Menu
Browse Options
Rabbinical Cartel Ought to Face Antitrust Scrutiny

During this past couple of years, my friend and colleague Barak Richman of the Duke law school has made a small cottage industry of pissing off organized Judaism.  Himself newly the president of a synagogue in North Carolina, he turned his frustrating experience in hiring a new rabbi into a study of the antitrust treatment of collusive or exclusionary practices that happen to involve religious officials.  His much discussed paper on the topic is forthcoming in the Pepperdine Law Review, and it has lately gotten some pretty high-profile attention

Well, the rabbis have noticed.  Personally, I think they ought to face antitrust scrutiny.  Based on their protestations so far, I think they misunderstand antitrust and its application to non-profit sectors, and I happen to think that even the First Amendment instincts on which many people find sympathy for them should not bar antitrust scrutiny.  So I thought I would take a moment to reply to a recent posting they made. 

“Professor Richman,” they say, “incorrectly attempts to apply antitrust concepts intended for the business marketplace to a religious movement.”  (Go figure.  As if in 120 years there has ever been an antitrust defendant that didn’t have an argument that antitrust didn’t apply to it.) 

To their credit, the rabbis discovered a choice quote from John Sherman.  To them, it shows that “churches are not covered under this nation’s antitrust laws.”  In Senate floor debate, in the course of responding to a long series of proffered amendments, Sherman said this [21 Cong.Rec. 2658-59 (1890)]: 

I do not see any reason for [exempting] temperance societies any more than churches or school-houses or any other kind of moral or educational associations that may be organized. Such an association is not in any sense a combination or arrangement made to interfere with interstate commerce.

Admittedly, this was a good catch, showing presumably that the rabbis have got an antitrust lawyer of their own.

Perhaps not an especially good one, though. 

Using the quote is like selectively relying on Old Testament moral protocols; some of them seem to have modern relevance, until you notice that some others say things like when and how to execute adulterers and rebellious children.  Sherman states his prediction that “churches . . . school-houses or any other kind of moral or educational associations” would be excluded from the Sherman Act.  But “school-houses” and “educational associations” emphatically are not excluded from the Sherman Act, as the U.S. Supreme Court has held in a widely respected opinion, NCAA v. Board of Regents of the University of Oklahoma [468 US 85, (CCH) 1984-2 Trade Cases ¶66,139]. (See also the celebrated United States v. Brown University, 5 F.3d 658, (CCH) 1993-2 Trade Cases ¶70,358 (3d Cir. 1993)).

But put aside that half of Sherman’s prediction of how the law would be applied has already proven wrong.  His reason for thinking that temperance societies, churches and school-houses would be exempt from antitrust was not their identities or status; it was the kind of conduct he thought they ordinarily engaged in, as of 1890.  As he said,  “[s]uch an association is not in any sense a combination or arrangement made to interfere with interstate commerce . . . .”  But what if a temperance society or a school or some such thing did interfere in commerce—for example, what if a religious order established a publishing company?  Is the sale of books exempt when undertaken by a church?  Pat Wald, who was one of the country’s most distinguished judges, and both the spouse and parent of eminent antitrust lawyers, didn’t think so.  Costello Pub. Co. v. Rotelle, 670 F.2d 1035, (CCH) 1981-2 Trade Cases ¶64,352 (D.C. Cir. 1981).  What about the many religious universities that exchange education for tuition, and therefore are no more exempt from antitrust than Brown University or the University of Oklahoma (see cases cited above)?  What about certifications of restaurants or food manufacturers as kosher or halal?  And, at least in a non-hierarchical organization like Judaism, in which clerics are not employees of a central church hierarchy, what about restraints on hiring and salary?

Finally, observe this.  Sherman here was reacting to an amendment that would have specifically exempted temperance societies from his bill.  The one issue he actually acutely considered was the status of temperance societies, which boycotted businesses and restrained trade in alcohol, but did so for moral reasons.  Those entities would in fact be exempt from modern antitrust, but not because they resemble churches.  It would be because boycotts and other anticompetitive group activity can be exempt under the First Amendment freedom of expression when they are genuinely “political” and not motivated by financial gain.  The leading case is NAACP v. Claiborne Hardware, 458 U.S. 886 (1982), as elaborated in Allied Tube and Superior Court Trial Lawyers. 

