Law Commons^™

The Knowledge Gap In Workplace Retirement Investing And The Role Of Professional Advisors, Jill E. Fisch, Tess Wilkinson-Ryan, Kristin Firth

Duke Law Journal

The dramatic shift from traditional pension plans to participant-directed 401(k) plans has increased the obligation of individual investors to take responsibility for their own retirement planning. With this shift comes increasing evidence that investors are making poor investment decisions.

This Article seeks to uncover the reasons for poor investment decisions. We use a simulated retirement investing task and a new financial literacy index to evaluate the role of financial literacy in retirement investment decisionmaking in a group of nonexpert participants. Our results suggest that individual employees often lack the skills necessary to support the current model of participant-directed investing. We …

Using The False Claims Act To Remedy Tax-Expenditure Fraud, Ian Ayres, Robert Mcguire

Duke Law Journal

The federal False Claims Act (FCA) may be a tool for combating fraudulent claims regarding tax expenditures. The FCA has been used to protect the public fisc by imposing liability upon anyone who makes a false or fraudulent claim relating to an expenditure of federal funds. A substantial share of government spending is implemented through tax credits and deductions granted to individuals and entities for taking particular actions promoted by the tax code—so-called “tax expenditures.” Funds subsidized by such tax expenditures can themselves be the objects of fraud. For example, a taxpayer could be defrauded of retirement funds that the …

The Role Of Blue Sky Laws After Nsmia And The Jobs Act, Rutheford B. Campbell Jr.

Duke Law Journal

State securities laws—in particular, state laws requiring that securities offered by issuers be registered with the states—have been an impediment to the efficient movement of capital to its highest and best use. The pernicious effects of these laws—generally referred to as “blue sky laws”—have been felt most acutely by small businesses, a vital component of our national economy.

It has been difficult to remedy this problem. States and state regulators have been tenacious in protecting their registration authority from federal preemption. The Securities and Exchange Commission, on the other hand, has been reluctant to advocate for preemption and unwilling to …

James D. Cox: The Shareholders’ Best Advocate, Randall S. Thomas, Harwell Wells

Duke Law Journal

This Article explores the historical development of the academic analysis of corporate law over the past forty years through the scholarship of one of its most influential commentators, Professor James D. Cox of the Duke University School of Law. It traces the ways in which corporate law scholarship changed from the 1970s to the present, including the rise of economic theory and empirical work in the study of corporate law. It shows how Professor Cox’s early scholarship shaped and challenged economic orthodoxy, while his later work used empirical analysis to help corporate law become a more dynamic and richer field. …

Regulating Public Offerings Of Truly New Securities: First Principles, Merritt B. Fox

Duke Law Journal

The public offering of truly new securities involves purchases by investors in sufficient number and in small enough blocks that each purchaser’s shares can reasonably be expected to be freely tradable in a secondary market that did not exist before the offering. Increasing the ability of small and medium-sized enterprises (SMEs) to make such offerings has been the subject of much recent discussion.

At the time that a firm initially contemplates such an offering, unusually large information asymmetries exist between its insiders and potential investors. These can lead to severe adverse-selection problems that prevent a substantial portion of worthy offerings …

Detecting Good Public Policy Rationales For The American Rule: A Response To The Ill-Conceived Calls For “Loser Pays” Rules, Peter Karsten, Oliver Bateman

Duke Law Journal

Several critiques have been leveled at the American Rule—that is, the rule that each party to a lawsuit should pay for its attorneys. Some claim that there were no principled justifications offered by the nineteenth-century jurists who authored the opinions marking the rule’s origins. Instead, these jurists only cited their states’ “taxable costs” statutes. Others claim that the American Rule—as well as its close relative, the contingency-fee contract—contributed to a “liability explosion” in that century. This Article offers a comprehensive examination of the origins of, rationales given for, and impact of the American Rule; then it evaluates instances in which …

How Understanding The Nature Of Corporate Norms Can Prevent Their Destruction By Settlements, James D. Cox

