Law Commons^™

Corporate Law: What Is The Impact Of New Ali Proposals On Shareholder Litigation, John C. Coffee Jr., Michael P. Dooley

Faculty Scholarship

When the American Law Institute's Corporate Governance Project meets this month, one of the most hotly debated agenda items is likely to be its new rules governing shareholder litigation, which are now up for final approval.

The proposed change means that corporate boards will now have to prove in court that a decision to dismiss a shareholder claim alleging self-dealing was in the corporation's best interest. In addition, the requirement for a formal "demand" on the board by shareholders will be uniform, rather than subject to excuse, as it is under Delaware law and in the majority of states.

Drafters …

Cleaning House: Environmental Hazards Can Undermine A Property's Use And Value, Michael B. Gerrard

Faculty Scholarship

Numerous horror movies and books depict the woes that befall fictional homeowners who don't know or care that they are living too close to cemeteries or brooding woods or scenes of hauntings.

However, even the vivid imaginations of filmmakers and novelists can't conjure up some of the real-life horrors that environmental hazards can create for property owners. These hazards can destroy the value and salability of property, render it unusable for its intended purpose, and burden owners with clean-up costs, fines and lawsuits.

Fortunately, an alert eye and inexpensive tests can identify most common environmental dangers.

Insider Trading In A Globalizing Market: Who Should Regulate What?, Merritt B. Fox

Faculty Scholarship

Trading by an insider on the basis of material non-public corporate information violates the securities laws of the United States and of many, but not all, other countries. As the market for securities becomes increasingly global, the question of whose rules should apply to any particular transaction will arise with increasing frequency. This article addresses that question.

Each country's regime concerning insider trading – which transactions, if any, to ban, and how to do so – has largely evolved through consideration of transactions that are entirely domestic in character and impact. In these transactions, the issuer's state of incorporation and …

Six Conservatives In Search Of The First Amendment: The Revealing Case Of Nude Dancing, Vincent A. Blasi

Faculty Scholarship

The future of political freedom in the United States hardly turns on whether women have a First Amendment right to dance in the nude in bars and peep shows. The future of artistic freedom is perhaps implicated by this question, but only if the law's demand for general principle prohibits judges from treating expressive nudity in those environments as fundamentally different from expressive nudity in ballet performances, museum exhibitions, and films. Barnes v. Glen Theatre, Inc. is an interesting and potentially important case not because of the significance of the specific issue it decided, but because it provoked a lively …

Law As Discourse, George P. Fletcher

Faculty Scholarship

Legal theory has traditionally taken the use of sanctions to be a characteristic feature of any legal order. Positivists like John Austin take the notion of commands backed by threats to be the essence of law. Yet even those who scorn positivism, like Immanuel Kant, are equally committed to the view that the sovereign must enforce positive legal rules by punishing those who violate them.

This emphasis on sanctions has always struck me as a bit curious. It is not irrelevant to the understanding of legal phenomena, but it does seem to have been exaggerated in philosophical efforts to understand …

The Third Man, Philip C. Bobbitt

Faculty Scholarship

Sandy is a divided man. On the one hand he is captivated by the notion of the theoretical and the explanatory, an idea that has captivated all of us since the 17th century. For Descartes, for Newton, for Freud, for Marx, for Levinson: theory is the foundation for understanding, and understanding for practice. How do they calculate the attraction among the planets? They apply the inverse square law according to the theories of Newton. How does Freud cure his patients: he explains to them why they've been behaving so peculiarly; he does this by expositing his theory. How does Marx …

Reproduction Of Protected Works For University Research Or Teaching, Jane C. Ginsburg

Faculty Scholarship

The new means of reproduction for teaching and research – photocopying, downloading, optical scanning – present special challenges to intellectual property teachers. As researchers and educators, we may rejoice at the vastly enhanced access these technologies afford to an enormous, and ever-growing, diversity of materials. The convenience of the photocopier is well-known. Digital media will accelerate production and dissemination of copies. Not only will computers, scanners and facsimile machines make it easier and faster to copy, but they will facilitate the dispersal of copies to all points of the globe.

