When The Court Said Congress Could Regulate "Inactivity"

Most Democrats are familiar with the story of FDR's battles with the Supreme Court regarding the constitutionality of his New Deal legislation. In 1937, the Court reversed course and recognized the Commerce power as empowering the Congress to enact the New Deal legislation.

In discussing the constitutionality of the individual mandate in the Affordable Care Act, much has been made of the supposed unprecedented nature of the regulation of "inactivity." I have found the argument to be so specious (particularly when one considers the power conferred by the Necessary and Proper Clause), that I have devoted little time to rebutting this argument. But in passing on another subject, I reread NLRB v. Jones & Laughlin Steel, 301 US Reports 1 (1937), the case that began the the "switch in time saves 9" process. A review of the case is instructive. Follow to the other side for the discussion.

Jones & Laughlin Steel decided the constitutionality of the National Labor Relations Act of 1935. Under the NLRA, Jones & Laughlin Steel were charged with unfair labor practices. Jones & Laughlin Steel challenged the constitutionality of the NLRA, arguing it exceeded Congress' Commerce power. The Court rejected the challenge:

We think it clear that the National Labor Relations Act may be construed so as to operate within the sphere of constitutional authority. The jurisdiction conferred upon the Board, and invoked in this instance, is found in section 10(a), 29 U.S.C.A. 160(a), which provides:

'Sec. 10(a). The Board is empowered, as hereinafter provided, to prevent any person from engaging in any unfair labor practice (listed in section 8 (section 158)) affecting commerce.'[...]:

[...]'affecting commerce' section 2(7), 29 U.S.C.A. 152(7):

'The term 'affecting commerce' means in commerce, or burdening or obstructing commerce or the free flow of commerce, or having led or tending to lead to a labor dispute burdening or obstructing commerce or the free flow of commerce.'

This definition is one of exclusion as well as inclusion. [...] It purports to reach only what may be deemed to burden or obstruct that commerce and, thus qualified, it must be construed as contemplating the exercise of control within constitutional bounds. It is a familiar principle that acts which directly burden or obstruct interstate or foreign commerce, or its free flow, are within the reach of the congressional power. [...] It is the effect upon commerce, not the source of the injury, which is the criterion. [...]

[...] Burdens and obstructions may be due to injurious action springing from other sources. The fundamental principle is that the power to regulate commerce is the power to enact 'all appropriate legislation' for its 'protection or advancement' (The Daniel Ball, 10 Wall. 557, 564); to adopt measures 'to promote its growth and insure its safety' (County of Mobile v. Kimball, 102 U.S. 691, 696 , 697 S.); 'to foster, protect, control, and restrain.' (Second Employers' Liability Cases, supra, 223 U.S. 1 , at page 47, 32 S.Ct. 169, 174, 38 L.R.A.(N.S.) 44). See Texas & N.O.R. Co. v. Railway & S.S. Clerks, supra. That power is plenary and may be exerted to protect interstate commerce 'no matter what the source of the dangers which threaten it.' Second Employers' Liability Cases, 223 U.S. 1 , at page 51, 32 S.Ct. 169, 176, 38 L.R.A.( N.S.) 44.

(Emphasis supplied.) Some would argue that the Court is merely declaring that regulation of activity is permitted by the Constitution according to these passage. I would disagree - "no matter what the source" seems fairly conclusive to me. But we need not speculate. For the Court continued:

Experience has abundantly demonstrated that the recognition of the right of employees to self-organization and to have representatives of their own choosing for the purpose of collective bargaining is often an essential condition of industrial peace. Refusal to confer and negotiate has been one of the most prolific causes of strife. [... E]xperience has shown that before the amendment, of 1934, of the Railway Labor Act, 'when there was no dispute as to the organizations authorized to represent the employees, and when there was willingness of the employer to meet such representative for a discussion of their grievances, amicable adjustment of differences had generally followed and strikes had been avoided.

