Showing papers in "Washington Law Review in 2019"

Community Consequences of Airbnb

Abstract: Short-term rental accommodations have increased over eighty percent in the last five years. The rise of companies like Airbnb have created a booming market that provides affordable short-term rentals for travelers and new income for those with an extra couch, spare room, or even unused home. However, while individual hosts and guests may benefit economically, their use produces significant consequences for the surrounding community. Airbnb proliferation causes fewer affordable housing options, higher average asking rents, and erosion of neighborhood social capital. Due to discrimination among users on Airbnb’s platform, many of the benefits of short-term rental accommodations accrue to white hosts and guests, locking communities of color out of potential income and equity streams. These issues raise questions at the core of property law: which stick in the bundle is implicated by a short-term rental accommodation? Current regulations attempt to walk the line between protecting property rights and mitigating externalities created by that use, and borne by the local community. In doing so, the law fails to adequately address consequences resulting from the vast increase in short-term rental accommodations. This Article assesses the benefits and costs of short-term-rental accommodations and analyzes how current statutory approaches amplify or diminish these effects. After examining the legal, economic, and social interests of multiple short-term rental accommodations stakeholders, including hosts, guests, the local community, and platform operators, it argues that current policies are fragmented, inconsistently applied, and ineffective. Instead, the law must be reformed to better secure access to affordable housing stock, prevent “hotelization” of residential neighborhoods, create meaningful opportunities for diverse users to share economic gains, and eliminate pathways to discriminate on home-sharing platforms like Airbnb.

An Empirical Study of Fast-Food Franchising Contracts: Towards a New "Intermediary" Theory of Joint Employment

Abstract: The “Fight for Fifteen and a Union” movement among fast-food workers and their allies has raised awareness about wage inequality in the United States. Rather than negotiating for better wages and working conditions with economically weak restaurant-level franchisees, the movement aims to affect the practices of what they view as the all-powerful brands — the franchisors. Few would dispute the notion that the franchisor brands, not their franchisees, set industry-wide standards and, thus, have the ability to offset rising wage inequality and improve working conditions. And yet, the movement has raised controversial law and policy questions about the legal responsibilities of these fast-food Goliaths under current labor and employment laws. Should fast-food brands, as franchisors, be legally responsible as “employers” for the wage-and-hour violations suffered by the individuals who serve us fast food in their franchised stores, pursuant to the Fair Labor Standards Act (FLSA)? Do they have a legal obligation, under the National Labor Relations Act (NLRA), to bargain with the labor unions representing fast-food workers in their franchised stores? This Article addresses these timely questions with original empirical research of forty-four contracts between top fifty fast-food franchisors and their franchisees in 2016. The contractual analysis reveals a new theory of joint employment via franchisor influence over franchisees’ managers. Unlike prior foci on franchisor-franchisee relations, and franchisor-crew member relations, this Article brings a new party to light: franchisees’ supervisorial managers. Jurisprudential analogy to the agricultural context, and case law regarding farm labor contractors as grower intermediaries, supports this proposed analytical lens. In sum, the theory developed from this rare dataset postulates why some of the Goliaths of fast food may indeed be “employers” with legal obligations to the workers in their franchised restaurants. Thus, courts, administrative agencies and legislators should be mindful of franchisor influence through intermediaries, as well as the complex relationships embedded in the franchise system that make disaggregating direct from indirect forms of influence difficult to impossible.

The Promises and Perils of Using Big Data to Regulate Nonprofits

Abstract: For the optimist, government use of “Big Data” involves the careful collection of information from numerous sources. The government then engages in expert analysis of those data to reveal previously undiscovered patterns. Discovering patterns revolutionizes the regulation of criminal behavior, education, health care, and many other areas. For the pessimist, government use of Big Data involves the haphazard seizure of information to generate massive databases. Those databases render privacy an illusion and result in arbitrary and discriminatory computer-generated decisions. The reality is, of course, more complicated. On one hand, government use of Big Data may lead to greater efficiency, effectiveness, and transparency; on the other hand, such use risks inaccurate conclusions, invasions of privacy, unintended discrimination, and increased government power. Until recently, these were theoretical issues for nonprofits because federal and state regulators did not use Big Data to oversee them. But nonprofits can no longer ignore these issues, as the primary federal regulator is now emphasizing “data-driven” methods to guide its audit selection process, and state regulators are moving forward with plans to create a single, online portal to collect required filings. In addition, regulators are making much of the data they collect available in machine-readable form to researchers, journalists, and other members of the public. The question now is whether regulators, researchers, and nonprofits can learn from the Big Data experiences of other agencies and private actors to optimize the use of Big Data with respect to nonprofits. This Article explores the steps that nonprofit regulators have taken toward using Big Data techniques to enhance their ability to oversee the nonprofit sector. It then draws on the Big Data experiences of government regulators and private actors in other areas to identify the potential promises and perils of this approach to regulatory oversight of nonprofits. Finally, it recommends specific steps regulators and others should take to ensure that the promises are achieved and the perils avoided.

