Justice Ginsburg's Stay of Chrysler Sale Defends Rule of Law

The problem with politicians, whether Democrats or Republicans, is that when the law doesn't suit their objectives, they simply disregard it or try to find around the intent and spirit of the law. When the Democrats believed that the Bush Administration had illegally tortured prisoners at Guantanamo, they expressed moral outrage, demanded hearings and requested the Justice Department to investigate for possible criminal wrongdoing. And they were entirely right to do so despite Republican objections and Dick Cheney's recent attempts to finger the Democratic Congressional Leadership as completely aware of interrogation techniques being utilized there. That is the nature of a system where the law is supposed to mean something -- people are called to account for their actions under the law.

But for all the moral outraged expressed by Democrats concerning the Bush Administration's failure to adhere to "the rule of law", that outrage seemed have dissipated when the Obama Administration chose to abrogate contract law and the entire bankruptcy process in the Chrysler Chapter 11 proceedings. In that case, the President Obama and his Democratic cohorts had no problems labeling legitimate secured creditors as holdouts for a Government bailout and unwilling to make sacrifices commensurate with other creditors despite the fact that by contract they has bargained for a senior security interest in Chrysler's assets in exchange for billions of dollars of loans. Based on the comments and heavy-handed actions of the Obama Administration, unsecured bank debt and UAW claims should either be treated equally with the secured lenders (in the case of unsecured bank debt) or receive significantly better treatment in terms of significant stock ownership in the reorganized Chrysler (in the case of UAW debt). Despite the fact that the Bankruptcy Code and substantial legal precedent did not support or justify any of the proposals of the Obama Administration which, blatantly, trample on the priority rights of secured creditors, there has been virtual silence from the Congressional Democrats about adherence to the rule of law. Conversely, the Republican who generally supported Bush Administration interrogation techniques are outraged by the debasement of the law in the Chrysler case.

So what is the takeaway? Is the rule of law important to Democrats and Republicans all of the time or only when it suits their provincial interests. The evidence to date generally suggests the latter. That is what is particularly intriguing about Justice Ginsburg's decision to stay implementation of the Chrysler asset sale, at least for the moment. Justice Ginsburg is unquestionable a liberal member of the Supreme Court and was appointed to it by Bill Clinton, a Democratic president. Therefore, it cannot be argued that her issuance of a stay was politically motivated and simply a means to carry out the Republican agenda. While more details will certainly emerge in the coming days, her action indicates that perhaps further thought should be given to the rule of law as it pertains to the Chrysler case. That is not to suggest how she or the entire court might ultimately decide the question, but is should give pause to the Obama Administration as to the limits of Executive Branch not only with respect to Chrysler but also with respect to the General Motors bankruptcy.

Justice Ginsburg with the stroke of a pen has implicitly if not explicitly stood up for the system of checks and balances set forth in the U.S. Constitution. For the proper role of the courts is to ensure that the rule of law is upheld despite the expediencies of the political process. Moreover, events have been happening so rapidly that a time to reflect on the long-term legal ramifications of trouncing on longstanding legal rights of creditors and other stakeholders just because the politicians prefer to do it their way.

In a way it is startling that the Chrysler case had to end up before the Supreme Court because the lower courts lacked the fortitude to seriously tackle the obvious legal injustices being perpetuated. This is also quite disturbing because it indicates that President Obama, a constitutional lawyer himself, the Justice Department, the Treasury Department and the Democratic Congressional Leadership and the Judiciary Committees in both the House of Representative and the Senate were willing to sacrifice the rule of law to buttress their political objectives regardless of their nobility.

While it will be interesting to see how Justice Ginsburg and the Supreme Court resolve the stay and the pending appeal of the Chrysler sale order, none of us should feel comforted by the abuse of power at Guantanamo or in the Chrysler case. However, we can take some comfort in the fact that we do have a system of checks and balances between the branches of government and Justice Ginsburg apparently recognized that our very freedoms depend on the judiciary remaining independent and not swayed by the prevailing political winds. For in the end, adherence to the rule of law is all that prevents overreaching by the other separate but equal branches of government.