Law Commons^™

Fourt (Or Five) Easy Lessons From Enron, Douglas G. Baird, Robert K. Rasmussen

Vanderbilt Law Review

Temptation. It lies at the heart of financial swindles. The promise of 50% returns in three months can lure thousands of investors-so too can a stock that soars 500% in three years. But those who are tempted are often skeptical. Before they invest, they want to know how one can enjoy such supracompetitive returns. The answer usually is a facially plausible story, though with a bit of mystery attached. The mystery is often touted as the reason that the investment opportunity is exclusive to the entrepreneur who discovered it. It is what ensures that the gains are not competed away. …

Introduction To The Symposium "Convergence On Delaware: Corporate Bankruptcy And Corporate Governance", Robert K. Rasmussen, Charles M. Elson

Vanderbilt Law Review

Bankruptcy is back. The use of Chapter 11 by large, publicly held firms was a subject of much debate in the academic and popular press in the late 1980s and the early 1990s. Firms such as Texaco, Revco, LTV, Federated Department Stores, Maxwell Communications, TWA, and Eastern Airlines all filed for bankruptcy during that time. The economic boom of the mid- and late 1990s, however, resulted in a relative dearth of high-profile bankruptcy cases. The recent economic downturn has moved corporate reorganizations back into the spotlight. The Chapter 11 filings by firms such as Enron, Global Crossing, the Loewen Group, …

The Law Of Last Resort, Barry E. Adler

Vanderbilt Law Review

A financially distressed individual or corporation employs the bankruptcy process only as a last resort. The study of bankruptcy law, however, need not, and should not, be an afterthought. The traditional bodies of law that compose private ordering are the laws of property, contract, and tort. Property law establishes private entitlements that can be specifically enforced against the world. Contract law permits individuals to exchange obligations and thus invest one another with entitlements. Tort law creates its own set of entitlements and imposes liability for unwanted interference with those or other entitlements. These bodies of law are often presented as …

Corporate Ownership Structure And The Evolution Of Bankruptcy Law: Lessons From The United Kingdom, John Armour, Brian R. Cheffins, David A. Skeel, Jr.

Vanderbilt Law Review

The corporate world today subdivides into rival systems of dispersed and concentrated ownership, each characterized by different corporate governance structures. The United States falls into the former category, whereas major industrial rivals such as Japan and Germany are members of the latter. The past decade has seen intense academic debate over possible explanations for the different systems of ownership and control in key developed economies. Anecdotal evidence suggesting that market forces may be serving to destabilize traditional business structures and foster some form of convergence in a U.S. direction has given the controversy powerful current relevance.

For those seeking to …

Corporate Governance Reform And Reemergence From Bankruptcy: Putting The Structure Back In Restructuring, Charles M. Elson, Paul M. Helms, James R. Moncus

Vanderbilt Law Review

A company's descent into bankruptcy may result from one or more troubling factors. Often the failing enterprise has adopted a poor business model, been led by deficient management, or labored under an unworkable capital structure. More often than not, a business failure is also accompanied by a less-than-ideal corporate governance structure within the organization. The failure to adopt an effective corporate governance model often leads to a sterile, inactive board of directors and may hasten a firm's demise. Conversely, proper corporate governance may prevent a business's slide into Chapter 11. Indeed, several studies have demonstrated a strong relationship between corporate …

Why Are Delaware And New York Bankruptcy Reorganizations Failing?, Lynn M. Lopucki, Joseph W. Doherty

Vanderbilt Law Review

Before 1990, the United States Bankruptcy Court for the District of Delaware was a sleepy backwater. During the entire decade of the 1980s, Phoenix Steel-whose only plant was located in Delaware-was the only large, public company to file there. In 1990, two large, public companies-Continental Airlines and United Merchants and Manufacturers-filed in Delaware. They constituted 7% of the twenty-nine large, public companies filing in the United States that year. From 1990 to 1996, Delaware's market share steadily increased to 87% (thirteen of fifteen cases).' In just seven years, Delaware had become the bankruptcy reorganization capital of the United States.

