Showing papers in "University of Chicago Law Review in 2016"

Does Majority Voting Improve Board Accountability

Abstract: Directors have traditionally been elected by a plurality of the votes. In uncontested elections, this means that a candidate who receives even a single vote is elected. Because most director elections are uncontested, proponents of “shareholder democracy” have long decried the traditional plurality voting rule. Over the last decade, the move from plurality to majority voting for corporate directors has been

Corporate Governance Regulation through Nonprosecution

Abstract: Over the last decade, federal corporate criminal enforcement policy has undergone a significant transformation. Firms that commit crimes are no longer simply required to pay fines. Instead, prosecutors and firms enter into pretrial diversion agreements (PDAs). Prosecutors regularly use PDAs to impose mandates on firms creating new duties that alter firms’ internal operations or governance structures. This Article evaluates PDA mandates to determine whether and when prosecutors can appropriately use them to deter corporate crime. We find that mandates can be justified. But, contrary to DOJ policy favoring mandates for any firm with a deficient compliance program at the time of the crime, we find that mandates should be imposed more selectively. Specifically, mandates are only appropriate if a firm is plagued by “policing agency costs”—in that the firm’s managers did not act to deter or report wrongdoing because they benefitted personally from tolerating wrongdoing or from deficient corporate policing. We show that this policing agency cost justification provides guidance on how to reform federal policy to make appropriate use of mandates, guidance which reveals that many mandates are inappropriate. * Norma Z. Paige Professor of Law, New York University School of Law and George T. Lowy Professor of Law at New York University School of Law, respectively. We benefited from helpful comments from David Abrams, Cindy Alexander, Miriam Baer, Rachel Barkow, Jayne Barnard, Michal Barzuza, Samuel Buell, Oscar Couwenberg, Brandon Garrett, Edward Iacobucci, Louis Kaplow, Michael Klausner, Brett McDonnell, Mark Ramseyer, Eva Schliephake, Steven Shavell, Matthew Spitzer, Abraham Wickelgren, Josefien van Zeben, and participants at the Business Law Section of the Association of American Law Schools annual meeting, European Law and Economics Association annual meeting, and participants at workshops at Brooklyn Law School, University of California at Los Angeles School of Law, Columbia University School of Law, ETH Zurich, Harvard Law School, NYU School of Law, University of Pennsylvania Law School of Law, University of Pompeu Fabra, Queens Law School, Stanford Law School, University of Texas Law School Law and Economics Colloquium, University of Toronto Faculty of Law, University of Virginia School of Law, and University of Western Ontario Faculty of Law. We also would like to thank Brandon Garrett and Vic Khanna for sharing their data on PDAs which we compared to our own hand-collected dataset. We also thank Brandon Arnold, Rachel Lu Chen, Elias Debbas, Josh Levy, Reagan Lynch, Matt Mutino, Alice Phillips, Jared Roscoe, KyungEun Kimberly Won, and Donna Xu, for excellent research assistance, with special thanks to Tristan Favro, Katya Roze, and Cristina Vasile. We are grateful for the financial support of the D’Agostino/Greenberg Fund of New York University School of Law. CORPORATE GOVERNANCE REGULATION THROUGH NON-PROSECUTION

Working Themselves Impure: A Life Cycle Theory of Legal Theories

Abstract: Prescriptive legal theories have a tendency to cannibalize themselves. As they develop into schools of thought, they become not only increasingly complicated but also increasingly compromised, by their own normative lights. Maturation breeds adulteration. The theories work themselves impure.This Article identifies and diagnoses this evolutionary phenomenon. We develop a stylized model to explain the life cycle of certain particularly influential legal theories. We illustrate this life cycle through case studies of originalism, textualism, popular constitutionalism, and cost-benefit analysis, as well as a comparison with leading accounts of organizational and theoretical change in politics and science. And we argue that an appreciation of the life cycle counsels a reorientation of legal advocacy and critique. The most significant threats posed by a new legal theory do not come from its neglect of significant first-order values -- the usual focus of criticism -- for those values are apt to be incorporated into the theory. Rather, the deeper threats lie in the second- and third-order social, political, and ideological effects that the adulterated theory’s persistence may foster down the line.