(Emphasis supplied.) "Refusal to negotiate and confer." To wit, inactivity. The NLRA imposed upon covered employers the duty to "negotiate and confer" with the chosen collective bargaining representatives of employees:

The provision of section 9(a)10 that representatives, for the purpose of collective bargaining, of the majority of the employees in an appropriate unit shall be the exclusive representatives of all the employees in that unit, imposes upon the respondent only the duty of conferring and negotiating with the authorized representatives of its employees for the purpose of settling a labor dispute. This provision has its analogue in section 2, Ninth, of the Railway Labor Act, as amended (45 U.S.C.A. 152, subd. 9), which was under consideration in Virginian Railway Co. v. System Federation No. 40, supra. The decree which we affirmed in that case required the railway company to treat with the representative chosen by the employees and also to refrain from entering into collective labor agreements with any one other than their true representative as ascertained in accordance with the provisions of the act. We said that the obligation to treat with the true representative was exclusive and hence imposed the negative duty to treat with no other.

(Emphasis supplied.) Some would argue that the distinction with the individual mandate is that the individual mandate requires "agreement" for the purchase of health insurance. Such an argument would concede that the Commerce power can in fact reach "inactivity," but that it can not require forced "agreement." This is a fallacious argument as to the Commerce power. Indeed, Jones & Laughlin Steel did not raise the argument as a challenge to the Commerce power, but as a violation of its substantive due process right to "liberty of contract." The Jones & Laughlin Steel Court stated:

Fifth. The Means Which the Act Employs.-Questions under the Due Process Clause and Other Constitutional Restrictions.-Respondent asserts its right to conduct its business in an orderly manner without being subjected to arbitrary restraints. [. . .] The act does not compel agreements between employers and employees. It does not compel any agreement whatever.

(Emphasis supplied.) In the ACA case before the Court, there is no substantive due process "liberty of contract" challenge. Nor does the mandate actually require "agreement" to purchase health insurance. ACA imposes a $500 "shared responsibility" penalty on non-exempt persons who do not secure heath insurance.

As Jones & Laughlin Steel demonstrates, the "activity/inactivity" distinction is specious and unprecedented. The hidden argument, one that has long been rejected by the Court, is in fact the Lochner Era Substantive Due Process "liberty of contract" argument.

The Commerce Clause, as consistently interpreted by the Supreme Court, empowers the Congress to enact the individual mandate and penalty. To rule otherwise would be a radical, extreme and extraordinary decision by the current Supreme Court.

Speaking for me only

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    Why, oh why, couldn't the Solicitor General (5.00 / 1) (#1)
    by oculus on Wed Apr 04, 2012 at 10:20:05 AM EST
    say this?

    It seemed to me that the (5.00 / 2) (#2)
    by KeysDan on Wed Apr 04, 2012 at 10:52:42 AM EST
    hapless Mr. Verrilli was arguing the ACA case with more than one eye to cases of the future, rather than to the one before the Court.  Not having a good enough grasp of health care and its uniqueness seemed to hamper his arguments on limiting principles and possible applications to other industries. Justice Ginsberg helped him out, but he allowed the notion of forcing individuals into the stream of commerce trump regulation of economic behavior already underway.  BTD's arguments are very persuasive and, it is agreed, would have changed the course of the argument in my view.

    The rationale jumps over a significant point (5.00 / 3) (#6)
    by BTAL on Wed Apr 04, 2012 at 11:49:23 AM EST
    In the NLRA case, there was an existing relationship between the employer and the employees/unions.  In the ACA scenario, such an existing relationship does not previously exist.  

    Using the highlighted "Refusal to confer" and "duty to confer" is based on the previously established contractual relationship.  

    There was no collective bargaining relationship (none / 0) (#8)
    by Big Tent Democrat on Wed Apr 04, 2012 at 12:04:43 PM EST
    But there were at least one if not two (none / 0) (#10)
    by BTAL on Wed Apr 04, 2012 at 01:54:16 PM EST
    existing relationships.  The employer/employee relationship and the employees/union relationship.  The union representing their client based on an existing contract/relationship.  Same as an employer negotiating with an contracted attorney.

    No (5.00 / 1) (#17)
    by Big Tent Democrat on Wed Apr 04, 2012 at 04:00:25 PM EST
    there was no union-employer  relationship. It was mandated by Congress.

    Read my comment again (5.00 / 1) (#18)
    by BTAL on Wed Apr 04, 2012 at 04:11:59 PM EST
    I never stated there was a employer-union relationship.  

    Regardless, there were established relationships, both directly and via the employee-union so NRLB nor SCOTUS forced one to be created from whole cloth.