Lynn …

"Delaware Is Not A State": Are We Witnessing Jurisdictional Competition In Bankruptcy?, Marcus Cole

Vanderbilt Law Review

Over the last twelve years, the United States District Court for the District of Delaware has experienced exponential growth in the number of bankruptcy filings for large corporate debtors. This relatively recent rise in Delaware bankruptcy venue cannot, on its face, be explained by Delaware's eighty-five-year preeminence in the race for corporate charters, since the advantages most often postulated for Delaware's dominance in corporate law do not carry over to corporate bankruptcy. The state has limited influence over federal bankruptcy law and virtually no control over the selection of federal bankruptcy judges. This rise of Delaware bankruptcy venue, or Delawarization …

Managers' Fiduciary Duty Upon The Firm's Insolvency: Accounting For Performance Creditors, Alon Chaver, Jesse M. Fried

Vanderbilt Law Review

A corporation's managers generally owe a fiduciary duty to the corporation and its shareholders. Legal scholars interpret this duty as requiring the managers to maximize shareholder value. When a firm is solvent, the obligation to maximize shareholder value tends to give managers an incentive to deploy firm assets efficiently-that is, in a way that maximizes total value.

When a firm is insolvent, however, the duty to maximize shareholder value could lead managers to take actions that reduce the value of debt more than they increase the value of equity and therefore reduce total value. Accordingly, a number of courts have …

Chapter 11 Reorganization Cases And The Delaware Myth, Harvey R. Miller

Vanderbilt Law Review

Since the mid-1990s, there has been a spirited debate concerning the emergence of the United States Bankruptcy Court for the District of Delaware (the "Delaware Bankruptcy Court") as the virtual Chapter 11 capital for distressed debtor corporations. The "Delawarization" of corporate reorganizations under title 11 of the United States Code (the "Bankruptcy Code"), which occurred during the 1990s as a result of the migration of Chapter 11 cases of large enterprises from other venues to Delaware, has provoked a stream of academic articles debating the consequences of Delaware's emergence. Armed with statistics purporting to demonstrate a high rate of recidivism …

An Equality Paradign For Preventing Genetic Discrimination, Anita Silvers, Michael A. Stein

Vanderbilt Law Review

On June 26, 2000, scientists announced at a White House news conference that they had completed mapping the human genome sequence, the human race's genetic blueprint. This pronouncement generated tremendous and well-deserved excitement. Genomics, the study and application of genetic information, promises to be an unparalleled tool for improving public health. Genetic testing can identify asymptomatic individuals who are at risk of becoming ill themselves or bestowing illness on their children. As a result, individuals who test positive can take prophylactic measures to slow or stop disease and can also reduce the births of progeny at high risk of compromised …

The Marriage Of The False Claims Act And The Freedom Of Information Act: Parasitic Potential Or Positive Synergy?, James R. Moncus, Iii

Vanderbilt Law Review

The qui tam provisions of the False Claims Act ("FCA" or "the Act") allow private citizens to prosecute fraud on the government's behalf. There are at least three primary justifications for such provisions: (1) the need to provide private incentives to expose fraudulent conduct, (2) the Justice Department's unwillingness to aggressively prosecute fraud, and (3) the limited enforcement resources available to the federal government. The FCA contains a jurisdictional bar that provides that no court shall have jurisdiction over a qui tam FCA action if the information on which the action is based has been publicly disclosed. Ostensibly, this jurisdictional …

Press One For Warrant: Reinventing The Fourth Amendment's Search Warrant Requirement Through Electronic Procedures, Justin H. Smith

Vanderbilt Law Review

Numerous rulings by the Supreme Court have confirmed the long-held assertion that the Fourth Amendment's warrant requirement is a "centerpiece for the law of search and seizure, and that prescreening by neutral and detached magistrates is [at] the heart of citizens' protection against police overreaching." On September 21, 1994, however, these assertions proved inaccurate and painfully hollow for Betty Ingram, a fifty-three-year-old diabetic who awoke to the sound of armed police officers charging through her front door. The officers, who were searching for a suspect involved in a buy- and-bust operation, had neither obtained a search warrant nor knocked and …

