Monthly Archives: March 2015

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Into Litigation’s Black Hole: A Cosmic Solution

How many federal courts scholars can identify what is meant by the litigation “black hole?” If you know the answer to this question, chances are you teach mass tort litigation or worked on asbestos litigation thirty years ago. And if you want to know what became of that black hole, Judge Eduardo C. Robreno of the Eastern District of Pennsylvania offers some answers.

Asbestos litigation was a seminal mass tort litigation and its procedural history provides an interesting parable about dispute resolution modalities. The flood of asbestos litigation began in the late 1970s and for approximately twenty years the Judicial Panel on Multidistrict Litigation resisted creation of an asbestos MDL. After the Judicial Conference issued a report on the nationwide asbestos litigation crisis, the Panel relented and finally created asbestos MDL-875 in 1991, docketed in the Eastern District of Pennsylvania.

The famous “black hole” refers to the contention by attorneys that the creation of the MDL—and the transfer of their cases to the MDL court—would send their asbestos cases into a litigation black hole, and that their cases would disappear forever. In issuing its order, the MDL panel took pains to assure lawyers that the MDL would not do so. Continue reading "Into Litigation’s Black Hole: A Cosmic Solution"

 
 

Queering the History of Sex Discrimination

In my employment discrimination course, I use Diaz v. Pan American Airlines (5th Cir. 1971), overturning Pan Am’s ban on male flight attendants, to illustrate how airlines and other employers tried and failed to exploit Title VII’s bona fide occupational qualification (BFOQ) exception in the years after the Civil Rights Act’s enactment. Pan Am defended its female-only policy as necessary to satisfy the “psychological needs” of its mostly male passengers, who “overwhelmingly” preferred to be served by “young girls.” In Diaz, the court ruled that the “essence” of an airline’s business was not to titillate male travelers, nor to offer maternal comfort to anxious fliers, but rather to keep passengers safe from harm. Excluding men, therefore, could not be “reasonably necessary to the normal operation” of an airline.

Phil Tiemeyer’s Plane Queer reveals that Pan Am’s defense of the male steward ban was even more insidious than previously understood. The airline argued that male flight attendants performing traditionally female ministrations, such as tucking blankets around dozing passengers, would repulse their (assumedly) male, heterosexual, and homophobic customers. Tiemeyer argues persuasively that Diaz and the other early challenges to airlines’ sex BFOQs are properly seen as queer equality cases, belying conventional assumptions that gay employment rights advocacy merely piggybacked on, or at least postdated, movements for racial justice and women’s rights. Continue reading "Queering the History of Sex Discrimination"

 
 

Theorising Global Justice

Frank J. Garcia, Global Justice and International Economic Law: Three Takes, Cambridge University Press (2013).

In a letter to the semi-pagan Nectarius (Epistle 91, §4), Saint Augustine sets forth one of the most fundamental problems of political life: political philosophers who have sought and ‘indeed described’ justice in private discussion have utterly failed to secure justice for the earthly city. The problem could not be clearer: true justice is not an utter mystery to human beings. It can be made present to thought and speech. But even amongst those who have bothered to obtain a rational image of it, this justice is absent from their activities and their communities. Justice in the earthly community is only ever a relative and internal justice, an ‘ordered agreement of mind with mind’ (De Citivate Dei XIX.13) that is limited to ‘the establishment of a kind of compromise between human wills…’ (IV.4) Even the laws of the most civilised society of Augustine’s time (Rome) represented but the distorted form of justice one finds in a criminal organisation.

The subject of justice in the earthly civitas (i.e. the human world) is examined at length in Frank Garcia’s impressive book, under the modern title of ‘global justice.’ The scope of the book is determined by two factors: (1) it is concerned with the specific dimension of global justice which applies to international economic activity; (2) it analyses the subject according to ‘three takes’ which have dominated recent Western political thought (Rawlsian liberalism, communitarianism, and consent theory) (P. 3.) My focus here is upon the second of these delimiting factors. It is given the following explanation:

There are of course many more theories of justice within Western political theory, and a comprehensive approach to the ethical foundations of global justice would need to engage in a comparative study of justice in normative traditions both within and beyond the West.