    If the supreme court really is flirting. . . (5.00 / 1) (#40)
    by RickTaylor on Thu Apr 05, 2012 at 11:20:28 PM EST
    with a radical re-interpretation of the commerce clause that would have such broad implications, then I think it's good if the President says something about it before they make a decision, especially as his comments were mild.

    Personally I suspect the reason conservatives reacted so strongly is on some level, they know he's right when he chides them for their hypocrisy on "judicial activism." Rather than address the point, they get the smelling salts and go to the feinting couch because the President would actually point out something that's actually apparent. But evidently, it's fine for the supreme court to flirt with a radical re-interpretation of the commerce clause, but completely out of bounds for the President to remark this would be a bad idea and so he doesn't expect them to make such a ruling. The sin is not the supreme court potentially making an indefensible highly partisan ruling; the sin is in a Democrat pointing out it would be an indefensible partisan ruling.

    Regarding this part (none / 0) (#3)
    by TeresaInSnow2 on Wed Apr 04, 2012 at 11:21:41 AM EST
    (Emphasis supplied.) In the ACA case before the Court, there is no substantive due process "liberty of contract" challenge. Nor does the mandate actually require "agreement" to purchase health insurance. ACA imposes a $500 "shared responsibility" penalty on non-exempt persons who do not secure heath insurance.

    Um, that's an inaccurate number.

    From Aetna.  Unfortunately, Googling, I couldn't find the same info from ACA.  Are they attempting to hide it?  Anyway.

    Aetna's words:

    What is the penalty for noncompliance?

    The penalty is the greater of:

    For 2014, $95 per uninsured person or 1 percent of household income over the filing threshold,
    *For 2015, $325 per uninsured person or 2 percent of household income over the filing threshold, and
    *For 2016 and beyond, $695 per uninsured person or 2.5 percent of household income over the filing threshold.
    There is a family cap on the flat dollar amount (but not the percentage of income test) of 300 percent, and the overall penalty is capped at the national average premium of a bronze level plan purchases through an exchange.  For individuals under 18 years old, the applicable per person penalty is one-half of the amounts listed above.

    Beginning in 2017, the penalties will be increased by the cost-of-living adjustment.

    Me again.

    Essentially if you don't meet the government standards of poverty outlined in the law, you are liable for up to the cost of the bronze level insurance plan depending on income.  In effect, yes, the mandate *requires agreement to purchase insurance, at least for some people.  In those cases, if you don't buy the insurance, you pay an equal penalty.

    I'm not fluent in legaleze and thus I can't really analyze your arguments.  But your minimization of the actual cost of the mandate to an individual or family makes me wonder what else you've minimized.  It would be interesting to read your self-critique of this post.  In the IT industry, when we do code reviews the idea is to flush out the weaknesses.  It would be interesting to flush out the weaknesses in this.

    Oops (none / 0) (#4)
    by TeresaInSnow2 on Wed Apr 04, 2012 at 11:22:19 AM EST
    I broke the links.  Preview is my friend.  I didn't mean for everything to be bold.

    I've seen the (none / 0) (#5)
    by jbindc on Wed Apr 04, 2012 at 11:25:31 AM EST
    $695 or 2.5% (whichever is higher) too.

    I believe that is correct.


    Thanks for the correction (none / 0) (#9)
    by Big Tent Democrat on Wed Apr 04, 2012 at 12:05:08 PM EST
    I do not think it affects the legal points.

    I appreciate you taking the time to break down (none / 0) (#7)
    by Slado on Wed Apr 04, 2012 at 11:56:39 AM EST
    the supporting legal argument.

    I've read the inverse on the conservative side and I still find it more convincing but your analysis is solid and appreciated.  I obviously am biased.

    All that said I still think it will be 5-4 against the mandate for no other reason than Obama took a shot at Kennedy and the conservatives after the Citizens United decision.  

    I am constantly amazed at the ability of our president to act the fool when discussing what should be his expertise, namely the constitution.

    Yesterday he tried to walk back his remarks but why did he even make them in the first place?  I thought he was a law professor after all?

    So, in 1937 in a 5-4 decision that (none / 0) (#11)
    by me only on Wed Apr 04, 2012 at 01:58:23 PM EST
    reversed the lower courts ruling was not "unprecedented," but a 2012 5-4 decision, saying, well they got it wrong in 1937 would be unprecedented.