The Critical Resource Theory Of Fiduciary Duty, D. Gordon Smith

Vanderbilt Law Review

This Article proposes a new theory to unify the law of fiduciary duty. The prevailing view holds that fiduciary law is atomistic, arising for varied reasons in established categories of cases (such as trustee-beneficiary and director-shareholder) and ad hoc in relation- ships where one person trusts another and becomes vulnerable to harm as a result. By contrast, the critical resource theory of fiduciary duty holds that every relationship properly designated as "fiduciary" conforms to the following pattern: One party (the "fiduciary') acts on behalf of another party (the "beneficiary') while exercising discretion with respect to a critical resource belonging to …

A Search For The Best Idea: Balancing The Conflicting Provisions Of The Individuals With Disabilities Education Act, Joshua A. Wolfe

Vanderbilt Law Review

One issue that is consistently at the forefront of political debate in America is the educational system. The debate over education involves funding, accountability, and curriculum issues, among others. One education issue that does not receive as much attention as some of the more politically charged issues is special education.

The goal of the American public school system is to educate all children, but how should that goal be implemented with regard to learning-disabled children? How does the educational system meet the individualized needs of disabled students while ensuring that these students are not isolated from the rest of the …

Unloved: Tort In The Modern Legal Academy, John C.P. Goldberg

Vanderbilt Law Review

In The Idea of Private Law, Ernest Weinrib makes an arresting claim. He says that private law-by which he means primarily the law of contract, restitution, and especially tort-is "just like love."'

Even members of a discipline devoted to analogies may be forgiven for not immediately perceiving the point of this one, particularly if we focus on the private law of tort. Few law students would mistake negligence, defamation, or battery for love, and if they did, their professors might be concerned for their well-being. Likewise, it is difficult to recall another law professor writing of love and tort in …

The Disappearing Settlement: The Contractual Regulation Of Smith & Wesson Firearms, Charles C. Sipos

Vanderbilt Law Review

Consider three transactions: (1) federal legislation passed by Congress; (2) an order of judgment in a private lawsuit; and (3) a contractual arrangement between private parties. If one were asked to rank those transactions in order of the potential impact they should have on public and social policy, they would probably appear in the order that they are listed. Intuition, experience, and plain common sense might likely lead to the conclusion that legislation has the greatest impact on public policy, private agreements the least,' and final judgments in litigation somewhere in between. Democratic principles provide very good reasons for this …

Shame On You: Campaign Finance Reform Through Social Norms, Todd R. Overman

Vanderbilt Law Review

In 1998, Senator Russell Feingold squared off against Representative Mark Neumann in a heated contest for a Wisconsin Senate seat. During the campaign, Representative Neumann and Senator Feingold voluntarily entered into a number of campaign finance restrictions.' Representative Neumann, despite losing the race to Senator Feingold, asserted that those restrictions "showed that campaign finance reform didn't require changes in law and was best handled on a voluntary basis.' In the 2000 New York Senate race, Representative Rick Lazio echoed Representative Neumann's sentiment and declared that it was he and "Mrs. Clinton's opportunity, to make a statement about our commitment to …

Killing The Messenger: The Misuse Of Disparate Impact Theory To Challenge High-Stakes Educational Tests, Jennifer C. Braceras

Vanderbilt Law Review

There are two basic theoretical models for addressing claims of discrimination: disparate treatment and disparate impact. The disparate treatment model attempts to expose and punish intentional discrimination; the disparate impact model seeks to eliminate policies that, while neutral on their face, disproportionately harm members of a protected class. Since 1991, Title VII of the Civil Rights Act of 1964, which prohibits discrimination in employment, has expressly permitted plaintiffs to challenge employment practices with a disproportionate impact on certain protected groups. By contrast, Title VI, which prohibits discrimination by federally assisted programs including most schools, does not explicitly authorize claims of …

