This Article tells a story about judges and the development of doctrine (or, arguably, lack thereof), and what happens when Congress both legislatively and rhetorically gives overworked federal courts the permission and the power to exercise docket control by eliminating cases at the motion-to-dismiss stage. It is also a story about the long-run implications of a focus on procedure and form over substance in the realm of securities law. The moral of the story is that when form over substance is the input, form over substance is the output. The story focuses on federal district court judges who are trial management specialists, faced with lengthy dockets. It is drawn from the courts' moves and language, followed, largely, by exploring cases in which courts have deployed judge-made heuristics to securities-fraud claims. In the end, it is a story about the limits of the rule of law. The larger story has its roots in the many years of cases decided since the Securities Act of 1933 and the Securities Exchange Act of 1934 were passed. But, the focus of this story is more recent, unfolding primarily since December of 1995, when Congress passed the Private Securities Litigation Reform Act (the "PSLRA"), and statutorily created pleading standards for securities-fraud claims. Although the story could be a novel, with chapters encompassing all types of claims and reforms included in the PSLRA, the securities-law portion of this Article is only part of the tale - a backdrop for the story about judging and judges and the heuristics they use and the impression those heuristics create. Section One of the Article discusses district court judges, their workloads, and motives. Then, in Section Two, I explore the heuristics, or shortcuts that are evolving out of those, largely, district court opinions, through the ways in which they have developed and applied one pre-PSLRA standard, called the Motive and Opportunity Test, to the scienter element of claims brought pursuant to the Securities Exchange Act. The district courts have eagerly and overwhelmingly accepted the "opportunity" Congress offered them by creating and using heuristics to eliminate cases on motions to dismiss that are arguably better preserved for summary judgment. In Section Three, I review those courts' rhetoric; how they exercise their discretion and the comments and powers they invoke in doing so, arguing that the courts' commentaries create the appearance of disdain for these cases and, sometimes, contempt for the plaintiffs' lawyers involved. Using that language and rhetoric, in combination with the heuristics discussed in Section Two, I then focus on the impressions created by the heuristics and rhetoric, arguing that the district courts are creating the impression that their own desires to clear their dockets have the potential to overwhelm the merits of the cases before them. Lastly, in Section Four, I explore the potential implications of these opinions and the heuristics for the legitimac
本文讲述了一个关于法官和原则发展(或者可以说，缺乏原则)的故事，以及当国会在立法和修辞上给予劳累过度的联邦法院许可和权力，通过在动议驳回阶段取消案件来行使摘要控制时会发生什么。这也是一个关于在证券法领域注重程序和形式而不是实质的长期影响的故事。这个故事的寓意是，当形式大于实质是输入时，形式大于实质就是输出。这个故事的重点是联邦地区法院的法官，他们是审判管理专家，面临着冗长的诉讼程序。它是从法院的行动和语言中得出的，其次，主要是通过探索法院在证券欺诈索赔中使用法官启发式的案例。最后，这是一个关于法治局限性的故事。从1933年《证券法》(Securities Act of 1933)和1934年《证券交易法》(Securities Exchange Act of 1934)通过以来的许多年里，案件的裁决都有其根源。但是，这个故事的焦点是最近的，主要是从1995年12月开始展开的，当时国会通过了《私人证券诉讼改革法案》(PSLRA)，并在法律上为证券欺诈索赔制定了辩护标准。虽然这个故事可以是一部小说，章节中包含了PSLRA中所有类型的索赔和改革，但本文的证券法部分只是故事的一部分-关于审判和法官以及他们使用的启发式以及这些启发式产生的印象的故事的背景。该条第一节讨论了地区法院法官、他们的工作量和动机。然后，在第二部分中，我探索了启发式或捷径，主要是从地方法院的意见中发展出来的，通过他们开发和应用pslra之前的一个标准的方式，称为动机和机会测试，根据《证券交易法》提出的索赔的科学要素。地方法院急切地、压倒性地接受了国会提供给他们的“机会”，通过创造和使用启发式法来排除动议驳回的案件，这些案件可能更好地保留在即决判决中。在第三部分，我回顾了这些法院的修辞;他们如何行使自己的自由裁量权，以及他们在这样做时援引的评论和权力，他们认为法院的评论造成了对这些案件的蔑视，有时甚至是对原告律师的蔑视。使用这种语言和修辞，结合第二节中讨论的启发式，然后我将重点放在启发式和修辞所产生的印象上，认为地方法院正在创造一种印象，即他们自己清理案卷的愿望有可能压倒他们面前案件的是非曲直。最后，在第四节中，我探讨了这些意见的潜在含义以及对证券市场和法院合法性的启发。
