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Is The Bankruptcy Code An Adequate Mechanism For Resolving The Distress Of Systemically Important Institutions?, Edward R. Morrison Jan 2009

Is The Bankruptcy Code An Adequate Mechanism For Resolving The Distress Of Systemically Important Institutions?, Edward R. Morrison

Faculty Scholarship

The President and members of Congress are considering proposals that would give the government broad authority to rescue financial institutions whose failure might threaten market stability. These systemically important institutions include bank and insurance holding companies, investment banks, and other "large, highly leveraged, and interconnected" entities that are not currently subject to federal resolution authority. Interest in these proposals stems from the credit crisis, particularly the bankruptcy of Lehman Brothers. That bankruptcy, according to some observers, caused massive destabilization in credit markets for two reasons. First, market participants were surprised that the government would permit a massive market player to ...


Accession And Original Ownership, Thomas W. Merrill Jan 2009

Accession And Original Ownership, Thomas W. Merrill

Faculty Scholarship

Although first possession is generally assumed to be the dominant means of establishing original ownership of property, there is a second but less studied principle for initiating ownership, called accession, which awards new resources to the owner of existing property most prominently connected to the new resource. Accession applies across a wide variety of areas, from determining rights to baby animals and growing crops to determining ownership of derivative rights under intellectual property laws. Accession shares common features with first possession, in that both principles assign ownership uniquely in a way that imposes minimal information cost burdens on society. But ...


On Capturing The Possible Significance Of Institutional Design And Ethos, Peter L. Strauss Jan 2009

On Capturing The Possible Significance Of Institutional Design And Ethos, Peter L. Strauss

Faculty Scholarship

At a recent conference, a new judge from one of the federal courts of appeal – for the United States, the front line in judicial control of administrative action-made a plea to the lawyers in attendance. Please, he urged, in briefing and arguing cases reviewing agency actions, help us judges to understand their broader contexts. So often, he complained, the briefs and arguments are limited to the particular small issues of the case. We get little sense of the broad context in which it arises – the agency responsibilities in their largest sense, the institutional issues that may be at stake, how ...


Chevron'S Two Steps, Kenneth A. Bamberger, Peter L. Strauss Jan 2009

Chevron'S Two Steps, Kenneth A. Bamberger, Peter L. Strauss

Faculty Scholarship

The framework for judicial review of administrative interpretations of regulatory statutes set forth in the landmark Chevron U.S.A. v. Natural Resources Defense Council decision prescribes two analytic inquiries, and for good reason. The familiar two-step analysis is best understood as a framework for allocating interpretive authority in the administrative state; it separates questions of statutory implementation assigned to independent judicial judgment (Step One) from questions regarding which the courts role is limited to oversight of agency decisionmaking (Step Two).

The boundary between a reviewing court's decision and oversight roles rests squarely on the question of statutory ambiguity ...


Creditor Control And Conflict In Chapter 11, Kenneth M. Ayotte, Edward R. Morrison Jan 2009

Creditor Control And Conflict In Chapter 11, Kenneth M. Ayotte, Edward R. Morrison

Faculty Scholarship

We analyze a sample of large privately and publicly held businesses that filed Chapter 11 bankruptcy petitions during 2001. We find pervasive creditor control. In contrast to traditional views of Chapter 11, equity holders and managers exercise little or no leverage during the reorganization process. 70 percent of CEOs are replaced in the two years before a bankruptcy filing, and few reorganization plans (at most 12 percent) deviate from the absolute priority rule to distribute value to equity holders. Senior lenders exercise significant control through stringent covenants, such as line-item budgets, in loans extended to firms in bankruptcy. Unsecured creditors ...


Redesigning The Sec: Does The Treasury Have A Better Idea?, John C. Coffee Jr., Hillary A. Sale Jan 2009

Redesigning The Sec: Does The Treasury Have A Better Idea?, John C. Coffee Jr., Hillary A. Sale

Faculty Scholarship

Symposiums supply a snapshot in time. By observing the common assumptions and shared frameworks of a collection of scholars writing contemporaneously, one gains both insight into the intellectual world of a past era and the ability to measure its distance from our own. Twenty-five years ago the Virginia Law Review organized a noted symposium (the "1984 Symposium") to celebrate the 50th anniversary of the SEC. A number of prominent scholars participated, and its articles have been much cited.