What Is Gun Control? Direct Burdens, Incidental Burdens, and the Boundaries of the Second Amendment

Abstract: Particularly in places with few recognizable gun control laws, 'gun neutral" civil and criminal rules are an important but often-unnoticed basis for the legal regulation of guns. The burdens that these rules impose on the keeping and bearing of arms are at times significant, but they are also incidental, which raises hard questions about the boundaries between constitutional law, regulation, and legally enforceable private ordering. Does the Second Amendment apply to civil suits for trespass, negligence, and nuisance? Does the Amendment cover gun-neutral laws of general applicability like assault and disturbing the peace? In the course of addressing these practical questions and the broader conceptual challenges that they represent, this Article fashions analytic tools that may be useful to a wide range of constitutional problems. Language: en

Privacy-Privacy Tradeoffs

Abstract: Legal and policy debates about privacy revolve around conflicts between privacy and other goods But privacy also conflicts with itself Whenever securing privacy on one margin compromises privacy on another margin, a "privacy-privacy tradeoff" arisesThis Essay introduces the phenomenon of privacy-privacy tradeoffs, with particular attention to their role in National Security Agency (NSA) surveillance After explaining why these tradeoffs are pervasive in modern society and developing a typology, the Essay shows that many of the arguments made by the NSA's defenders appeal not only to a national security need but also to a privacy-privacy tradeoff An appreciation of these tradeoffs, the Essay contends, illuminates the structure and the stakes of debates over surveillance law specifically and privacy policy generally

A Fresh Look at Plausibility Pleading

Abstract: The plausibility pleading regime of Twombly and Iqbal has generated continuing controversy and concern over its effects on the ability of plaintiffs, particularly certain categories of civil rights plaintiffs, to bring cases in federal court. I assess the effects of plausibility pleading by undertaking a novel thought experiment: What would a plaintiff’s filing and pleading decisions look like in a world with no pleading standard at all? In other words, what if there were no motions to dismiss for failure to state a claim, and every filed case could reach discovery? I show that in this hypothetical world, with few exceptions plaintiffs file factually detailed, plausible complaints or do not file at all. In short, pleading standards rarely matter. Perhaps most surprisingly, this is true even for cases in which asymmetries of information favor the defendant. Plaintiffs’ attorneys, not judges, are the gatekeepers to court, and pleading practices are driven not by doctrine but by settlement strategy. This analysis generates empirical predictions, which find support in a wide range of qualitative (though hardly conclusive) evidence. Further, this thought experiment may turn the normative critique of Twombly and Iqbal on its head: plausibility pleading may advance, rather than undermine, the “liberal ethos” of the Federal Rules.

Cyberwar, International Politics, and Institutional Design

Abstract: In the United States, the breadth of the president’s warmaking authority has been governed by the Constitution, the Supreme Court’s jurisprudence, and, over time, historical practice; in short, the president’s powers are constrained by a well-developed body of US foreign relations law. But the prospect of a new kind of conflict — cyberwar — potentially challenges the existing regulatory regime, which rests on assumptions that are common to traditional, conventional war. For some, the complexities of cyberwar generate new foreign relations law questions about the president’s authority to engage in offensive cyberoperations, and they thus necessitate a new regulatory framework. For others, cyberwar is not meaningfully different from traditional war for purposes of foreign relations law, and the extant regime regulating the president is sufficient. As it currently stands, the debate about the scope of the president’s cyberwar authority turns on arguments about cyberwar’s similarity or dissimilarity to conventional war. This Essay argues that any claim about regulating the president’s authority to engage in cyberwar requires consideration of the United States’ cyberstrategy and the capacity and national interests of the United States’ cybercompetitors. For the United States to achieve its foreign policy goals in cyberspace, the president must navigate both the internal constraints from domestic law and the external constraints from international politics. Building on previous work, the Essay provides two models with which to understand internal and external constraints and their consequences on any potential cyberwar regulation. It contends that a frame-work that does not consider the complex relationship between the two types of constraints might result in a regulatory regime that leaves the president overconstrained and unable to achieve US cyberpolicy goals.

