Law Commons^™

Deterring And Compensating Oil-Spill Catastrophes: The Need For Strict And Two-Tier Liability, W. Kip Viscusi

Vanderbilt Law School Faculty Publications

The BP Deepwater Horizon oil spill highlighted the glaring weaknesses in the current liability and regulatory regime for oil spills and for environmental catastrophes more broadly. This Article proposes a new liability structure for deep-sea oil drilling and for catastrophic risks generally. It delineates a two-tier system of liability. The first tier would impose strict liability up to the firm's financial resources, including insurance coverage. The second tier would be an annual tax equal to the expected costs in the coming year beyond this damages amount. Before beginning a risky operation, the proposed liability scheme would identify a single firm-the …

Real-Time Economic Analysis And Policy Development During The Bp "Deepwater Horizon" Oil Spill, Joseph E. Aldy

Vanderbilt Law Review

The 2010 BP Deepwater Horizon oil spill posed near-term economic risks to the Gulf of Mexico region and raised questions about appropriate policies to mitigate catastrophic oil-spill risks. This Essay reviews the Obama Administration's assessment of the economic vulnerabilities to the spill, the Administration's May 12, 2010, legislative proposal focused on minimizing the adverse economic impacts to workers and small businesses in the Gulf of Mexico, and the effort to secure an agreement with BP to ensure that those harmed by the spill will receive full compensation. Then, the Essay discusses several of the policy reforms advanced by the Administration …

Coastal Wetland Restoration And The "Deepwater Horizon" Oil Spill, Edward B. Barbier

Vanderbilt Law Review

Both the 2005 Hurricanes Katrina and Rita and the 2010 BP oil spill have focused attention on the need to restore coastal wetland habitats along the Gulf of Mexico of the United States. As restoration is required by the Oil Pollution Act of 1990, restoring coastal wetlands will be required as part of BP's legal obligations. Although plans to restore the Mississippi River Delta are well on their way, the damages to the Gulf Coast wetlands caused by the Deepwater Horizon spill are still occurring and have yet to be fully assessed. At this critical time for wetland restoration in …

Should Bp Be Liable For Economic Losses Due To The Moratorium On Oil Drilling Imposed After The "Deepwater Horizon" Accident?, Steven Shavell

Vanderbilt Law Review

In the aftermath of the Deepwater Horizon accident and the BP oil spill, the government imposed a moratorium on deepwater oil drilling in the Gulf of Mexico. The issue addressed here is whether, on grounds of policy, BP should be held responsible for moratorium- related economic losses. The answer that is developed is no. The reason, in essence, is that, although the spill caused the moratorium, the moratorium might be viewed as a socially beneficial event on net because its purpose was to avert a significant danger.

Deterring And Compensating Oil-Spill Catastrophes: The Need For Strict And Two-Tier Liability, W. Kip Viscusi, Richard J. Zeckhauser

Vanderbilt Law Review

The BP Deepwater Horizon oil spill highlighted the glaring weaknesses in the current liability and regulatory regime for oil spills and for environmental catastrophes more broadly. This Article proposes a new liability structure for deep-sea oil drilling and for catastrophic risks generally. It delineates a two-tier system of liability. The first tier would impose strict liability up to the firm's financial resources, including insurance coverage. The second tier would be an annual tax equal to the expected costs in the coming year beyond this damages amount. Before beginning a risky operation, the proposed liability scheme would identify a single firm-the …

Deepwater Drilling: Law, Policy, And Economics Of Firm Organization And Safety, Mark A. Cohen, Madeline Gottlieb, Joshua Linn, Nathan Richardson

Vanderbilt Law Review

Although the causes of the Deepwater Horizon spill are not yet conclusively identified, significant attention has focused on the safety-related policies and practices-often referred to as the safety culture-of BP and other firms involved in drilling the well. This Article defines and characterizes the economic and policy forces that affect safety culture and identifies reasons why those forces may or may not be adequate or effective from the public's perspective. Two potential justifications for policy intervention are that: (1) not all of the social costs of a spill may be internalized by a firm; and (2) there may be principal-agent …