There also is the fact, incidentally, that the rabbis’ effort here is like one that the newspapers have been losing for about 100 years.  The rabbis say very generally, as have the newspapers, that because they are a peculiarly First Amendment-protected enterprise, they are wholly exempt from antitrust.  That has broadly failed in the case of the press.  See, e.g., Cohen v. Cowles Media Co., 501 U.S. 663, 670 (1991) ([t]he publisher of a newspaper has no special immunity from the application of general laws. He has no special privilege to invade the rights and liberties of others.”).  I know, I know, I know, religion and the press are different, the press is a for-profit enterprise, yada, yada, yada.  I still expect the same desirable balancing of values that led to that result as to the press will lead courts to reject the kind of blanket antitrust immunity the rabbis seem to invoke.

In that light, consider the specific restraints Prof. Richman has criticized.  The organized rabbinate constrains the freedom of individual rabbis to interview for specific jobs, and the freedom of congregations to hire whom they like.  Barak collects evidence in his paper suggesting that restraints of this kind keep clerical salaries high, as if that weren’t already obvious. With respect, I think rabbinical organizations need to deal more realistically with the law and their likely relation to it.  They definitely should give up 120-year-old quotes and other random bits and pieces like the one above.

 

Print Friendly

About Christopher Sagers

Christopher Sagers is a Professor at Cleveland-Marshall College of Law. He has taught courses in Antitrust, Business Organizations, Law & Economics and Administrative Law. His scholarship focuses on antitrust and business regulation. Before joining the faculty, Professor Sagers practiced law for four years in Washington, D.C., first at Arnold & Porter and then at Shea & Gardner. View all posts by Christopher Sagers →
  • Brad Pollina

    Professor Sagers,

    I really enjoyed your article. I am a 3L student at NYU interested in antitrust and was wondering if you are of the view that the arrangements you and Professor Richman speak of ought to be declared per se illegal? Or under cases like NCAA, do you think they deserve a Rule of Reason analysis because in this area, some restraints may be necessary and per se condemnation is inappropriate. Further, under the Rule of Reason, how do you think courts would deal with quality-based arguments (e.g., the arrangement ensures only rabbis of the “best quality” or best pedigree are placed in synagogues). Justice Souter’s opinion in California Dental seems to indicate such arguments have gained traction and may be counted as pro-competitive justifications.

    Many thanks in advance for your thoughts.

    Brad Pollina

  • Chris Sagers

    Hi Brad!
    I think it’s a hard question, because on the one hand one has to have sympathy for the religious order, for obvious reasons.

    But on the other hand, if there is one clear rule in antitrust it is that you cannot defend against liability by arguing that some value other than competition is served by your conduct. E.g., if the Rabbinical Assembly’s restraints really are subject to antitrust at all, they cannot be defended by saying that they are needed for theological reasons. (E.g., I do not believe salary and hiring restraints could be justified by saying they are necessary to preserve the theological purity of Conservative Judaism.) They have to be defended as pro-competitive, meaning that they reduce prices (here, they plainly do not), increase output (ditto), or lead to innovation or quality improvements (this seems at least more plausible but I doubt that naked price and output restraints will be held to do so). And, indeed, the Supreme Court itself has already held that if a restraint would otherwise be per se illegal, it cannot be given rule of reason treatment in order to respect First Amendment values. The Court so held in Superior Court Trial Lawyers.

    As a separate issue, I would feel much better about liability if it were clear that the Rabbinical Assembly could face only injunctive and not monetary relief, but there is no rule in American antitrust that money damages are not available because a particular defendant is sympathetic.

    So I think it’s hard. But I also think they’ve kind of engaged in legally risky conduct on the unsafe assumption that antitrust did not apply, and harms have resulted of the kind that antitrust is meant to remedy.

    I think it’s useful to remember a distinction that Barak has stressed–the restraints in this particular case are not imposed in a religion that is organized by a central hierarchy that itself employs the individual clerics. This whole scenario would seem different were that the case.

Contributors, Authors, Books, & More...