{"title":"Judging Heuristics","authors":"Hillary A. Sale","doi":"10.2139/ssrn.262725","DOIUrl":"https://doi.org/10.2139/ssrn.262725","url":null,"abstract":"This Article tells a story about judges and the development of doctrine (or, arguably, lack thereof), and what happens when Congress both legislatively and rhetorically gives overworked federal courts the permission and the power to exercise docket control by eliminating cases at the motion-to-dismiss stage. It is also a story about the long-run implications of a focus on procedure and form over substance in the realm of securities law. The moral of the story is that when form over substance is the input, form over substance is the output. The story focuses on federal district court judges who are trial management specialists, faced with lengthy dockets. It is drawn from the courts' moves and language, followed, largely, by exploring cases in which courts have deployed judge-made heuristics to securities-fraud claims. In the end, it is a story about the limits of the rule of law. The larger story has its roots in the many years of cases decided since the Securities Act of 1933 and the Securities Exchange Act of 1934 were passed. But, the focus of this story is more recent, unfolding primarily since December of 1995, when Congress passed the Private Securities Litigation Reform Act (the \"PSLRA\"), and statutorily created pleading standards for securities-fraud claims. Although the story could be a novel, with chapters encompassing all types of claims and reforms included in the PSLRA, the securities-law portion of this Article is only part of the tale - a backdrop for the story about judging and judges and the heuristics they use and the impression those heuristics create. Section One of the Article discusses district court judges, their workloads, and motives. Then, in Section Two, I explore the heuristics, or shortcuts that are evolving out of those, largely, district court opinions, through the ways in which they have developed and applied one pre-PSLRA standard, called the Motive and Opportunity Test, to the scienter element of claims brought pursuant to the Securities Exchange Act. The district courts have eagerly and overwhelmingly accepted the \"opportunity\" Congress offered them by creating and using heuristics to eliminate cases on motions to dismiss that are arguably better preserved for summary judgment. In Section Three, I review those courts' rhetoric; how they exercise their discretion and the comments and powers they invoke in doing so, arguing that the courts' commentaries create the appearance of disdain for these cases and, sometimes, contempt for the plaintiffs' lawyers involved. Using that language and rhetoric, in combination with the heuristics discussed in Section Two, I then focus on the impressions created by the heuristics and rhetoric, arguing that the district courts are creating the impression that their own desires to clear their dockets have the potential to overwhelm the merits of the cases before them. Lastly, in Section Four, I explore the potential implications of these opinions and the heuristics for the legitimac","PeriodicalId":35903,"journal":{"name":"Journal of Environmental Law and Litigation","volume":"1 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2001-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"74836077","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This essay responds to claims that the "new" nondelegation doctrine, applied by D.C. Circuit Judge Stephen Williams in American Trucking Association, Inc. v. EPA, 175 F.3d 1027 (D.C. Cir. 1999), advances the rule of law. The Supreme Court has generally favored ex post over ex ante mechanisms for control of administrative action. Currently, for instance, courts apply arbitrary and capricious review, as a way to control agency decision making ex post. But the rule of law benefits of the "new" nondelegation doctrine are no greater than those delivered by the current means of ex post controls. The rule of law serves three primary functions: it reduces uncertainty; it minimizes the likelihood of government tyranny; and it helps to assure political accountability. Judicially enforced ex ante constraints, however, are not necessary to perform any of these functions, and may even undermine some of them. In addition, the rule of law is not the be-all and end-all of regulatory systems. There are countervailing benefits to a system that allows for regulatory flexibility. Although there may be some role for ex ante constraints in controlling agency discretion, the factors that determine the means of limiting agency discretion are political rather than legal in nature. Thus, imposition of ex ante limitations is best left to the political process--not to courts.