Restating The U.S. Law Of International Commercial Arbitration, George A. Bermann Jan 2009

Restating The U.S. Law Of International Commercial Arbitration, George A. Bermann

Faculty Scholarship

The American Law Institute's new Restatement of the U.S. Law of International Commercial Arbitration is only barely underway, and the reporters began with a chapter, on the recognition and enforcement of awards, that should represent for them a comfort zone of sorts within the overall project. Yet already a number of difficult, and to some extent unexpectedly difficult, questions have arisen. Some of the difficulties stem from the very nature of an ALl Restatement project. Others stem from the nature of arbitration itself and, more particularly, from the inherent tension between arbitral and judicial functions in the arbitration ...


New Frontiers In The Relationship Between National And European Courts, George A. Bermann Jan 2009

New Frontiers In The Relationship Between National And European Courts, George A. Bermann

Faculty Scholarship

Considering that a full fifty years have passed since the Treaty Establishing the European Community came into force, it seems appropriate to take a "long" view of the subject of this panel, namely, national courts and the courts of the European Union. I mean here to sketch the evolution, as I see it, of the challenge that consists of managing the "interface" between these two series of courts.

The central question pervading this discussion is simply stated: whether and to what extent the European Court of Justice ("Court of Justice" or "Court") (and the European institutions more generally) can count ...


Contract Design And The Structure Of Contractual Intent, Jody S. Kraus, Robert E. Scott Jan 2009

Contract Design And The Structure Of Contractual Intent, Jody S. Kraus, Robert E. Scott

Faculty Scholarship

Modern contract law is governed by a two-stage adjudicative regime – an inheritance of the centuries-old conflict between law and equity. Under this regime, formal contract terms are treated as prima facie provisions that courts can override by invoking equitable doctrines so as to substantially "correct" the parties' contract by realigning it with their contractual intent. This ex post judicial determination of the contractual obligation serves as a fallback mechanism for vindicating the parties' contractual intent whenever the formal contract terms fall short of achieving the parties' purposes. Honoring the contractual intent of the parties is thus the central objective of ...


Contracting For Innovation: Vertical Disintegration And Interfirm Collaboration, Ronald J. Gilson, Charles F. Sabel, Robert E. Scott Jan 2009

Contracting For Innovation: Vertical Disintegration And Interfirm Collaboration, Ronald J. Gilson, Charles F. Sabel, Robert E. Scott

Faculty Scholarship

Rapidly innovating industries are not behaving the way theory expects. Conventional industrial organization theory predicts that, when parties in a supply chain have to make transaction-specific investments, the risk of opportunism will drive them away from contracts and toward vertical integration. Despite the conventional theory, however, contemporary practice is moving in the other direction. Instead of vertical integration, we observe vertical disintegration in a significant number of industries, as producers recognize that they cannot themselves maintain cutting-edge technology in every field required for the success of their products. In doing this, the parties are developing forms of contracting beyond the ...


Lou Lowenstein: An Enduring Legacy, David M. Schizer Jan 2009

Lou Lowenstein: An Enduring Legacy, David M. Schizer

Faculty Scholarship

It was inspiring to know Lou Lowenstein, and a great privilege to have him as a colleague, mentor, and friend. Lou was proof of the idea that there is no necessary correlation between excellence and ego, and that the highest of achievers can be the sweetest and most decent of people. Lou's intellect and character were the gold standard. He had a brilliant analytical mind, exceptionally good judgment, a tireless work ethic, and ironclad integrity. He was forceful when he needed to be, but only when he needed to be. Lou had a warm and generous spirit, always cheerful ...


Uncooperative Federalism, Jessica Bulman-Pozen, Heather K. Gerken Jan 2009

Uncooperative Federalism, Jessica Bulman-Pozen, Heather K. Gerken

Faculty Scholarship

This Essay addresses a gap in the federalism literature. Scholars have offered two distinct visions of federal-state relations. The first depicts states as rivals and challengers to the federal government, roles they play by virtue of being autonomous policymakers outside the federal system. A second vision is offered by scholars of cooperative federalism, who argue that in most areas states serve not as autonomous outsiders, but supportive insiders – servants and allies carrying out federal policy. Legal scholarship has not connected these competing visions to consider how the state's status as servant, insider, and ally might enable it to be ...


