According to SCOTUS Blog, the Supreme Court today lifted the stay postponing the sale of ‘zombie’ Chrysler (h/t AoSHQ). I am sure there will be all sorts of rumbings and grumblings about this, especially among conservatives opposed to the sale. Before the rumblings get too loud, I would like to make a couple points.
First, this was a unanimous decision. That means conservative-stalwart Scalia and strictest-of-strict-constructionists Thomas did not object to the lifting of the stay. It is possible there was some internal politics involved, but on a big case like this I think it is far more likely that they simply did not see any merit in the stay application. Unanimous action by the Court, especially on big cases, is not the norm, so it is probably safe to say that this decision was pretty cut and dry.
My second, and related, point is that a stay is an unusual creature in the law. Courts very rarely act preemptively, which is what the creditors were asking the Court to do — and it is even more rare for the Supreme Court to do so. There are a lot of reasons for that, but most of them are addressed by one of the prerequisites for a stay in federal (and most, if not all, state) courts: irreparable harm. In order for a court to act preemptively, it requires that the party requesting the action show that it will be irreparably harmed if the court does not step in. A lot of people — including lawyers — tend to think that any ‘harm’ ought to qualify, but it does not. The easy rule of thumb is that if the court can sort things out after the fact and order one side to cough up money to the other (or otherwise ‘make them whole’) then harm is not irreparable.
Here, where the issues boil down to arguments over who gets how much money out of Chrysler (even, ultimately, the constitutional issues), I cannot imagine a court finding irreparable harm. On top of that, the Court went out of its way to avoid in any manner giving its blessing to the sale itself. If — or more likely, when — this ends up back on the Court’s docket, that is when the issues will be addressed and sparks will fly. The initial stay was meaningless, and there is no reason to get excited about the Court lifting it.
I saw your link on Hot Air and wondered if you read the most recent post on SCOTUS blog that seems to confirm your points here and doesn’t rule out weighing in on “bailout” law in the future.
Do you know how tuned in to the thinking of the Court, the blog writers at SCOTUS blog tend to be? I have not followed the blog closely in the past so I was curious. It seemed to be tipping a hand in some respects that the Court will weigh in at some point possibly when the crisis is past.
brad Reply:
June 9th, 2009 at 21:42
I really don’t know, but I would assume they are. Trying to guess what any court will do is pretty risky at best, but I think that it is probably a safe bet that the Court end up addressing at least some of the bailout issues.
The whole stay process has only been the tip of the iceberg. Courts tend to deal with things after the fact (other than the bankruptcy court here). Once the sale has happened, then it is more likely that the objections will be considered in detail.
I agree, there is no predicting what this or any court will do. It seemed to me that Denniston’s commentary was meant as a specific smackdown of the Obama administrations claim that the courts saw no problem with the structuring of the deal here. Let’s face it, this administration is not lacking in the hubris department.
I agree the stay is only the tip of the iceberg. I think the commentary was meant as a signal, perhaps to investors, or even the administration, the Court will weigh in at some point or at a minimum they are watching.
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