{"title":"The False Promise of the 'New' Nondelegation Doctrine","authors":"M. Seidenfeld, Jim Rossi","doi":"10.2139/SSRN.214508","DOIUrl":"https://doi.org/10.2139/SSRN.214508","url":null,"abstract":"This essay responds to claims that the \"new\" nondelegation doctrine, applied by D.C. Circuit Judge Stephen Williams in American Trucking Association, Inc. v. EPA, 175 F.3d 1027 (D.C. Cir. 1999), advances the rule of law. The Supreme Court has generally favored ex post over ex ante mechanisms for control of administrative action. Currently, for instance, courts apply arbitrary and capricious review, as a way to control agency decision making ex post. But the rule of law benefits of the \"new\" nondelegation doctrine are no greater than those delivered by the current means of ex post controls. The rule of law serves three primary functions: it reduces uncertainty; it minimizes the likelihood of government tyranny; and it helps to assure political accountability. Judicially enforced ex ante constraints, however, are not necessary to perform any of these functions, and may even undermine some of them. In addition, the rule of law is not the be-all and end-all of regulatory systems. There are countervailing benefits to a system that allows for regulatory flexibility. Although there may be some role for ex ante constraints in controlling agency discretion, the factors that determine the means of limiting agency discretion are political rather than legal in nature. Thus, imposition of ex ante limitations is best left to the political process--not to courts.","PeriodicalId":35903,"journal":{"name":"Journal of Environmental Law and Litigation","volume":"45 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2000-03-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"84626060","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We consider the formation and legal protection of secret agreements by analyzing a negotiated settlement between a harmed plaintiff and a culpable defendant that seeks to disenfranchise a second harmed plaintiff by keeping the existence (and details) of the instant settlement secret. This is done so as to reduce the likelihood of the second plaintiff suing the defendant for damages or, failing that, to reduce the losses incurred by the defendant in the second suit. Such agreements happen every day and are generally legal, but are they socially optimal? Formally, we consider a sequence of incomplete information bargaining games wherein uninformed plaintiffs make demands of the informed defendant, with the defendant and the first plaintiff recognizing that their actions in the first case may convey information about the defendant's culpability to the second plaintiff. We then use the results of the analysis to provide insight as to when the law should prohibit or permit confidential agreements. We find that, even though early plaintiffs prefer permitting confidentiality and later plaintiffs prefer prohibiting it, the average plaintiff prefers prohibition. We also show that defendants always prefer that confidentiality be permitted. When role-interim decisions (that is, decisions made when agents know whether they are likely to be plaintiffs or defendants) have no (or small) adverse welfare consequences, society would (ex ante) prefer permitting confidential settlements. However, if agents know their roles, then this conflict of preferences can mean reduced consumer demand due to perceived incentives for firms to reduce care and due to the expectation of undercompensation for harms suffered. This can lead to further reduced care and provide reduced incentives to innovate. Furthermore, confidentiality potentially biases perceived reputations of firms, potentially leading consumers to avoid trade due to concern for adverse selection and moral hazard. We also show how this analysis can systematically inform the exercise of judicial discretion with regard to such agreements.