Of interest in this passage is its juxtaposition of two critical ideas: on the one hand, the identification of global justice as being, in the last end, an ethical problem; and on the other hand, the belief that the resolution of the ethical problem would come about through a comparative (i.e. empirical) investigation of normative traditions. The underlying implication is (I believe) not that ethical questions can be dissolved by, or exposed as, empirical concerns, but that some form of comparative study represents the realistic limit of what can be achieved by way of progress in the face of so much entrenched division. If so, this reflects the more pessimistic implication of Augustine’s letter: justice in the worldly community is not genuine justice but is forever limited to a kind of compromise between human wills. Continue reading "Theorising Global Justice"

 
 

Internet Payment Blockades: SOPA and PIPA in Disguise? Or Worse?

Annemarie Bridy, Internet Payment Blockades, Fla. L. Rev (forthcoming), available at SSRN.

The law of intermediary liability in intellectual property reflects a constant struggle for balance. On the one hand, rights owners frustrated by the game of whack-a-mole have good reason to look for more efficient ways to stanch the flow of infringement. While this concern is not a new one, the global reach and decentralization of the Internet have exacerbated it. On the flipside, consumers, technology developers, and others fret about the impact of broad liability: it can impede speech, limit competition, and impose a drag on economic sectors with only a peripheral relationship to infringement. As the Supreme Court put it thirty years ago in the seminal Sony case, the law must seek a “balance between a [rights] holder’s legitimate demand for effective – not merely symbolic – protection of the statutory monopoly, and the rights of others freely to engage in substantially unrelated areas of commerce.”

For the most part, the battle of these competing interests has played out in litigation, legislation, and deals involving online intermediaries whose services are used to infringe. The Digital Millennium Copyright Act’s notice-and-takedown procedures, the peer-to-peer copyright battles, keyword advertising suits, and lawsuits against websites like eBay are giving shape to the relative rights and responsibilities of IP owners and intermediaries. Continue reading "Internet Payment Blockades: SOPA and PIPA in Disguise? Or Worse?"

 
 

Can the Supportive State be Non-intrusive?

Wendy A. Bach, The Hyperregulatory State: Women, Race, Poverty, and Support, 25 Yale J.L. & Feminism 317 (2014).

Two truths that feminists hold to be self-evident are: (1) that this society requires a more pro-active, supportive state that recognizes the fact of dependency and assumes some responsibility for the needs that dependency creates; and (2) that when the state intervenes in the lives of poor, minority women, it discriminates against and penalizes those most in need of its support. Advocates of each proposition generally also adhere to the other as if the two propositions were completely compatible: Those making the case for a supportive state adopt as a principal goal the reduction of society’s profound inequalities,1 while critics of the state’s discriminatory intrusions into the lives of the poor take for granted the necessity for state interventions to address dependency.2

Wendy Bach’s article advances both propositions sympathetically—so sympathetically that the reader initially might understand the article to be primarily a celebration of the convergences in feminist insight. But read on. The work is, above all else, a caution. The case for a supportive state is a powerful one, she argues; yet current institutional realities mean that state-sponsored programs typically make women more vulnerable, not less. This is not inevitable, she argues, but to avoid it, reformers need to pay more attention to the specificity of the mechanisms the state employs. Otherwise, Bach argues, calls for a more supportive state may yield measures making it easier for middle-class women to work and raise children, but they won’t dismantle the punitive mechanisms that so acutely affect poor women and minorities. (P. 329). Continue reading "Can the Supportive State be Non-intrusive?"

 
 

Interdependent Legalities

The first thing I liked about Kirsten Anker’s book was its title.1 The idea of a declaration of interdependence is extremely evocative, and multilayered. It foregrounds values of connection and interdependence as basic to legal relations, within and between cultures, and also between human societies and our ecologies and environments. At the same time, it constitutes an ironic reflection on non-Indigenous histories, with their insistence on independence. Assertions of independence have been vital to shaping the nation-state world we currently live in, and which forms the legal and philosophical backdrop to this book. Declarations of independence may still have a defensible role in a world which oppresses marginalized groups and fails sufficiently to promote the self-determination of colonized peoples. But interdependence goes further, and acknowledges interconnection between peoples and their worlds – it reasserts that there are relations of dependence between groups, and relations between their laws. It also, and this is the real depth of this particular book, shows how the very act of defining and understanding any law in this context brings into play multivocal exercises of recognition, translation, and negotiation.

