Law Commons^™

A Theory Of Representative Shareholder Suits And Its Application To Multijurisdictional Litigation, Randall Thomas, Robert B. Thompson

Vanderbilt Law School Faculty Publications

We develop a theory to explain the uses and abuses of representative shareholder litigation based on its two most important underlying characteristics: the multiple sources of the legal rights being redressed (creating dynamic opportunities for arbitrage) and the ability of multiple shareholders to seek to represent the collective group in such litigation (creating increased risk of litigation agency costs by those representatives and their attorneys). Placed against the backdrop of controlling managerial agency costs, our theory predicts that: (1) the relative strength of the different forms of shareholder litigation will shift over time; (2) these shifts can result in new …

Dodd-Frank's Say On Pay: Will It Lead To A Greater Role For Shareholders In Corporate Governance?, Randall S. Thomas, Alan R. Palmiter, James F. Cotter

Vanderbilt Law School Faculty Publications

"Say on pay" gives shareholders an advisory vote on a company's pay practices for its top executives. Beginning in 2011, Dodd-Frank mandated such votes at public companies. The first year of "say on pay" under the new legislation may have changed the dialogue and give-and-take in the shareholder-management relationship at some companies, particularly on the question of executive pay.

We study the evolution of shareholder voting on "say on pay" - beginning in 2006 as a fledgling shareholder movement to get "say on pay" on the corporate ballot, evolving as a handful of companies and later the financial firms receiving …

An Empirical Assessment Of Climate Change In The Courts: A New Jurisprudence Or Business As Usual?, J.B. Ruhl, David L. Markell

Vanderbilt Law School Faculty Publications

While legal scholarship seeking to assess the impact of litigation on the direction of climate change policy is abundant and growing in leaps and bounds, to date it has relied on and examined only small, isolated pieces of the vast litigation landscape. Without a complete picture of what has and has not been within the sweep of climate change litigation, it is difficult to offer a robust evaluation of the past, present, and future of climate change jurisprudence. Based on a comprehensive empirical study of the status of all (201) climate change litigation matters filed through 2010, this Article is …

Shareholder Litigation In Mergers And Acquisitions, Randall S. Thomas, C. N.V. Krishnan, Ronald W. Masulis

Vanderbilt Law School Faculty Publications

Using hand-collected data, we examine the targeting of shareholder class action lawsuits in merger & acquisition (M & A) transactions, and the associations of these lawsuits with offer completion rates and takeover premia. We find that M & A offers subject to shareholder lawsuits are completed at a significantly lower rate than offers not subject to litigation, after controlling for selection bias, different judicial standards, major offer characteristics, M & A financial and legal advisor reputations as well as industry and year fixed effects. M & A offers subject to shareholder lawsuits have significantly higher takeover premia in completed deals, …

Erie And The Rules Of Evidence, Edward K. Cheng

Vanderbilt Law School Faculty Publications

Jay Tidmarsh offers an intriguing new test for drawing the allimportant line between procedure and substance for purposes of Erie. The Tidmarsh test is attractively simple, yet seemingly reaches the right result in separating out truly “procedural” rules from more substantive ones. Since I am not a proceduralist, in this Response I will leave the Tidmarsh test’s explanatory power and practical workability vis-à-vis general civil procedure rules to others more qualified than I. Instead, I want to focus on the implications of the Tidmarsh test for the Federal Rules of Evidence. Like others in the evidence world, I have long …

Inadvertent Implications Of The War Powers Resolution, Michael A. Newton

Vanderbilt Law School Faculty Publications

The constitutional infirmity of the War Powers Resolution has been uniformly demonstrated by more than four decades of bipartisan experience. The Resolution manifestly fails to eliminate the healthy interbranch tensions that are in our constitutional DNA with respect to military deployments. In its context, the override of President Nixon's veto represented little more than a stark act of congressional opportunism. The President's veto message was prescient in warning that the Resolution is dangerous to the best interests of our Nation. This article suggests that the act represents an attempted abdication of the enumerated obligation of Congress to oversee military operations …