{"title":"Is Silence Golden? Confidentiality and Correlated Culpability","authors":"A. Daughety, Jennifer F. Reinganum","doi":"10.2139/ssrn.149778","DOIUrl":"https://doi.org/10.2139/ssrn.149778","url":null,"abstract":"We consider the formation and legal protection of secret agreements by analyzing a negotiated settlement between a harmed plaintiff and a culpable defendant that seeks to disenfranchise a second harmed plaintiff by keeping the existence (and details) of the instant settlement secret. This is done so as to reduce the likelihood of the second plaintiff suing the defendant for damages or, failing that, to reduce the losses incurred by the defendant in the second suit. Such agreements happen every day and are generally legal, but are they socially optimal? Formally, we consider a sequence of incomplete information bargaining games wherein uninformed plaintiffs make demands of the informed defendant, with the defendant and the first plaintiff recognizing that their actions in the first case may convey information about the defendant's culpability to the second plaintiff. We then use the results of the analysis to provide insight as to when the law should prohibit or permit confidential agreements. We find that, even though early plaintiffs prefer permitting confidentiality and later plaintiffs prefer prohibiting it, the average plaintiff prefers prohibition. We also show that defendants always prefer that confidentiality be permitted. When role-interim decisions (that is, decisions made when agents know whether they are likely to be plaintiffs or defendants) have no (or small) adverse welfare consequences, society would (ex ante) prefer permitting confidential settlements. However, if agents know their roles, then this conflict of preferences can mean reduced consumer demand due to perceived incentives for firms to reduce care and due to the expectation of undercompensation for harms suffered. This can lead to further reduced care and provide reduced incentives to innovate. Furthermore, confidentiality potentially biases perceived reputations of firms, potentially leading consumers to avoid trade due to concern for adverse selection and moral hazard. We also show how this analysis can systematically inform the exercise of judicial discretion with regard to such agreements.","PeriodicalId":35903,"journal":{"name":"Journal of Environmental Law and Litigation","volume":"71 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"1999-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"78703817","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This note extends the Bernardo, Talley & Welch (1999) model of legal presumptions to study situations where litigation efforts are spent sequentially rather than simultaneously. The equilibria of the litigation stage are presented as functions of the underlying presumption. The equilibria and comparative statics are shown to be qualitatively similar to those of the simultaneous version. However, sequentiality allows the principal to pre commit to a litigation strategy, and thus possibly preempt any litigation effort whatsoever by the agent.
{"title":"A Note on Presumptions with Sequential Litigation","authors":"Antonio E. Bernardo, E. Talley","doi":"10.2139/ssrn.167568","DOIUrl":"https://doi.org/10.2139/ssrn.167568","url":null,"abstract":"This note extends the Bernardo, Talley & Welch (1999) model of legal presumptions to study situations where litigation efforts are spent sequentially rather than simultaneously. The equilibria of the litigation stage are presented as functions of the underlying presumption. The equilibria and comparative statics are shown to be qualitatively similar to those of the simultaneous version. However, sequentiality allows the principal to pre commit to a litigation strategy, and thus possibly preempt any litigation effort whatsoever by the agent.","PeriodicalId":35903,"journal":{"name":"Journal of Environmental Law and Litigation","volume":"35 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"1999-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"80460222","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Despite liberalization of the rules of evidence, children must still understand the difference between truth and falsehood, appreciate the obligation to tell the truth, and take some form of the oath before they are allowed to testify. The legal requirements raise three questions: (a) How should children's understanding be assessed? (b) What form of the oath should be used? and (c) Does understanding and/or oath-taking correlate with honesty? I review the research on these issues and present data from a series of studies involving maltreated and non-maltreated children. The research demonstrates that conventional methods of assessing children's understanding are prone to serious error and that young children may have difficulty understanding even simplified versions of the oath. I recommend more sensitive measures for qualifying children and a child-friendly version of the oath. I also review research testing the relation among oath-taking competence, oath-taking, and honesty, and present data from two studies demonstrating that the oath can affect children's honesty.