Stealing Swagger: NFL End Zone Celebrations and Fortnite's Fortune

Abstract: Football is a staple in many American households: each week, millions watch the game. Every year, National Football League athletes benefit by taking advantage of this passion, not only by earning millions of dollars in salary, but also by signing lucrative endorsement deals. While success on the field is a starting point, an athlete with a captivating personality stands to gain even more financially. A unique end zone celebration that captures fans’ hearts contributes to that personality and makes the player more marketable. In 2017, after announcing plans to relax the rules against end zone celebrations, the National Football League saw a rise in such celebrations. That same year, a video game called Fortnite exploded onto the scene. Fans were particularly interested in the dances they could make their video game characters perform—dances originally created and performed by pop culture icons. Because copyright law presumes authors need a financial incentive to create, copyright law protects expressive works, including choreography. However, recent guidance from the U.S. Copyright Office denies protection to end zone celebrations. This Comment largely concurs: Given copyright’s requirements, most celebrations are too simple and therefore will not, and should not, receive protection. Nevertheless, more complex celebrations are arguably copyrightable. If Fortnite has already copied the choreography of others and profited handsomely, there is no reason why end zone celebrations could not be its next target. The Copyright Office opened the door to this kind of commercial appropriation, and now it is time to shut it. * J.D. Candidate, University of Washington School of Law, Class of 2019. This piece could not have been possible without the help of Professor Robert Gomulkiewicz, Don McGowan, Professor David Ziff, and the Washington Law Review team. 15 Avakiantz (2).docx (Do Not Delete) 4/4/2019 9:00 PM 454 WASHINGTON LAW REVIEW [Vol. 94:453

Regulating Wage Theft

Abstract: Wage theft costs workers billions of dollars each year. During a time when the federal government is rolling back workers’ rights, it is essential to consider how state and local laws can address the problem. As this Article explains, the pernicious practice of wage theft seemingly continues unabated, despite a recent wave of state and local laws to curtail it. This Article provides the first comprehensive analysis of state and local anti-wage theft laws. Through a compilation of 141 state and local anti-wage theft laws enacted over the past decade, this Article offers an original typology of the most common anti-wage theft regulatory strategies. An evaluation of these laws shows that they are unlikely to meaningfully reduce wage theft. Specifically, the typology reveals that many of the most popular anti-wage theft strategies involve authorizing worker complaints, creating or enhancing penalties, or mandating employers to disclose information to workers about their wage-related rights. Lessons learned about these conventional regulatory strategies from other contexts raise serious questions about whether these state and local laws can be successful. Rather than concede defeat, this Article contends that there are useful insights to be drawn from the typology and analysis. It concludes by recognizing promising regulatory innovations, identifying new collaborative approaches to enhance agency enforcement, and looking beyond regulation to nongovernmental strategies.

Taxing Selling Partners

Abstract: Under current law, when a partner sells a partnership interest, the resulting gain or loss is treated as capital gain or loss, except to the extent that the partnership holds certain items whose sale would result in gain or loss that was not capital. The purpose of the current regime appears to be to prevent taxpayers from obtaining more favorable treatment by selling an interest in a partnership than what would result if the partnership were to sell its underlying assets. Given this apparent aim of legislators, current law produces results for taxpayers that are both unduly favorable and unduly unfavorable. In particular, despite current law’s aim to equate the tax treatment of the sale of a partnership interest with the tax treatment of the sale of underlying assets (at least with respect to the character of income recognized), differences persist. Sometimes sale of a partnership interest produces more favorable tax treatment than the sale of underlying assets. Other times, sale of a partnership interest triggers less favorable tax treatment than a sale of underlying assets. The current statutory design necessitates piece-meal reform as taxpayers discover new opportunities to exploit ways in which the statute produces unduly favorable results. Most recently, in December 2017, Congress adopted legislative reform to address one such instance involving the sale of a partnership interest by a non-U.S. person. The current statutory design also requires Congress to update the existing statute to take into account potential ripple effects of unrelated legislative changes, and, therefore, the design is error prone because, inevitably, Congress overlooks and fails to address these potential ripple effects. Changes enacted by Congress in December 2017 provide at least one example of this phenomenon. In particular, Congress enacted a new restriction on the deductibility of losses incurred in a trade or business but did not provide for a corresponding modification to the tax provisions governing sale of an interest in a partnership – creating the potential for another way in which the current statutory design is unduly favorable. This Article proposes a better approach to the tax treatment of the sale of a partnership interest that would more effectively serve the aim of equating the tax treatment of the sale of a partnership interest with the sale of underlying assets.