Throughout the book, Anker emphasizes that she seriously regards all sides of a relation as ‘dependent’ on the others (as well as, to a lesser degree, ‘independent’). In the context of Anker’s study, which primarily concerns legal relations between Indigenous and non-Indigenous people in Australia, the ‘sides’ of the relation are primarily two. When the two sides come together to negotiate or determine their legal relations, each is dependent on the other. This is not to deny the existence of state dominance or, on the other hand, to say that there can be no self-determination or autonomy for Aboriginal people. Rather it conveys the way that ‘decisions and their consequences will always be taking shape in relation to other communities and governments, at different scales.’ (P. 194). In order for there to be any real encounter between different legalities, they each have to be open to the other, and in particular to the process of being reconstituted by the other. Anker argues this mutual dependence by reference to philosophical tradition. In particular she points out that approaches to recognition and translation will be extremely problematic if understood or practiced simply in terms of one (sovereign) side having all of the power to recognize the other, or being permitted to assume that their own conceptual tools are sufficient to render the other’s world intelligible. For recognition and translation to work and for justice to be a plausible goal, the interpretive and conceptual horizons of both sides must shift. Even more importantly, Anker also argues this case inductively from detailed readings of significant native title cases, and through an analysis of the nature of negotiated settlements. At their most positive, even within the decision-making framework of state law, these sources show people coming together in a jurisgenerative space, in which ‘law’ appears as a dialogue rather than being given from above. (P. 103). At the same time, the opportunities for state law to misrecognize and mistranslate Aboriginal law, because of doctrinal dogmatism, ideology, or other limitations, remain considerable. The detail provided by Anker to illustrate these points is extraordinary, and quite impossible to do justice to in a short review. Continue reading "Interdependent Legalities"

 
 

Decriminalization and Its Discontents

Alexandra Natapoff, Misdemeanor Decriminalization, 68 Vand. L. Rev. ___ (forthcoming 2015), available at SSRN.

Have we reached a turning point in criminal justice? Political leaders, criminal justice actors and even the general public have come to agree that our criminal justice system is broken. It delivers a product that is long on punishment, but short on justice, mercy, efficiency, cost-effectiveness and rationality. Consequently, states are moving to shorten some drug sentences, to decrease overall imprisonment rates, and to legalize or decriminalize marijuana possession. We are even witnessing manifestations of leniency from the public: witness the California voters’ 2014 roll-back of that state’s notorious “three-strikes” law.

Clearly, we are at an inflection point. But is this a true turning point? Or are we witnessing another historical moment in which harsh and unequal criminal justice systems demonstrate the uncanny ability to achieve preservation through transformation in the face of widespread criticism? In her article Misdemeanor Decriminalization, Sasha Natapoff helps her readers to wrestle with this question. The answer may not be as encouraging as we might have hoped. Continue reading "Decriminalization and Its Discontents"

 
 

Typecastes: Big Data’s Social Stratifications

Recently, Scott Peppet, Dan Solove, and Paul Ohm appeared in a great Al Jazeera comic on big data and privacy, called “Terms of Service.” The comic covered the growth of data-driven companies from scrappy startups to the behemoths we know and fear today. It’s also a good introduction to the problem of discrimination by data and algorithm. For those who want to continue the conversation, Nathan Newman‘s article is an excellent guide to the issues.

Newman has already made several important interventions into the scholarly debate over the effects of big data. Marketing industry leaders have argued that data-driven marketing increases the accuracy of ad targeting. Critics have contended that the opacity and complexity of data flows makes it impossible for the average citizen to understand how they are being rated, ranked and judged. The White House Big Data Report from 2014 was a major validation for critics, compiling numerous problems in the big data economy and taking seriously threats on the horizon. Continue reading "Typecastes: Big Data’s Social Stratifications"

 
 

The Settler-in-Chief

Adam Zimmerman, Presidential Settlements, 163 U. Pa. L. Rev. __ (forthcoming 2015), available at SSRN.