{"title":"Young Children's Competency to Take the Oath","authors":"T. Lyon","doi":"10.2139/ssrn.161190","DOIUrl":"https://doi.org/10.2139/ssrn.161190","url":null,"abstract":"Despite liberalization of the rules of evidence, children must still understand the difference between truth and falsehood, appreciate the obligation to tell the truth, and take some form of the oath before they are allowed to testify. The legal requirements raise three questions: (a) How should children's understanding be assessed? (b) What form of the oath should be used? and (c) Does understanding and/or oath-taking correlate with honesty? I review the research on these issues and present data from a series of studies involving maltreated and non-maltreated children. The research demonstrates that conventional methods of assessing children's understanding are prone to serious error and that young children may have difficulty understanding even simplified versions of the oath. I recommend more sensitive measures for qualifying children and a child-friendly version of the oath. I also review research testing the relation among oath-taking competence, oath-taking, and honesty, and present data from two studies demonstrating that the oath can affect children's honesty.","PeriodicalId":35903,"journal":{"name":"Journal of Environmental Law and Litigation","volume":"42 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"1999-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"88095389","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The concept of present value is a standard and uncontroversial staple of business economists. While there may be some legitimate debate over the choice of interest rate to be used in any application, the idea of present value is not seriously in debate. It may come as a surprise, therefore, to learn that the use of present value calculations in legal settings is not routinely accepted. We examine this difference of opinion in the context of a major case study in which huge amounts of money hinged on the willingness of the courts to allow present value calculations. This case is the calculation of damages in the lawsuits brought by state attorney generals against tobacco companies. From the perspective of damages experts retained by the plaintiffs in many of these cases, we found ourselves convincing lawyers and judges of the need to use present value calculations. Given the long time horizon over which damages occurred, for example back to 1957 in the Oklahoma case, the use of present value could be expected to make a significant difference to the overall damages amounts. Indeed, we show that it does. For the state of Oklahoma, un-discounted excess medical expenditures due to smoking are $1.395 billion during the forty-year period since 1957. When an appropriate risk-adjusted rate is applied, the present value of those damages nearly triples to $4.011 billion. This is a significant difference in damages, by virtually any metric.
{"title":"Should Tobacco Companies Pay the Present Value of Damages?","authors":"M. Coller, G. Harrison","doi":"10.2139/ssrn.185532","DOIUrl":"https://doi.org/10.2139/ssrn.185532","url":null,"abstract":"The concept of present value is a standard and uncontroversial staple of business economists. While there may be some legitimate debate over the choice of interest rate to be used in any application, the idea of present value is not seriously in debate. It may come as a surprise, therefore, to learn that the use of present value calculations in legal settings is not routinely accepted. We examine this difference of opinion in the context of a major case study in which huge amounts of money hinged on the willingness of the courts to allow present value calculations. This case is the calculation of damages in the lawsuits brought by state attorney generals against tobacco companies. From the perspective of damages experts retained by the plaintiffs in many of these cases, we found ourselves convincing lawyers and judges of the need to use present value calculations. Given the long time horizon over which damages occurred, for example back to 1957 in the Oklahoma case, the use of present value could be expected to make a significant difference to the overall damages amounts. Indeed, we show that it does. For the state of Oklahoma, un-discounted excess medical expenditures due to smoking are $1.395 billion during the forty-year period since 1957. When an appropriate risk-adjusted rate is applied, the present value of those damages nearly triples to $4.011 billion. This is a significant difference in damages, by virtually any metric.","PeriodicalId":35903,"journal":{"name":"Journal of Environmental Law and Litigation","volume":"45 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"1999-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"76196475","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This article, a review essay of Marcia Angell's Science on Trial, begins by discussing the history of breast implant litigation. The implant litigation was not driven by scientific evidence, but by political posturing by self-proclaimed consumer activist Sidney Wolfe, FDA Commissioner David Kessler, and others, sensationalistic media coverage, public opinion inflamed by revelations that implant manufacturers had not followed up on concerns about the potential health effects of silicone, and a contingency fee system that encourages speculative litigation. Once plaintiffs' attorneys won a few big, early victories through superior lawyering, reliance on junk science, and emotional appeals to juries, this attracted investment by other attorneys and created an irrepressible flood of litigation. Next, this article discusses reforms of the American tort system that would reduce attorneys' financial incentives to bring scientifically-dubious claims. First, courts should establish and enforce strict standards for the admissibility of scientific evidence. Second, the contingency fee system should be replaced with the British conditional fee system. Finally, trial procedures should be reformed to increase the probability that fact-finders will arrive at scientifically-correct judgments. Finally, this article considers and rejects recent proposals to allow plaintiffs in toxic tort cases to recover damages for their illnesses without proof of causation if there is proof of defendant's negligence. Instead, the article proposes a legislative solution, akin to whistle-blower statutes and qui tam provisions, that would permit individuals to bring an action in a federal tribunal against a company that is negligently putting the health of the public at risk.