    Bah.  Just like the current congress can't bind a future Congress, the Supreme Court get a second crack at it.  Otherwise opposing the death penalty in the Supreme Court would be useless.  They already decided that it was Constitutional.

    But unlike legislative bodies, the ... (5.00 / 2) (#12)
    by Donald from Hawaii on Wed Apr 04, 2012 at 03:12:48 PM EST
    ... judiciary is nominally bound by prior legal precedent when formulating an opinion. While Congress is free to amend or repeal established federal law as its members may see fit, federal appellate judges and Supreme Court justices should not be in the habit of unilaterally setting aside established case law to render a decision striking down federal on the basis of personal whim.

    That's what makes this particular conservative SCOTUS under John Roberts so scary. In reading the transcripts of the ACA debate, it's pretty clear to me that at some of the justices weren't even fully informed regarding the particulars of the legislation, and further, didn't seem to care.

    Take Justice Scalia's disparaging reference during oral arguments to the "Cornhusker Kickback," for example. Congress and legislatures have long reserved for themselves the right to determine their own rules and standards regarding how they'll deliberate and conduct their business. And it's long been said that the development of legislation is like sausage-making, in that you don't necessarily want to see the gory details.

    But it should be noted that the so-called "Cornhusker Kickback," an increase in the amount of federal Medicaid appropriations for the State of Nebraska, never made into the final version, and is thus not part of the law. What Ben Nelson's colleagues offered him legislatively in exchange for his affirmative vote on a early Senate draft of ACA is strcitly an internal matter, and it's none of SCOTUS's business.

    Therefore, I believe that not only was Justice Scalia was clearly out of line by implying that his forthcoming vote to strike down ACA may be based in part upon his personal view regarding the "sausage-making" that went into it, he's setting a rather dangerous precedent by presuming to influence or interfere in the autonomous affairs of the legislative branch of government.

    Unless Sen. Nelson was offered a personal quid pro quo, i.e., a bribe, in exchange for his vote on ACA (which would constitute a crime), the Supreme Court justices and the fedral judiciary should not concern themselves with the propriety of the deal cut by Nelson and his Democratic colleagues, lest they violate the doctrine of separation of powers established by the U.S. Constitution.

    Evaluation and final judgment regarding the performance of lawmakers is the sole province of the electorate that sends its representatives to the Capitol, and not the realm of the judiciary.



    To be fair (5.00 / 1) (#19)
    by jbindc on Wed Apr 04, 2012 at 04:27:41 PM EST
    Many members of Congress couldn't be bothered to read thd bill either - before they voted on it and made it the law.

    That happens (5.00 / 1) (#20)
    by Zorba on Wed Apr 04, 2012 at 04:28:58 PM EST
    with a whole lot of bills they vote on.

    True, but (none / 0) (#23)
    by jbindc on Wed Apr 04, 2012 at 05:27:14 PM EST
    In this case, many of them admitted it.

    I think it's more egregious to vote on a multi thousand page bill that coukd have wide sweeping consequences than to ne a judge who makes a comment about it from the bench.

    You have no idea whether Scalia or any of thr justices read the bill (or more than those who voted on it at least).


    Well, one would hope that ... (5.00 / 2) (#24)
    by Donald from Hawaii on Wed Apr 04, 2012 at 08:45:29 PM EST
    ... the justices are at least familiar with both its provisions and how it's supposed to work, given that they're, you know, about to rule whether or not the law is constitutional!

    uh-oh . . . . (none / 0) (#25)
    by nycstray on Wed Apr 04, 2012 at 08:59:00 PM EST
    there's that word "hope" again . . .  ;)

    I know. (none / 0) (#26)
    by Donald from Hawaii on Wed Apr 04, 2012 at 09:04:04 PM EST
    It's not unlike the word "assume" -- rely on it too much, and it gets us in trouble.

    You know for sure they don't? (none / 0) (#27)
    by jbindc on Wed Apr 04, 2012 at 09:13:50 PM EST
    They could have just been asking questions to see how the parties would react.

    You have no idea what they do and don't know about the provisions or what they will know by the time they write their opinion.

    That assuming thing again, doncha know.....


