Fight the Power: Helping Harvard

By Alec Pruchnicki

The Trump administration’s holding back funding for grants, subsidies, and other government business contracts on the grounds that DEI (diversity, equity, inclusion) principles are a new form of intimidation and have become extensive. Some victims, such as Columbia University, have given into the administration’s demands (see the May 19 issue of New York Magazine), and others such as Harvard have decided to fight back in the courts. But these court cases are mostly defensive and if successful only get the aggrieved party back to what they should have received initially. I think the best defense is a good offense and since Trump has a history of doubling down when challenged we should learn from him and turn these defensive cases into a strong legal offense. I would suggest three tactics for us to use in courts: breach of contract, restraint of trade, and punitive damages.

A bedrock principle of business law is that contracts should be enforced. In 1810, the Supreme Court in the case of Fletcher v. Peck decided that if a contract itself is legally obtained it cannot be cancelled because of the criminality of one of the parties or a change in the political leaders who originally signed the contract. A contract is a contract. It also established that the Supreme Court could rule on such cases, even if the contracts were at the state level. When researchers at a university obtain a grant from the federal government, it is not sealed with a handshake. There are usually detailed obligations for the granting government agency and for the grant’s recipients. This is essentially a contract and one side, such as the government, should not be allowed to cancel it except on legal grounds and not just retroactive displeasure with DEI moral or practical principles.

According to most media accounts, the cases of Harvard and other universities are being argued based on first amendment free speech principles and the importance of academic freedom of private institutions. But if this is viewed as a business contract it might have significantly more weight.

The Sherman Antitrust Act of 1890 makes it illegal for businesses to conspire to restrict interstate trade (regulated by the federal government according to the Constitution) and undermine competition. But what if one of the conspirators is the federal government or individuals in the government including the president? Can this be considered a restraint of trade especially if done by executive order and not legislation of the same magnitude as the original Sherman Act? When Trump threatened to restrict federal business and contracts to legal and business firms that didn’t give in to his demands, he was potentially restricting trade and competition. The outrageous presidential immunity decision of the Supreme Court protects him from liability but as we know from recent behavior, what the Court gives the Court can reverse if there is a good reason.

Both contract and restraint of trade cases have an additional feature that can make them even more powerful. They both allow for punitive damages if the violations are egregious enough and we know from previous Trump court decisions that the right judge or jury can impose them. Punitive damages can also sometimes be massive. Many of Trump’s actions seem to be both unprecedented and egregious and can be subjected to damage decisions for the institutions or individuals who are injured. Of course, Trump himself might not be liable for these damages, but the federal government can, and there are enough right-wing deficit hawks in the Republican party who claim to be worried about excessive government expenditures to maybe start complaining. As the old saying goes, a billion dollars here, a billion there, and before you know it, you’re talking real money (attributed to Senator Everett Dirkson).

These countless cases are winding their way up to the Supreme Court. What’s more troubling is that they are going up to this Supreme Court which has frequently, although not always recently, shown a bias toward the Republican agenda and Trump’s behavioral excesses. But there is another bias that is at least as strong as these. Many recent decisions have been extremely pro-business and sometimes very much anti-labor and anti-public interest. Trump might not be around forever, but corporations will be, and they will benefit from strong court decisions. Both contract enforcement and restraint of trade violations can sometimes have significant impact on the conduct of business in the private sector and the Court has shown support for these types of decisions.

Trump’s authoritarian behavior and demands have been both excessive and often unprecedented. Opposition to them needs to follow established legal precedents but that doesn’t mean that we can’t use excessive and unprecedented defenses also. Business as usual might not be enough. Who knows, if some of these approaches are successful, especially if they come through with punitive awards, they might encourage other victims of Trump to stand up and fight harder. Maybe even Columbia. Fight the power (apologies to Public Enemy).