Silent Generation Judge - vs Baby Boomer and Generation X

[Reality Check]

The recent political decision ( in my opinion ) by Chief Justice Roberts reminds me of a story told to me by my brother in-law.

My brother in-law is a silent generation Judge. He is retired now, but at the time of the story he was still on the bench and had just presided over a state trial related to what was, before the financial crisis, the biggest bond default in United States history.

Bond holders, through their trustees, were seeking judgement against (state name removed) public utilities and (state name removed) private utilities who were unable to pay Billions of dollars in principle and interest on bonds issued to build nuclear reactors in Washington State.

Various consortium of public and private utility companies in the Washington, Idaho, Montana, Oregon and Wyoming had banded together to build five nuclear power plants in Washington state. Only one was ever built and bonds issued to build some of the reactors went into default.

The utilities had guaranteed various bond issues to raise money to build the five reactors. Many of the bond issues had exactly the same terms and conditions. The attorney's for the bond holders had written what they believed was an iron clad contract, it included joint and several liability for all the utilities, so if one went bankrupt, the rest were responsible for paying the bankrupt parties share. The private utilities had insisted on one term as compensation for this: If the courts decided the contract was illegal ( not just unenforceable but actually illegal ) for any of the utilities, then the contract was unenforceable for all the utilities. For some reason the bond holder's attorney's agreed to this, probably because such contracts are virtually never found to be illegal and maybe because they also did an inadequate review of the applicable laws.

During trial an interesting defense against paying the bond holders was argued by the Private Utilities. They pointed out that the public utilities had been created during the Great Depression under federal laws that allowed public utility districts to take by eminent domain the assets of Private utilities and pay them only Depression era valuations, which were basically zero, but the Public Utilities were forced to continue under those federal laws if they wished to maintain ownership of the assets. When the public utilities changed their incorporation to state law the state law incorporated the federal laws by reference as governing in any cases where there were conflicts between the original federal laws and the state laws the public utilities were now incorporated under.

To make a long story short, under state law the public utilities board of directors was authorized to sign contracts that put the assets of the utilities at risk, but this conflicted with the original federal law which required the voters of public utility districts to approve any such contract for the contract to be legal. State law expressly said the federal law governed and the federal law said the contract was not just unenforceable, but it was illegal, because the board of directors was expressly prohibited by federal law to sign such a contract on behalf of the public utility without a prior vote by the voters of the public utility district in favor of the contract. The bond holders attorney's had written into the terms and conditions of the bonds an escape clause for all the utilities, if and, only if, a court found the contract illegal for any of the utilities, then the contract was unenforceable for all the other utilities.

Some of the public utilities had signed the bond contract without having a vote first.

The silent generation judge, my brother in-law, followed the law and issued judgement for the both the private and public ( state name removed ) utilities: they owed nothing under the terms of the contract the bond holders' attorneys had not only agreed to, but the same bond holder attorneys had actually written. The order was also stayed to give the ( state name removed ) appeals courts an opportunity to review the decision. The ( state name removed ) tiral was completed long before the other state court cases and before the federal court cases relating to these same bonds.

This case had huge political implications. If the ( state name removed ) utilities were found responsible, and the other states were not, every utility in ( state name removed ) would go bankrupt and be taken over by the bond holders, with skyrocketing electric rates. New York investment banks were also threatening to raise interest rates on all public and private entities seeking bond financing if "( state name removed ) was a place where the courts allowed people to avoid paying valid debts".

This judgement was stayed pending review by an ( state name removed ) state appeals court. Shortly thereafter the appeals court reversed the judgment saying that ( state name removed ) citizens and corporations had a moral duty to pay their debts and finding some legal justification for such an opinion. But again the judgement was stayed pending review by the ( state name removed ) State Supreme court.

The ( state name removed ) Supreme Court accepted the case for review and then simply sat on it.

This was the point at which I heard the story.

My brother in-law also predicted exactly what would be done by the Chief Justice of the ( state named removed ) Supreme Court:

The ( state name removed ) Chief Justice, was a "young guy" ( Baby Boomer ) who was "a good politician", but a ...

The state supreme court sat on the case without ruling until the other cases had worked there way through the state courts of the other states and also worked it's way into the federal courts.

The eventual result was that the federal courts agreed with the original judgement by the silent generation judge.

The ( state name removed ) Supreme Court then reviewed the appeals court decision, agreed that ( state name removed ) paid it's debts and affirmed the appeals court reversal of the original silent generation judgment, but then noted that Federal Courts had blocked the Oregon courts from enforcing this judgment so the bond holders needed to continue any collection efforts in the federal courts.

This result was the exact result my brother in-law predicted the Chief Justice of the state Supreme Court would achieve.

I would suggest that the Baby Boomer State Supreme Court Justice and Justice Roberts, who is also a Baby Boomer, both orchestrated a political decision that achieved a political result they desired, but did not follow the law. Unlike Generation Xers, however, they did it in a way that was legally defensible, even if the ethics and morality of their methods could be questioned.

[Marc]

Great anecdote and analysis, Reality Check, on how jurists' decisions may be influenced by their generational archetype. I think that what you had to say regarding US Supreme Court Chief Justice Roberts particularly makes sense, even if none of us can ever truly know what was going on in his mind in regards to the Obamacare decision.

As an addition to this, I respectfully feel that one could also look at Obama himself in regards to how he got Obamacare through Congress (and passed in a way that was likely to pass muster with the Supreme Court). Yes, there was, well, a little bit of the "Chicago way" invoked in how he used a balance of caution and chutzpah to do it, which I feel is an X'er hallmark. Also, I agree with John that there is a potential huge flaw in Obamacare via wage-price controls, but what I respectfully feel was key here was in getting this slippery octopus passed and validated: the wage-price issues will be dealt with (i.e., relaxed) as needed in a politically workable way in the near future, I feel, in order to make Obamacare "work." Yes, once again, it took an X'er to get the big, intractable job done, even if a lot of people curse it or just don't believe it

Thanks for sharing! —Best regards, Marc