    I never said any of that. (none / 0) (#28)
    by Donald from Hawaii on Wed Apr 04, 2012 at 10:25:07 PM EST
    I initially said that based upon my reading of the transcipts, it was apparent to me that:

    "[Some] of the justices weren't even fully informed regarding the particulars of the legislation, and further, didn't seem to care."

    And I then cited Justice Antonin Scalia's clearly disparaging reference to the "Cornhusker Kickback" during oral arguments to support my contention, by noting that it was never included in the final version of ACA as it was enacted. I think it's pretty clear from both the transcipts and his tone on the audio recordings that he was overtly hostile to the government's case.

    (Further, the crux of my expressed concern had to do with the constitutional doctrine of separation of powers and Justice Scalia's apparent willingness to wade into what is essentially a political argument, by deigning to question the internal process by which Congress fashioned the legislation. It's my opinion that unless one can demonstrate that a law has been broken and / or a crime committed, the internal rules and standards by which Congress conducts its deliberations are really none of the federal judiciary's concern from a legal standpoint.)

    You then commented that:

    "I think it's more egregious to vote on a multi thousand page bill that coukd have wide sweeping consequences than to ne a judge who makes a comment about it from the bench." (sic)

    I then replied that one would hope that the justices would be familiar with the law's provisions and its mechanics, given that they were prepared to rule on its constitutionality. That's not an assumption, but an observation.

    Further, I had also said earlier in a reply to you that if members of Congress hadn't bothered to read the bill before voting on it:

    "Then that's an issue for their respective constituents to take up with them when they run for re-election. It's not a proper criterion or basis for judges and justices to decide case law."

    Please don't put words in my mouth, for the apparent purpose of taking issue with something I never said in the first place.



    Then that's an issue for ... (5.00 / 0) (#22)
    by Donald from Hawaii on Wed Apr 04, 2012 at 04:44:51 PM EST
    ... their respective constituents to take up with them when they run for re-election. It's not a proper criterion or basis for judges and justices to decide case law.

    Oh, for crying out loud (none / 0) (#29)
    by gyrfalcon on Thu Apr 05, 2012 at 12:40:32 AM EST
    That's why they have this thing called "staff."  Governing the country is wildly more complicated than any legislator can possibly keep track of if he/she insists on reading every line of the legislation.  Perhaps it should be written more intelligibly to the non-lawyer, but that's not the way it's been done for a very long time.

    I want my reps. paying attention to the policy itself and the politics of enacting it, not reading this stuff line by line.


    Yes (5.00 / 1) (#30)
    by jbindc on Thu Apr 05, 2012 at 05:57:24 AM EST
    But when they vote on bills and still have no idea what the bill contains, then that is on them - not their staff. They are ultimately responsible.

    And it's also fine to say that they can be voted out in the next election, but by then the damage has been done.


    Justice Scalia not only disdained (none / 0) (#13)
    by oculus on Wed Apr 04, 2012 at 03:21:58 PM EST
    disdained reading the 2700 pp. bill, be also doesn't believe in reading legislative history.  

    You assume that the judiciary (none / 0) (#14)
    by me only on Wed Apr 04, 2012 at 03:30:05 PM EST
    should be bound by precedent, but the Constitution does not require that it be.

    Look, however you want to wrangle it, this is very similar to the problem facing Brown.  Plessy was the law of the land and the appellate courts followed it.  The Supreme Court made a bunch of hooey to say that they were not overturning Plessy, but they were.  (distinction w/o a difference)

    Under the system, it is fair to say that whatever the Supreme Court decides is constitution is constitution and little else.  There are no "super precedents."


    Brown developed a factual record... (5.00 / 1) (#31)
    by magster on Thu Apr 05, 2012 at 10:31:16 AM EST
    ... to show separate but equal was nothing more than a phrase that wasn't true in the real world. Just like the fallacy of gay marriage harms traditional marriage or is bad for kids, when put to the proof, the haters had nothing to offer.

    so... (none / 0) (#32)
    by magster on Thu Apr 05, 2012 at 10:33:05 AM EST
    the mandate has no real world effect, for better or worse by which a judge or justice can measure the mandate's constitutional argument. The case isn't ripe. It's just political philosophy argument.

