Response to Douthat on the Death Penalty

In today's New York Times, Ross Douthat argues that we should focus controversy over Troy Davis on the broken mechanics of the justice system, rather than simply giving up on the death penalty and its underlying problems.  According to Douthat, the problem with the death penalty is not that it is immoral, but that it is imperfectly implemented, and our response to its imperfections should be to tweak.  Non-death penalty offenders would benefit from reforms as well, in amounts that far exceed the harm caused  by a few erroneous executions.

The argument is not novel, and it has an intuitive appeal.  Wouldn't it be nice if we could have a justice system we trusted with "life and death," rather than resign ourselves to failure?  It would indeed be nice, but its not realistic and its not worth the cost. 

In 1972, the Supreme Court in Furman v. Georgia struck down the death penalty based on fears it was applied inconsistently, with racial bias, and was inhumane.  These concerns are the same as those raised today by the Troy Davis execution.  In response to this death penalty moratorium, many states took Douthat's advice and enacted reforms to their death penalty systems to try to make them less arbitrary and inconsistent.  In particular, Georgia enacted a series of objective guidelines for enhancing a sentence to the death penalty.  The Supreme Court four years later, in Gregg v. Georgia, decided it would give Douthat's approach a try.

Since 1976, the Supreme Court has engaged in the business of setting guidelines and limitations on what sorts of death penalty systems could pass muster.  The Court has prohibited application of the death penalty to minors, the mentally retarded, or non-homicide offenders.  However, despite  the best intentions (sometimes) of lawmakers, jurors, and judges, the Court's experiment in regulating and reforming the death penalty has failed.  Its application continues to be tainted by racial prejudice, inadequate assistance of underpaid court-appointed counsel, politically-motivated elected judges, and congressional emasculation of the federal appellate process.  These problems cannot be fixed merely by writing op-eds about the problem.

The death penalty was re-instated in 1976 out of a naive hope that the death penalty could be reformed.  Since then, its problems have only amplified.  35 years is long enough to recognize that our underfunded justice system will not be reformed by placing faith in the majority's compassion for its least popular citizens.  If Douthat wants to pass laws reforming the justice system into one worthy of meting out capital punishment, then I might be persuaded to vote for it.  But until then, let's put down the shovel.

US Savings Ass'n v. Timbers of Inwood Forest Associates

Preliminarily, I find it interesting that Scalia uses legislative history at one point to justify claiming that "value of such creditor's interest" in § 506(a) means the "value of the collateral."  Scalia is one of the most ardent opponents of legislative history that one could find.  Within the same opinion, in fact, he says, "If it is at all relevant, the legislative history tends to subvert rather than support petitioner's thesis."  The only explanation I can offer for this rare instance of hypocrisy is that it is qualified by "if at all relevant," and it is 1988, perhaps before Scalia has fully embraced his "death to legislative history" schtick.

As for the case, the issue presented is whether the Bankruptcy Code's protections for secured creditors include post-petition interest.  The justification for post-petition interest is that, but for the automatic stay against foreclosure actions, the secured creditor would have been able to invest foreclosure proceeds.  By denying the right to foreclosure, the automatic stay deprives the secured creditor of its interest in the investment value of its collateral.  On the other hand, there are textual problems with interpreting the Code in this manner.  The phrase "interest in property" ordinarily means a property interest, which is not the same as a right to foreclose.  There are numerous other instances in the Code where the property interest is described as a prepetition claim, and interest payments are discussed in other contexts, implying that Congress knew how to provide interest payments in this situation if it wanted to be explicit in its intent.

I am reminded of the Rash case, where, once again, Scalia writes about valuation of collateral.  In Rash, the Court valued collateral based on its retail replacement costs, not on the price it would fetch in a foreclosure sale.  Perhaps this outcome is required for the sake of consistency with Timbers.  Interesting that the professor did not bring up Timbers in our discussion of Rash, though perhaps he did and I just wasn't paying attention.  Anyway, this significance of both Timbers and Rash appears to be that the Court views a secured creditor's interest in collateral as if it were already in the creditor's possession, and adequate protection of this possessory interest only requires protection of its prepetition market retail value.

Its easy to see why this approach rankles so many commentators and provides controversy for the classroom.  The ability to sell property in the market is only one of the rights that accompany property interest.  What about the right to use the property?  To invest it?  By depriving secured creditors of this aspect of their property rights, the Court puts secured creditors in a worse position than they would be in if there had been no automatic stay, which is supposedly one of the fundamental principles behind absolute priority in a Chapter 11 reorganization.  (This does not take into account price reductions inherent in foreclosure sales.)

Textual support in the Code for Scalia's interpretation:

• §506(b) provides postpetition interest only for an oversecured creditor.  Thus, adequate protection in §361 would conflict with §506(b) if it required interest payments for undersecured creditors.  Further, 506a provides creditors only with security in the value of the estate's interest in the collateral.  I think (Scalia doesn't discuss this) the estate's interest is not in a foreclosure value, nor could the estate's interest referred to here include the investment proceeds of the collateral, because the estate's use of the collateral is "products of the property of the estate," which is property of the estate specifically reserved for distribution among the creditors.  An undersecured deficiency claim must be shared pro-rata with the other general creditors of the estate.
• §552(a) says that a prepetition security interest does not reach property of the estate acquired postpetition.  But there is an exception only if the security agreement specifically calls for "proceeds, product, offspring, rents, or profits" of the collateral.  Thus, 552a seems only to grant postpetition interest if the interest comes in a form anticipated by the parties prepetition in the security agreement.
• 362d1 and d2 would be inconsistent with one another if postpetition interest were allowed, because an undersecured creditor would technically never have adequate protection, so why would it matter, in 362d2, that the collateral was not necessary for the reorganization?  (I'm a little shaky on this argument.)