Civil Liability And Mandatory Disclosure, Merritt B. Fox Jan 2009

Civil Liability And Mandatory Disclosure, Merritt B. Fox

Faculty Scholarship

This Article explores the efficient design of civil liability for mandatory securities disclosure violations by established issuers. An issuer not publicly offering securities at the time of a violation should have no liability. Its annual filings should be signed by an external certifier – an investment bank or other well-capitalized entity with financial expertise. If the filing contains a material misstatement and the certifier fails to do due diligence, the certifier should face measured liability. Officers and directors should face similar liability, capped relative to their compensation but with no indemnification or insurance allowed. Damages should be payable to the issuer ...


Beyond Protection, Philip A. Hamburger Jan 2009

Beyond Protection, Philip A. Hamburger

Faculty Scholarship

Do foreign terrorists have rights under American law? And can they be prosecuted under such law? These questions may seem novel and singularly dificult. In fact, the central legal questions raised by foreign terrorism have long been familiar and have long had answers in the principle of protection.

This Article explains the principle of protection and its implications for terrorism. Under the principle of protection, as understood in early American law, allegiance and protection were reciprocal. As a result, a person without allegiance was without protection, including the protection of the law. Not owing allegiance, such a person had no ...


The Correspondence Of Contract And Promise, Jody S. Kraus Jan 2009

The Correspondence Of Contract And Promise, Jody S. Kraus

Faculty Scholarship

Correspondence accounts of the relationship between contract and promise hold either that contract law is justified to the extent it enforces a corresponding moral responsibility for a promise or unjustified to the extent it undermines promissory morality by refusing to enforce a corresponding moral responsibility for a promise. In this Article, I claim that contract scholars have mistakenly presumed that they can assess the correspondence between contract and promise without first providing a theory of self-imposed moral responsibility that explains and justifies the promise principle. I argue that any plausible theory of self-imposed moral responsibility is inconsistent with a strong ...


Revealing Choices: Using Taxpayer Choice To Target Tax Enforcement, Alex Raskolnikov Jan 2009

Revealing Choices: Using Taxpayer Choice To Target Tax Enforcement, Alex Raskolnikov

Faculty Scholarship

People pay their taxes for many different reasons. Some choose to game the system, paying only when the cost of noncompliance outweighs its benefits. Others comply out of habit, a sense of duty or reciprocity, a desire to avoid feelings of guilt or shame, and for many other reasons. Our tax enforcement system has ignored this variety of taxpaying motivations for decades. It continues to rely primarily on audits and penalties, at least where information reporting and withholding are impossible. Fines and audits deter those rationally playing the tax compliance game, but are wasteful or even counterproductive when applied to ...


On The Origins Of Originalism, Jamal Greene Jan 2009

On The Origins Of Originalism, Jamal Greene

Faculty Scholarship

For all its proponents' claims of its necessity as a means of constraining judges, originalism is remarkably unpopular outside the United States. Recommended responses to judicial activism in other countries more typically take the form of minimalism or textualism. This Article considers why. Ifocus particular attention on the political and constitutional histories of Canada and Australia, nations that, like the United States, have well-established traditions of judicial enforcement of a written constitution, and that share with the United States a common law adjudicative norm, but whose political and legal cultures less readily assimilate judicial restraint to constitutional historicism. I offer ...


Selling Originalism, Jamal Greene Jan 2009

Selling Originalism, Jamal Greene

Faculty Scholarship

Justice Scalia has described an originalist approach to interpretation as a prerequisite to faithful application of a written Constitution. If, says he, constitutional judicial review is implicit in the notion that the Constitution is paramount law, as has been settled in this country at least since Marbury v. Madison, then that review must be guided by the ordinary tools of legislative interpretation. In a democracy, serious legislative interpretation requires that judges keep faith with the meaning of the text as understood at the time of enactment, not as desired by those judges or by anyone else who does not, in ...


