Law Commons^™

How Algorithmic Trading Undermines Efficiency In Capital Markets, Yesha Yadav

Vanderbilt Law Review

This Article argues that the rise of algorithmic trading undermines efficient capital allocation in securities markets. It is a bedrock assumption in theory that securities prices reveal how effectively public companies utilize capital. This conventional wisdom rests on the straightforward premise that prices reflect available information about a security and that investors look to prices to decide where to invest and whether their capital is being productively used. Unsurprisingly, regulation relies pervasively on prices as a proxy for the allocative efficiency of investor capital. Algorithmic trading weakens the ability of prices to function as a window into allocative efficiency.

This …

In Praise Of Ex Ante Regulation, Brian Galle

Vanderbilt Law Review

The plaintiffs' daughter was four years old when they brought her in to the local medical clinic. Clinic staff gave the girl a sedative to keep her calm while they examined her, but they miscalculated the dose, and she later died.' Tort liability, or the specter of it, is supposed to discourage these kinds of preventable tragedies. The clinic's owner, fearing a potential crippling award to bereaved families, should have trained his staff more carefully. As it happens, the owner instead had carefully scooped all the assets out of the firm. When the girl's parents won a $34.6 million award …

High Value Lies, Ugly Truths, And The First Amendment, Alan K. Chen, Justin Marceau

Vanderbilt Law Review

Lying has a complicated relationship with the First Amendment. It is beyond question that some lies-such as perjury and fraud-are simply not covered by the Constitution's free speech clause.' But it is equally clear that some lies, even intentionally lying about military honors, are entitled to First Amendment protection. Until very recently, however, it has been taken for granted in Supreme Court doctrine and academic writing that any constitutional protection for lies is purely prophylactic-it provides protection to the truth-speaker by also incidentally protecting the liar. What remains unresolved is whether other rationales might also justify First Amendment protection for …

An Executive-Power Non-Delegation Doctrine For The Private Administration Of Federal Law, Dina Mishra

Vanderbilt Law Review

Private entities often administer federal law. The early-twentieth-century Supreme Court derived constitutional limits to delegations of administrative power to private entities, grounding them in Article I of the Constitution where legislative power is delegated and in the Due Process Clause where the delegee's bias is apparent. But limits to the delegation of executive power to private administrators of law might exist in Article II. Those limits- in particular, their scope and the interplay among them-have been left underdeveloped by existing scholarship.

This Article explores the possibility of an Article II executive-power non-delegation doctrine for the private administration of federal law, …

Curb Your Enthusiasm For Pigovian Taxes, Victor Fleischer

Vanderbilt Law Review

Pigovian (or "corrective") taxes have been proposed or enacted on dozens of harmful products and activities: carbon, gasoline, fat, sugar, guns, cigarettes, alcohol, traffic, zoning, executive pay, and financial transactions, among others. Academics of all political stripes are mystified by the public's inability to see the merits of using Pigovian taxes more frequently to address serious social harms, some even calling for the creation of a "Pigovian state." This academic enthusiasm for Pigovian taxes should be tempered. A Pigovian tax is easy to design-as a uniform excise tax-if one assumes that each individual causes the same amount of harm with …

Efficiency Run Amok: Challenging The Authority Of Magistrate Judges To Hear And Accept Felony Guilty Pleas, Tomi Mendel

Vanderbilt Law Review

In an ideal world, a trial would never be unreasonably delayed or cut short. Judges would never need to juggle multiple difficult trials or drown in administrative tasks that distract from the fair adjudication of cases, and lawyers and litigants could be reassured that each judgment was arrived at fairly and after proper reflection. Congress created the magistrate system in an attempt to move the federal judiciary closer to this ideal state of affairs.' The purpose of this Article I judicial system is to facilitate the resolution of less significant disputes and speed the administration of procedural tasks. When district …

A Laboratory Of Regulation: The Untapped Potential Of The Hhs Advisory Opinion Power, Christopher J. Climo

Vanderbilt Law Review

Of late, the federal government's approach to regulation of hospitals and other healthcare providers asks them to do more with less. Both the government and private insurers have increasingly assigned hospitals and other providers with financial responsibility for the quality of the care they provide to federal beneficiaries.' At the same time, experts predict that reimbursement rates by both the government and private insurers will fall as a result of the Affordable Care Act's recent efforts to increase access to healthcare. Facing a widening gap between expectations of quality and availability of financial resources, healthcare providers will need to pursue …

Empowering Shareholders, Or Overburdening Companies? Analyzing The Potential Use Of Instant Runoff Voting In Corporate Elections, G. Scott Edwards