As scholars of intellectual property, we may be concerned about …

The Role Of Local Control In School Finance Reform, Richard Briffault

Faculty Scholarship

Local control is a puzzle, or rather, a series of related puzzles that has both structured and hindered the uncertain development of school finance reform. The first puzzle is really a paradox: courts and commentators generally assume that local control of education exists, that it is a basic organizational principle of American public elementary and secondary education, and a norm that must be taken into account when the existing school finance system is challenged. Yet for the law of local government generally, local control is the exception, not the rule. The ground rule of state-local relations is state control and …

The Constitutional Principle Of Separation Of Powers, Thomas W. Merrill

Faculty Scholarship

The Supreme Court has had many occasions in recent years to consider what it calls "the constitutional principle of separation of powers." The principle in question has been effusively praised and on occasion vigorously enforced. But just what is it? The Court clearly believes that the Constitution contains an organizing principle that is more than the sum of the specific clauses that govern relations among the branches. Yet notwithstanding the many testimonials to the importance of the principle, its content remains remarkably elusive.

The central problem, as many have observed, is that the Court has employed two very different conceptions …

Hungarian Legal Reform For The Private Sector, Cheryl W. Gray, Rebecca J. Hanson, Michael A. Heller

Faculty Scholarship

Hungary is in the midst of a fundamental transformation toward a market economy. Although Hungary has long been in the forefront of efforts to reform socialism itself, after 1989 the goals of reform moved from market socialism toward capitalism, as the old Communist regime lost power and the idea of widespread private ownership gained acceptance. The legal framework – the "rules of the game – is now being geared toward encouraging, protecting, and rewarding entrepreneurs in the private sector.

This Article describes the evolving legal framework in Hungary in several areas: constitutional, real property, intellectual property, company, foreign investment, contract, …

Revisiting Overton Park: Political And Judicial Controls Over Administrative Actions Affecting The Community, Peter L. Strauss

Faculty Scholarship

Overton Park is a 342-acre municipal park lying close to downtown Memphis, Tennessee, in one of that city's better residential areas. Citizens to Preserve Overton Park, Inc. v. Volpe is a Supreme Court decision frequently cited for its general propositions about judicial review of informal administrative action that, to the citizens of Memphis, was one way-station in a more than two-decade struggle concerning whether and where an inner-city expressway, part of Interstate 40, would be built. Overall, the story of that struggle reveals a complex brew of national and local politics about the marriage of highway convenience to urban amenity; …

The Ethics Of Criminal Defense, William H. Simon

Faculty Scholarship

A large literature has emerged in recent years challenging the standard conception of adversary advocacy that justifies the lawyer in doing anything arguably legal to advance the client's ends. This literature has proposed variations on an ethic that would increase the lawyer's responsibilities to third parties, the public, and substantive ideals of legal merit and justice.

With striking consistency, this literature exempts criminal defense from its critique and concedes that the standard adversary ethic may be viable there. This paper criticizes that concession. I argue that the reasons most commonly given to distinguish the criminal from the civil do not …

A Reply: Imperfect Bargains, Imperfect Trials, And Innocent Defendants, Robert E. Scott

Faculty Scholarship

To understand what is and is not wrong with plea bargaining, one must understand the relationship of bargains to trials. Unsurprisingly, we disagree with much of what Judge Frank Easterbrook and Professor Stephen Schulhofer say about that relationship. Most of those disagreements need not be rehearsed here; readers attentive enough to wade through their essays and ours will pick up the key points readily enough. But there is one point where the dispute is at once sharp and hidden. It has to do with the fact that both trials and bargains are flawed.

That fact might seem obvious, but the …

Getting It Right, Robert E. Scott

Faculty Scholarship

Writing a tribute for any beloved colleague who is retiring is a difficult experience. Writing about Tom Bergin, who is retiring after twenty-nine years at the Law School, is an even greater challenge. The challenge stems from Tom's legacy to his students and to his colleagues at the Law School; both the challenge and the legacy require some explanation.

Gatt Membership In A Changing World Order: Taiwan, China, And The Former Soviet Republics, Lori Fisler Damrosch

Faculty Scholarship

My introduction to questions of GATT membership came in 1979 when, as an attorney in the U.S. Department of State, I was immersed in a series of issues concerning trade relations with the People's Republic of China ("China" or "PRC") and Taiwan ("Republic of China" or "ROC"). I kept hearing about the "Chinese seat" in the GATT as if it were some piece of furniture waiting to be taken out of storage and put back in the dining room. The image of a chair is hardly an apt way of visualizing the extraordinarily complex network of legal relationships that exists …

The International Code Of Marketing Of Breast-Milk Substitutes: Survey Of Legislation And Other Measures Adopted (1981-1991), Gillian L. Lester