Ascertaining The Parties' Intentions In Arbitral Design, George A. Bermann Jan 2009

Ascertaining The Parties' Intentions In Arbitral Design, George A. Bermann

Faculty Scholarship

Supreme Court case law teaches us that the federal interest in arbitration does not consist of enforcing agreements to arbitrate according to some sort of abstract or ideal arbitral model, but rather according to the particular arbitral model upon which the parties had agreed. This body of law is driven by the same notions of party autonomy that underlie the law of arbitration generally. That parties may agree to forego access to national courts in favor of arbitration is an initial manifestation of that attitude. By logical extension, the parties also enjoy extraordinary latitude in determining the features that "their ...


Deep Secrecy, David E. Pozen Jan 2009

Deep Secrecy, David E. Pozen

Faculty Scholarship

This Article offers a new way of thinking and talking about government secrecy. In the vast literature on the topic, little attention has been paid to the structure of government secrets, as distinct from their substance or function. Yet these secrets differ systematically depending on how many people know of their existence, what sorts of people know, how much they know, and how soon they know. When a small group of similarly situated officials conceals from outsiders the fact that it is concealing something, the result is a deep secret. When members of the general public understand they are being ...


Facial And As-Applied Challenges Under The Roberts Court, Gillian E. Metzger Jan 2009

Facial And As-Applied Challenges Under The Roberts Court, Gillian E. Metzger

Faculty Scholarship

One recurring theme of the Roberts Court's jurisprudence to date is its resistance to facial constitutional challenges and preference for as-applied litigation. On a number of occasions the Court has rejected facial constitutional challenges while reserving the possibility that narrower as-applied claims might succeed. According to the Court, such as-applied claims are "the basic building blocks of constitutional adjudication." This preference for as-applied over facial challenges has surfaced with some frequency, across terms and in contexts involving different constitutional rights, at times garnering support from all the Justices. Moreover, the Roberts Court has advocated the as-applied approach in contexts ...


The Law Of Armed Conflict And Detention Operations In Afghanistan, Matthew C. Waxman Jan 2009

The Law Of Armed Conflict And Detention Operations In Afghanistan, Matthew C. Waxman

Faculty Scholarship

In reflecting on the arc of US and coalition detention operations in Afghanistan, three key issues related to the law of armed conflict stand out: one substantive, one procedural and one policy. The substantive matter – what are the minimum baseline treatment standards required as a matter of international law? – has clarified significantly during the course of operations there, largely as a result of the US Supreme Court's holding in Hamdan v. Rumsfeld. The procedural matter – what adjudicative processes does international law require for determining who may be detained? – eludes consensus and has become more controversial the longer the Afghan ...


Intimate Discrimination: The State's Role In The Accidents Of Sex And Love, Elizabeth F. Emens Jan 2009

Intimate Discrimination: The State's Role In The Accidents Of Sex And Love, Elizabeth F. Emens

Faculty Scholarship

This is a challenging moment for the law of discrimination. The state's role in discrimination has largely shifted from requiring discrimination – through official policies such as segregation – to prohibiting discrimination – through federal laws covering areas such as employment, housing, education, and public accommodations. Yet the problem of discrimination persists, often in forms that are hard to regulate or even to recognize.

At this challenging moment, the intimate domain presents a vital terrain for study in two main ways. First, conceptually, studying the intimate domain permits new insights into discrimination and the law's identity categories, because people are more ...


Charles H. Whitebread, Michael J. Graetz Jan 2009

Charles H. Whitebread, Michael J. Graetz

Faculty Scholarship

Late in April when Charlie Whitebread learned that he had Stage 4 lung cancer, it occurred to me that I might someday be asked to say a few words about him. But these are comments I hoped never to make. I do not have words to describe to you the emptiness in my life that Charlie had filled for so many years. But our purpose here is not to mourn our loss; rather it is to celebrate Charlie's life.