Vanderbilt Law Review

Although hotly debated today, one of the prevailing theories in the mind of the public as to why the shareholders of a corporation possess the right to vote in corporate elections is the fact that shareholders "own" the corporation. Even though one academic has written that this theory is the "worst" argument for shareholder primacy, the notion that shareholders should vote in corporations because the corporation "belongs" to them is strongly entrenched in the minds of the general public; in fact, this theory of shareholder primacy often creeps into judicial opinions, showing that even judges are influenced by the theory. …

The Incompatibility Of Due Process And Naked Statistical Evidence, G. Alexander Nunn

Vanderbilt Law Review

Qualitative evidence is a cornerstone of the modern trial system. Parties often invoke eyewitness testimony, character witnesses, or other forms of direct and circumstantial evidence when seeking to advance their case in the courtroom, enabling jurors to reach a verdict after weighing two competing narratives.' But what if testimonial, experience-based evidence were removed from trials? In a legal system that draws its legitimacy from centuries of tradition-emphasizing notions of fairness even above absolute accuracy. Would a jury, not to mention the public at large, reject a verdict that imposes liability or guilt on a defendant in the complete absence of …

Second Liens And The Leverage Option, Adam J. Levitin, Susan M. Wachter

Vanderbilt Law Review

This Article demonstrates that the housing bubble was driven by second mortgages to a much greater extent than previously appreciated. A unique feature of American law allows homeowners to take out second mortgages, without the consent or even knowledge of the first mortgage lender. The result is an underpricing and overextension of credit as first mortgage lenders cannot control or properly price for the risks created by second mortgages. Homeowners' unilateral right to encumber their properties with additional mortgage loans creates what we term the "leverage option" that is embedded in American mortgages. The leverage option is an unintended consequence …

Regulatory Exit, J. B. Ruhl, James Salzman

Vanderbilt Law Review

Exit is a ubiquitous feature of life, whether breaking up in a marriage, dropping a college course, or pulling out of a venture capital investment. In fact, our exit options often determine whether and how we enter in the first place. While legal scholarship is replete with studies of exit strategies for businesses and individuals, administrative law scholarship has barely touched the topic of exit. Yet exit plays just as central a role in the regulatory state as elsewhere- -welfare support ends, government steps out of rate-setting. In this Article, we argue that exit is a fundamental feature of regulatory …

Hung Up On Words: A Conduct-Based Solution To The Problem Of Conspiracy In Military Commissions, Joshua D. Foote

Vanderbilt Law Review

At 9:02 a.m. on September 11, 2001, the world watched in horror as American Airlines Flight 175 slammed into the South Tower of the World Trade Center on live television,' ending all consideration that the first collision might have been an accident. Halfway around the world, Ali al Bahlul sat in a remote part of Afghanistan operating a radio so that Usama Bin Laden could monitor reports of the attacks. That day, Al Qaeda terrorists killed 2,977 people, caused billions of dollars of economic damage, and initiated the defining sociopolitical issue of the early 21st century.

Legal practitioners have faced …

Overcriminalization's New Harm Paradigm, Todd Haugh

Vanderbilt Law Review

The harms of overcriminalization are usually thought of in a particular way-that the proliferation of criminal laws leads to increasing and inconsistent criminal enforcement and adjudication. For example, an offender commits an unethical or illegal act and, because of the overwhelming depth and breadth of the criminal law, becomes subject to too much prosecutorial discretion and faces disparate enforcement or punishment. But there is an additional, possibly more pernicious, harm of overcriminalization. Drawing from the fields of criminology and behavioral ethics, this Article makes the case that overcriminalization actually increases the commission of criminal behavior itself, particularly by white collar …

The Supreme Court And The New Equity, Samuel L. Bray

Vanderbilt Law Review

The line between law and equity has largely faded away. Even in remedies, where the line persists, the conventional scholarly wisdom favors erasing it. Yet something surprising has happened. In a series of cases over the last decade and a half, the U.S. Supreme Court has acted directly contrary to this conventional wisdom. These cases range across many areas of substantive law-from commercial contracts and employee benefits to habeas and immigration, from patents and copyright to environmental law and national security. Throughout these disparate areas, the Court has consistently reinforced the line between legal and equitable remedies, and it has …

Putting An End To False Claims Act Hush Money: An Agency-Approval Approach To Qui Tam Prefiling Releases, Jeremy Johnston

Vanderbilt Law Review

The False Claims Act ("FCA") deputizes private citizens to combat fraud against the United States government by offering them a portion of the bounty.' This concept has existed in some form for hundreds of years-the strategy of "setting a rogue to catch a rogue." Medieval England used it in place of police forces. The American Colonies caught pirates this way. Even Abraham Lincoln protected the Union Army from faulty equipment by encouraging corrupt military suppliers to report one another. In modern American history, the FCA has proven extraordinarily effective at using this ancient tactic. The Act fines wrongdoers triple the …