Faculty Scholarship

Since the adoption of the International Code of Marketing of Breast·milk Substitutes in 1981, Member States of the World Health Organization have responded in varying degree and manner in giving effect to it. WHO has prepared a comprehensive summary, organized on a country-by-country basis, of government action in this regard (document WHO /MCH/NVT /90.1). The present paper complements chis summary, and increases its usefulness, by focusing on the Code's individual articles and describing how each has been given expression through national legislation or other measures. Their adoption is one aspect of the wider efforts Member States are making to address …

Free Speech In The United States And Canada, Kent Greenawalt

Faculty Scholarship

This comparison of freedom of speech in the United States and Canada concentrates on Supreme Court decisions in the two countries and on kinds of speech mainly engaged in by extreme dissenters and political outsiders. After brief comments about constitutional language and general approaches, I discuss subversive speech and other speech that encourages criminal acts, hate speech, symbolic speech, and public demonstrations.

In both countries, a major premise of modern adjudication is that freedom of expression is a central feature of liberal democracy. Government "by the people," even in the extended sense of government by representatives, requires that citizens openly …

The Reasonable Woman And The Ordinary Man, Carol Sanger

Faculty Scholarship

Nineteen ninety-one was a seismic year for sexual harassment. The first localized shift occurred in January, when the Ninth Circuit established that the standard by which sexual harassment in the workplace would be judged was no longer the reasonable man or even the reasonable person but rather the reasonable woman. In October a larger audience felt a much stronger jolt when Anita Hill spoke before the Senate Judiciary Committee.

Hill testified that Supreme Court nominee Clarence Thomas had sexually harassed her while she worked for him at the Department of Education and at the Equal Employment Opportunity Commission. Her testimony …

Pluralism, Paternal Preference, And Child Custody, Elizabeth S. Scott

Faculty Scholarship

Modern child custody law faces an important challenge in responding to pluralistic and evolving gender and parenting roles. Professor Scott finds rules favoring maternal custody, joint custody, and the best interests of the child wanting; she argues that the optimal response to the current pluralism in family structure is a rule that seeks to replicate past parental roles. This "approximation" standard promotes continuity and stability for children. It encourages cooperative rather than conflictual resolution of custody, thereby ameliorating the destructive effects of bargaining at divorce. It also recognizes and reinforces role change in individual families, encouraging both parents to invest …

Zero-Sum Madison, Thomas W. Merrill

Faculty Scholarship

Has the fabric of American constitutional law been permanently "distorted" by the Framers' preoccupation with protecting private property against redistribution? Jennifer Nedelsky thinks so. In this provocative study of how the idea of property shaped the political thought of the Framers and the institutions they designed, she argues that James Madison's constitutional philosophy was driven by fear that a future propertyless majority would seek to expropriate the holdings of a minority. To combat this danger, Madison sought to create a structure of government that would ensure the dominance of the propertied elite. Madison's obsessive fear of redistribution spread to the …

Institutional Reform In Eastern Europe: Evolution Or Design?, Roman Frydman, Andrzej Rapaczynski

Faculty Scholarship

Most recent studies of privatization in Eastern Europe focus on its impact on individual enterprises. In our previous work, we examined this issue from the viewpoint of the future corporate governance structure in Eastern Europe. The aggregate effects of privatization have been largely neglected, perhaps on the assumption that they have no particular bearing on how privatization is to be effected at the enterprise level. It is very important, however, to link the discussion of the various approaches to large-scale privatization with a consideration of other obstacles in the transition to a market economy. These obstacles, which include the weakness …

Minor Changes: Emancipating Children In Modern Times, Carol Sanger, Eleanor Willemsen

Faculty Scholarship

Parents and their teenage children don't always get along. At some time during adolescent development, parents may turn into embarrassments and teenagers into domestic terrorists. For most families this is a phase. Adolescence is endured, the child accomplishes some degree of separation from parents, and the transition to adulthood advances.

