DOT should have shared its slot concerns with the Mexican aviation authority and the MEX airport authority in order to come to a consensus for slot divestitures together that would permit ATI approval. Offering assistance in bringing the MEX slot allocation system in line with the IATA World Slot Guidelines, while touting the benefits that JetBlue and other U.S. airlines bring to communities would also be more effective than a divestiture power grab. Going forward, a DOT mentality that respects international comity and robust market competition will incentivize all airlines and generate the greatest public benefit.

Conclusion

Under many metrics, U.S. airlines are serving passengers at record levels. Foremost, U.S. commercial aviation has never been safer; 2017 marked the eighth straight year of zero U.S. airline passenger fatalities.[313] Average ticket prices are at historic lows, and increases in fares are considerably behind increases in disposable income, CPI, and jet fuel prices this century.[314] Airlines are aggressively competing and expanding into competitor hubs, while improving flight operations; in 2017, fewer flights were cancelled, on-time arrival rate increased, and airlines lost fewer bags and bumped fewer passengers.[315] However, viral incidents such as United’s removal of Dr. Dao and the large domestic market share of the four biggest U.S. airlines contribute to the public’s negative perception of air travel. The data paint a different picture. Ugly on-board incidents are the exception, and all U.S. airlines have demonstrated an impressive flexibility to quickly adopt policies that reduce the likelihood of repeating such incidents. United adopted ten policy changes in response to the Dr. Dao incident, including reducing overbooking and increasing gate agent flexibility to reach voluntary seat denials, which other U.S. airlines also adopted.[316]

There will always be room for improvement, but high market concentration in the U.S. domestic airline market has not caused disastrous anticompetitive results. That said, there is no guarantee that similar results will occur as international markets become more concentrated. International air travel involves unique barriersas the slot situation at MEX exemplifiesand significant costs to acquire aircraft and establish operations abroad. Open Skies and ATI have enormous potential to open international markets and improve travel for U.S. passengers. However, ATI is also an extraordinary tool of regulatory relief that requires adequate safeguards. The DOT can better serve airlines and passengers alike by clarifying public interest considerations, periodically reviewing ATI approvals, and increasing DOJ involvement.

 


[*] *. Senior Submissions Editor, Southern California Law Review, Volume 91; J.D. 2018, University of Southern California Gould School of Law; B.A. Political Science and Economics 2015, Emory University. I am forever thankful to my dad for his twenty-eight years of service as an Air Force pilot and for instilling in me a passion for aviation from a young age. A special thank you to Rob Land for sparking my interest in airline antitrust immunity and encouraging this Note. Lastly, I am extremely grateful to Katie Schmidt, Karen Blevins, and Christopher Phillips for their outstanding feedback and editing efforts.

 [1]. Michael Goldstein, Biggest Travel Story of 2017: The Bumping and Beating of Dr. David Dao, Forbes (Dec. 20, 2017, 9:13 PM), https://www.forbes.com/sites/michaelgoldstein/2017/12/20/biggest-travel-story-of-2017-the-bumping-and-beating-of-doctor-david-dao/#b43cd2cf61fc.

 [2]. Hugo Martin & Joseph Serna, Passenger Mix-Up on Flight to Japan Caps a Year of Airline Foul-Ups, L.A. Times (Dec. 27, 2017, 4:50 PM), http://lat.ms/2Fkp01C.

 [3]. Jon Ostrower, Delta’s Meltdown: What Went Wrong, CNN (Apr. 10, 2017, 5:51 PM), http://cnnmon.ie/2oEJrwy. See also Scott McCartney, The Best and Worst U.S. Airlines of 2017, Wall St. J. (Jan. 10, 2018, 9:33 AM), http://on.wsj.com/2FQLuoL (reporting overloaded telephone lines prevented Delta pilots and flight attendants from calling in for new assignments).