Duke Law Journal

Scholars have long celebrated the importance of norms in corporate law. Indeed, norms likely guide corporate actors more than the omnipresent threat of shareholder suits. This Article divides corporate norms into two distinct groups: aspirational norms and arbiter norms. Aspirational norms announce socially desirable objectives for corporate managers and encourage certain disclosure practices; arbiter norms identify distinct transactions for closer scrutiny by an independent body, the court. This Article shows that even though aspirational norms and arbiter norms serve different objectives, they share a common characteristic—overbreadth. This feature exists whether the norm is set forth by statute or found in …

Journal Staff

Duke Law Journal

No abstract provided.

Adaptive Financial Regulation And Regtech: A Concept Article On Realistic Protection For Victims Of Bank Failures, Lawrence G. Baxter

Duke Law Journal

Frustrated by the seeming inability of regulators and prosecutors to hold bank executives to account for losses inflicted by their companies before, during, and since the financial crisis of 2008, some scholars have suggested that private-attorney-general suits such as class action and shareholder derivative suits might achieve better results. While a few isolated suits might be successful in cases where there is provable fraud, such remedies are no general panacea for preventing large-scale bank-inflicted losses. Large losses are nearly always the result of unforeseeable or suddenly changing economic conditions, poor business judgment, or inadequate regulatory supervision—usually a combination of all …

“We Believe”: Omnicare, Legal Risk Disclosure And Corporate Governance, Hillary A. Sale, Donald C. Langevoort

Duke Law Journal

The Supreme Court’s decision in Omnicare Inc. v. Laborers District Council Construction Industry Pension Fund presents new challenges for boards of directors. The opinion speaks to whether and when an issuer’s statement of belief can be false or misleading other than by proof that the issuer’s genuine opinion was different from what it stated. Statements of opinion imply something about how the belief was formed, and that process implicates the role of directors as fiduciaries.

This Article uses Omnicare as a starting point for exploring and developing the interplay between disclosure, discourse, and fiduciary duties. Using the lens of corporate-discourse …

James D. Cox, David F. Levi

Duke Law Journal

No abstract provided.

The Jurisdictional Difficulties Of Defining Charter-School Teachers Unions Under Current Labor Law, Amelia A. Degory

Duke Law Journal

As charter schools have flourished in form, they have also evolved in variety: parents can send their children to a trilingual immersion school or a school whose classes meet entirely online. The same flexibility that charters offer as an alternative to traditional public schools also makes them difficult to classify for purposes of labor law. When charter-school teachers form a union, it is not clear why the National Labor Relations Board (NLRB), and not a state labor analogue, should have jurisdiction over a charter-school labor dispute. And yet, the NLRB has asserted jurisdiction in most charter-school cases. This Note examines …

Fiduciary Voters?, D. Theodore Rave

Duke Law Journal

What does the majority owe the minority when issues are put to a vote? This question is central to direct democracy, where voters bypass the legislature and enact law directly. Some scholars have argued that voters in direct democracy bear fiduciary-like duties because they act as representatives when casting their ballots. The Supreme Court, by contrast, has suggested that voters are not agents of the people and thus have no fiduciary obligation. By focusing on whether direct-democracy voters are representatives who bear duties, both sides have framed the issue incorrectly. They have imported a legal tool—fiduciary duty—from private law designed …

Journal Staff

Duke Law Journal

No abstract provided.

Muscle Memory And The Local Concentration Of Capital Punishment, Lee Kovarsky

Duke Law Journal

The modern death penalty is not just concentrating in a handful of practicing states; it is disappearing in all but a few capitally active localities. Capital-punishment concentration, however, still surfaces more as the subject of casual observation than as the object of sophisticated academic inquiry. Normative and doctrinal analyses of the phenomenon are virtually nonexistent, in part because the current ability to measure and report concentration is so limited.