The Paradox of Access Justice, and Its Application to Mandatory Arbitration

Abstract: Equal Access is one of the most appealing and least contentious regulatory techniques in law’s repertoire. It aspires to give people even opportunity to utilize certain primary goods, and it does so by assuring openness — that access to these goods is not distorted by wealth or by privilege. But equal access often fails, because access and its benefits are deployed disproportionately by elites, yet paid for directly or indirectly by weaker groups. This article demonstrates the unintended and regressive cross-subsidy created by policies of access to information, compensation, insurance, and accommodations. It then examines the debate over access to courts, and the effect of mandatory arbitration agreements that limit such access. It demonstrates that access to courts is a benefit to the elite and of little value to weak consumers. Finally, it considers the effect of arbitration clauses on class actions, and whether weak consumers are potentially the indirect beneficiaries of class action litigation. This argument has theoretical merit, but it, too, is limited in ways that are often unappreciated.

Balancing Implied Fundamental Rights and Reliance Interests: A Framework for Limiting the Retroactive Effects of "Obergefell" in Property Cases

Abstract: On June 26, 2015, the Supreme Court held in Obergefell v Hodges1 that “the right to marry is a fundamental right inherent in the liberty of the person [ ] under the Due Process and Equal Protection Clauses of the Fourteenth Amendment.”2 The Court also held that states cannot withhold legal recognition of samesex marriages.3 The decision raises the following problem: Suppose that a couple was legally married before Obergefell in a state recognizing same-sex marriage (a former recognition state), either because they traveled to the recognition state for the sole purpose of getting married or resided there for a while before moving to a former nonrecognition state.4 For property rights purposes, at which date is the couple deemed married in the former nonrecognition state after Obergefell? If Obergefell applies retroactively, it should be from the actual date of marriage. If not, it should be from the date of the Obergefell decision.

The Dual-Grant Theory of Fair Use

Abstract: 2 INTRODUCTION 3 I. CURRENT UNDERSTANDINGS OF FAIR USE 9 A. THE MARKET FAILURE UNDERSTANDING OF FAIR USE 9 B. RECENT TRENDS IN FAIR USE CASE LAW 15 II. A NEW THEORY OF FAIR USE 19 A. THE ECONOMICS OF COPYRIGHT 21 B. THE ALLOCATION OF RIGHTS 24 III. A NEW DOCTRINE OF FAIR USE 28 A. THE EXTANT DOCTRINE OF FAIR USE 29 B. A PROPOSED NEW DOCTRINE OF FAIR USE 32 1. Two Steps and Four Factors 32 2. Privileged Uses 34 a. Political Speech 35 b. Truth-seeking 38 c. Criticism and Comment 43  Professor, Bar Ilan University Faculty of Law and University of San Diego School of Law.  Robert G. Fuller Jr. Professor of Law at the University of Pennsylvania School of Law and Professor at the Bar-Ilan University Faculty of Law. This Article greatly benefited from comments and criticisms by Larry Alexander, Shyamkrishna Balganesh, Brad Greenberg, Paul Heald, Roberta Kwall, Orly Lobel, Glynn Lunney, David McGowan, Joseph Miller, Lisa Ramsey, Guy Rub, Maimon Schwarzschild, Ted Sichelman, Steve Smith, Horacio Spector, Christian Turner, and Chris Wonnell, from participants in panels of the 2015 Intellectual Property Scholars Conference and the 2015 annual conferences of the Association for Law, Property and Society and the International Society for New Institutional Economics, and from excellent research assistance from Ananth Padmanabhan.