In his famous, unfinished article The Forms and Limits of Adjudication, Lon Fuller posited that certain types of claims—he called them “polycentric” disputes— were incapable of resolution through adjudication. In these disputes the number of interested parties is so large and the potential ramifications of the dispute so vast that it is impossible for each person affected by the decision to participate in the decision-making process through proofs and reasoned arguments—participation which, Fuller argued, was the sine qua non of adjudication. According to Fuller, the binary nature of a second decision-making mechanism—voting—also made elections a poor means for resolving mass disputes, with their multifaceted nuances. Therefore, the only legitimate mechanisms to resolve polycentric disputes were negotiation or managerial direction. One type of dispute that Fuller held out as an exemplar of polycentrism was a labor dispute over wages in a centralized economy: the way in which different levels of increase in wages would have ripple effects across the economy made it unimaginable that a judge or a voter could determine the question of a proper wage.

Of course, Fuller’s claim is contestable, both theoretically and factually. In particular, the rise of complex litigation, which emerged as a significant legal phenomenon after Fuller drafted his article in 1957, has tested the assumption that large-scale disputes cannot be resolved through proofs and reasoned arguments. But the course of complex litigation over the past sixty years has also given Fuller’s thesis some support. Consider, for example, the aggregation techniques that courts in complex disputes have employed: class actions that limit participation rights in return for the promise of adequate representation and MDL proceedings whose bellwether trials are designed to channel most cases into settlement and whose settlement structures take their inspiration from administrative agencies and insurance companies. In each of these, the right of each affected individual to participate through proofs and arguments falls by the wayside. Likewise, some of the “best practices” for resolving aggregate litigation—for instance, providing separate representation for each interest group to prevent conflicts of interest within groups and using statistical sampling to ensure that issues of liability and damages are determined accurately on a macro scale—highlight the difficulty of guaranteeing the individual participation and the individualized assessment of claims that lie at the heart of Fuller’s adjudicatory paradigm.

Fuller’s paradigm casts a long shadow over complex litigation. In recent years courts have seemed especially reluctant to stray too far from the traditional understanding of adjudication that Fuller describes. Courts have declined to head down adventurous doctrinal paths that would facilitate the aggregation of large numbers of cases: think, for instance, of the many cases narrowly construing Federal Rule 23, Wal-Mart’s rejection of the use of trial by statistics, and the increasing judicial resistance to cy pres relief. Whatever the merits of these decisions (and some of them seem to me more defensible than others), convincing a present-day court to use its adjudicatory powers to resolve “polycentric” claims in a single, comprehensive lawsuit is an uphill climb. Yet even if courts are reluctant to adjudicate mass disputes, the disputes themselves continue to proliferate. Predictably, substitute mechanisms have stepped into the breach.

Adam Zimmerman has explored many non-judicial dispute-resolution mechanisms. His latest article turns to another one: presidential settlements, which are deals brokered by the White House that extinguish the legal rights of claimants in favor of an executive-branch compensation system, without judicial involvement or imprimatur. The BP oil spill settlement is perhaps the largest and most recent example. As Zimmerman recognizes, however, presidents have been hammering out similar deals since the earliest days of the Republic. In the past four decades alone, President Carter negotiated, and President Reagan implemented, the Algiers Accords, providing a compensation mechanism for claims arising from the Iranian Revolution; President Clinton engineered a settlement between Holocaust victims and banks that had confiscated Jewish bank accounts; and President George W. Bush brokered a deal between the government of Libya and the victims of the Lockerbie bombing. Over the years presidents have also intervened to resolve labor disputes—a role that calls to mind Fuller’s argument that such disputes are classically polycentric and therefore beyond the legitimate reach of adjudication. Continue reading "The Settler-in-Chief"

 
 

Privacy and the New Press

In The First Amendment Bubble, Professor Amy Gajda comprehensively examines privacy threats posed by digital media and “quasi-journalists” and demonstrates how their intrusive practices threaten existing press freedoms. The law Gajda addresses is mainly tort law and First Amendment law. Through a wide-ranging survey of reported cases, she documents trial court judges’ growing reluctance to interpret First Amendment precedent to protect journalists who are sued for invasions of privacy, intentional infliction of emotional distress, or other torts. She attributes this judicial reluctance to perceived and real changes within the media itself, including the rise of “quasi-journalists” unmoored by journalistic ethics or a sense of social responsibility, the growing use of invasive newsgathering technology, a tell-all culture enabled by social media, and competitive pressures to both sensationalize the news and present it to the public without benefit of editorial judgment.