Effective Corporate Compliance: A Holistic Approach for the SEC and the DOJ

Abstract: Today, most global corporations claim to have effective compliance programs that ensure and monitor their compliance with all state, federal, and even international requirements. A growing body of literature and regulatory activity indicates that truly effective compliance programs must incorporate all of the “Seven Elements of an Effective Compliance Program” contained in the Federal Sentencing Guidelines. Despite these Guidelines and growing industry and regulatory interest in effective compliance, noncompliance continues, and many companies run into trouble when noncompliance brings their actions to the attention of the SEC and the DOJ. In turn, the SEC and the DOJ struggle to encourage effective compliance programs within these noncompliant companies and in the wider corporate community. This Comment proposes that the SEC and the DOJ should take a more integrated and holistic approach to compliance by regularly and publicly incorporating all of the elements in the Guidelines into deferred and non-prosecution agreements and penalty settlements. The agencies should also consider greater use of independent monitorships to ensure effective compliance.

Permissive Certificates: Collectors of Art as Collectors of Permissions

Abstract: Artists have been dramatically reshaping the fine art certificate of authenticity since the 1960s. Where traditional certificates merely certified extant objects as authentic works of a named artist, newer instruments purported both to authorize the creation of unbuilt artworks and instruct buyers how to manifest and install them. Such “Permissive Certificates” have fascinated contemporary art historians ever since. Prior scholarship has shown how such documents, essentially blueprints for art creation, force us to confront fundamental ontological questions on the nature of art, the relationship between artist, collector and viewer, and the influence of money and acquisitiveness on art generation. But rarely, if ever, have they been approached as legal instruments. This Article accordingly fills that gap by construing Permissive Certificates through the complex but potent array of legal rights that they define. It argues that Permissive Certificates are not unitary instruments, but in fact an amalgamation of two distinct legal structures. They couple narrow retrospective warranties on the one hand with prospective copyright licenses and rights of source association on the other. Critically, as with all copyright and source-based permissions, they are conditioned on the owner/licensee complying with use guidelines. Material variations from such terms place the owner/licensee outside the scope of the license, or otherwise in breach, and at risk of claims of infringement by the artist. This approach to Permissive Certificates yields two important insights. First, they harbor an unappreciated power as a tool for artist control, particularly in jurisdictions such as the U.S. where moral rights remain relatively weak. Second, and more broadly, as art becomes increasingly more dematerialized, digitized, and duplicable, and ever more legalized in turn, Permissive Certificates will grow more and more into the locus of value for such works. Over the long run, museums and other collectors of fine art will become collectors, not of objects, but of permissions. The aura of the artist’s hand will be that of a signature and not of a brushstroke.

Striking a Balance: Privacy and National Security in Section 702 U.S. Person Queries