 [4]. Bart Jansen, Delta: Atlanta Airport Power Outage Cost $25M to $50M in Income, USA Today (Jan. 3, 2018, 11:49 AM), https://usat.ly/2tcSUQN.

 [5]. David Koenig, Police Drag Woman Off Southwest Airlines Flight, Chi. Trib. (Sept. 28, 2017, 3:00 AM), http://trib.in/2Fbmr2E.

 [6]. Amy B. Wang, Passenger Says JetBlue Booted His Family from Flight Over a Birthday Cake, Wash. Post (May 14, 2017), http://wapo.st/2FiEbZo.

 [7]. McCartney, supra note 3 (noting that most of the operational shorthandedness was with Alaska’s subsidiary, Horizon Air).

 [8]. Amy B. Wang & Luz Lazo, Federal Court Orders Spirit Pilots Back to Work After Chaos at Fort Lauderdale Airport, Wash. Post (May 9, 2017), http://wapo.st/2oF3DhQ.

 [9]. Kathryn Vasel, America’s Least Favorite Airline (Hint: It’s Not United), CNN (Apr. 25, 2017, 12:13 PM), http://cnnmon.ie/2FclbMY.

 [10]. Benjamin Zhang, ‘Infuriated’ United Pilots Union Slams Cops for Forcibly Dragging Passenger from Plane, Bus. Insider (Apr. 13, 2017, 6:22 PM), http://read.bi/2GYcNNl. The four Chicago Department of Aviation officers involved in the incident were suspended immediately, and two were subsequently fired. Maya Salam, Security Officers Fired for United Airlines Dragging Episode, N.Y. Times (Oct. 17, 2017) https://nyti.ms/2kXopKv. A Chicago directive later stripped Chicago Airport Security Officers of their “police” label. Id.

 [11]. Tracey Lien, Before Apologizing on Tuesday, United Tried Two Unsuccessful Tactics to Quell Its Public Relations Crisis, L.A. Times (Apr. 11, 2017, 11:20 AM), http://lat.ms/2oYhLVt. See also Erin McCann, United’s Apologies: A Timeline, N.Y. Times (Apr. 14, 2017), http://nyti.ms/2um2OeG.

 [12]. Lien, supra note 11.

 [13]. Michael Edison Hayden & Erin Dooley, United CEO Feels ‘Shame,’ Passenger Will Be Compensated, ABC News (Apr. 12, 2017), http://abcn.ws/2o6tkpj.

 [14]. Goldstein, supra note 1.

 [15]. Trefis Team, How M&A Has Driven the Consolidation of the US Airline Industry Over the Last Decade?, Forbes: Great Speculations (May 4, 2016, 8:34 AM), http://bit.ly/2oG127C.

 [16]. See Christopher Drew, Airlines Under Justice Dept. Investigation Over Possible Collusion, N.Y. Times (July 1, 2015), http://nyti.ms/1dyF91l.

 [17]. Airlines Carried Record Number of Passengers in 2016, CBS News (Mar. 27, 2017), http://cbsn.ws/2FSvrGU. See also Air Traffic by the Numbers, Fed. Aviation Admin. (Nov. 14, 2017), https://www.faa.gov/air_traffic/by_the_numbers.

 [18]. Karl Russell, Why We Feel So Squeezed When We Fly, N.Y. Times (May 2, 2017), https://nyti.ms/2pv5cOa.

 [19]. Brian Pearce & Gary Doernhoefer, The Economic Benefits of Airline Alliances and Joint Ventures, Int’l Air Transp. Ass’n (Nov. 28, 2011), https://www.iata.org/whatwedo/Documents
/economics/Economics%20of%20JVs_Jan2012L.pdf.

 [20]. A Brief History of the FAA, Fed. Aviation Admin. (Jan. 4, 2017), https://www.faa.gov
/about/history/brief_history.

 [21]. Air Commerce Act, Pub. L. No. 69-254, 44 Stat. 568 (1926).

 [22]. Id.