Gajda warns that journalists have “pushed the envelope” of First Amendment freedoms so far that the First Amendment bubble may be about to burst. She documents the judicial backlash against journalists’ broad claims of constitutional protection by presenting hundreds of examples gleaned (mostly) from trial courts around the country. She argues convincingly that a legal strategy of pushing every First Amendment argument to its outer limits may backfire on journalists and news organizations, since courts increasingly lump legacy media with internet scandal mongers such as TheDirty.com, and become skeptical of media claims that they provide the public with newsworthy information. Continue reading "Privacy and the New Press"

 
 

Human Rights for Corporate Persons?

Turkuler Isiksel, The Rights of Man and the Rights of the Man-Made: Corporations and Human Rights (January 7, 2015), available at SSRN.

The Citizens United and Hobby Lobby decisions have drawn heavy fire from critics of the Supreme Court’s ascription of constitutional and statutory rights to corporations. According to Professor Turkuler Isiksel, a political scientist at Columbia, things may be even worse than those critics appreciate. In the paper referenced above, Isiksel illuminates and offers a trenchant critique of disturbing developments in the transnational arena that may be unknown to specialists in U.S. corporate law. Multinational corporations are claiming that, as legal persons, they are entitled to the rights of human persons under international human rights law.

These assertions seek to shield corporations from domestic regulations imposed by host countries in which they do business. Isiksel’s primary focus is the international investment regime, consisting of a large web of bilateral investment treaties and regional free trade agreements. These are designed to promote foreign investment by guaranteeing protection from expropriation and excessively costly regulations for corporations that have invested in countries that are parties to these agreements. When disputes arise between a corporation and the host state, they are typically resolved through arbitration. Arbitral tribunals are supposed to apply the terms of the particular investment agreement but “they increasingly also make use of human rights law to assess state behavior toward foreign investors.” (P. 38.) Isiksel notes that “[i]nternational human rights law is congenial to firms looking to challenge state measures because it offers a framework for contesting the treatment of private actors by states.” (P. 40.) Continue reading "Human Rights for Corporate Persons?"

 
 

New Wine, Old Bottles, and a Do-Nothing Congress

Jody Freeman & David B. Spence, Old Statutes, New Problems, 163 U. Pa. L. Rev. 1 (2014).

The Rivers and Harbors Act of 1899 was adopted to protect against hazards to and interference with navigation. It prohibited “creation of any obstruction to the navigable capacity of any of the waters of the United States” or altering or filling navigable waters (§10) and also made it unlawful “to throw, discharge, or deposit . . . any refuse matter” into navigable waters “whereby navigation shall or may be impeded or obstructed,” although the Corps of Engineers could permit such a discharge if “anchorage and navigation will not be injured thereby” (§13). For two-thirds of a century, those provisions operated as one would expect. Then came the modern environmental movement, and in short order the courts and the executive branch turned these provisions about obstruction to navigation into a water-pollution control regime. As President Nixon drily put it in issuing an executive order that created a sweeping new pollution permit program under §13, the Act’s “potential for water pollution control has only recently been recognized.” Richard Nixon, Statement on Signing Executive Order Establishing a Water Quality Enforcement Program (Dec. 23, 1970).