    The burden of proof (5.00 / 2) (#39)
    by Peter G on Thu Apr 05, 2012 at 02:25:24 PM EST
    with respect to a challenge to the constitutionality of a duly enacted statute is on the challengers, not on Congress. It's not "the mandate's constitutional argument" that might require evidentiary support; that shoe is on the other foot. In this respect, the analogy to Brown is imperfect.  There, the plaintiffs were challenging the federal constitutionality of state and local laws.  The evidence presented at trial in Brown and related cases was not to justify overturning Plessy necessarily, but to show that segregated schools, while "separate," were not "equal" in their educational impact on black children, and could never be.  That's a factual proposition, which the Supreme Court agreed the NAACP Legal Defense Fund had proven.

    If it was so clear cut (none / 0) (#15)
    by Slado on Wed Apr 04, 2012 at 03:35:42 PM EST
    We wouldn't be here.

    So Scalia did a little grandstanding.  

    Sounds like a certain president I know recently in the rose garden throwing a hissy fit and 2 years ago throwing a similar one at the state of the union.  Guess what, politics isn't beanbag.

    Don't look for excuses why ACA might fail.   If it fails it is because a majority of the court feels the legislative branch abused the commerce clause.

    Plain and simple.


    Excuse me, but Supreme Court justices ... (5.00 / 3) (#21)
    by Donald from Hawaii on Wed Apr 04, 2012 at 04:39:53 PM EST
    Slado: "So Scalia did a little grandstanding. [...] Guess what, politics isn't beanbag."

    ... and federal judges aren't politicians. They enjoy lifetime appointment to the bench, and their function is to interpret the law and provide guidance when there is clear legal disagreement or dispute regarding its meaning or intent. They shouldn't be interfering in the political process, resist the temptation to insert themselves into purely political disputes, as the ACA clearly is.

    Most especially, federal judges and Supreme Court justices should not take up causes or cases based upon political favoritism or personal calculations, nor should they expressly tailor their decisions to meet the political expediency of a given moment.


    PFFFFLLLL (none / 0) (#38)
    by me only on Thu Apr 05, 2012 at 01:43:54 PM EST
    John Roberts served in the AG office.

    Elena Kagan was solicitor general.

    Samuel Alito was an assistant US Attorney.

    Stephen Breyer was an assistant to the United States Assistant Attorney General for Antitrust and an assistant special prosecutor on the Watergate Special Prosecution Force. He was a special counsel to the U.S. Senate Committee on the Judiciary from 1He worked closely with the chairman of the committee, Senator Edward M. Kennedy, to pass the Airline Deregulation Act that closed the Civil Aeronautics Board.

    Antonin Scalia was an assistant attorney general.

    Anthony Kennedy helped Reagan draft tax proposals for California.

    Clarence Thomas was a legislative assistant to a US Senator and an assistant Secretary for Civil Rights at the US Department of Education.

    Yeah, but other than that, they are not politicians, right?


    And although she is no longer there (none / 0) (#41)
    by jbindc on Fri Apr 06, 2012 at 09:48:25 AM EST
    Sandra Day O'Connor was in the state legislature in Arizona as an elected representative before she became a judge.

    And many states elect local, city, county, appeals, and supreme court judges as well.

    They are ALL politicians.


    Yoikes! (none / 0) (#16)
    by sj on Wed Apr 04, 2012 at 03:52:28 PM EST
    I agree with you

    I've appreciated the legal analysis here, (none / 0) (#33)
    by ruffian on Thu Apr 05, 2012 at 10:58:43 AM EST
    some of which I can follow. But I have a question about the "switch in time saves 9" process. Is that:

    a) a legal doctrine related to the 9 SCOTUS members

    b) a typo of the "a stitch in time saves 9' old saying

    c) a failed Mitt Romney campaign slogan

    None of the above (none / 0) (#34)
    by CoralGables on Thu Apr 05, 2012 at 11:18:03 AM EST
    would be the answer.

    but I like C.


    An interesting bedtime read (none / 0) (#35)
    by CoralGables on Thu Apr 05, 2012 at 11:21:01 AM EST
    PS (none / 0) (#36)
    by CoralGables on Thu Apr 05, 2012 at 11:24:35 AM EST
    Don't dive in if you prefer the wikipedia style approach.

    thank you - interesting! (none / 0) (#37)
    by ruffian on Thu Apr 05, 2012 at 11:34:16 AM EST
    Will make for afternoon break reading - the stuff I have to read at work is a lot more boring than that, believe me.