 [23]. Dennis Parks, The First Regulations, Gen. Aviation News (Oct. 23, 2011), https://generalaviationnews.com/2011/10/23/the-first-regulations.

 [24]. Civil Aeronautics Authority Act of 1938, Pub. L. No. 75-706, 52 Stat. 973.

 [25]. See id.

 [26]. Post-War Revival and Regulation, Smithsonian Nat’l Air & Space Museum, http://s.si.edu/2FevJXI (last visited July 30, 2018).

 [27]. See Con’l Air Lines, Inc. v. Civil Aeronautics Bd., 519 F.2d 944, 959–60 (D.C. Cir. 1975) (ordering the Civil Aeronautics Board to approve Continental Airline’s outstanding application of eight years to begin service between Denver and San Diego).

 [28]. See Justin Elliott, The American Way, ProPublica (Oct. 11, 2016), https://www.propublica.org/article/airline-consolidation-democratic-lobbying-antitrust. See also John F. Stover, American Railroads 234 (2d ed. 1997) (examining the Penn Central Railroad collapse and its domino effect causing concern that air transport could follow the nation’s troubled railroads).

 [29]. Airline Deregulation Act of 1978, Pub. L. No. 95-504, 92 Stat. 1705.

 [30]. Id.

 [31]. Jagdish N. Sheth et al., Deregulation and Competition: Lessons from the Airline Industry 31 (2007) (“CAB’s authority over routes that an airline could serve was to terminate by December 31, 1981, and regulation of fares that airlines could charge was to cease by January 1, 1983.”).

 [32]. Amended Complaint ¶ 1, United States v. US Airways Group., Inc., 38 F. Supp. 3d 69 (D.D.C. 2014) (No. 13-cv-1236-CKK) [hereinafter Amended Complaint].

 [33]. See Wilfred S. Manuela Jr. et al., The U.S. Airways Group: A Post-Merger Analysis, 56 J. Air Transp. Mgmt. 138, 139 (2016).

 [34]. Dennis W. Carlton et al., Are Legacy Airline Mergers Pro- or Anti-Competitive? Evidence from Recent U.S. Airline Mergers, Int’l J. Indus. Org. 1, 4 (2018), https://doi.org/10.1016/j.ijindorg
.2017.12.002.

 [35]. Id. at 4–5.

 [36]. Drew, supra note 16.

 [37]. Sheth et al., supra note 31, at 57–60.

 [38]. Id. at 57–58, 65.

 [39]. Manuela Jr. et al., supra note 33, at 139 (finding that only one merger could be judged successful in improving financial and operating performance).

 [40]. Id.

 [41]. Id. at 138–39, 141. See also Carlton et al., supra note 34, at 4–5.

 [42]. American Airlines filed most recently in 2011. Jiajun Liang, What Are the Effects of Mergers in the U.S. Airline Industry? An Econometric Analysis on Delta-Northwest Merger, 3 Macalester Rev. no. 1, art. 2, 2013, at 1.

 [43]. Manuela Jr. et al., supra note 33, at 139.

 [44]. See U.S. Airline Mergers and Acquisitions, Airlines for Am., http://airlines.org/dataset/u-s-airline-mergers-and-acquisitions (last visited July 30, 2018).

 [45]. Fiona Scott Morton et al., Benefits of Preserving Consumers’ Ability to Compare Airline Fares 34 (2015), http://3rxg9qea18zhtl6s2u8jammft-wpengine.netdna-ssl.com/wp-content
/uploads/2015/05/CRA.TravelTech.Study_.pdf.

 [46]. Elaine X. Grant, TWA—Death of a Legend, St. Louis Mag. (July 28, 2006, 12:00 AM), https://www.stlmag.com/TWA-Death-Of-A-Legend.

 [47]. See Morton et al., supra note 45, at 35.

 [48]. Id.