Pawnshops, Behavioral Economics, And Self Regulation, Paige Marta Skiba, Susan Payne Carter

Vanderbilt Law School Faculty Publications

Pawnbroking is the oldest source of credit. There is growing public interest in day-to-day pawnbroking operations, as evidenced by the popularity of reality shows such as “Pawn Stars” and “Hardcore Pawn.” Television viewers’ curiosity about an old credit institution may be due to the fact that 7% of all U.S. households have used pawn credit. Although pawnshops predate biblical times, researchers know surprisingly little about this ancient form of banking and its customers. We fill this gap by documenting detailed information on pawnshop loan repayment and default, and by discussing how pawnshop borrowers’ behavior is consistent with various behavioral economics …

Twombly And Iqbal Reconsidered, Brian T. Fitzpatrick

Vanderbilt Law School Faculty Publications

In Bell Atlantic Corp. v. Twombly and Ashcroft v. Iqbal, the Supreme Court reinterpreted the Federal Rules of Civil Procedure to permit judges to dismiss claims at the very outset of a case whenever they think the claims are implausible. The decisions have been extremely controversial, and they are already on track to become the most cited Supreme Court decisions of all time. Critics contend that the decisions are prime examples of the “conservative judicial activism” widely attributed to the Roberts Court. In particular, critics contend that the decisions circumvented the usual process for promulgating amendments to the Federal Rules …

Good For You, Bad For Us: The Financial Disincentive For Net Demand Reduction, Michael P. Vandenbergh, Jim Rossi

Vanderbilt Law School Faculty Publications

This Article examines a principal barrier to reducing U.S. carbon emissions — electricity distributors’ financial incentives to sell more of their product — and introduces the concept of net demand reduction (“NDR”) as a primary goal for the modern energy regulatory system. Net electricity demand must decrease substantially from projected levels for the United States to achieve widely-endorsed carbon targets by 2050. Although social and behavioral research has identified cost-effective ways to reduce electricity demand, state-of-the-art programs to curtail demand have not been implemented on a widespread basis. We argue that electric distribution utilities are important gatekeepers that can determine …

The Null Patent, Sean B. Seymore

Vanderbilt Law School Faculty Publications

Failure is the basis of much of scientific progress because it plays a key role in knowledge building. In fact, negative results comprise the bulk of knowledge produced in scientific research. This is not a bad thing because failures always produce valuable technical information - whether it be a serendipitous finding, an abundance of unexpected technical data, or simply knowledge that an initial hypothesis was totally wrong. Though some have recognized that the dissemination of negative results has many upsides for science, transforming scientific norms toward disclosure is no easy task. As for patent law, the potentially important role that …

Selectica Resets The Trigger On The Poison Pill: Where Should The Delaware Courts Go Next?, Paul H. Edelman, Randall S. Thomas

Vanderbilt Law School Faculty Publications

Since their invention in 1982, shareholder rights plans have been the subject of intense controversy. Rights plans, or as they are known more pejoratively “poison pills,” enable a target board to “poison” a takeover attempt by making it prohibitively expensive for a bidder to acquire more than a certain percentage of the target company’s stock (until recently 15-20%). Not surprisingly, some commentators view rights plans as an inappropriate means of shifting power from shareholders to the board of directors.