Catastrophic Oil Spills And The Problem Of Insurance, Kenneth S. Abraham

Vanderbilt Law Review

The BP oil spill of 2010 focused considerable attention on the operating conduct of BP, on the potential liability of BP and other entities associated with the spill, and on the fund that BP established to provide compensation to victims of the spill. Much less attention has been paid, however, to the nature and scope of insurance covering losses caused by catastrophic environmental disasters such as oil spills. BP's establishment of the Gulf Coast Claims Facility, and the compensation that will be paid by that facility, will likely dampen awareness of the mismatches between the resulting losses and the insurance …

Deepwater Drilling: Law, Policy, And Economics Of Firm Organization And Safety, Mark A. Cohen

Vanderbilt Law Review

Nathan Richardson 64 Vand. L. Rev. 1853 (2011) Although the causes of the Deepwater Horizon spill are not yet conclusively identified, significant attention has focused on the safety-related policies and practices-often referred to as the safety culture-of BP and other firms involved in drilling the well. This Article defines and characterizes the economic and policy forces that affect safety culture and identifies reasons why those forces may or may not be adequate or effective from the public's perspective. Two potential justifications for policy intervention are that: (1) not all of the social costs of a spill may be internalized by …

Litigating Bp's Contribution Claims In Publicly Subsidized Courts: Should Contracting Parties Pay Their Own Way?, Bruce L. Hay, Christopher Rendall-Jackson, David Rosenberg

Vanderbilt Law Review

In this Article, we focus on an important problem involving mass-accident cases that was highlighted by the Deepwater Horizon litigation: overuse of courts to enforce contribution claims. These claims seek to shift incurred or expected liability and damages between the business and governmental entities that participated in the activity that gave rise to the mass-accident risk. Participants in such ventures generally have the option to determine by contract beforehand whether to subject themselves to contribution claims and, if so, whether such claims will be resolved by a publicly funded court or by a privately funded process, such as arbitration. Because …

Organizational Apologies: Bp As A Case Study, Erin O'Hara O'Connor

Vanderbilt Law Review

This Article examines the conduct of BP executives in the weeks following the Deepwater Horizon oil spill to illuminate the use of apology by organizations. After briefly describing the value of apology and its nuances from an evolutionary perspective, the Article describes how apology and other responsibility-accepting behaviors can be mobilized by organizations to avoid the costs of its apparently careless conduct. In particular, organizations can designate particular agents as spokespersons who possess the ability to portray a sense of sincerity and regret. Moreover, reconciliation by ingroup members appears to be more common than is reconciliation by outgroup members, likely …

Splitting The Baby: Standardizing Issue Class Certification, Jenna G. Farleigh

Vanderbilt Law Review

The Bible depicts King Solomon resolving a dispute between two women who claimed to be the mother of the same child. In the pursuit of justice, King Solomon threatened to do the unthinkable- slice the child in two. Although severing children is not a recommended vehicle for justice, severing lawsuits is. In fact, in the class-action context, the "issue class" established by Federal Rule of Civil Procedure 23(c)(4) does just what King Solomon threatened-it severs litigation into pieces, allowing aggregate treatment of only certain issues in a given lawsuit. Residual issues are left to be determined in plaintiff-specific, follow-on suits. …

Patently Impossible, Sean B. Seymore

Vanderbilt Law Review

The quest to achieve the impossible fuels creativity, spawns new fields of inquiry, illuminates old ones, and extends the frontiers of knowledge. It is difficult, however, to obtain a patent for an invention which seems impossible, incredible, or conflicts with well- established scientific principles. The principal patentability hurdle is operability, which an inventor cannot overcome if there is reason to doubt that the invention can really achieve the intended result. Despite its laudable gatekeeping role, this Article identifies two problems with the law of operability. First, though objective in theory, the operability analysis rests on subjective credibility assessments. These credibility …