Racially Polarized Voting

Abstract: Whether voting is racially polarized has for the last generation been the linchpin question in vote dilution cases under the core, nationally applicable provision of the Voting Rights Act. The polarization test is supposed to be clear-cut (“manageable”), diagnostic of liability, and free of strong racial assumptions. Using evidence from a random sample of vote dilution cases, we argue that these objectives have not been realized in practice, and, further, that they cannot be realized under current conditions. The roots of the problem are twofold: (1) the widely shared belief that polarization determinations should be grounded on votes cast in actual elections, and (2) normative disagreement, often covert, about the meaning of racial vote dilution. We argue that the principal normative theories of vote dilution have conflicting implications for the racial polarization test. We also show that votes are only contingently related to the political preferences that the polarization inquiry is supposed to reveal, and, further, that the estimation of candidates’ vote shares by racial group from ballots cast in actual elections depends on racial homogeneity assumptions similar to those the Supreme Court has disavowed. Our analysis casts serious doubt on the notion — promoted in dicta by the Supreme Court and supported by prominent commentators — that courts should establish bright-line, vote-share cutoffs for “legally significant” racial polarization. The courts would do better to screen vote dilution claims using evidence of preference polarization derived from surveys, or non-preference evidence of minority political incorporation.

Civil Rights in a Desegregating America

Abstract: The law largely has overlooked one of the most important sociological developments of the last half-century: a sharp decline in residential segregation. In 1970, 80% of African Americans would have had to switch neighborhoods for blacks to be spread evenly across the typical metropolitan area. By 2010, this proportion was down to 55%, and was continuing to fall. Bringing this striking trend (and its causes) to the attention of the legal literature is my initial aim in this Article.My more fundamental goal, though, is to explore what desegregation means for the three bodies of civil rights law — housing discrimination, vote dilution, and school segregation — to which it is tied most closely. I first explain how all three bodies historically relied on segregation. Its perpetuation by housing practices led to disparate impact liability under the Fair Housing Act. It meant that minority groups were “geographically compact,” as required by the Voting Rights Act. And it contributed to the racially separated schools from which segregative intent was inferred in Brown and its progeny.I then argue that all of these doctrines are disrupted by desegregation. Fair Housing Act plaintiffs cannot win certain disparate impact suits if residential patterns are stably integrated. Nor can claimants under the Voting Rights Act satisfy the statute’s geographic compactness requirement. And desegregating homes usually result in desegregating schools, which in turn make illicit intent difficult to infer.Lastly, I offer some tentative thoughts about civil rights law in a less racially separated America. I am most optimistic about the Fair Housing Act. “Integrated and balanced living patterns” are among the statute’s aspirations, and it increasingly is achieving them. Conversely, I am most pessimistic about the Voting Rights Act. One of its objectives is minority representation, which is threatened when minorities are politically distinctive but spatially dispersed. And a mixed verdict seems in order for school desegregation law. Rising residential integration eventually should produce rising school integration. But it has not done so yet, and even when it does, this improvement may not reach schools’ other racial imbalances.

The Original Fourth Amendment

Abstract: The meaning of the rights enshrined in the Constitution provide a critical baseline for understanding the limits of government action — perhaps nowhere more so than in regard to the Fourth Amendment. At the time of the Founding, the Fourth Amendment prohibited the government from entering into any home, warehouse, or place of business, against the owner’s wishes, to search for or to seize persons, papers, and effects, absent a specific warrant. The only exception was when law enforcement or citizens were in active pursuit of a felon. Outside of that narrow circumstance, the government was prohibited from search and seizure absent approaching a magistrate and, under oath, providing evidence of the suspected offence and particularly describing the place to be searched, and persons or things to be seized.Scholars’ insistence that the Fourth Amendment does not entail a general protection against government entry into the home does more than just fail to appreciate the context. It contradicts the meaning of the text itself, which carefully lays out the conditions that must be met by the government before it may intrude on one’s person, papers, and effects. Reclaiming this meaning is essential for understanding the scope of the original Fourth Amendment.