In this Article, we critically examine Delaware law on the use of shareholder rights plans and propose a new approach to …

Adversarial Economics In Antitrust Litigation: Losing Academic Consensus In The Battle Of The Experts, Rebecca Haw Allensworth

Vanderbilt Law School Faculty Publications

The adversarial presentation of expert scientific evidence tends to obscure academic consensus. In the context of litigation, small, marginal disagreements can be made to seem important and settled issues can be made to appear hopelessly deadlocked. This Article explores this dynamic's effect on antitrust litigation. Modem antitrust law is steeped in microeconomics, and suits rely heavily on economic expert witnesses. Indeed, expert testimony is often the "whole game" in an antitrust dispute because experts testify about dispositive issues such as the competitive effect of a business practice or the relevant boundaries of a market. And the Supreme Court has encouraged-even …

A Regulatory Design For Monetary Stability, Morgan Ricks

Vanderbilt Law School Faculty Publications

This Article proposes a unified regulatory approach to the issuance of "money-claims"--a generic term that refers to fixed-principal, very short-term IOUs, excluding trade credit. The instability of this market is arguably the central problem for financial regulatory policy. Yet our existing regulatory system lacks a coherent approach to this market. The Article proposes a public-private partnership ("PPP") regime, under which only licensed entities would be permitted to issue money - claims (subject to de minimis exceptions). Licensed moneyclaim issuers would be required to abide by portfolio restrictions and capital requirements. In addition, the government would explicitly insure licensed issuers' outstanding …

Money And (Shadow) Banking: A Thought Experiment, Morgan Ricks

Vanderbilt Law School Faculty Publications

This paper approaches the shadow banking problem from a monetary point of view. It does so by means of a simple thought experiment. The aim is to strip away the inessentials so as to reveal some of the basic legal-institutional design considerations that attend the establishment and management of a monetary system. It is the author's experience that underlying assumptions in this area are surprisingly divergent and, at any rate, are seldom made explicit in the shadow banking literature. If this paper merely assists in surfacing some otherwise unstated assumptions, it will have served its purpose.

Medical Marijuana And The Political Safeguards Of Federalism, Robert A. Mikos

Vanderbilt Law School Faculty Publications

Medical marijuana has emerged as one of the key federalism battlegrounds of the last two decades. Since 1996, sixteen states have passed new laws legalizing the drug for certain medical purposes.' All the while, the federal government has remained committed to zero-tolerance, prohibiting the possession, cultivation, and distribution of marijuana for any purpose.2 The federal government's uncompromising stance against medical marijuana seemingly exposes the states' vulnerability to the whims of the national political process, and it has inspired calls for the courts to step in and protect state experimentation from this and other instances of arguable congressional over-reaching.

Good For You, Bad For Us: The Financial Disincentive For Net Demand, Jim Rossi, Michael P. Vandenbergh

Vanderbilt Law School Faculty Publications

This Article examines a principal barrier to reducing U.S. carbon emissions — electricity distributors’ financial incentives to sell more of their product — and introduces the concept of net demand reduction (“NDR”) as a primary goal for the modern energy regulatory system. Net electricity demand must decrease substantially from projected levels for the United States to achieve widely-endorsed carbon targets by 2050. Although social and behavioral research has identified cost-effective ways to reduce electricity demand, state-of-the-art programs to curtail demand have not been implemented on a widespread basis. We argue that electric distribution utilities are important gatekeepers that can determine …

Supply And Demand: Barriers To A New Energy Future, Jim Rossi, Michael P. Vandenbergh, J. B. Ruhl

Vanderbilt Law School Faculty Publications

Like many fields, energy law has had its ups and downs. A period of remarkable activity in the 1970s and early 1980s focused on the efficiencies arising from deregulation of energy markets, but the field attracted much less attention during the 1990s. In the last decade, a new burst of activity has occurred, driven largely by the implications of energy production and use for climate change. In effect, this new scholarship is asking what efficiency means in a carbon-constrained world. Accounting for carbon has induced scholars to challenge the implicit assumption of the early scholarship that the price of energy …

Immigration Enforcement And The Fugitive Slave Acts: Exploring Their Similarities, Karla M. Mckanders

Vanderbilt Law School Faculty Publications

Two seemingly different federal enforcement systems that affect the movement of unskilled workers — the 1793 and 1850 Fugitive Slave Acts and current state immigration enforcement policies — have remarkable similarities. Both systems are political stories that are demonstrative of the failure of federalism. The federal government’s current failure to enforce immigration laws has encouraged state and local governments to pass their own laws. Alabama and Arizona have enacted far-reaching laws, which are similar to the federal Immigration and Nationality Act § 287(g) programs. Both have been challenged on constitutional preemption and equal protection grounds. Recent scholarship has focused mainly …