Richard A. Nagareda, "In Memorian" 1963-2010, Chris Guthrie, John C.P. Goldberg, Andrew R. Gould, J. Maria Glover

Vanderbilt Law Review

A year ago, many of us gathered in Vanderbilt University Law School's Flynn Auditorium to attend a "Celebration of the Life of Professor Richard Nagareda." Frankly, I didn't feel like celebrating, a sentiment I suspect others shared. Richard-scholar, teacher, mentor, colleague, friend, father, husband-had left this earth before any of us were ready to part with him. And yet, as the speakers shared their memories of Richard, the intense grief I had felt since learning of Richard's untimely death began to dissipate. There was then, and there remains now, so much to celebrate about his life. For in his forty-seven …

Plea Bargaining, Discovery, And The Intractable Problem Of Impeachment Disclosures, R. Michael Cassidy

Vanderbilt Law Review

Several recent high-profile cases have illustrated flaws with the government's discovery practices in criminal cases and have put prosecutors across the country on the defensive about their compliance with disclosure obligations. The conviction of former Alaska Senator Ted Stevens on ethics charges was set aside after it was revealed that federal prosecutors withheld notes of an interview with a key government witness; one member of the Stevens prosecution team who was under investigation for contempt subsequently committed suicide. The Supreme Court remanded a double murder case from Tennessee for potential resentencing after it was revealed that state prosecutors had withheld …

Should "Twombly" And "Iqbal" Apply To Affirmative Defenses?, Nathan Pysno

Vanderbilt Law Review

In 2007, the U.S. Supreme Court promulgated a new pleading standard in Bell Atlantic Corp. v. Twombly, specifically holding that complaints must state a claim to relief that is "plausible on its face." The Twombly decision retired the well-established and more lenient pleading regime that reigned since the Court's 1957 decision in Conley v. Gibson. Two years after Twombly, the Supreme Court confirmed in Ashcroft v. Iqbal that neither the reach of the new plausibility standard nor the death of Conley was exaggerated. "Labels and conclusions" are now insufficient, as are "naked assertions devoid of further factual enhancement" and "unadorned …

When A Promise Isn't A Promise: Public Employers' Ability To Alter Pension Plans Of Retired Employees, Gavin Reinke

Vanderbilt Law Review

The economic downturn has placed enormous pressure on state budgets. The recession hit state pension funding plans for public employees particularly hard. Some projections indicate that, even with as much as an 8% return on their pension fund investments, seven states' funds will be out of money by 2020, and half of states' funds will be fully depleted by 2027.

State legislatures are scrambling to pass measures designed to return their pension funds to solvency. Most proposals only call for decreases in the amount of pension benefits provided to future retirees, but four states have gone much further. Colorado, Minnesota, …

Breaching The Mortgage Contract: The Behavioral Economics Of Strategic Default, Tess Wilkinson-Ryan

Vanderbilt Law Review

Underwater homeowners face a quandary: Should they make their monthly payments as promised or walk away and save money? Traditional economic analysis predicts that homeowners will strategically default (voluntarily enter foreclosure) when it is cheaper to do so than to keep paying down the mortgage debt. But this prediction ignores the moral calculus of default, which is arguably much less straightforward. On the one hand, most people have moral qualms about breaching their contracts, even when the financial incentives are clear. On the other hand, the nature of the lender-borrower relationship is changing and mortgage lenders are increasingly perceived as …

Foreign Official Immunity Determinations In U.S. Courts: The Case Against The State Department, Ingrid Wuerth Brunk

Vanderbilt Law School Faculty Publications

The immunity of foreign states from suit in U.S. courts is governed by a federal statute, the Foreign Soveriegn Immunities Act (FSIA). This statute does not apply to the immunity of individual foreign officials, however, as the Supreme Court recently held in Samantar v. Yousuf Instead, the Court reasoned, the immunity of foreign government officials is controlled by common law. But there is no extant body offederal or state common law governing foreign official immunity, and the Court did not clarify how this law should be developed going forward. The State Department claims that it holds constitutional power to make …