This Article is the first attempt to measure capital-punishment concentration rigorously, by combining different sources of county-level data and by borrowing quantitative tools that economists use to study market competition. The …

(In)Equitable Subrogation: The Federal Circuit’S Irrational And Unworkable Progress Payment Framework In Balboa, Will F. Hawkins

Duke Law Journal

American taxpayers spend more than $100 billion per year on federal construction projects. Yet massive construction delays, huge budget overruns, and unorganized contractors increase the cost of construction for the federal government. Passed in 1935, the Miller Act attempted to protect the federal government in the event that the contractor defaulted or was unable to complete the project. By requiring contractors to enlist third party “sureties” as guarantors on projects, the Miller Act provides the government with the assurance that another party will step in to complete projects if need be. Contractors are typically paid via periodic progress payments, with …

People Prefer System 2 Nudges (Kind Of), Cass R. Sunstein

Duke Law Journal

In the United States, the United Kingdom, Australia, and many other nations, those involved in law and policy have been exploring initiatives that preserve freedom of choice, or “nudges,” informed by behavioral science and promoting important public policy goals, such as improved health and safety. But there is a large and insufficiently explored difference between System 1 nudges, which target or benefit from automatic processing, and System 2 nudges, which target or benefit from deliberative processing. Graphic warnings and default rules are System 1 nudges; statistical information and factual disclosures are System 2 nudges. On philosophical grounds, it might seem …

To Erie Or Not To Erie: Do Federal Courts Follow State Statutory Interpretation Methodologies?, J. Stephen Tagert

Duke Law Journal

The Erie doctrine requires federal courts sitting in diversity jurisdiction to apply state substantive law if applying federal law would change the outcome of the case. If statutory interpretation methodologies affect the outcomes of cases and state courts give them stare decisis effect, does Erie require federal courts to use state interpretation methodologies when applying state substantive law? This Note examines whether federal courts are already applying state interpretation methodologies when they interpret state statutes by examining state statutory interpretation cases heard in Michigan federal courts interpreting Michigan statutes. This Note examines Michigan state cases because its supreme court established …

Leveling The Playing Field: Applying Federal Corporate Charging Considerations To Individuals, Nicole T. Amsler

Duke Law Journal

The American prison system is grappling with a well-publicized carceral crisis. In the words of former U.S. Attorney General Eric Holder, “too many Americans go to too many prisons for far too long, and for no truly good law enforcement reason.” And, as a result of developments in federal law over the past few decades, the power of federal prosecutors to decide when and how to charge individuals with crimes is crucial to when and how American citizens go to prison.

Many ideas have been proposed to revise prosecutorial discretionary powers, but few have been heeded by the Department of …

Analyzing Avoidance: Judicial Strategy In Comparative Perspective, Erin F. Delaney

Duke Law Journal

Courts sometimes avoid deciding contentious issues. One prominent justification for this practice is that, by employing avoidance strategically, a court can postpone reaching decisions that might threaten its institutional viability. Avoidance creates delay, which can allow for productive dialogue with and among the political branches. That dialogue, in turn, may result in the democratic resolution of—or the evolution of popular societal consensus around—a contested question, relieving the court of its duty. Many scholars and judges assume that, by creating and deferring to this dialogue, a court can safeguard its institutional legitimacy and security.

Accepting this assumption arguendo, this Article seeks …

Journal Staff

Duke Law Journal

No abstract provided.

Institutions And The Second Amendment, Darrell A. H. Miller

Duke Law Journal

District of Columbia v. Heller ruptured the one institution—the militia—that courts had used for centuries to implement the right to keep and bear arms. If the question was “what arms?,” one looked to the militia to find an answer; if the question was “whose arms?,” again, one looked to the militia. Heller loosened the fit between the militia and the right, causing a welter of conflict as to what institutions now facilitate and constrain the Second Amendment. This Article attempts to restructure the inquiry into Second Amendment rights by drawing from the literature on institutionalism and constitutional law.

