Law Commons^™

The “Co-Conspirator Exception” To Illinois Brick: Mandatory Joinder Of Direct Purchaser Co-Conspirators, Nikki Chavez Brown

The University of Chicago Business Law Review

Illinois Brick was intended to be a bright-line rule prohibiting indirect purchasers from recovering damages against an upstream antitrust violator under § 4 of the Clayton Act for overcharges passed-on by direct purchasers. In reality, the Illinois Brick decision has resulted in a patchwork of incongruent jurisprudence governing antitrust standing in private enforcement cases. In a seemingly endless struggle to satisfy long-recognized antitrust principles of compensation and deterrence through private enforcement, courts have employed an inconsistent array of rationales and “exceptions” to Illinois Brick. The so-called “co-conspirator exception” to Illinois Brick is intended to provide the first purchaser from outside …

Musical Chairs: Vertical Antitrust Should Prevail Over Congressional Payola Prohibitions To Protect Musicians, Maria Stevenson

The University of Chicago Business Law Review

The music industry is highly concentrated at multiple stages along the production chain between the Big Three music group conglomerates (Universal, Sony, and Warner) and the three largest streaming services (Spotify, Apple, and YouTube). The Big Three and the streaming services have extensive vertical arrangements, from the Big Three having ownership stakes in the largest streaming services to their contracts for the streaming services’ algorithms to prioritize Big Three artists. This resembles historical radio era payola arrangements. This double layer of market concentration and the arrangements between music production and distribution primarily harm musicians, who lack the bargaining power to …

Decolonial Constitutionalism, Richard Albert

Chicago Journal of International Law

The American Declaration of Independence kindled the first successful decolonial movement in the modern world, culminating in the enactment of the United States Constitution. From colony to sovereign state to great power, the United States modeled for subordinated peoples abroad how to win their own battles for sovereignty. Since the end of the Second World War, however, America’s eighteenth-century precedent of revolutionary self-determination is no longer the prevailing path to decolonization. The traditional warmaking toolkit for winning independence—revolution, illegality, and violence—has been replaced by more orderly tactics consonant with the rule of law. Evolution, lawfulness, and continuity are the touchstones …

Creating A System To Deal With The Systemic Risk In Private Credit, Kyle O’Malley

The University of Chicago Business Law Review

Private credit, a financing method where non-bank lenders provide loans to predominantly middle-market businesses, has experienced exponential growth since the 2008 financial crisis, with its offerings, client base, and collaborations with other market participants expanding significantly. Recent trends highlight regulatory acceptance of this growth and increased interconnectedness between private credit and the broader financial industry, as private credit firms form numerous new partnerships with traditional lenders and deposit-taking institutions. These developments have raised concerns about systemic risk, the potential for financial instability in private credit to spread to the broader financial system, and how to deal with increased exposure to …

Premium Justice: An Egalitarian Defense Of Risk-Based Insurance Pricing, Travis Luis Pantin

The University of Chicago Business Law Review

Should insurance companies be allowed to charge different prices based on a policyholder’s likelihood of making claims? This Article challenges the common view that “risk-based pricing” in insurance presents a tradeoff between the twin goals of efficiency and fairness. It argues that the most compelling justification for charging policyholders prices that reflect their individual risk is grounded not in efficiency, but in egalitarian distributive justice. The Article begins by shifting the focus of distributive analysis from the burdens of insurance (i.e., premium costs) to the benefits of insurance, measured as the consumer surplus each participant gains from coverage. It then …

Are Banks Obsolete?, Jonathan R. Macey

The University of Chicago Business Law Review

Banks, which are businesses that simultaneously make loans and take deposits that are available to customers on demand, are inherently unstable. The instability exists because the mismatch in the (long-term) maturity of banks’ assets and the (short-term) maturity of their liabilities makes them susceptible to runs and panics that destabilize the broader economy and require bailouts on a regular basis. As such, banks essentially hold society hostage. They must be continuously propped up by the government to prevent them from collapsing and bringing the rest of the economy down with them.