{"title":"The Breast Implant Fiasco","authors":"D. Bernstein","doi":"10.2139/SSRN.107588","DOIUrl":"https://doi.org/10.2139/SSRN.107588","url":null,"abstract":"This article, a review essay of Marcia Angell's Science on Trial, begins by discussing the history of breast implant litigation. The implant litigation was not driven by scientific evidence, but by political posturing by self-proclaimed consumer activist Sidney Wolfe, FDA Commissioner David Kessler, and others, sensationalistic media coverage, public opinion inflamed by revelations that implant manufacturers had not followed up on concerns about the potential health effects of silicone, and a contingency fee system that encourages speculative litigation. Once plaintiffs' attorneys won a few big, early victories through superior lawyering, reliance on junk science, and emotional appeals to juries, this attracted investment by other attorneys and created an irrepressible flood of litigation. Next, this article discusses reforms of the American tort system that would reduce attorneys' financial incentives to bring scientifically-dubious claims. First, courts should establish and enforce strict standards for the admissibility of scientific evidence. Second, the contingency fee system should be replaced with the British conditional fee system. Finally, trial procedures should be reformed to increase the probability that fact-finders will arrive at scientifically-correct judgments. Finally, this article considers and rejects recent proposals to allow plaintiffs in toxic tort cases to recover damages for their illnesses without proof of causation if there is proof of defendant's negligence. Instead, the article proposes a legislative solution, akin to whistle-blower statutes and qui tam provisions, that would permit individuals to bring an action in a federal tribunal against a company that is negligently putting the health of the public at risk.","PeriodicalId":35903,"journal":{"name":"Journal of Environmental Law and Litigation","volume":"34 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"1999-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"76203056","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This Article considers the extent to which the creation of law has been privatized through arbitration. It suggests that, under Supreme Court cases and other current legal doctrine, vast areas of law are privatizable and that this degree of privatization is possible only through arbitration. The implications of this point are separated along the familiar line between mandatory rules of law and default rules. The first implication is that arbitration jeopardizes mandatory rules of law. To preserve the mandatory effect of these rules, the Supreme Court must make a choice. The Court must either reverse its decisions that claims arising under otherwise mandatory rules are arbitrable, or require de novo judicial review of arbitrators' legal rulings on such claims. The second implication is that claims arising under default rules should be arbitrable and completely free from judicial review for errors of law. The arbitration of claims arising under default rules presents an opportunity to privatize the creation of vast areas of law. It is an opportunity to create private legal systems of unwritten norms, written rules, and the precedents of private courts.