Abstract: The transformation of U.S. foreign intelligence in recent years has led to increasing privacy concerns. The Foreign Intelligence Surveillance Act of 1978 (FISA) traditionally regulated foreign intelligence surveillance by authorizing warrant-based searches of U.S. and non-U.S. persons. Individualized court orders under traditional FISA were intended to protect U.S. persons and limit the scope of intelligence collection. In a post-9/11 world, however, the intelligence community cited concerns regarding the speed and efficiency of collection under traditional methods. The intelligence and law enforcement communities recognized the “wall” preventing information sharing between the communities as a central failure leading to the 9/11 attacks. In response, the scope and authorizations of foreign intelligence collection were expanded with numerous statutory measures, culminating in the passage of Section 702. Under Section 702, only non-U.S. persons located abroad may be surveillance targets, but no warrant is required for the intelligence collection. Since its passage, the intelligence community and privacy advocates have intensely debated the implications of incidental collection of U.S. person communications, including the use of U.S. person queries. Despite the significant expansion of surveillance authorized in the shift from traditional FISA to Section 702, minimization and targeting procedures regulated by the new statute are designed to protect U.S. persons and balance national security and privacy interests. This Comment addresses the uncomfortable question of whether the U.S. Constitution permits the minor intrusion of a few to protect national security and argues that Section 702 queries are searches under the Fourth Amendment that require a justification independent from the overall surveillance to be constitutional. Nonetheless, the Fourth Amendment protects against only unreasonable searches or seizures by the government, and U.S. person queries are reasonable searches characterized by critical foreign intelligence interests and robust safeguards that outweigh limited impacts on privacy. While the Fourth Amendment does require probable cause warrants for U.S. person queries conducted for criminal investigative purposes, such queries are rare. Striking the proper balance between privacy and security, particularly in the modern technological era, is a complex and challenging legal question. In this context, considerations must include policy and value-laden choices that weigh the statute’s own regulatory measures against the rights protected by the Fourth Amendment. Such an approach renders U.S. person queries reasonable Fourth Amendment searches, albeit subject to more stringent requirements than courts and the government have previously found. * J.D. Candidate, University of Washington School of Law, Class of 2019. Special thanks to David Kris for his guidance on the topic and invaluable insights on earlier drafts of this Comment. I would also like to thank the staff of Washington Law Review for their thoughtful suggestions and editorial work. 13 Adams.docx (Do Not Delete) 3/25/2019 8:40 PM 402 WASHINGTON LAW REVIEW [Vol. 94:401

Who Decides Fair Use -- Judge or Jury?

Abstract: For more than two-hundred years, the issue of fair use has been the province of the jury. That recently changed when the Federal Circuit Court of Appeals decided Oracle America, Inc. v. Google LLC. At issue was whether Google fairly used portions of Oracle’s computer software when Google created an operating system for smartphones. The jury found Google’s use to be fair, but the Federal Circuit reversed. Importantly, the Federal Circuit applied a de novo standard of review to reach its conclusion, departing from centuries of precedent. Oracle raises a fundamental question in jurisprudence: Who should decide an issue – judge or jury? For the issue of fair use, the Seventh Amendment dictates that the jury should decide. The Seventh Amendment guarantees a right to a jury where an issue would have been heard by English common-law courts in 1791. Fair use is such an issue: early copyright cases make clear that juries decided fair-use issues at common law. Furthermore, the recent Supreme Court case of U.S. Bank National Ass’n v. Village at Lakeridge, LLC instructs appellate courts to employ a deferential standard in reviewing mixed questions of law and fact that resist factual generalizations. The question of fair use resists factual generalizations, turning on circumstances and factual nuances specific to each case. U.S. Bank thus suggests a deferential review. Importantly, this conclusion is consistent with the Supreme Court’s instruction in Harper & Row Publishers, Inc. v. Nation Enterprises, where the Court applied an independent review of a district court’s finding on fair use. The context of the Harper Court’s independent review was a bench trial, and at that time, courts treated the review of fair use at a bench trial differently from the review of fair use at a jury trial. Finally, juries are simply better positioned than judges to decide the sort of issues that arise in fair-use cases. Those issues call for subjective judgments that turn on cultural understandings and social norms, and the heterogeneous perspective of a jury is particularly valuable in making these judgments. Thus, the Federal Circuit in Oracle wrongly applied a de novo standard. The Constitution, precedent, and sound policy mandate deference to the jury.

Public or Private Venture Capital

Abstract: The United States has an unparalled entrepreneurial ecosystem. Silicon Valley startups commercialize cutting-edge science, create plentiful jobs, and spur economic growth. Without angel investors and venture capital funds (VCs) willing to gamble on these high-risk, high-tech companies, none of this would be possible. From a law-and-economics perspective, startup investing is incredibly risky. Information asymmetry and agency costs abound. In the U.S., angels and VCs successfully mitigate these problems through private ordering and informal means. Countries without our robust private venture capital system have attempted to fund startups publicly by creating junior stock exchanges. These exchanges have been largely failures, however, in part because they have unsuccessfully relied on mandatory disclosure and other tools better suited to mitigating investment risks in established public companies. The U.S.’s relative success in supplying private venture capital makes our recent infatuation with crowdfunding curious. Fortunately, while crowdfunding was originally designed to resemble public venture capital, with “funding portals” acting as the junior stock exchanges, its final implementing rules took important steps back toward the private venture capital model.