The February issue of 艾可直播 College Law Review is now available. The issue features four articles by outside authors as well as three student notes. Summaries of the seven pieces can be found below. The full texts are also聽.
by Professor J. Shahar Dillbary
Collective liability is commonplace in the American legal system. Examples range from medical malpractice cases to criminal larceny to public housing evictions under the federal 鈥淥ne Strike Rule.鈥� Courts impose liability on a group that may include innocent actors under the theory that such a regime incentivizes actors to monitor each other, take preventative measures, and if harm occurs, to share information identifying the wrongdoer. Despite the ubiquity and accepted wisdom of collective liability regimes, Professor Dillbary finds that its actual effects remain under-theorized and under-studied. Using economic theory and empirical evidence, this Article shows that imposing collective liability can erode the incentive for actors to monitor and prevent harm, as well as encourage collusion and other harmful practices. All, however, is not lost. Professor Dillbary argues that the right approach can remedy these faults while retaining the regime鈥檚 benefits in certain situations. The Article provides a new way forward with a practical approach to minimize strategic behaviors and reduce collective liability鈥檚 detrimental effects.
by Hilary J. Allen
The processing of retail payments traditionally has been the domain of regulated banks, but technologically sophisticated players like Venmo, AliPay, Bitcoin, and Ripple, and potentially, Facebook鈥檚 Libra, are making incursions into the market. Professor Allen argues that technological failures at a payments provider鈥攅ither a bank or non-bank鈥攃ould be amplified in unexpected ways. This Article is the first to raise the possibility of a financial crisis precipitated primarily by operational failures. Such a crisis would look more like a rolling blackout than a bank run, and thus it is insufficient to approach the risk of payments failure with a purely prudential strategy. This Article makes the case for a complementary 鈥渕acro-operational鈥� approach to regulation, rooted in complexity theory, to deal with the possibility that the systemic interactions of operational risks could hobble our retail payments system鈥攁nd the broader economy. Using this framework, this Article analyzes the potential threats posed by different technologies and business models to the orderly functioning of our retail payments system. Finally, this Article suggests the beginnings of what proactive macro-operational regulation of the retail payments system might look like.
by Emily Berman
This Article argues that the Office of Legal Counsel (OLC)鈥攁n office within the Justice Department that issues legal opinions that govern executive branch actors鈥攁rms the executive branch with a powerful weapon to deploy in its conflicts with Congress. Professor Bermans argues that, despite its reputation as a neutral arbiter of constitutional questions, OLC鈥檚 separation-of-powers opinions do not simply describe the executive鈥檚 view of the law; they actually augment executive powers vis-脿-vis Congress. This novel argument emerges from two descriptive claims: (1) that OLC鈥檚 institutional design guarantees that its separation-of-powers opinions will articulate a decidedly pro-executive view of the law; and (2) that these executive-friendly legal analyses not only guide the actions of executive officials, but also shape the legal landscape outside the executive branch. In other words, Professor Berman argues, OLC makes its own legal reality: its separation-of-powers opinions first envision a world that values executive branch prerogatives over congressional interests, and then, by their very existence, help realize that vision. The result is that OLC provides the executive with a powerful weapon in its inter-branch disputes with Congress鈥攁 phenomenon that to date has gone unremarked. After identifying the mechanisms through which OLC places a thumb on the executive鈥檚 side of the scale in inter-branch disputes, this Article suggests several ways that Congress could level the playing field.