There is a strong need for the transaction-account services …

Let’S Nms With Texas: The Implications Of The Texas Stock Exchange For Self-Regulation, Onnig H. Dombalagian

The University of Chicago Business Law Review

The Texas Stock Exchange’s registration as a new national securities exchange is arguably the most formidable challenge to the NYSE and Nasdaq duopoly in recent memory. TXSE has raised expectations not only among those who champion the rise of Texas as a financial center and resist the imposition of progressive norms through securities law, but also among scholars who favor competition as a solution to structural problems in the national market system (NMS) for equity trading. This Article explores the extent to which a new exchange can manage these expectations. It further considers what it means to be a “fully …

Taxing Corporate Payouts, David A. Weisbach

Public Law and Legal Theory Working Papers

Corporate distributions total about $1.5 trillion per year, yet the system for taxing distributions is a mess. It favors buybacks over dividends, and therefore is a possible cause of the growth of buybacks in recent years. It is almost comically complex. And even with its fantastic level of complexity (or perhaps because of the complexity), it provides opportunities for egregious shelters.

Congress has repeatedly attempted reforms to fix these problems, with at best mixed success and often outright failure. Numerous commentators have proposed reforms but all either fail to eliminate the tax differential between buybacks and dividends or require significant …

The Supreme Court Under Threat: Early Lessons In Judicial Self- Protection, Curtis Bradley, Neil S. Siegel

Public Law and Legal Theory Working Papers

This Essay explores how the U.S. Supreme Court, despite being vulnerable to defiance of its decisions and political retaliation, has developed tools of judicial self- protection to preserve its institutional authority as well as the Constitution and the rule of law. Arguing that the Court performs not only a legal role that requires interpretation of the law but also a political one that demands institutional preservation, the Essay examines how the Court has historically navigated political threats by using a range of tools—including avoidance, delay, narrow rulings, strategic dicta, and rhetorical appeals. The Essay focuses on three nineteenth-century episodes: the …

The Genesis Of Constitutions: A Natural Language Processing Approach, Tejas Ramdas, Patrick Chung-Chia Huang, Nuno Garoupa, Martin T. Wells, Yun-Chien Chang, Tom Ginsburg

Public Law and Legal Theory Working Papers

The diffusion of constitutional ideas and models has been the subject of extensive scholarship. In this paper, we use natural language processing methods to examine the persistence of constitutional ideas and models, focusing on how 16 core and iconic constitutions influence 572 newer constitutions over a long period (1900–2020). Our findings indicate that “old” core constitutions (such as those of the U.S. of 1789, Spain of 1812, France of 1848, and to a lesser extent France of 1791) have maintained significant influence over those 121 years. Austria of 1920 and France of 1946 are the most influential among the 20th …

The Silicon Valley No-Poach Conspiracy, Eric A. Posner, Ruth Zheng

Coase-Sandor Institute for Law & Economics Research Paper Series

The Silicon Valley no-poach conspiracy is the most important cartel no one has heard of. It is rarely discussed in the cartel literature and is lost to public memory. More than forty tech firms, including Apple and Google, agreed not to poach employees from one another over three decades, causing an estimated $3.1 billion in lost wages. The Justice Department discovered and broke apart the cartel in 2010, but did not punish the cartel members, who quickly settled with employees and never admitted guilt. However, the case foreshadowed, and perhaps helped spur, two major developments in antitrust law a decade …

Space Over Time: Housing For The Life Cycle, Lee Anne Fennell

Coase-Sandor Institute for Law & Economics Research Paper Series

People need housing throughout the life cycle, and what they need from that housing changes over time. Yet the menu of residential options is often too static, rigid, and limited to respond to these changes. What would it mean to configure housing to adapt to households’ evolving spatial requirements, risk tolerances, health challenges, and financial statuses? How could greater flexibility in the built environment enable communities to deliver better residential services to their populations? Elder housing offers a illuminating window into these questions and their answers. Addressing life-stage correlated housing mismatches could help to loosen the larger supply constraints—and failures …