Memory And Punishment, O. Carter Snead

Vanderbilt Law Review

Developments in cognitive neuroscience-the science of how the brain enables the mind--continue to prompt profound scholarly debate and reflection on the practice and theory of criminal law. Advances in the field have raised vexing questions relating to lie detection, interrogation methods, the Fifth Amendment right against compelled self-incrimination, competency to stand trial, defenses to guilt (such as diminished capacity and insanity), sentencing, and the relationship between moral responsibility and punishment. Similarly, for the past decade, philosophers, scientists, clinicians, and legal scholars have been engaged in a major debate about the cognitive neuroscience of memory and new capacities to modify it …

Public(Ly Oriented) Companies: B Corporations And The Delaware Stakeholder Provision Dilemma, Steven J. Haymore

Vanderbilt Law Review

During his 2007 commencement address at Harvard University, Bill Gates called on the graduates to invent "a more creative capitalism" where "we can stretch the reach of market forces so that more people can make a profit, or at least make a living, serving people who are suffering from the worst inequities." A number of entrepreneurs, including those that started online bookstore Better World Books ("BWB"), are doing their best to create a more creative capitalism. BWB sells approximately 10,000 books a day and brought in $30 million in revenue in 2010. BWB sells its products to return a profit …

Visa As Property, Visa As Collateral, Eleanor Marie L. Brown

Vanderbilt Law Review

Three decades ago Guido Calabresi and Philip Bobbit famously wrote about "tragic choices," namely tough policy choices which offend deeply held values, and the accompanying "subterfuges," that is, efforts by policy elites to shield such choices from public view.' Strangely, the "tragic choice" framework has not been applied in the context of U.S. immigration law, although current immigration policy is rife with tragic choices and subterfuges. A case in question is the issue of commodification of visas. It is clear that U.S. policymakers remain deeply committed to maintaining an illusion that U.S. visas are not being "sold."2 For example, in …

Text Offenders: Privacy, Text Messages, And The Failure Of The Title Iii Minimization Requirement, Seth M. Hyatt

Vanderbilt Law Review

For the past forty years, theory and practice in electronic surveillance have enjoyed an uneasy coexistence. In theory, under ("Title III"), government agents must use wire and electronic taps sparingly, and only under strict judicial supervision. In practice, however, federal courts have recognized countless loopholes and exceptions, leading critics to wonder whether Title III meaningfully limits state investigatory power.

Nowhere is this tension more apparent than in the context of "minimization." Under Title III, government agents conducting electronic surveillance must "minimize the interception of communications not otherwise subject to interception under this chapter." They must not listen in on any …

Optimal Lead Plaintiffs, Elizabeth C. Burch

Vanderbilt Law Review

Good lead counsel is hard to find. We, Congress, the Securities Exchange Commission ("SEC"), and the public trust that class counsel will be a good and faithful agent so long as a lead plaintiff is there to monitor her every move. Problem is, good lead plaintiffs are hard to find, too. In part, we expect too much: the Private Securities Litigation Reform Act ("PSLRA") insists that a lead plaintiff monitor the class attorneys and hopes that she will prevent strike suits and deter fraud; Rule 23(a)(4), on the other hand, demands that the lead plaintiff adequately represent class members with …

Implementing An Online Dispute Resolution Scheme: Using Domain Name Registration Contracts To Create A Workable Framework, Michael G. Bowers

Vanderbilt Law Review

Online businesses have grown tremendously in the past decade. As a larger percentage of the U.S. economy moves onto the Internet, a larger percentage of people doing business online will find themselves disagreeing with each other. How those disputes are resolved presents an ongoing challenge in a world where traditional ordering mechanisms, like geographical boundaries, become increasingly antiquated. As contracts are formed across state and national lines, dispute resolution systems built around spatial locations become ever more unwieldy. The complications and costs of securing a favorable decision from a far-off decisionmaking body make reliance on geographic-based systems exceedingly difficult. Out …

