Big New Problem Deflated

Vincent S.J. Buccola, Jameson K. Mah, and Tai Zhang, The Myth of Creditor Sabotage, __ U. Chi. L. Rev. __ (forthcoming), available at SSRN.

I love really good contrarian papers. They teach me things, and they don’t come along very often. Let’s face it, we academics tend to run in herds and our work tends to conform to our herd’s paradigm. Now, there may be more than one herd roaming in a given field—in corporate law we have at least three and maybe more—so that even the most argumentative, tendentious piece is less contrarian than it is directed at an opposing herd’s paradigm. The contrarian paper I have in mind works differently. It takes aim at a basic assumption shared amongst all members of all herds and tells us that that’s not what’s going on at all.

I also love really good papers about derivatives. There are certainly more than a few of these, but they don’t add up to very many given the importance of the subject matter and the concomitant need for investigation and learning. Corporate law professors for the most part don’t want to go there, preferring the comfier and less technically demanding precincts of corporate governance.

The Myth of Creditor Sabotage,” forthcoming in the University of Chicago Law Review and co-written by Vincent S. J. Buccola, an Assistant Professor at Wharton, Jameson K. Mah, an Investment Analyst at Cyrus Capital Partners, and Tai Zhang, a member of the Wharton class of 2020, hits both of these buttons. It is a really good, deeply contrarian paper about credit derivatives. I knew it was going to be special when the sheer orneriness of the introduction gave me a pleasant jolt. My pleasure grew as the analysis unfolded. Continue reading "Big New Problem Deflated"

Business Strategies in the Computer Age

Shmuel I. Becher & Sarah Dadush, Relationship as Product: Transacting in the Age of Loneliness, __ U. Ill. L. Rev. __ (forthcoming, 2021), available at SSRN.

Articles on contract law contribute to our understanding of the subject in many different ways. Professors Becher and Dadush’s article, Relationship as Product: Transacting in the Age of Loneliness is a must read, not because it resolves a legal issue or presents a novel way of looking at a problem, but because it raises a red flag about business practices with consumers that requires attention. Becher and Dadush argue that businesses have new methods of taking advantage of consumers in contracts brought about in part by technological advances and the concomitant social isolation and loneliness of people in our 21st century society. The authors write that “[B]usinesses increasingly utilize big data, sophisticated technology, and psychological vulnerabilities to design and tailor highly personalized and emotionally charged messages. Such messages are meant to signal, and instill in consumers, a sense of mutuality, care, compassion, intimacy, love, and affection.” (P. 4.) And more: “The loneliness epidemic makes it easy for firms to succeed in offering deep relationships to consumers—and to profit from doing so.” (P. 25-26.)

According to Becher and Dadush, businesses seek to create caring social relationships with consumers, at least superficially, to benefit their bottom line. The authors call this strategy “relationship as product.” The authors worry that this businesses strategy exploits consumers, among other things, by lulling them into making emotional instead of rational decisions about their contracts. This culminates in consumers making unwanted purchases of goods and services that “undermine social trust and decrease overall well-being.” (P. 7.) Moreover, consumers resistant to “relationship as product” do not go unaffected: “Relationship as product may thus result in higher prices for goods and services for all consumers, not just those who fall for love promises.” (P. 44.) Continue reading "Business Strategies in the Computer Age"

What Would MLK Do?: A Civil Rights Model of “Good Citizenship” in Criminal Procedure

I. Bennett Capers, Criminal Procedure and the Good Citizen, 118 Colum. L. Rev. 653 (2018).

Good citizenship and eager participation in police investigations would seem to fit hand-in-glove. The good citizen helps to enforce the criminal law, particularly if the physical safety of the citizenry is thought to be at risk. But as Bennett Capers argues in his essay, Criminal Procedure and the Good Citizen, this version of the good citizen—crafted and propagated by our nation’s highest court—falls into direct tension with the activist principles animating the Civil Rights Movement. For instance, Martin Luther King, Jr., insisted that the citizen not suffer from a cultural condition Capers describes as “too much respect for majoritarian law.” (P. 704.) The Movement, led by persons we now consider some of the greatest citizens in our nation’s history, rejected the notion of reflexive deference to majoritarian law and its enforcement.