Informative Jury Disagreement, Roy Baharad

Coase-Sandor Institute for Law & Economics Research Paper Series

The article introduces a counterintuitive argument, contending that jury disagreement on the defendant’s guilt—a nonunanimous conviction—may well provide a more informative signal, compared to consensus. Because stronger consensus implies higher likelihood of herding, it is shown that beyond some threshold, further accumulation of votes to convict would carry negligible epistemic contribution, barely enhancing the posterior probability of guilt. On the other hand, while dissenting votes provide a direct signal of innocence, they indicate that herding has not been involved in the decision-making process, hence increase the epistemic contribution of any vote generated by said process— including votes to convict—and may …

Forced Migration And Women’S Empowerment: Evidence From Rohingya Refugees, Adam Chilton, Katerina Linos, Anup Malani

Coase-Sandor Institute for Law & Economics Research Paper Series

We explore a paradox: high levels of satisfaction among forcibly displaced Rohingya women in informal camps in Hyderabad, India. Despite experiencing extreme poverty, loss of family and community, and high levels of gender-based violence after resettlement, both men and women—particularly women—report significant increases in satisfaction. We structured a representative household survey, employed a trusted female Muslim interviewer with deep ties to the local community, interviewed comparable numbers of men and women, and embedded list experiments in our questionnaire, to allow people to answer sensitive questions indirectly. We attribute this paradoxical finding to increased freedom post-resettlement, facilitated by economic, legal, and …

Can Ai Hold Office Hours?, Lisa Larrimore Ouellette, Amy R. Motomura, Jason Reinecke, Jonathan S. Masur

Coase-Sandor Institute for Law & Economics Research Paper Series

Rapid improvements in AI tools offer transformative opportunities in legal education, including the possibility of students using AI tools to answer questions that students might otherwise ask during office hours. But a critical challenge is the accuracy of these tools’ responses. Both general-purpose and law-specific AI models have been shown to “hallucinate” incorrect responses to a range of legal questions. Here, we evaluate the current capabilities of AI models when given the more constrained task of answering questions about a specific legal text. We provided three AI tools—OpenAI’s GPT-4o, Anthropic’s Claude 3.5 Sonnet, and Google’s NotebookLM—with the text of Masur …

Introducing The Corporate Restructuring Machine: An Open Platform Approach, Horst Eidenmüller, Jared I. Mayer

Coase-Sandor Institute for Law & Economics Research Paper Series

The promise of Artificial Intelligence (AI) has become apparent. Yet how will AI affect corporate reorganizations? Based on previous work on the use of AI applications in negotiations, we argue that the potential of such applications to increase the efficiency of corporate workout negotiations is significant. To do so, we imagine the “Corporate Restructuring Machine” (CRM). This is a private, online platform armed with AI tools and services that are designed to support or even automate corporate workouts (out-of-court restructurings). Stakeholders, particularly creditors and shareholders, could join the platform and opt into AI applications at different times, for different services, …

Taxing Corporate Payouts, Neil Dokurno, David A. Weisbach

Coase-Sandor Institute for Law & Economics Research Paper Series

Corporate distributions total about $1.5 trillion per year, yet the system for taxing distributions is a mess. It favors buybacks over dividends, and therefore is a possible cause of the growth of buybacks in recent years. It is almost comically complex. And even with its fantastic level of complexity (or perhaps because of the complexity), it provides opportunities for egregious shelters.

Congress has repeatedly attempted reforms to fix these problems, with at best mixed success and often outright failure. Numerous commentators have proposed reforms but all either fail to eliminate the tax differential between buybacks and dividends or require significant …

The Uneasy Case For Copyright Disgorgement, Roy Baharad

Coase-Sandor Institute for Law & Economics Research Paper Series

Along with lost profits damages that are designed to put copyright owners in the position they would have occupied in the absence of infringement, copyright law entitles rightsholders to seek disgorgement of any additional profits elicited by infringers. The disgorgement remedy is designed to infuse principles of unjust enrichment into copyright doctrine, allowing owners to collect any ill-gotten gain creditable to the infringement. Despite its prominence, this Article reveals a hitherto overlooked problem in applying the disgorgement remedy to copyright infringement. As a baseline for the analysis, the Article embraces the canonic distinction between two types of infringements: imitations and …