How The "Equal Opportunity" Sexual Harasser Discriminates On The Basis Of Gender Under Title Vii, Kyle F. Mothershead

Vanderbilt Law Review

Americans commonly know that federal law prohibits workplace sexual harassment. Many might be surprised to find, however, that generally courts have not found liability in the case of the so-called "equal opportunity" harasser.' A simple hypothetical will explain the nature of this peculiar species of harasser. Suppose Ken and Carol are both employed at Happyfun, Inc. as manufacturers of reindeer Christmas ornaments under the direction of their supervisor, Fred. Fred corners each of them daily and asks, "How about some sex today?" No doubt he is sexually harassing both Ken and Carol. If they sue for relief, however, a judge …

"Charitable Choice" And The Accountability Challenge: Reconciling The Need For Regulation With The First Amendment Religion Clauses, Michele E. Gilman

Vanderbilt Law Review

Charitable choice, or the use of federal money to fund social services provided by religious organizations, has engendered controversy and confusion since its inception in the 1996 welfare reform legislation. Under the welfare reform statute, entitled the Personal Responsibility and Work Opportunity Reconciliation Act ("PRA"), states may contract out administration of their welfare programs to private entities, including houses of worship. President Bush is promoting the expansion of charitable choice into other federal social service programs as a major policy initiative of his administration. Federal funding of faith-based organizations has supporters and opponents on both the left and the right. …

Assessing The Risk Of Executing The Innocent: A Case For Allowing Access To Physical Evidence For Posthumous Dna Testing, Anne-Marie Moyes

Vanderbilt Law Review

On February 5, 1985, Helen Schartner was raped and murdered on her way home from a bar in Virginia Beach. Joseph O'Dell was at the same bar that night, and fellow patrons claim he left the bar shortly after Schartner departed. Several hours later, O'Dell was seen entering a convenience store with blood on his hands, face, and clothes. O'Dell's estranged girlfriend--who had previously falsely accused O'Dell of other murders--read about Schartner's murder and called the police to report that O'Dell had left some bloody clothes in her garage. The police arrested O'Dell and charged him with the rape and …

First Amendment Limits On Copyright, C. Edwin Baker

Vanderbilt Law Review

Although the tension between copyright and the First Amendment has long been noted and increasing numbers of First Amendment challenges to copyright have recently been filed, few scholarly commentaries have gone beyond relatively narrow attempts at doctrinal accommodation. Under the assumption either that existing copyright law fully accommodates First Amendment interests or that some balance is appropriate, commentators have avoided any principled exploration of the full force of First Amendment principles. This Essay aims to fill that gap. Rather than use mechanical doctrine to evaluate existing copyright law, this Essay begins with a theoretical approach to the First Amendment and …

Not Without My Father: The Legal Status Of The Posthumously Conceived Child, Christopher A. Scharman

Vanderbilt Law Review

Twins Amanda and Elyse were born to William and Mariantonia Kolacy of New Jersey on November 3, 1996. At this ordinarily joyous occasion, only Mariantonia was able to welcome the two girls into the world; their father, William, had passed away some eighteen months before their birth-nearly a year before the girls were conceived.

When William and Mariantonia were a young married couple, doctors diagnosed William with leukemia and advised him to begin chemotherapy immediately. Fearing the treatment or the disease would render him sterile, William preserved some of his sperm for later use. Regrettably, William did not survive the …

Commercial Speech And The Unconstitutional Conditions Doctrine: A Second Look At "The Greater Includes The Lesser", Mitchell N. Berman

Vanderbilt Law Review

Over half a century ago, the Puerto Rico legislature legalized casino gambling in an effort to promote tourism to the island.' To help ensure that the local population would not overindulge in this particular vice, however, the legislature at the same time provided that "[n]o gambling room shall be permitted to advertise or other- wise offer their facilities to the public of Puerto Rico."' Thirty years later a casino operator challenged the statutory advertising ban and its implementing regulations as violating the freedom of speech guaranteed by the First Amendment. Although the Superior Court of Puerto Rico agreed with the …