 [49]. Chris Dimarco, US Airways Defends American Airlines Merger, Inside Counsel (Sept. 12, 2013), http://web3.insidecounsel.com/2013/09/12/us-airways-defends-american-airlines-merger.

 [50]. A.W., Why Did the Obama Administration Change Its Mind on the American Airlines-US Airways Merger?, Economist: Gulliver (Oct. 15, 2016), https://www.economist.com/blogs/gulliver
/2016/10/connected; James B. Stewart, Baffling About-Face in American-US Airways Merger, N.Y. Times (Nov. 15, 2013), http://nyti.ms/2thoSet.

 [51]. Jad Mouawad & Christopher Drew, Justice Dept. Clears Merger of 2 Airlines, N.Y. Times, (Nov. 12, 2013), http://nyti.ms/2oHKBHU.

 [52]. Trefis Team, supra note 15.

 [53]. See Amended Complaint, supra note 32, ¶¶ 1–10.

 [54]. Id. at ¶¶ 34–35.

 [55]. Ben Mutzabaugh, Justice Dept. OKs Alaska Airlines-Virgin America Merger, USA Today (Dec. 6, 2016, 2:14 PM), https://usat.ly/2I31EMB.

 [56]. Winnie Sun, What the Virgin-Alaska Air Merger Means for Millennials and Investors Alike, Forbes (Apr. 5, 2016, 4:14 PM), http://bit.ly/2D0qzwC.

 [57]. Elliott, supra note 28.

 [58]. Id.

 [59]. James B. Stewart, ‘Discipline’ for Airlines, Pain for Fliers, N.Y. Times (June 11, 2015), http://nyti.ms/1QPNKtp.

 [60]. See id.

 [61]. Doug Cameron & Nicole Friedman, Warren Buffett’s Berkshire Hathaway Discloses New Investments in Airlines, Wall St. J. (Nov. 14, 2016, 9:57 PM), http://on.wsj.com/2fzTRHP.

 [62]. 2017 Annual and 4th Quarter U.S. Airline Financial Data, Bureau Transp. Stat. https://www.bts.gov/newsroom/2017-annual-and-4th-quarter-us-airline-financial-data (last visited July 30, 2018).

 [63]. IATA Reveals 2018 Financial Forecast, Int’l Air Transp. Ass’n (Dec. 5, 2017), http://airlines.iata.org/news/iata-reveals-2018-financial-forecast.

 [64]. Drew, supra note 16.

 [65]. A.W., supra note 50.

 [66]. Drew, supra note 16.

 [67]. This Note cannot go into detail on Europe, but it is plain to see that the European airline industry has felt a large impact from the growth of ULCCs Ryanair and EasyJet. EBIT margins for European airlines were just 5.3% and 5.6% in 2015 and 2016, while North American carriers were 14.7% and 15.4% in 2015 and 2016, respectively. Chris Bryant, Europe’s Airlines are Drunk on Cheap Fuel, Bloomberg (Oct. 6, 2016, 4:45 AM), https://bloom.bg/2dW6OLP. But see Airlines for Am., U.S. Airline Industry Review: Allocating Capital to Benefit Customers, Employees and Investors 16 (2018) [hereinafter Airlines for America] (finding that U.S. airlines’ average pre-tax profit margin between 2010 and 2017 was 6.5%, while the average U.S. corporation margin was 16.7%).

 [68]. Bryant, supra note 67.

 [69]. Annabel Fenwick Elliott, Thousands to Be Refused Refunds as Europe’s 10th Biggest Airline Ceases Trading, Telegraph (Oct. 10, 2017, 2:57 PM), https://www.telegraph.co.uk/travel/news/air-berlin-to-stop-flights-by-end-of-october.

 [70]. Robert Wall, European Airlines Fly into Trouble, Wall St. J. (July 21, 2016), http://on.wsj.com/2D1sHEh.

 [71]. Airlines for America, supra note 67, at 17.