This striking repurposing of a 19th century statute to solve 20th century problems is not unique. EPA’s current reliance on the Clean Air Act to regulate greenhouse gases can be seen as another example, this time using a 20th century statute to solve a 21st century problem (though the gap between the original conception of the statute and its repurposing is much less dramatic in this later instance). Jody Freeman and David Spence have now provided a valuable, and quite sympathetic, analysis of the technique of using “old statutes” to address “new problems.” Continue reading "New Wine, Old Bottles, and a Do-Nothing Congress"

 
 

The Constitution at Work: Everything Old is New Again

Sophia Z. Lee’s new book, The Workplace Constitution: From the New Deal to the New Right, traces a fifty-year history of the tumultuous battle over whether and when the Constitution should apply to employees working at private sector jobs. This is in part a story about the Supreme Court, but Lee also reveals a fascinating account of rapidly shifting alliances and tensions between and among civil rights groups, unions, employers, the right-to-work movement, and administrative agencies. With all of these players, Lee’s book could have easily gotten bogged down in details. Instead, it beautifully brings to life lawyers’ and activists’ deliberations over whether their interests would be well-served by the application of constitutional law in private workplaces, against the backdrop of changing constitutional jurisprudence and shifting legislative and regulatory priorities.

Of course, the end of the story will be familiar to many readers—after some hopeful starts for liberal and conservative supporters of the Workplace Constitution during the 1960s and early 1970s, it nearly disappeared after the Burger and Rehnquist Courts issued a series of narrow state action decisions. As Lee explains, this development was ultimately not unwelcome to many civil rights groups—this about-face was linked to the Court’s growing tendency to strike down governmental affirmative action plans on constitutional grounds, which meant voluntary affirmative action plans at private workplaces would also be threatened if the constitution applied there. But along the way, Lee opens a window on what might have been, describing administrative agencies’ creative uses of constitutional law to promote diversity within the entities they regulated. The FCC and the NLRB get the most airtime here, and the FCC’s efforts in particular were almost breathtaking: spurred on by activists, that agency concluded that it had the constitutional authority—or even the constitutional duty—to condition dozens of station’s licenses on the adoption of affirmative action programs, including educational programs designed to create a pipeline of qualified applicants. These programs yielded documented results; if they had been continued, today’s workforce diversity might be much improved, especially within highly regulated industries. Continue reading "The Constitution at Work: Everything Old is New Again"

 
 

The Impact of Federal Law on a Decedent’s Digital Assets

Naomi R. Cahn, Probate Law Meets the Digital Age, 67 Vand. L. Rev. 1697 (2014), available at SSRN.

Recently, estate planners and scholars have begun to grapple with the problem of transferring digital assets at death. In Probate Law Meets the Digital Age, Professor Naomi Cahn adds an interesting new dimension to this relatively new issue. She focuses on the effect of the Stored Communications Act (“SCA”) on estate administration. Although the SCA does not affect a fiduciary’s ability to distribute assets once they are discovered, it affects the fiduciary’s ability to examine on-line accounts to discover those assets.

The SCA, which was enacted nearly two decades before the development of Facebook, was passed in response to privacy concerns related to the internet. It was not aimed at transfers at death, but it certainly can impact probate administration in an era when most people have some sort of on-line presence. This has created a great deal of uncertainty for internet service providers as well as for fiduciaries, including personal representatives, agents, conservators, and trustees. As Professor Cahn points out in her piece, this uncertainty currently impacts anyone who dies with an e-mail account. Continue reading "The Impact of Federal Law on a Decedent’s Digital Assets"

 
 

In Praise of Accountability

Jeremy Waldron, Accountability: Fundamental to Democracy (April 2014), available at SSRN.

Accountability is a term that gets bandied about a great deal these days, sometimes as a criticism of regulatory government (agencies are not accountable to the people), sometimes as a justification for federalism (when government is closer to the people it is more accountable). It is also a term that has been widely disparaged by scholars as vague, fanciful and under-theorized. In Accountability: Fundamental to Democracy, Jeremy Waldron remedies this situation. By carefully parsing various meanings of the term, focusing on the essential meaning, explaining its importance, and responding to the concerns it raises, Waldron has convincingly demonstrated the way that accountability is, as his title asserts, fundamental to democracy.