During the Civil Rights Movement, the good “civil rights” citizen was inclined to assert her rights and to fight to extend them. After accounting for instances in which the Supreme Court, in its Fourth Amendment cases, admonished citizens to forgo their civil rights in the interest of effective police investigation, Capers poses a philosophical question. In the distinctive space of police-administered criminal procedure, what is the good citizen’s civic duty? Continue reading "What Would MLK Do?: A Civil Rights Model of “Good Citizenship” in Criminal Procedure"

AI Agents in Federal Agencies

David Freeman Engstrom, Daniel E. Ho, Catherine M. Sharkey & Mariano-Florentino Cuéllar, Government by Algorithm: Artificial Intelligence in Federal Administrative Agencies, Report for the Administrative Conference of the United States (2020), available at SSRN.

The use of artificial intelligence is on the rise at federal agencies, and administrative law scholars aren’t paying enough attention. In a forthcoming article, Ryan Calo and Danielle Citron question whether this increasingly “automated administrative state” presents a legitimacy crisis. After all, legislatures delegate broad law-implementation authority to administrative agencies because of regulators’ “ability to accrue expertise and the prospect of flexible and nimble responses to complex problems.” Yet these agencies are increasingly subdelegating such implementation authority to “systems in which they hold no expertise, and which foreclose discretion, individuation, and reason-giving almost entirely.” Despite these concerns, Calo and Citron ultimately do not demand a deconstruction of the automated administrative state. Instead, they argue that “agencies should consciously select technology to the extent its new affordances enhance, rather than undermine, the [expertise] rationale that underpins the administrative state.”

The Calo-Citron article deserves its own Jot. But it also raises a more fundamental question: How automated is the federal administrative state today? Although some work has documented the use of artificial intelligence and machine learning (AI/ML) at a handful of federal agencies, we had lacked a system-wide study. Recognizing this deficiency, the Administrative Conference of the United States commissioned an all-star group of scholars to comprehensively examine this regulatory landscape. In February, those scholars—David Freeman Engstrom, Daniel E. Ho, Catherine M. Sharkey, and Mariano-Florentino Cuéllar—issued their 122-page report, entitled Government by Algorithm: Artificial Intelligence in Federal Administrative Agencies.

There is so much to like *lots* in this report—too much to cover in this short Jot. But I’ll flag a few highlights. Continue reading "AI Agents in Federal Agencies"

Taking Business Law Back from the Economists: Building Worker Power Through Antitrust Reform

  • Hiba Hafiz, Labor’s Antitrust Paradox, 87 U. Chi. L. Rev. 381 (2019).
  • Sanjukta Paul, Antitrust as Allocator of Coordination Rights, 67 UCLA L. Rev. ___ (forthcoming 2020), available at SSRN.

The political economy of work in the United States is on the skids. In April 2020, unemployment skyrocketed,reaching a level not seen since the worst days of the Depression in the 1930s. Many who are still going to work — so-called “essential workers” — are in low-wage jobs without basic legal protections (think of independent contractor delivery and truck drivers, home care workers), as a matter of policy choice, not as a matter of some irresistible law of economics . Many farmworkers and other food sector workers are undocumented – meaning that government deems their work both essential and illegal. People of color and immigrants are hardest hit by coronavirus deaths and unemployment.

Now is the time to rethink how antitrust weakens collective action by workers while allowing massive concentration and enhancing the power of capital. Hiba Hafiz and Sanjukta Paul are doing exactly that. Both Hafiz and Paul challenge the dominance of a particular school of economic thought in antitrust analysis. They reflect an exciting push back against what Sandeep Vaheesan has called the economism of antitrust law. Their work helps scholars of labor and judges to discuss when, whether, or why collective action by labor is legal rather than an anti-competitive restraint on trade, and to understand why law has failed to curb the economic concentration that has suppressed wages. Continue reading "Taking Business Law Back from the Economists: Building Worker Power Through Antitrust Reform"

Towards the Consistent and Equitable Treatment of Phantom Income in Determining Domestic Support Obligations

Timothy M. Todd, Phantom Income and Domestic Support Obligations, 67 Buff. L. Rev. 365 (2019), available at SSRN.