 [72]. See, e.g., David Reid, U.S. Airlines to Scoop Almost Half of Global Profit in 2018, CNBC (Dec. 5, 2017), https://www.cnbc.com/2017/12/05/us-airlines-to-scoop-almost-half-of-global-profit-in-2018.html.

 [73]. Amended Complaint, supra note 32, ¶ 59.

 [74]. Karl Russell, Why We Feel So Squeezed When We Fly, N.Y. Times (May 2, 2017), http://nyti.ms/2pv5cOa.

 [75]. Id.

 [76]. E.g., Jad Mouawad, Senator Urges Inquiry into Airline Behavior, N.Y. Times (June 17, 2015), https://nyti.ms/1eoLoWK.

 [77]. Id.

 [78]. Stewart, supra note 59.

 [79]. See, e.g., Drew, supra note 16.

 [80]. Brent Kendall & Susan Carey, Obama Antitrust Enforcers Won’t Bring Action in Airline Probe, Wall St. J. (Jan. 11, 2017, 5:33 AM), https://www.wsj.com/articles/obama-antitrust-enforcers-wont-bring-action-in-airline-probe-1484130781; Ryan Strong, DOJ Antitrust Investigation: Is It Time For Airline Discipline?, Colum. Bus. L. Rev. Online (Oct. 8, 2015) https://cblr.columbia.edu/doj-antitrust-investigation-is-it-time-for-airline-discipline.

 [81]. Drew, supra note 16.

 [82]. Stewart, supra note 59.

 [83]. Scott Mayerowitz et al., Government Seeks Evidence that Airlines Illegally Worked Together, but Will the Case Fly?, U.S. News (July 3, 2015, 9:28 AM), http://bit.ly/2FfOgae. Perhaps no investigation was more open and shut than the DOJ investigation of Robert Crandall.

In 1982, Robert Crandall . . . who would become CEO of American Airlines, expressed his anger about . . . fare wars in a phone call with Howard Putnam, CEO of Braniff Airways. Putnam . . . asked Crandall if he had a suggestion to deal with the problem. Crandall told him to raise his fares and he’d follow suit. Specifically, Crandall replied: “Yes. I have a               suggestion for you. Raise your goddamn fares 20 percent. I’ll raise mine the next morning.”               He said: “You’ll make more money and I will too.” The Justice Department sued and the case               was settled for little more than an agreement by Crandall to keep a written record of all of his               contact with other airline executives for two years.

Id.

 [84]. Steven Davidoff Solomon, Rise of Institutional Investors Raises Questions of Collusion, N.Y. Times (Apr. 12, 2016), https://nyti.ms/2Gx2fJe. See also José Azar, Martin C. Schmalz & Isabel Tecu, Anti-Competitive Effects of Common Ownership, 73 J. Fin. 4. at 5, 12, 18 (2018) (finding that when common ownership is taken into account, HHI figures are ten times larger than what the DOJ considers “presumed likely to enhance market power,” and that airfares are 3% to 7% percent higher for airlines that are commonly owned by the same major stockholders).

 [85]. Kendall & Carey, supra note 80.

 [86]. Id.

 [87]. In re Domestic Airline Travel Antitrust Litig., 221 F. Supp. 3d 46, 60 (D.D.C. 2016).

 [88]. Andrew M. Harris & Mary Schlangenstein, American Airlines Agrees to Pay $45 Million to Settle Fare Collusion Lawsuit, Bloomberg (June 15, 2018), https://www.bloomberg.com/news/articles
/2018-06-15/american-agrees-to-pay-45-million-to-settle-fare-collusion-suit; Chuck Stanley, Airline Antitrust MDL Discovery Deadline Pushed to 2019, Law360 (Feb. 12, 2018), http://bit.ly/2tk9VbC.

 [89]. Drew, supra note 16.

 [90]. Id.

       [91].     Shawn Tully, Why United’s Big Expansion Plans Made Investors Freak Out, Fortune (Jan. 26, 2018), http://fortune.com/2018/01/26/united-airlines-stock-capacity.