Although the …

Administrative Power In The Era Of Patent Stare Decisis, Stuart Minor Benjamin, Arti K. Rai

Duke Law Journal

The elaborate adjudicatory proceedings set up by the America Invents Act of 2011 (AIA) have thrust the U.S. Patent and Trademark Office (PTO) squarely into the patent-litigation process. The AIA proceedings, conducted by the newly formed PTO Patent Trial and Appeal Board (PTAB), are now a formidable competitor to district court litigation. The executive branch has further enhanced PTO and PTAB power by vigorously asserting the agency’s prerogatives with respect to certain aspects of these proceedings. Despite the formality of the AIA proceedings, the agency’s lawyers have steered clear of asking for Chevron deference on legal issues decided in these …

Patent Office Cohorts, Michael D. Frakes, Melissa F. Wasserman

Duke Law Journal

Concerns regarding low-quality patents and inconsistent decisions prompted Congress to enact the first major patent reform act in over sixty years and likewise spurred the Supreme Court to take a renewed interest in substantive patent law. Because little compelling empirical evidence exists as to what features affect the patent office’s granting behavior, policymakers have been trying to fix the patent system without understanding the root causes of its dysfunction.

This Article aims to fill at least part of this gap by examining one factor that may affect patent examiners’ grant rates throughout their tenures: the year in which they were …

Cba At The Pto, Jonathan S. Masur

Duke Law Journal

What are the costs and benefits of patent laws? While Congress and the courts are often able to evade this difficult question, there is one institutional actor that is not only well-advised but also required to consider costs and benefits: the Patent and Trademark Office, which—as an administrative agency—is required by executive order to conduct cost-benefit analysis of all economically significant regulations. Yet the agency’s efforts have been less than satisfactory. In its cost-benefit analysis, the PTO overlooks crucial functional considerations, misunderstands basic precepts of patent economics, and resists quantification when quantification is required. In combination, these shortcomings suggest that …

Journal Staff

Duke Law Journal

No abstract provided.

Working Without Chevron: The Pto As Prime Mover, John M. Golden

Duke Law Journal

Through a proliferation of post-issuance administrative proceedings, the U.S. Patent and Trademark Office (PTO) has become a major player in the fate of patents after their initial examination and grant. In combination with the PTO’s more traditional roles in initial examination and general guidance, new post-issuance proceedings enable the PTO to help steer the development of substantive patent law even without general provision of high-level Chevron deference for the agency’s interpretations of substantive aspects of the U.S. Patent Act. Contrary to some commentators’ suggestions, congressional authorization for new post-issuance proceedings does not appear to have included an implicit delegation of …

Patent Exceptionalism With Presidential Advice And Consent, James Donald Smith

Duke Law Journal

No abstract provided.

Joint And Several Jurisdiction, Scott Dodson, Philip A. Pucillo

Duke Law Journal

Is federal diversity jurisdiction case specific or claim specific? The complete-diversity rule makes clear that, when a diversity defect is noted in a putative diversity action, the court lacks subject-matter jurisdiction over that action as a whole. But does the court’s jurisdiction nevertheless extend to claims between diverse parties, such that the case continues if the nondiverse spoiler is dismissed?

We engage this persistent and unsettled question by identifying and exploring two possible answers, each based on a distinct theory of subject-matter jurisdiction that boasts doctrinal support. The first we denote “joint jurisdiction”—an all-or-nothing theory—under which a diversity defect contaminates …

Pre-Twombly Precedent: Have Leatherman And Swierkiewicz Earned Retirement Too?, Lucas F. Tesoriero

Duke Law Journal

In theory, a complaint is a relatively minor part of a lawsuit, intended to initiate the litigation process. In practice, federal courts are struggling to implement the Supreme Court’s opinions in Bell Atlantic Corp. v. Twombly and Ashcroft v. Iqbal. This struggle is due, in part, to the fact that neither Twombly nor Iqbal expressly overruled the Court’s pre-Twombly pleading jurisprudence. This Note focuses on how lower courts are assessing the continued vitality of two major pre-Twombly cases: Leatherman v. Tarrant County Narcotics Intelligence and Coordination Unit and Swierkiewicz v. Sorema N.A. It finds that lower courts …