Credit Cards And Debit Cards In The United States And Japan, Ronald J. Mann

Vanderbilt Law Review

The widespread use of cards is one of the most salient features of consumer retail payment systems in the United States. American consumers use those cards to pay for about one-fourth of their retail purchases each year.' And this is not a static phenomenon; among other things, the use of debit cards, though still relatively small, is rising rapidly. That pattern of use is not, however, typical of other countries. Even in some highly industrialized nations, consumers use cards to pay for purchases much less frequently. Statistics from the Bank for International Settlements, for example, suggest about sixty card-based payment …

Assisting Minors Seeking Abortions In Judicial Bypass Proceedings: A Guardian Ad Litem Is No Substitute For An Attorney, Elizabeth S. Graybill

Vanderbilt Law Review

Since the 1973 decision in Roe v. Wade,' minors have been particularly affected by the efforts of pro-life activists and state legislatures who have curtailed abortion rights by lobbying for and passing legislation that restricts reproductive freedom. Forty-three states have enacted laws requiring a minor either to obtain consent from or to notify one or both parents before undergoing an abortion, and thirty-three of these statutes are currently enforceable. The Supreme Court has recognized the right of parents to be involved in a child's upbringing and the prerogative of the state to limit a minor's freedom to make major life …

Regulating Federal Prosecutors' Ethics, Bruce A. Green, Fred C. Zacharias

Vanderbilt Law Review

To what extent should federal prosecutors be regulated by states, by federal courts, or by the U.S. Department of Justice ("DOJ) as a matter of self-regulation? This Article concludes that, subject to congressional oversight, federal courts should have the ultimate authority to regulate federal prosecutors. However, it also acknowledges the legitimacy of competing claims by the states and DOJ. Sometimes, federal courts should defer to state court regulation, given traditional state regulation of the practice of law and a host of practical considerations. At other times, federal prosecutors have compelling reasons to seek freedom from both state regulation and regulation …

Haste Makes Waste: Congress And The Common Law In Cyberspace, Suzanna Sherry

Vanderbilt Law Review

Speed is an asset in computer technology, but not necessarily in law. The new technologies of the twentieth and twenty-first centuries have inevitably raised new legal questions; all too often, the response to these new legal challenges is a hastily enacted federal statute. If the Internet allows children access to pornography, we enact the Communications Decency Act ("CDA"). Commercial concerns about cyber-authenticity prompt the Electronic Signatures in Global and National Commerce Act ("E-SIGN"). Are cybersquatters creating domain name problems? We've got a law for that, too. These are just a few of the quick fixes driven by a perceived need …

Law On The Rocks: The Intoxication Defenses Are Being Eighty-Sixed, Meghan P. Ingle

Vanderbilt Law Review

The ever-controversial voluntary intoxication defense faces possible elimination by statutory abrogation. Originally developed by nineteenth-century common law courts, the defense recognizes that an intoxicated defendant may be incapable of possessing the mens rea specified by an offense. Increasingly criticized in recent years, the defense received a substantial blow to its continued vitality in the 1996 Supreme Court decision Montana v. Egelhoff. In a sharply divided opinion," a plurality of the Court held that a defendant does not possess a constitutional right to present evidence of voluntary intoxication in his defense. The Egelhoff decision has caused much commentary, both positive and …

Perceived Disabilities, Social Cognition, And "Innocent Mistakes", Michelle A. Travis

Vanderbilt Law Review

Employment discrimination takes many more forms than the current models in our antidiscrimination laws explicitly recognize. As new forms of employment discrimination are identified, courts must decide whether or not to apply our existing statutes, which many continue to believe were narrowly constructed to focus primarily on conscious acts of prejudice. Litigants have had more success challenging that notion with respect to Title I of the Americans with Disabilities Act of 1990 (the "ADA"), because Congress was relatively clearer about the multifaceted nature of disability discrimination. Legislators openly acknowledged that disability discrimination may result not only from invidious animus, but …