Raising The Bar: Law Schools And Legal Institutions Leading To Educate Undocumented Students, Karla M. Mckanders, Raquel Aldana, Beth Lyon

Vanderbilt Law School Faculty Publications

This paper explores the adoption of best practices for the admission and graduation of undocumented students as lawyers and promoting their integration into the legal profession. Law schools are already both knowingly and unknowingly admitting and graduating undocumented students. It is our contention in this paper, after careful analysis, that no law precludes law schools from admitting undocumented students, offering them in-state tuition or other types of private and even public financial aid in states that permit it, or allowing them to participate fully in the law schools’ educational opportunities. We acknowledge that there are tensions around the decision to …

Regulation Of Payday Loans: Misguided?, Paige Marta Skiba

Vanderbilt Law School Faculty Publications

Since payday lenders came on the scene in 1990s, regulation of their "predatory" practices has been swift and often severe. Fourteen states now ban payday loans outright. From an economist's perspective, high-interest, short-term, small loans need not be a bad thing. Payday credit can help borrowers "smooth" consumption, unequivocally improving welfare as consumers borrow from future good times to help cover current shortfalls. These benefits of credit can accrue even at typical payday loan interest rates of 300%-600% APR. The question of whether payday credit actually assists borrowers in this way is an empirical one. In this Article, I review …

Evolution And The Expression Of Biases: Situational Value Changes The Endowment Effect In Chimpanzees, Owen D. Jones, Sarah F. Brosnan, Molly Gardner, Susan P. Lambeth, Steven J. Schapiro

Vanderbilt Law School Faculty Publications

Cognitive and behavioral biases, which are widespread among humans, have recently been demonstrated in other primates, suggesting a common origin. Here we examine whether the expression of one shared bias, the endowment effect, varies as a function of context. We tested whether objects lacking inherent value elicited a stronger endowment effect (or preference for keeping the object) in a context in which the objects had immediate instrumental value for obtaining valuable resources (food). Chimpanzee subjects had opportunities to trade tools when food was not present, visible but unobtainable, and obtainable using the tools. We found that the endowment effect for …

Islamic Law Meets Erisa: How America's Private Pension System Unintentionally Discriminates Against Muslims And What To Do About It, Beverly I. Moran

Vanderbilt Law School Faculty Publications

This article asks whether Muslims whose religious beliefs prevent investment in their employers’ private pension plans have a right to religious accommodation. This is a real issue for a growing part of the population whose spiritual lives are governed by rules that prohibit the giving or taking of interest. As one might expect, the investments available through most American pension plans involve some aspect of interest making those investments unsuitable retirement vehicles for devote Muslims. Consequently, in order to secure their retirement income, Muslims are faced with either violating their religious beliefs, losing years of investment opportunity as they wait …

Can The States Keep Secrets From The Federal Government?, Robert A. Mikos

Vanderbilt Law School Faculty Publications

States amass troves of information detailing the regulated activities of their citizens, including activities that violate federal law. Not surprisingly, the federal government is keenly interested in this information. It has ordered reluctant state officials to turn over their confidential files concerning medical marijuana, juvenile criminal history, immigration status, tax payments, and employment discrimination, among many other matters, to help enforce federal laws against private citizens. Many states have objected to these demands, citing opposition to federal policies and concerns about the costs of breaching confidences, but the lower courts have uniformly upheld the federal government’s power to commandeer information …

Global Public Goods, Governance Risk, And International Energy, Timothy Meyer

Vanderbilt Law School Faculty Publications

Scholars and commentators have long argued that issue linkages provide a way to increase cooperation on global public goods by increasing participation in global institutions, building consensus, and deterring free-riding. In this symposium article, I argue that the emphasis on the potential of issue linkages to facilitate cooperation in these ways has caused commentators to underestimate how common features of international legal institutions designed to accomplish these aims can actually undermine those institutions’ ability to facilitate cooperation. I focus on two features of institutional design that are intended to encourage participation in public goods institutions but can create the risk …