Causing Infringement, Mark Bartholonew, Patrick F. Mcardle

Vanderbilt Law Review

Two years ago, the outbreak of a mysterious virus captivated the world. First detected in the state of Veracruz, Mexico in April 2009, the virus hopscotched from country to country leaving a trail of death and panicked citizens. Concerned that the virus would continue to spread, world governments banned travel to affected nations and urged citizens to take precautionary measures. U.S. Vice President Biden told citizens not to take mass transit. Airports installed thermal scanners to detect and quarantine infected travelers. Thousands donned surgical masks. Despite these precautions, two months after the virus's discovery, public health authorities diagnosed a full-fledged …

Just Shoot Me: Public Accommodation Anti-Discrimination Laws Take Aim At First Amendment Freedom Of Speech, James M. Gottry

Vanderbilt Law Review

Imagine a young woman, Elaine, who is a gifted photographer. She launches a small photography business with her husband, and soon she is in demand throughout the state. Her specialty is weddings. One day Elaine receives a request to photograph a same-sex commitment ceremony. Politely, she declines, explaining that she only photographs traditional weddings. Several months later, she is contacted by the state's Human Rights Commission. Elaine learns that a complaint has been filed against her, and she is being charged with discrimination on the basis of sexual orientation.

Imagine a young man, Michael, who is a gifted filmmaker. While …

Agents In Secrecy: The Use Of Information Surrogates In Trust Administration, Lauren Z. Curry

Vanderbilt Law Review

Trusting another to look after one's best interest when money is at stake is difficult in many different situations. This is true in the area of trust administration as well. As with most areas of law and regulation, trust law addresses this concern primarily through the requirement of information disclosure. Information disclosure to trust beneficiaries has become a heated issue among trust scholars and practitioners. Interestingly, as fundamental as disclosure may be in trust administration, the duty to disclose is not precisely defined at common law and is far from uniform. This creates a profusion of problems for trustees who …

Giving It Another Shot: A Reexamination Of The "Second Or Subsequent Conviction" Language Of The Firearm Possession Sentencing Statute, Rachel E. Moore

Vanderbilt Law Review

The effects of the current interpretation of the federal firearm possession sentencing statute are severe, often mandating the imposition of de facto life sentences for first-time offenders. For example, suppose a twenty-three-year-old first-time offender was found guilty in a federal district court of robbing $500 from two financial institutions in two days and carrying a single firearm during the robbery spree. Under the Federal Sentencing Guidelines, this first-time offender would be subject to a sentence ranging between forty-one and fifty-one months for each robbery. Thus, for the substantive offenses, the sentence would total eighty-two to 102 months, or six years …

Committee Capture? An Empirical Analysis Of The Role Of Creditors' Committees In Business Reorganizations, Michelle M. Harner, Jamie Marincic

Vanderbilt Law Review

The number of businesses experiencing financial distress increased significantly during the past several years. The number of Chapter 11 reorganization cases likewise rose. And many of these business failures were spectacular, leaving little value for creditors and even less for shareholders. Consequently, how the business debtor's limited asset pie is divided and who gets to allocate the pieces are very relevant and important questions.

The U.S. Bankruptcy Code generally contemplates the appointment of a committee of the debtor's unsecured creditors to serve as a fiduciary for all general unsecured creditors and as a statutory watchdog over the debtor and its …

The Firm As Cartel Manager, Herbert Hovenkamp, Christopher R. Leslie

Vanderbilt Law Review

Antitrust law is the primary legal obstacle to price fixing, which is condemned by Section One of the Sherman Act. Section One condemns only concerted action between separate entities, not unilateral conduct by a single entity. Firms that engage in price fixing may try to reduce the risk of antitrust liability by structuring their actions to appear to be those of a unified single entity that is beyond the reach of Section One.

In this Article, Professors Hovenkamp and Leslie examine how price-fixing cartels govern themselves and maximize their profits by cooperating and colluding, instead of competing. They then use …