To focus the discussion, Waldron distinguishes between three different ways in which the term “accountability” is used in political discourse. The first is forensic accountability, where the actions of a person with some sort of power or authority are assessed by a supervisory entity according to an established norm. The second is consumer accountability, where the power-holder acknowledges the importance of considering the views of the people whom its actions affect. Third is agent accountability, where the power-holder has been appointed by a principal, must report its actions to the principal, and can be sanctioned or dismissed if those actions are deemed unacceptable. Judicial review, where a court determines whether a statute or executive action violates the standards established by the Constitution, is an example of forensic accountability. Calls for “client-centered” administration, which figured prominently in Al Gore’s “Reinventing Government” initiative when he was Vice President, are based on consumer accountability. These may be important from a juridical or management perspective, Waldron argues, but the third type—agency accountability—is the one that is fundamental to democracy. Continue reading "In Praise of Accountability"

 
 

Not Business as Usual for In-House Counsel

One of the most interesting things written about professional responsibility in 2014 is not a book or a law review article, but the report of an internal investigation. Anton Valukas, a former United States Attorney, now chair of the Chicago law firm Jenner & Block, was retained by the board of directors of General Motors to investigate the company’s inadequate response to reports of a serious defect in some of its cars. As extensively reported, a faulty ignition switch used in several G.M. cars, including the Chevrolet Cobalt and Saturn Ion, would sometimes fail in a way that both shut off the engine and disabled the car’s airbags.1 The switch departed from its intended design in a crucial respect – the torque was less than specified, so that if a driver inadvertently bumped into it, or if the keys hanging from the ignition switch were too heavy, the electrical system might change from “run” to “accessory” mode. As early as 2005, G.M. started to receive reports of crashes in which the car’s airbags failed to deploy. At first they did not suspect a problem, as there were other factors that might have caused the airbags to fail to deploy. It was also hard to track down the problem because the engineer who had approved the original, faulty switch also approved a change to the switch design that solved the problem, but did so in a way that obscured the original problem.2 But by about 2007, it was becoming clear that there might be a defect in the electrical system of certain car lines. Finally, in early 2014, G.M. publicly disclosed the defect, began recalling as many as 2.6 cars, and established a compensation fund for the victims of switch-related accidents.

What happened between 2007 and 2014? The long and short of it is, evidence of a possible defect was fed into the machinery of a cumbersome, bureaucratic process that churned on and on without moving toward a resolution. G.M. did not set about to cover up the problem. It has a byzantine structure of review programs, tracking systems, and cross-disciplinary committees that exists precisely to detect and rectify issues like the ignition switch defect.3 Customer satisfaction issues, which comes to the attention of G.M. personnel involved in marketing, are supposed to get directed to engineers for improvement, coded for whether the problems are a mere annoyance or a possible safety concern.4 Managers from divisions of products, systems, and safety engineering periodically met with business managers to work on solutions to safety problems and overcome roadblocks.5 Additional committees dealt with problems manifesting themselves in the field, and had contact with representatives from engineering, marketing, business, and legal teams.6 Reading the description of these procedures and protocols, one comes away with the impression of a company that takes its obligations to customers quite seriously, but in reality the redundancy and ambiguity inherent in the structure sapped the energy from the company’s response. With multiple committees dealing with various aspects of the same problem, no person or centralized team had responsibility for making sure something got done. CEO Mary Barra memorably testified before Congress about the “G.M. nod,” when everyone in the room agrees with a proposed plan of action, but no one does anything to make it happen, and the “G.M. salute,” which consists of crossed arms with fingers pointing toward others, to whom responsibility is being punted.7 The human cost of this dithering can be measured in the injuries and deaths that would have been prevented if prompt corrective action had been taken. Continue reading "Not Business as Usual for In-House Counsel"

 
 

Big Data and Deterrence

Zenon Zabinski and Bernard Black, The Deterrent Effect of Tort Law: Evidence from Medical Malpractice Reform, available at SSRN.

In a provocative new piece, Zenon Zabinski and Bernard Black address one of the most stubborn questions within all of tort law: Does tort law deter? The idea of deterrence is so deeply embedded within tort law that it seems absurd that the answer isn’t clear cut. But alas, a full four decades after the law and economics movement propelled tort’s deterrent function onto center stage, the answer to the question has, so far, remained maddeningly inconclusive.