Can Consumers Protect Themselves Against Privacy Dark Patterns?, Matthew B. Kugler, Lior Strahilevitz, Marshini Chetty, Chirag Mahapatra

Coase-Sandor Institute for Law & Economics Research Paper Series

Dark patterns have emerged in the last few years as a major target of legislators and regulators. Dark patterns are online interfaces that manipulate, confuse, or trick consumers into purchasing goods or services that they do not want, or into surrendering personal information that they would prefer to keep private. As new laws and regulations to restrict dark patterns have emerged, skeptics have countered that motivated consumers can and will protect themselves against these manipulative interfaces, making government intervention unnecessary. This debate occurs alongside active legislative and regulatory discussion about whether to prohibit dark patterns in newly enacted comprehensive consumer …

Continuity And Change On Corporate Boards, Peter Cziraki, Adriana Robertson

Coase-Sandor Institute for Law & Economics Research Paper Series

The number of women on public company boards has increased dramatically in recent years. We study where these women directors came from and how they were absorbed. Since 2018, women with board experience obtain significantly more board seats than their male counterparts. Women directors are also more likely to have no previous board experience than men, indicating movement on both the intensive and extensive margin. Adding a woman director is associated with a transitory increase in board size roughly one third of the time. This increase is offset when an existing director rolls off. The bulk of this reversion happens …

Fraudulent Transfer Law’S Forgotten Foundations, Douglas G. Baird

The University of Chicago Business Law Review

Fraudulent transfer law is one of the principal bulwarks of private law. Fraudulent transfer law, however, now faces a crisis. Courts have long assumed that it was easy to determine whether a debtor made a fraudulent transfer of its property. One could use traditional markers of ownership to determine whether the debtor transferred property to a confederate. But today, most assets are intangible. Transactions happen in the blink of an eye, and they take place entirely on corporate books. Reliance on simple notions of what constitutes a “transfer” of property is wholly inadequate. Understanding what it means for a debtor …

Risk, Return, And Restoration: A Fundamental Approach To Pre-Judgment Interest, Yijia Lu, Scott Vincent

The University of Chicago Business Law Review

Courts routinely miscalculate pre-judgment interest, thereby failing to fully restore injured parties. Because pre-judgment interest can be substantial—often rivaling or even exceeding the underlying award—errors in its calculation are important and may create distorted incentives, promote opportunistic behavior, and suppress investment and economic activity. These errors often stem from reliance on speculation to determine the costs covered by interest. This Article argues that such speculation is unnecessary. The litigation claim is identified as the asset which has burdened the injured party with risks and costs imposed by the wrongful act, eliminating the need to rely on a hypothetical asset to …

Textualism As A Pro-Employee Force In Employment Discrimination Law, Alex Reed

The University of Chicago Business Law Review

Textualism has gotten a bad rap, at least insofar as employment discrimination law is concerned. Derided by antidiscrimination scholars as an interpretive smokescreen concerned less with faithfully construing statutory text than reliably yielding pro-employer results, textualism is understood to pose an existential threat to employment discrimination law. This Article challenges academic orthodoxy by demonstrating that, in practice, textualism is correlated with employee-favorable outcomes. Specifically, the Article examines a subset of the Supreme Court’s major employment discrimination cases over the past thirty years and finds that textualism is twice as likely to be associated with outcomes benefiting employees than it is …

Resolving American Semiconductor Challenges Through Making The Itc A Preferred Forum, Emma Donnelly

The University of Chicago Business Law Review

This Comment demonstrates the need in United States’ semiconductor policy for the United States to establish itself as a preferred IP litigation forum. The paper notes three obstacles to be solved in current semiconductor IP policy: IP Theft, Semiconductor Counterfeiting, and Balanced Licensing. The paper next argues why the International Trade Commission (ITC) is an ideal United States forum for these concerns and addresses general benefits and shortcomings of ITC litigation. Lastly, this paper evaluates potential policy changes to ITC procedure and application to entrench the ITC as the premier legal forum for semiconductor policy. The paper argues that changes …