Codifying Custom, Timothy Meyer

Vanderbilt Law School Faculty Publications

Codifying decentralized forms of law, such as the common law and customary law, has been a cornerstone of the positivist turn in legal theory since at least the nineteenth century. Commentators laud codification’s purported virtues, including systematizing, centralizing, and clarifying the law. These attributes are thought to increase the general welfare of those subject to legal rules, and therefore to justify and explain codification. The codification literature, however, overlooks codification’s distributive consequences. In so doing, the literature misses the primary motive for codification: to define legal rules in a way that advantages individual codifying institutions, regardless of how codification affects …

Law, Emotion, And Terra Nova: Neal Feigenson As Both Radical And Reformer, Terry A. Maroney

Vanderbilt Law School Faculty Publications

Law and emotion scholarship can engage with law on its own terms. It can seek to expose moments where the law already incorporates some kind of emotional component, and it can show how a richer understanding of emotion could inform or refine how the law treats that component. With crimes of passion, for example, we might ask people to notice how that aspect of criminal law doctrine privileges some emotions over others. For example, anger is more valued than contempt. We might also ask them to notice how the law reflects lay theories of how those emotions operate. For example, …

Angry Judges, Terry A. Maroney

Vanderbilt Law School Faculty Publications

Judges get angry. Law, however, is of two minds as to whether they should; more importantly, it is of two minds as to whether judges’ anger should influence their behavior and decision making. On the one hand, anger is the quintessentially judicial emotion. It involves appraisal of wrongdoing, attribution of blame, and assignment of punishment — precisely what we ask of judges. On the other, anger is associated with aggression, impulsivity, and irrationality. Aristotle, through his concept of virtue, proposed reconciling this conflict by asking whether a person is angry at the right people, for the right reasons, and in …

Non-Capital Habeas Cases After Appellate Review: An Empirical Analysis, Nancy J. King

Vanderbilt Law School Faculty Publications

n 2007, researchers from the National Center for State Courts and Vanderbilt University Law School reported the findings from a study of litigation in 2384 randomly selected, non-capital habeas cases, approximately 6.5% of the non-capital habeas cases commenced in federal district courts in 2003 and 2004 by state prisoners. In this article, I update that report, including the cases that were pending when the 2007 report was prepared, and following the study cases into the federal courts of appeals, and back into the state courts. Even after appellate review of denials and dismissals, the percentage of non-capital petitioners receiving federal …

Lafler V. Cooper And Aedpa, Nancy J. King

Vanderbilt Law School Faculty Publications

The Supreme Court in Missouri v. Frye1 and Lafler v. Cooper2 broke new ground by holding for the first time that a defendant’s right to the effective assistance of counsel under the Sixth Amendment can be violated by the loss of a favorable plea deal. Less noted, but also worthy of attention, are Lafler’s implications for federal habeas law. Four Justices protested that the Lafler decision violated the federal habeas statute. At the least, the decision expanded habeas review in unexpected ways. Lafler presented the Supreme Court with an unusual opportunity to declare new doctrine on habeas review

Harmonizing Commercial Wind Power And The Endangered Species Act Through Administrative Reform, J.B. Ruhl

Vanderbilt Law School Faculty Publications

This Article explores the intersection of utility-scale wind power development and the Endangered Species Act, which thus far has not been as happy a union as one might expect. Part I provides background on how the ESA and wind power have met in policy, permitting, and litigation. Part II then examines whether wind power (and other renewable energy sources) can and should receive a green pass under the ESA given its unquestioned climate change mitigation benefits, concluding that doing so would face a host of legal and policy concerns. Part III then outlines a model for administrative innovation of ESA …