In (Partial) Defense Of Strict Liability In Contract, Robert E. Scott Jan 2009

In (Partial) Defense Of Strict Liability In Contract, Robert E. Scott

Faculty Scholarship

Many scholars believe that notions of fault should and do pervade contract doctrine. Notwithstanding the normative and positive arguments in favor of a fault-based analysis of particular contract doctrines, I argue that contract liability is strict liability at its core. This core regime is based on two key prongs: (1) the promisor is liable to the promisee for breach, and that liability is unaffected by the promisor's exercise of due care or failure to take efficient precautions; and (2) the promisor's liability is unaffected by the fact that the promisee, prior to the breach, has failed to take ...


Surrogacy And The Politics Of Commodification, Elizabeth S. Scott Jan 2009

Surrogacy And The Politics Of Commodification, Elizabeth S. Scott

Faculty Scholarship

In 2004, the Illinois legislature passed the Gestational Surrogacy Act, which provides that a child conceived through in vitro fertilization (IVF) and born to a surrogate mother automatically becomes the legal child of the intended parents at birth if certain conditions are met. Under the Act, the woman who bears the child has no parental status. The bill generated modest media attention, but little controversy; it passed unanimously in both houses of the legislature and was signed into law by the governor.

This mundane story of the legislative process in action stands in sharp contrast to the political tale of ...


Heller High Water? The Future Of Originalism, Jamal Greene Jan 2009

Heller High Water? The Future Of Originalism, Jamal Greene

Faculty Scholarship

Has originalism won? It's easy to think so, judging from some of the reaction to the Supreme Court's recent decision in District of Columbia v. Heller. The Heller Court held that the District of Columbia could neither ban possession of handguns nor require that all other firearms be either unloaded and disassembled or guarded by a trigger lock. In finding for the first time in the Court's history that a gun control law violated the Second Amendment, Justice Scalia's opinion for the 5-4 majority appeared to be a sterling exemplar of originalism, the method of constitutional ...


The Warren Court, Legalism And Democracy: Sketch For A Critique In A Style Learned From Morton Horwitz, William H. Simon Jan 2009

The Warren Court, Legalism And Democracy: Sketch For A Critique In A Style Learned From Morton Horwitz, William H. Simon

Faculty Scholarship

Morton Horwitz's Transformation books developed a critical approach that elaborates the underlying premises of legal doctrine and compares them to suppressed or ignored alternative perspectives. However, Horwitz's Warren Court book is largely an appreciation of the Court's doctrine that accepts at face value its underlying premises and the judges' claim to vindicate democratic values. In this essay, I speculate on what a Transformation-style critique of the Warren Court might look like and suggest that the Court is vulnerable to criticisms analogous to those the Transformation books make of earlier doctrine. I suggest that book ignores an alternative ...


Why Do Criminals Obey The Law? The Influence Of Legitimacy And Social Networks On Active Gun Offenders, Andrew V. Papachristos, Tracey L. Meares, Jeffrey Fagan Jan 2009

Why Do Criminals Obey The Law? The Influence Of Legitimacy And Social Networks On Active Gun Offenders, Andrew V. Papachristos, Tracey L. Meares, Jeffrey Fagan

Faculty Scholarship

Recent research on procedural justice and legitimacy suggests that compliance with the law is best secured not by mere threat of force, but by fostering beliefs in the fairness of the legal systems and in the legitimacy of legal actors. To date, however, this research has been based on general population surveys and more banal types of law violating behavior (such as unpaid parking tickets, excessive noise, etc.). Thus, while we know why normal people obey the law, we do not have similar knowledge as it pertains to the population most likely to commit serious violent crimes. This study fills ...


The Empagran Exception: Between Illinois Brick And A Hard Place, Victor P. Goldberg Jan 2009

The Empagran Exception: Between Illinois Brick And A Hard Place, Victor P. Goldberg

Faculty Scholarship

In F. Hoffmann-La Roche Ltd. v. Empagran S.A., the Supreme Court interpreted the Foreign Trade Antitrust Improvements Act ("FTAIA") to bar an antitrust suit by foreign plaintiffs against foreign defendants despite the fact that the foreign and domestic markets were interconnected. I identify one narrow class of cases that would satisfy the statutory exception. Rather than focusing on the interrelatedness of the foreign and domestic prices, the inquiry centers on the resale of goods to the domestic market. The argument is a variant on Illinois Brick.