The Business of Defense: Defense-Side Litigation Financing

Abstract: Imagine an entrepreneur starting a business: She has obtained the venture capital, developed the product, created the website, and started selling. Her balance sheet is slowly growing when she receives notice that a competitor has filed suit against her. The lawsuit alleges trademark infringement and unfair competition, and the plaintiff is seeking injunctive relief and damages in the millions. The entrepreneur panics. While she doubts that the lawsuit has strong merits, the cost of defending it would require her to use all of the venture capital financing she obtained, and she doubts her business could survive until the end of litigation.1 Where should she turn? She might consider turning to a new industry that is developing in the United States: defense-side litigation financing. In exchange for providing the financier a promised rate of return if the litigation is successful, the business can obtain funding to fight the lawsuit and transfer the risk, even if slight, of an unfavorable judgment. With the availability of defense-side financing, the business can continue growing while fighting the litigation. As the example above shows, defense-side financing can provide a valuable service by filling a risk management gap that has

Contract as Empowerment

Abstract: This Article offers a novel interpretation of contract law, which I call “Contract as Empowerment”. On this view, contract law is neither a mere mechanism to promote efficiency nor a mere reflection of any familiar moral norm — such as norms of promise keeping, property, or corrective justice. Contract law is instead a mechanism of empowerment: it empowers people to use legally enforceable promises as tools to influence other people’s actions and thereby meet a broad range of human needs and interests. It also empowers people in a special way, which reflects a moral ideal of equal respect for persons. This fact explains why contract law can produce genuine legal obligations and is not just a system of coercion. This Article introduces contract as empowerment and argues that it reflects an interpretation of contract with distinctive advantages over the alternatives. Contract as empowerment is an “interpretive” theory: it is simultaneously descriptive, explaining what contract law is, and normative, explaining what contract law should be. To support contract as empowerment’s interpretive credentials, I identify a core set of doctrines and puzzles that are particularly well suited to testing competing interpretations of contract. I argue that contract as empowerment is uniquely capable of harmonizing this entire constellation of doctrines while explaining the legally obligating force of contracts. Along the way, contract as empowerment offers (1) a more penetrating account of the expectation damages remedy than exists in the current literature; (2) a more compelling account of the consideration requirement; and (3) a concrete framework to determine the appropriate role of certain doctrines — like unconscionability — that appear to limit freedom of contract. The whole of this explanation is greater than the sum of its parts. Because of its harmonizing power, contract as empowerment demonstrates how a broad range of seemingly incompatible surface values in modern contract law can work together — each serving its own distinctive but partial role — to serve a more fundamental principle distinctive to contract. These surface values include the values of fidelity, autonomy, liberty, efficiency, fairness, trust, reliance and assurance. Although many people think that contract law must involve trade offs between these values, contract as empowerment suggests that tensions between them are not always real. So long as the complex system of rules that governs contracts is fashioned in the right way, these doctrines can work together to serve a deeper and normatively satisfying principle distinctive to contract. This framework can therefore be used to guide legal reform and identify places where market regulation is warranted by the principles of contract in many different contexts of exchange — from those involving consumer goods to labor, finance, credit, landlord-tenant, home mortgages and many others.

Pinning Down Subjective Valuations: A Well-Being-Analysis Approach to Eminent Domain

Abstract: This Comment provides an argument for applying a wellbeing-analysis approach to eminent domain compensation, discussing the inefficiencies that result from compensating individuals with only the fair market value of their properties and arguing that a well-being-analysis approach provides a way out of the practical compromises made in eminent domain jurisprudence. Although happiness regressions do not demonstrate the exact valuation that an individual has of her property, using a multiplier that reflects the average subjective premium generated by a happiness regression is consistent with value-of-life evidence, which uses information about others to estimate an average multiplier that ensures more-accurate damages. This Comment demonstrates that the BHPS data set, along with certain assumptions about why individuals move, implies that a wedge exists between the subjective valuation of an owned property and its fair market value. Not only does this wedge exist but it measures somewhere around or above 22 percent of fair market value. Given such a potentially large effect, this Comment aims to inspire future survey work with respect to individuals who are required to move. Such survey data would measure changes in happiness when the move—since it is due to eminent domain—is exogenous. For this reason, regression analyses based on such moves will provide even more-accurate estimates for the average undercompensation that occurs when individuals are paid only the fair market value of their properties in the context of eminent domain.