       [92].     Id.

 [93]. Id.

 [94]. See, e.g., Arnold v. Soc’y for Sav. Bancorp, Inc., 678 A.2d 533, 539 (Del. 1996).

 [95]. Manuela Jr. et al., supra note 33, at 139.

 [96]. Id.

 [97]. Id.

 [98]. Id.

 [99]. Id. at 140.

Despite anticipated gains at the time of the announcement, market returns to the acquiring firm after the acquisition including return on assets (ROA), return on equity (ROE), and return on sales, are generally a zero-sum game and the expected synergies from the merger . . . are not realized by acquiring firms, indicating that acquisitions have no significant effect or even have a slightly negative effect on an acquiring firm’s financial performance in the post-announcement period.

 [100]. Id.

 [101]. Id.

 [102]. Id. at 140–41.

 [103]. Amended Complaint, supra note 32, ¶ 41.

 [104]. Kai Hüschelrath & Kathrin Müller, Airline Networks, Mergers, and Consumer Welfare, 48 J. Transp. Econ. & Pol’y 385, 386 (2014).

 [105]. Morton et al., supra note 45, at 33–35.

 [106]. U.S. Dep’t of Justice & Fed. Trade Comm’n, Horizontal Merger Guidelines 19 (2010) [hereinafter Horizontal Merger Guidelines], https://www.ftc.gov/sites/default/files/attachments
/merger-review/100819hmg.pdf.

     [107].     Morton et al., supra note 45, § 36 (referring to domestic U.S. city pairs).

 [108]. Id.

 [109]. Max Maruna & Peter Morrell, Mergers: After the Honeymoon, FlightGlobal (July 29, 2010), https://www.flightglobal.com/news/articles/mergers-after-the-honeymoon-345465.

 [110]. Id.

 [111]. Manuela Jr. et al., supra note 33, at 148–49.

 [112]. See, e.g., Carlton et al., supra note 34, at 2–4, 29.

 [113]. Id. at 3–4.

 [114]. See John Kwoka & Evgenia Shumilkina, The Price Effect of Eliminating Potential Competition: Evidence from an Airline Merger, 58 J. Indus. Econ. 767, 782 (2010) (finding that the US Airways and Piedmont merger resulted in higher fares on routes in which Piedmont was only a potential entrant).

 [115]. Carlton et al., supra note 34, at 3–4.

 [116]. Id. at 4.

 [117]. Id.

 [118]. See id. at 2.

 [119]. Id. at 3.

 [120]. See Nancy L. Rose, After Airline Deregulation and Alfred E. Kahn, 102 Am. Econ. Rev.: Papers & Proc. 376, 379 (2012) (finding that Kahn did not intend nor advocate for deregulation to mean “laissez-faire” and that he attributed the industry’s early struggles and industry concentration to “a ‘lamentable failure of the administration to enforce the policies of the antitrust laws—to disallow a single merger or to press for divestiture of the computerized reservation systems or attack a single case of predation.’”) (citation omitted).

 [121]. Sherman Act, 26 Stat. 209 (1890).

 [122]. Clayton Act, 38 Stat. 730 (1914).

 [123]. Sherman Act, ch. 647, § 1, 26 Stat. 209 (codified as amended at 15 U.S.C. § 1 (2018)).

 [124]. Volodymyr Bilotkach & Kai Hüschelrath, Antitrust Immunity for Airline Alliances, 7 J. Competition L. & Econ. 335, 358 (2011).

 [125]. Clayton Act, ch. 323, § 7, 38 Stat. 731 (codified as amended at 15 U.S.C. § 18 (2018)).

 [126]. Bilotkach & Hüschelrath, supra note 124, at 358.

 [127]. Catherine A. Peterman, The Future of Airline Mergers After the US Airways and American Airlines Merger, 79 J. Air L. & Com. 781, 783–84 (2014) (emphasis added).