Professor Todd’s article addresses an issue at the intersection of divorce/family law, federal income tax law, and, even, trusts and estates law. For me, the article highlights that the ideal situation for spouses in a divorce (if, among other things, money were no object) is for each of them to have their own divorce/family law attorney, tax attorney, and estate planning attorney. That, or have Professor Todd on call.

The issue addressed in the article is how “phantom income” should be treated by courts in determining a domestic support obligation (whether child support or spousal support or a modification to either one, hereinafter “DSO”). “Phantom income” is “amounts that are includible as [gross] income under the federal tax code but that have not resulted in any actual current cash receipt.” (P. 386.) Individuals obligated to make DSO payments “have argued that phantom income should not be included when calculating such obligations because the individual’s ability to pay has not materially changed.” (P. 386.) Because those individuals never received any current cash receipt, they contend that the court should not increase a DSO based on any phantom income. Continue reading "Towards the Consistent and Equitable Treatment of Phantom Income in Determining Domestic Support Obligations"

Planning For The Next Recession (Oh, Wait A Second …)

Recession-Ready: Fiscal Policies to Stabilize the American Economy (Heather Boushey, Ryan Nunn & Jay Shambaugh eds., 2019), available at The Hamilton Project.

Legal scholars, in tax and elsewhere, have increasingly recognized the need for countercyclical policy instruments. (An important example is Yair Listokin’s Law and Macroeconomics: Legal Remedies to Recessions.) Much of the tax system, of course, automatically responds to economic slowdowns, such as by generating less revenue when economic activity declines. In severe recessions, however, non-tax instruments become indispensable to delivering adequate stimulus and individual support.

In this regard, the Great Recession of 2007-2009 taught us several important things the hard way. One was that down business cycles are likely to be a recurrent feature of modern economic life. A second was that austerity makes absolutely no sense as a response to economic slowdowns. A third was that the political system cannot be trusted to respond adequately through discretionary policy changes.

The political economy concern used to be that Congress would simply act too slowly – as in the metaphor of a home heating system that has a six-month time lag, and hence that responds to a January deep freeze by turning on the boiler in July. But now there is also the threat of deliberate obstruction by Republicans whenever there is a Democratic president, alongside a rigid, non-reality-based ideology that tamps down responsiveness even when Republicans control both Congress and the White House. This creates an urgent need for the Democrats, if they win in 2020, to design automatic countercyclical fiscal policy changes that do not require any further discretionary enactment of legislative changes.

Luckily, an important recent book – Recession-Ready: Fiscal Policies to Stabilize the American Economy, edited by Heather Boushey, Ryan Nunn, and Jay Shambaugh and published by the Hamilton Project – offers a wide-ranging set of suggestions. These suggestions would merit serious consideration as cornerstones of a Biden Administration legislative agenda in January 2021. Continue reading "Planning For The Next Recession (Oh, Wait A Second …)"

Authority, Vulnerability, and Strict Liability

In Reconceptualising Strict Liability for the Tort of Another Christine Beuermann—a Lecturer in Law at the University of Newcastle—shines new light on strict liability for the wrongdoing of others. In the United States, we generally classify these as vicarious liabilities and non-delegable duties, and we usually conceptualize them in terms of the liability of principals for the acts of their agents. Perhaps surprisingly, these liabilities are at once ancient, very active at present, and poorly understood. Professor Beuermann’s book supplies a badly needed, original, and illuminating framework for thinking about these forms of liability. The book both offers an answer to longstanding theoretical puzzles, and guidance in deciding cases that presently vex the courts. It repays a reader’s careful study by reorienting the reader’s thinking.