A Commitment Rule For Insolvency Forum, Anthony J. Casey, Aurelio Gurrea-Martínez, Robert K. Rasmussen

The University of Chicago Business Law Review

In this Article, we propose a new rule for determining the proper forum for insolvency proceedings. Currently, the Model Law on Cross-Border Insolvency (Model Law)—promulgated by the United Nations Commission on International Trade Law (UNCITRAL)—looks to a debtor’s center of main interest (COMI) to determine the proper forum for a foreign main insolvency proceeding. This rule is flawed. It is both inflexible and manipulable. It is also indeterminate and neither requires nor allows advance commitment by debtors. As a result, it leads to uncertainty, increases litigation costs, and opens the door to opportunistic manipulation by debtors. These costs, in turn, …

Horizons Of Risk: Climate Stress And The Federal Reserve, David A. Wishnick

The University of Chicago Business Law Review

Contemporary financial supervision depends on knowledge about risk. Threats to bank soundness and financial stability abound, but they present themselves in amorphous ways. How should supervisors assess their significance? This Article examines a process being employed by the Federal Reserve (Fed) to assess threats posed by climate change. The process, climate scenario analysis (CSA), models the impact of hypothetical climate-related events on financial market participants. Descriptively, the Article argues that the Fed’s approach to CSA hews closely to the most prominent supervisory innovation to emerge from the Global Financial Crisis: stress testing. With its CSA experiments, the Fed is adapting …

Event Contracts Are A Step Too Far For Derivatives Regulation, Ilya Beylin

The University of Chicago Business Law Review

This Article develops two branches of history towards understanding derivatives markets and their regulation. First, using a comprehensive database of derivatives products that the Commodity Futures Trading Commission (CFTC) has authorized, this Article traces stages in the development of derivatives products. The empirical study examines key evolutionary steps from the birth of agricultural futures in the second half of the 1800s to where traders now bet on how long Taylor Swift’s most recent album dominates the Billboard 200, whether the President will pardon specific individuals, or how many times Bill Ackman (a notable hedge fund manager) accuses MIT professors of …

Regulating Cryptocurrency Non-Custodial Service Providers Through The Bank Secrecy Act, Kai Wang

The University of Chicago Business Law Review

Bad actors launder dirty money through cryptocurrency non-custodial service providers, including cryptocurrency unhosted wallets, non-custodial mixers, and decentralized exchanges (DEXs). Unlike banks and other traditional financial intermediaries, these providers do not take custody of payment assets. Therefore, the Bank Secrecy Act (BSA) cannot require them to comply with its substantive obligations, such as monitoring and reporting of suspicious payment activities associated with money laundering. As a result, law enforcement agencies are unable to obtain useful reports and records to effectively investigate money laundering and prosecute bad actors.

To address this issue, this Article analyzes how cryptocurrency non-custodial service providers, despite …

Finance For The Common Good, Adriana Z. Robertson

The University of Chicago Business Law Review

The Capital Market doesn’t get much love these days. It is viewed with suspicion in many quarters, and graduates who take jobs related to finance are described as “selling out.” Rather than defending them on their own terms, many seem to think that they are valuable as a means to achieve other—largely unrelated—social goals. This Article, adapted from a pair of lectures in the first quarter of 2024, pushes back against these perceptions. It explains the vital role that the capital market plays in our society and cautions against grafting on secondary objectives. Rather, efforts to regulate the capital market …

The Cost Of Qui Tam: Assessing The Constitutional Challenges To The False Claims Act, Jonathan Coleman

The University of Chicago Business Law Review

The federal government’s most powerful tool for combating fraud is the False Claims Act (FCA). The statute targets individuals and entities that submit fraudulent claims for government funds, particularly in healthcare—where it addresses Medicare and Medicaid fraud—and in government contracting, including defense industry overpayments. FCA violators must repay up to three times the government’s losses, along with additional penalties. A key feature of the FCA is its qui tam provision, which allows private citizens, known as relators, to sue violators on behalf of the United States. The statute incentivizes whistleblowing by granting relators 15% to 30% of any successful recovery. …