In some families, however, the period is more like a siege than a phase. Conflict may last longer and be more strifeful, more intense. If the family is incapable or unwilling to resolve the tensions, an intractability may set in. In these cases, domestic tranquility seems attainable only when the …

The Rulemaking Continuum, Peter L. Strauss

Faculty Scholarship

The two papers we have before us tell both descriptive and normative stories about current issues of rulemaking. Each suggests, in its field of attention, pressures that operate to increase proceduralization and agency responses to those pressures, as well as an attitude toward these developments. In rulemaking, as in other activities, discretion and order are in constant tension; one might find in that tension the very engine that makes the processes of public law go. Like the studies that assisted the move away from formal rulemaking, and the perceptions underlying the Supreme Court's Vermont Yankee decision, which quieted the judicial …

Social-Republican Property, William H. Simon

Faculty Scholarship

Economic democracy is the idea that the norms of equality and participation that classical liberalism confines to a narrowly defined sphere of government should apply to the sphere of economic life. Economic democracy thus entails a challenge to the classical liberal notion of property. In classical liberalism, property defines a realm of private enjoyment. No particular property right is a prerogative of, or a prerequisite to, citizenship, and the exercise of property rights by those who have them is not assessed in political terms.

One alternative to classical liberalism responsive to the ideal of economic democracy is classical socialism. Classical …

The Relevance Of Coherence, Joseph Raz

Faculty Scholarship

Coherence is in vogue. Coherence accounts of truth and of knowledge have been in contention for many years. Coherence explanations of morality and of law are a newer breed. I suspect that like so much else in practical philosophy today they owe much of their popularity to John Rawls. His writings on reflective equilibrium, while designed as part of a philosophical strategy which suspends inquiry into the fundamental questions of moral philosophy, had the opposite effect. They inspired much constructive reflection about these questions, largely veering toward coherence as the right interpretation both of reflective equilibrium and of moral philosophy. …

The Political Ecology Of Takeovers: Thoughts On Harmonizing The European Corporate Governance Environment, Ronald J. Gilson

Faculty Scholarship

Economic policy debate in the United States during the 1980s focused on the dynamics of bidder and target tactics in hostile takeovers. Confronted with the largest transactions in business history, financial economists took advantage of developments in econometric techniques to conduct virtually real time studies of the impact on firm value of each new bidder tactic and target defense. For courts and lawyers, hostile takeovers subjected standard features of corporate law to the equivalent of a stress x-ray, revealing previously undetected doctrinal cracks. Congress held seemingly endless hearings on the subject, although managing to enact only relatively innocuous tax penalties …

Plea-Bargaining As A Social Contract, Robert E. Scott, William J. Stuntz

Faculty Scholarship

Most criminal prosecutions are settled without a trial. The parties to these settlements trade various risks and entitlements: the defendant relinquishes the right to go to trial (along with any chance of acquittal), while the prosecutor gives up the entitlement to seek the highest sentence or pursue the most serious charges possible. The resulting bargains differ predictably from what would have happened had the same cases been taken to trial. Defendants who bargain for a plea serve lower sentences than those who do not. On the other hand, everyone who pleads guilty is, by definition, convicted, while a substantial minority …

Judgment And Reasoning In Adolescent Decisionmaking, Elizabeth S. Scott

Faculty Scholarship

Few people believe that five year olds and fifteen year olds think, act or make decisions in the same way. The question is whether and how the law should respond to developmental differences. Traditionally, childhood and adulthood have been two dichotomous legal categories, demarcated by the age of majority. This conception has been contested in recent years, as has the premise that all minors are incompetent to make decisions and function as legal actors. Fueled by the controversy over adolescent access to abortion, an advocacy movement has emerged that challenges the authority of parents and the state over the lives …

Judicial Deference To Executive Precedent, Thomas W. Merrill

Faculty Scholarship

In 1984, the Supreme Court adopted a new framework for determining when courts should defer to interpretations of statutes by administrative agencies. Previous decisions had looked to multiple contextual factors in answering this question. Chevron U.S., Inc. v. National Resources Defense Council, Inc. appeared to reject this approach and require that federal courts defer to any reasonable interpretation by an agency charged with administration of a statute, provided Congress has not clearly specified a contrary answer. The Court justified this new general rule of deference by positing that Congress has implicitly delegated interpretative authority to all agencies charged with enforcing …

Benign Restraint: The Sec's Regulation Of Execution Systems, David M. Schizer

Faculty Scholarship

To the handful of traders who founded the New York Stock Exchange (NYSE) in 1792 – and perhaps even to the securities traders of the 1960's – today's securities markets would be virtually unrecognizable. New communications and data processing technologies, the globalization of investment portfolios, and a surge in trading volume have created new needs and possibilities. As a result, revolutionary advances have occurred in the design and performance of execution systems: the technologies (computers, telephones, modems) and formats (auction-based stock exchanges, dealer-based "over-the-counter" markets, computerized single price auctions) that traders use to conduct trades. These advances enable trades on …