Vicarious liability may well be the oldest form of tort liability extant in contemporary tort law. Legal historians often trace it back to Roman law, which held masters liable for the legal wrongs of their slaves, husbands liable for the wrongs of their wives, and fathers liable for the wrongs of their children. Blackstone distanced himself from Roman law’s instantiations, but he saw in them the roots of a more modern and general liability of masters for the torts of their servants. Over time, that liability transformed into the liability of employers for the torts of their employees committed within the scope of their employment.1 If the broad outlines of the history are clear, both the doctrine and the justification are not. Oliver Wendell Holmes thought that vicarious liability was wrong in principle, if too entrenched to uproot.2 Modern corrective justice theorists also tend to see the doctrine as anomalous because it is not fault-based.3 Other contemporary scholars have been more receptive to justifying the doctrine by reference to policies of accident prevention and loss-spreading, or by reference to “a deeply rooted sentiment that a business enterprise cannot justly disclaim responsibility for accidents which may fairly be said to be characteristic of its activities.”4 Whatever their virtues, these justifications have not been particularly helpful to courts struggling to decide the wave of sexual assault cases that have recently arisen. Why, exactly, is sexual assault a characteristic risk, say, of being a teacher but not of being a school janitor? Continue reading "Authority, Vulnerability, and Strict Liability"

Testing the Intro ParaLimit

A. Michael Froomkin, The Virtual Law School 2.0, __ J. Legal Ed. __ (forthcoming 2021).

Just over twenty years ago I gave a talk to the AALS called The Virtual Law School? Or, How the Internet Will De-skill the Professoriate, and Turn Your Law School Into a Conference Center. I came to the subject because I had been working on Internet law, learning about virtual worlds and e-commerce, and about the power of one-to-many communications. It seemed to me that a lot of what I had learned applied to education in general and to legal education in particular.

It didn’t happen. Or at least, it has not happened yet. In this essay I want to revisit my predictions from twenty years ago in order to investigate which were wrong and which were just premature. The massive convulsion now being forced on law teaching due to the social distancing required to prevent COVID-19 transmission presents an occasion in which we are all forced to rethink how we deliver law teaching. After discussing why my predictions failed to manifest before 2020, I will argue that unless this pandemic is brought under control quickly, the market for legal education may force some radical changes on us—whether we like it or not, and that in the main my earlier predictions were not wrong, just premature.

Back in 2000, I started my talk with hard truths which are no longer controversial but perhaps were not entirely fit for polite company when the law teaching industry was still very much in a go-go growth mentality: First, that law teaching is a business, therefore legal education has to worry about the bottom line. Second, that at least a private law school—which is where I found and still find myself—is just one of many ‘product lines’ for a private university. Third, that at least from the University’s point of view the law school is a “profit center.” And, fourth, that, as businesses go, law schools were a business with great structural problems.

Even in 2000 it was obvious that costs were out of control. Law school tuition was going up every year. Students were beginning to experience sticker shock and were graduating with ever higher levels of debt. Indeed, for the first time law schools were beginning to experience some customer resistance on price and this was leading to discounting competition between law schools. Meanwhile, student attitudes towards educational institutions were changing, leading to the rise of what became called the ‘consumer mentality’ in place of the ‘student mentality.’ And students from Harvard onward began to complain about the perceived hostility and unfriendliness of many law schools. Continue reading "Testing the Intro ParaLimit"

Revised Plugin Test

John Hart Ely, The Wages of Crying Wolf: A Comment on Roe v. Wade, 82 Yale L.J. 920 (1973).

Explaindio is not only a video creator but also an animation designer and one of the best whiteboard animation software tools. It’s an entertaining and practical software application that gives you the possibility to design eye-catching videos that will draw more buyers to your products or services.

Finding fun and engaging ways to promote your merchandise over the Internet can be quite challenging, even if you have a top-notch product that would normally sell itself. Adding the right images and writing the right text is an essential part of a sales pitch. Continue reading "Revised Plugin Test"

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