{"title":"Default Rules from Mandatory Rules: Privatizing Law Through Arbitration","authors":"S. Ware","doi":"10.2139/SSRN.140738","DOIUrl":"https://doi.org/10.2139/SSRN.140738","url":null,"abstract":"This Article considers the extent to which the creation of law has been privatized through arbitration. It suggests that, under Supreme Court cases and other current legal doctrine, vast areas of law are privatizable and that this degree of privatization is possible only through arbitration. The implications of this point are separated along the familiar line between mandatory rules of law and default rules. The first implication is that arbitration jeopardizes mandatory rules of law. To preserve the mandatory effect of these rules, the Supreme Court must make a choice. The Court must either reverse its decisions that claims arising under otherwise mandatory rules are arbitrable, or require de novo judicial review of arbitrators' legal rulings on such claims. The second implication is that claims arising under default rules should be arbitrable and completely free from judicial review for errors of law. The arbitration of claims arising under default rules presents an opportunity to privatize the creation of vast areas of law. It is an opportunity to create private legal systems of unwritten norms, written rules, and the precedents of private courts.","PeriodicalId":35903,"journal":{"name":"Journal of Environmental Law and Litigation","volume":"6 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"1999-01-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"75009559","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We analyse the major economic issues raised by the 1997 Tobacco Resolution and the ensuing proposed legislation that were intended to settle tobacco litigation in the United States. By settling litigation largely in return for tax increases, the Resolution was a superb example of a "win-win" deal. The taxes would cost the companies about $1 billion per year, but yield the government about $13 billion per year, and allow the lawyers to claim fees based on hundreds of billions in "damages". Only consumers, in whose name many of the lawsuits were filed, lost out. Though the strategy seems brilliant for the parties involved, the execution was less intelligent. We show that alternative taxes would be considerably superior to those proposed, and explain problems with the damage payments required from the firms, and the legal protections offered to them. We argue that the legislation was not particularly focused on youth smoking, despite the rhetoric. However, contrary to conventional wisdom, youth smokers are not especially valuable to the companies, so marketing restrictions are a sensible part of any deal. The individual state settlements set very dangerous examples which could open up unprecedented opportunities for collusion throughout the economy, and the multistate settlement of November 1998 is equally flawed. The fees proposed for the lawyers (around $15 billion) and the equally remarkable proposed payoff for Liggett (perhaps $400 million annually, for a company with a prior market value of about $100 million) also set terrible examples. We conclude with some views about how public policy might do better.
{"title":"The Tobacco Deal","authors":"P. Klemperer, Jeremy I. Bulow","doi":"10.2139/ssrn.158328","DOIUrl":"https://doi.org/10.2139/ssrn.158328","url":null,"abstract":"We analyse the major economic issues raised by the 1997 Tobacco Resolution and the ensuing proposed legislation that were intended to settle tobacco litigation in the United States. By settling litigation largely in return for tax increases, the Resolution was a superb example of a \"win-win\" deal. The taxes would cost the companies about $1 billion per year, but yield the government about $13 billion per year, and allow the lawyers to claim fees based on hundreds of billions in \"damages\". Only consumers, in whose name many of the lawsuits were filed, lost out. Though the strategy seems brilliant for the parties involved, the execution was less intelligent. We show that alternative taxes would be considerably superior to those proposed, and explain problems with the damage payments required from the firms, and the legal protections offered to them. We argue that the legislation was not particularly focused on youth smoking, despite the rhetoric. However, contrary to conventional wisdom, youth smokers are not especially valuable to the companies, so marketing restrictions are a sensible part of any deal. The individual state settlements set very dangerous examples which could open up unprecedented opportunities for collusion throughout the economy, and the multistate settlement of November 1998 is equally flawed. The fees proposed for the lawyers (around $15 billion) and the equally remarkable proposed payoff for Liggett (perhaps $400 million annually, for a company with a prior market value of about $100 million) also set terrible examples. We conclude with some views about how public policy might do better.","PeriodicalId":35903,"journal":{"name":"Journal of Environmental Law and Litigation","volume":"19 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"1998-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"84661383","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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