 [128]. Am. Bar Ass’n Section of Antitrust Law, Mergers and Acquisitions: Understanding the Antitrust Issues 1 (3d ed. 2008).

 [129]. Peterman, supra note 127, at 784.

 [130]. See Brown Shoe Co. v. United States, 370 U.S. 294, 325–32, 336, 343–46 (1962).

 [131]. Peterman, supra note 127, at 785.

 [132]. Id. (citation omitted).

 [133]. 15 U.S.C. § 18a (2018) (establishing that proposed mergers that exceed a certain size cannot be legally consummated until expiration of the thirty-day waiting period after making the pre-merger filings or waiver by the reviewing agency).

 [134]. Peterman, supra note 127, at 785–86.

 [135]. Id. at 786.

 [136]. Id. (citation omitted).

 [137]. Id.

 [138]. See Horizontal Merger Guidelines, supra note 106.

 [139]. See Peterman, supra note 127, at 786–87.

 [140]. Bilotkach & Hüschelrath, supra note 124, at 359.

 [141]. William E. O’Connor, An Introduction to Airline Economics 41 (6th ed. 2001).

 [142]. Sunset Act of 1984, Pub. L. No. 98-443, 98 Stat. 1703 (1984).

 [143]. O’Connor, supra note 141, at 41–42.

 [144]. Id. at 42. See also Charles N.W. Schlangen, Differing Views of Competition: Antitrust Review of International Airline Alliances, 2000 U. Chi. Legal F. 413, 437 (2000) (“Although DOJ was slated to oversee mergers and other domestic aviation-related antitrust issues beginning in 1989, Senator Metzenbaum . . . was so dissatisfied with DOT’s performance that he introduced a bill to accelerate the transfer to the fall of 1987. It is telling that both DOT and DOJ favored the transfer.”).

 [145]. U.S. Department of Transportation Notice of Practice Regarding Proposed Airline Mergers and Acquisitions, No. 80,011, 80 Fed. Reg. 2468–69 (proposed Jan. 16, 2015).

 [146]. Bilotkach & Hüschelrath, supra note 124, at 359.

 [147]. International Air Transportation Competition Act of 1979, Pub. L. No. 96-192, 94 Stat. 35 (1980).

 [148]. 49 U.S.C. §§ 41308–41309 (2018).

 [149]. William Gillespie & Oliver M. Richard, Antitrust Immunity and International Airline Alliances 5, 5 n.10 (Econ. Analysis Group, Discussion Paper No. 11-1, Feb. 2011), https://www.justice.gov/atr
/antitrust-immunity-and-international-airline-alliances.

U.S. airlines may merge. They may also request from the antitrust agencies a business review on joint venture proposals. There was an exception on immunity grants within the U.S after the U.S. Congress passed the Aviation and Transportation Security Act of 2001 in response to the terrorist attacks of 09/11/2001. The Act, which has since expired, included a provision that allowed DOT to grant antitrust immunity to carriers in States with “extraordinary” air transportation needs. This provision only applied to intra-state routes. Under this Act, DOT temporarily granted antitrust immunity to Aloha Airlines and Hawaiian Airlines in inter-island routes in Hawaii in the period from 12/2002 to 10/2003 . . . [W]ith antitrust immunity the carriers made significant capacity reductions and not only did fares rise sharply (by 35% to 41%) but they also remained high well past the expiration of immunity.

 [150]. Pearce & Doernhoefer, supra note 19, at 3.

 [151]. Id. at 4 (arguing that “[i]n open markets firms locate themselves and their services where consumers demand them, constrained only by competition law or regulations such as health and safety”). This is the strategy pursued by telecom, banking, media, and other industries. Id.

 [152]. Id.

 [153]. Eur. Comm’n & U.S. Dep’t of Transp., Transatlantic Airline Alliances: Competitive Issues and Regulatory Approaches 3 (2010) [hereinafter Transatlantic Airline Alliances].