by Charles R. Korsmo
This Article examines strategic disclosure behavior in the context of merger announcements. Merger transactions are frequent targets of litigation, including both fiduciary duty class actions and statutory appraisal actions. In either type of litigation, the fair value of the target company as a going concern is at least a part of the measure of damages. In recent years, courts have increasingly looked to market evidence of valuation鈥攊ncluding the trading price of the target company鈥檚 stock prior to the announcement of the merger. Professor Korsmo argues that this gives managers an incentive to minimize this trading price by strategically timing disclosures such that negative news is released prior to announcement of a merger while positive news is released simultaneously with or following a merger announcement. In many ways, the disclosure incentives managers face in the merger context mirror those they face in the securities fraud context. For years, securities fraud plaintiffs have typically been required to prove loss causation by using an event study to show a market decline upon corrective disclosure鈥攁 practice enshrined by the United States Supreme Court in Dura Pharmaceuticals, Inc. v. Broudo. Managers can make this task more difficult by bundling corrective disclosures with other potentially material news. Combining the corrective disclosure with additional bad news can make it impossible to determine what portion of any resulting price drop to ascribe to the corrective disclosure. Combining the disclosure with offsetting good news can reduce or eliminate the price reaction altogether. These types of strategic disclosure behaviors have important implications for the design of federal disclosure rules and judicial doctrine. To the extent that courts and regulators ascribe legal significance to the market鈥檚 reaction to information contained in corporate disclosures, those disclosures should be required to be made in a way that results in an informative market reaction. As such, this Article proposes that the Securities Exchange Commission should require several types of litigation-relevant information to be disclosed in standalone, unbundled fashion. In addition, this Article suggests refinements to judicial doctrine. These refinements are designed to: (1) minimize the incentive for managers to employ opportunistic disclosure strategies; and (2) preserve the flexibility to employ non-market valuation evidence where market evidence has been corrupted or obscured.
by Nina Labovich
Nina Labovich鈥檚 Note explores the impact of anosognosia, a common symptom of schizophrenia that renders individuals unable to understand that they are living with a disease, upon an individual's competency to give (or deny) consent to treatment.聽 When courts find individuals to be a danger to others or themselves, states can impose involuntary commitment. In the event of commitment, however, individuals may retain the ability to refuse medication, regardless of whether they understand that they have a serious illness. Nina argues that documented anosognosia requires a finding of incompetency, whether people are a danger to themselves or not.聽 Nina proposes a novel statutory definition of competency that encompasses the specific needs of people with anosognosia and grapples with the significant interests at stake in taking away an individual鈥檚 right to choose or refuse treatment.
by Abigail Mahoney
Students attending under-resourced public schools are held to the same statewide standards as their peers in wealthier districts, but are attempting to learn under conditions of neglect. In most states, students lacking qualified teachers, safe classrooms, textbooks, and other learning resources have no power to change their school environments. Without a federal constitutional right to education, efforts to improve school conditions by invoking general state protections have had mixed success. Abigail Mahoney鈥檚 Note examines California鈥檚 student complaint process as a national model for community oversight of specific school conditions. In California, the Williams student class action helped set enforceable requirements to force state accountability for teacher qualification, classroom resources, and school health and safety. Abigail argues that all states should adopt modern, accessible complaint mechanisms to restore agency to students, empower teachers to engage in school reform, and ensure efficient use of state resources in addressing individual school site problems. Abigail further argues that establishing specific bright-line rules for classroom conditions across all public schools in a state can delineate clear instances for court intervention in education policy, and set the groundwork for more ambitious student lawsuits in the future.
by Jonathan Lester
Fraud victims suffer many indignities with the loss of financial security and the accompanying hardships. The patchwork of state treatments of emotional distress in fraud cases further compounds that indignity by preventing compensation for emotional trauma experienced due to a fraudster鈥檚 malfeasance. Jonathan Lester鈥檚 Note first explores the history of emotional distress damages in American tort law in concert with the development of psychiatric diagnostic ability. Jonathan鈥檚 Note then reviews plaintiffs鈥� ability to recover in each state for the emotional harm suffered in fraud cases and, in states where recovery is allowed, what methods courts use to evaluate that distress. Jonathan鈥檚 Note culminates in an argument that the modern development of psychiatric medicine enables all courts to recognize emotional distress in fraud and that all courts should compensate fraud victims鈥� emotional distress based on a severity standard.