This is not for lack of effort or investigation. Indeed, over the past few decades, scholars have tried to assess tort’s deterrent function in a wide variety of contexts, using any number of methodologies, from interviews with organizational insiders, to targeted case studies, to experimental vignettes, to surveys to assess the behavior and motivations of everyone from physicians and corporate managers to in-house counsel and CEOs.

In addition, empirically-minded scholars have contributed to this sprawling literature, most notably by exploiting natural experiments. Thus, they’ve amassed data to evaluate external shocks to liability risk in “treated” environments to see whether accident rates go up when liability risk (for whatever reason) goes down. Continue reading "Big Data and Deterrence"

 
 

So Who, at the End of the Day, Owns Google (or Apple, or Microsoft, or Pfizer…)?

Chris William Sanchirico, As American as Apple Inc.: International Tax and Ownership Nationality, 68 Tax. L. Rev. __ (forthcoming), available at SSRN.

As I was sitting down to draft this review of Chris Sanchirico’s paper, I ran a simple search on Google News: “‘U.S. Companies’ and Tax”. Here are some of things I learned skimming through search results returned by major news outlets: “U.S. Companies” now stash over $2 trillion overseas in order to avoid taxes (NBCNews, Nov. 12, 2014); “U.S. Companies” use mergers to shift their legal address to low-tax jurisdictions in a strategy known as “inversion” in order to reduce their U.S. tax bill (Bloomberg, Oct. 28, 2014); and, one of Congress’ top priorities for 2015 is a tax reform aimed at “helping” “U.S. Companies” avoid the U.S.’s “highest-in-the-world corporate tax rates”, in order to grow the economy (CNBC, Nov. 17, 2014).

Clearly, the taxation of “U.S. Companies” plays a major role in public discourse. Roughly speaking, the two sides of the debate can be outlined as follows: U.S. multinational corporations either pay too much (because our tax system is not competitive compared with the rest of the world), or too little (because our tax system is riddled with loopholes). We need to reform our tax system so “U.S. Companies” are at par with their foreign competitors; or, we need to tighten our tax rules so as to make sure that “U.S. Companies” share the burden. While political views differ, the terms of the debate seem clear. Whichever side of the debate one takes, something must be done about how we tax “U.S. companies.”

Sanchirico, however, questions the core terms of the debate: “When we speak of ‘U.S. multinationals,’ what do we mean by ‘U.S.’? More specifically, to what extent are these ‘U.S.’ companies owned by non-U.S. investors?” Sanchirico’s ultimate answer is quite a shocker: we have no idea what we are talking about when we speak of “U.S. Companies,” at least in terms of who owns these companies. Continue reading "So Who, at the End of the Day, Owns Google (or Apple, or Microsoft, or Pfizer…)?"

 
 

The Law and Economics of the Civil Rights Revolution

Quantitative scholars too often seem intent on sucking the complexities and nuances out of history. Sometimes, however, throwing numbers at history can have the reverse effect. Historians get themselves into ruts, embracing assumptions and approaches that ultimately shorten the horizons of analysis. A certain predictability develops in the scholarship. New contributions add more bricks to a building whose dimensions have already been charted. What may be needed is a jolt to these assumptions and approaches, a compelling case for reconceiving the central issues. At its best quantitative analysis delves beneath the surface of the familiar, revealing unfamiliar patterns or connections. And in the unfamiliar may be the complexities, contradictions, and puzzles that suggest productive new directions for scholars of all methodological proclivities to explore.

While not a discipline-shaking work of scholarship, Gavin Wright’s Sharing the Prize: The Economics of the Civil Rights Revolution in the American South does use quantitative analysis to make a persuasive case for reconsidering several tenets that have become accepted wisdom among scholars of the civil rights movement. Wright, an economic historian, synthesizes an array of quantitative research—some his own, some the work of others—in support of a claim that is both striking and important: the landmark federal civil rights policies of the 1960s marked not just a revolution in legal rights for African Americans, but also a significant advancement in their economic wellbeing. Continue reading "The Law and Economics of the Civil Rights Revolution"