 [154]. Id. at 3.

 [155]. Bilotkach & Hüschelrath, supra note 124, at 360 (noting “the impossibility of worldwide airline networks operated by a single airline, and the impossibility to coordinate (and therefore rationalize) operations by way of merging two companies”).

 [156]. Pearce & Doernhoefer, supra note 19, at 4.

 [157]. Gillespie & Richard, supra note 149, at 2.

 [158]. Id. at 2–3.

 [159]. Id. at 3.

 [160]. Id.

 [161]. Id.

 [162]. See Freedoms of the Air, Int’l Civ. Aviation Org., https://www.icao.int/Pages
/freedomsAir.aspx (last visited July 31, 2018).

 [163]. Gillespie & Richard, supra note 149, at 3.

 [164]. See id.

 [165]. Transatlantic Airline Alliances, supra note 153, at 13.

 [166]. Id. at 5.

 [167]. Pearce & Doernhoefer, supra note 19, at 4.

 [168]. Id.

 [169]. Id. at 4–5.

 [170]. Id. at 5.

 [171]. Id.

 [172]. Id. at 2, 5.

 [173]. Gillespie & Richard, supra note 149, at 3.

 [174]. Id. at 1.

 [175]. Id. at 3.

 [176]. Id. (noting that sales revenue goes to the operating carrier and the marketing carrier receives a booking fee to cover handling costs).

 [177]. Pearce & Doernhoefer, supra note 19, at 5.

 [178]. Id. See also Gillespie & Richard, supra note 149, at 13–16, 20.

 [179]. Pearce & Doernhoefer, supra note 19, at 1–2.

 [180]. Id.

 [181]. Id. at 1, 6.

 [182]. Transatlantic Airline Alliances, supra note 153, at 5.

 [183]. Supra Section II.B.

 [184]. See Gillespie & Richard, supra note 149, at 1. See also Order to Show Cause at 4, Am. Airlines, Inc., DOT-OST-2015-0129 (Dep’t of Transp. Nov. 18, 2016) [hereinafter AA-QF Show Cause Order].

 [185]. Pearce & Doernhoefer, supra note 19, at 2.

 [186]. Order to Show Cause at 7, Delta Air Lines, Inc., DOT-OST-2015-0070 (Dep’t of Transp. Nov. 4, 2016) [hereinafter DL-AM Show Cause Order].

 [187]. 49 U.S.C. §§ 41308–41309 (2018).

 [188]. See 14 C.F.R. § 303 (2018).

 [189]. 49 U.S.C. § 41710 (2018).

 [190]. Order to Show Cause at 33, Alitalia-Linee Aeree Italiane-S.p.A., DOT-OST-2004-19214 (Dep’t of Transp. Dec. 22, 2005) (emphasis added).

 [191]. Answer of Hawaiian Airlines, Inc. at 4, Am. Airlines, Inc., DOT-OST-2015-0129 (Dep’t. of Transp. Feb 22, 2016) (citation omitted).

 [192]. See 49 U.S.C. §§ 41308-41309 (2018).

 [193]. Id. § 41309(b)(1).

 [194]. Id. § 41309(b)(1)(A).

 [195]. Id. § 41309(b)(1)(B).

 [196]. Id. § 41309(b).

 [197]. Id. § 41308.

 [198]. Id. § 41308(b).

 [199]. Hubert Horan, Double Marginalization and the Counter-Revolution Against Liberal Airline Competition, 37 Transp. L.J. 251, 254 (2010).

 [200]. DL-AM Show Cause Order, supra note 186, at 9.

 [201]. Id.

 [202]. Id.

 [203]. Peterman, supra note 127, at 788–89 (citation omitted).

 [204]. Order to Show Cause at 6–10, Delta Air Lines, Inc., DOT-OST-2015-0070 (Dep’t of Transp. Nov. 4, 2016).

 [205]. Gillespie & Richard, supra note 149