The Mutual Dependency of Force and Law in American Foreign Policy

Abstract: A successful American grand strategy requires a close integration of international and domestic institutions and practices. This Essay explores the vital interdependence of grand strategy and law, both international and domestic. First, it asks how the United States should formulate its foreign policy strategy by pointing to the three primary components that must be deployed in tandem to forge a successful American foreign policy—persuasion, inducements, and force. Second, this Essay shows that in light of the distribution of powers between the president and Congress, and within the executive branch, the execution of that strategy requires a high level of bipartisan consensus in favor of an approach that neither disclaims the use of American power nor solely relies on it. The soundness of this strategy is tested against the American experience in Iraq and elsewhere.

How the Fourth Amendment and the Separation of Powers Rise (and Fall) Together

Abstract: This Essay explores the purposive and functionalist parallelisms between the Fourth Amendment and the separation of powers. Not only do those two elements of the Constitution share a common ambition, they are also entangled in practical operation. The vindication of Fourth Amendment interests, however defined, depends on institutional differentiation between branches of government. That institutional predicate, however, has eroded over time. In its absence, new questions arise about how Fourth Amendment values are best implemented and whether the their realization is better attained by private rather than state action.

Do Patent Challenges Increase Competition

Abstract: As a general rule, judges and scholars believe settlement is a good thing. But for nearly a century, the Supreme Court has said that patent litigation is categorically different, since it offers the chance to increase competition by freeing the public from the burdens of a monopoly. Based on this theory, and in the hopes of seeing more patent litigation fought to completion, the Court has overturned long-standing common-law doctrines, declined to enforce otherwise-valid contracts, and — in the recent case of Federal Trade Commission v Actavis, Inc — subjected patent settlements to scrutiny under the antitrust laws. Similar reasoning has resulted in legislative initiatives to encourage patent disputes, including the regulatory bounty for challenging pharmaceutical patents included in the 1984 Hatch-Waxman Act and the administrative review procedures created by the 2011 America Invents Act. Moreover, scholars continue to call for reforms to provoke additional patent challenges, again asserting their supposed procompetitive benefits.This Article is the first to seriously scrutinize the claim that patent challenges lead to increased competition. It identifies a number of conditions that must hold for a patent challenge to provide this particular benefit, and evaluates the reasonableness of assuming that the procompetitive benefits of patent challenges are generally available. As it turns out, there are a number of ways these conditions can and regularly do fail. This Article synthesizes legal doctrine, recent empirical scholarship, and several novel case studies to identify categories of challenges in which the potential benefits for competition are smaller than previously thought or, in some cases, completely unavailable.This analysis has a number of implications for patent law and policy. First, it provides guidance for how the Patent Office should administer its new review authority under the America Invents Act. Second, it exposes weaknesses in judicially created policies intended to encourage more patent challenges. Third, it vindicates the present scope of the regulatory bounties provided under the Hatch-Waxman Act and cautions against recently proposed expansion of these incentives to other technology areas. Fourth, it sheds new light on the competitive consequences of patent settlements, and thus informs how the Court’s recent Actavis decision should be applied in future cases.

Learning from History in Changing Times: Taking Account of Evolving Marijuana Laws in Federal Sentencing

Abstract: The difference between becoming a successful entrepreneur in a fast-growing industry and becoming a federal prisoner may largely depend on which state you place your business in. This is the reality for those in the marijuana business. This predicament occurs because of two issues: the increasing spread of marijuana legalization for both medical and recreational use at the state level,1 and the Department of Justice’s decision not to enforce federal marijuana laws against those in compliance with their states’ laws, while maintaining full enforcement against everyone else.2 While this seems unproblematic at first glance, 18 USC § 3553(a) provides that one of the factors judges must consider in imposing a criminal sentence is “the need to avoid unwarranted sentence disparities among defendants with similar records who have been found guilty of similar conduct.”3 The sentence should also “reflect the seriousness of the offense.”4 Because the federal government is willing to accede to popular will and forego enforcement of marijuana laws in many states, the seriousness of the offense is lessening. This selective enforcement has created a regime in which some ostensible drug felons are allowed to become entrepreneurs and others who commit the same acts go to prison. As such, conforming to these two provisions suggests that a substantial downward variance from the sentence a court would ordinarily impose on a federal marijuana offender is appropriate.