Pricing Lives For Corporate Risk Decisions, W. Kip Viscusi

Vanderbilt Law Review

The 2014 GM ignition-switch recall highlighted the inadequacies of the company's safety culture and the shortcomings of regulatory sanctions. The company's inattention to systematic thinking about product safety can be traced to the hostile treatment of corporate risk analyses by the courts. This Article proposes that companies should place a greater value on lives at risk than they have in previous risk analyses and that they should receive legal protections for product risk analyses. Companies' valuations of fatality risks and regulatory penalties have priced lives too low. The guidance provided by the value of a statistical life, which is currently …

Misdemeanor Decriminalization, Alexandra Natapoff

Vanderbilt Law Review

As the United States reconsiders its stance on mass incarceration, misdemeanor decriminalization has emerged as an increasingly popular reform. Seen as a potential cure for crowded jails and an overburdened defense bar, many states are eliminating jail time for minor offenses such as marijuana possession and driving violations, replacing those crimes with so-called "nonjailable" or "fine-only" offenses. This form of reclassification is widely perceived as a way of saving millions of state dollars-nonjailable offenses do not trigger the right to counsel-while easing the punitive impact on defendants, and it has strong support from progressives and conservatives alike. But decriminalization has …

The Litigation Budget, Jay Tidmarsch

Vanderbilt Law Review

Because of fears that litigation is too costly, reduction of litigation expenses has been the touchstone of procedural reform for the past thirty years. In certain circumstances, however, the parties have incentives-both rational and irrational-to spend more on a lawsuit than the social benefits that the case provides. Present and proposed reform efforts do not adequately address these incentives, and, in some instances, exacerbate the parties' incentives to overspend. The best way to ensure that the cost of a lawsuit does not exceed the benefits that it provides to the parties and society is to control spending directly: to require …

The Emergency Aid Doctrine And 911 Hang-Ups: The Modern General Warrant, Alexander C. Ellman

Vanderbilt Law Review

The phone rings. A 911 dispatcher starts to answer, but the line goes dead. The dispatcher calls back. No one answers. Was it a misdial or a cry for help cut short? Because callers often expect help to arrive when intentionally calling 911, the police respond to the address from which the call likely originated.' Police approach the house and knock on the door. Again, no one answers. There may be an emergency inside, so the police enter the house without a warrant and without consent. If they find a heart attack victim lying on the floor, they might save …

Federalizing Education By Waiver?, Derek W. Black

Vanderbilt Law Review

In the fall of 2011, the U.S. Secretary of Education told states he would use his statutory power to waive violations of the No Child Left Behind Act ("NCLB'), but only on the condition that they adopt his new education policies- policies that had already failed to move forward in Congress. States had no choice but to agree because eighty percent of their schools were faced with serious statutory sanctions. As a result, the Secretary was able to unilaterally dictate core education policies for the nation's public schools. For the first time, the content of school curriculum and the means …

Human Equity? Regulating The New Income Share Agreements, Shu-Yi Oei, Diane Ring

Vanderbilt Law Review

A controversial new financing phenomenon has recently emerged. New "income share agreements" ("ISAs") enable an individual to raise funds by pledging a percentage of her future earnings to investors for a certain number of years. These contracts, which have been offered by entities such as Fantex, Upstart, Pave, and Lumni, raise important questions for the legal system: Are they a form of modern-day indentured servitude or an innovative breakthrough in human financing? How should they be treated under the law? This Article comprehensively addresses the public policy and legal issues raised by ISAs and articulates an analytical approach to evaluating …

The Realities Of Electoral Reform, Nicholas O. Stephanopoulos, Eric M. Mcghee, Steven Rogers

Vanderbilt Law Review

What good are theories if they cannot be tested? Election law has wrestled with this question over the last generation. Two new theories have emerged during this period that reject conventional rights-and-interests balancing. In its place, the responsiveness theory asserts that legislators' positions should be sensitive to changes in the views of their constituents. Similarly, the alignment theory claims that voters' and legislators'preferences should be congruent. Unfortunately, both of these theories share a common flaw: They provide no way for anyone to tell whether electoral policies improve or worsen responsiveness or alignment. They operate at too normative a level to …

Filling The Gap: Refining Sex Trafficking Legislation To Address The Problem Of Pimping, John Elrod

Vanderbilt Law Review

Nearly twenty-one million men, women, and children worldwide are victims of human trafficking,' earning an estimated $31.6 billion in profits for the perpetrators of these crimes. Human trafficking is the third-largest and the fastest-growing criminal enterprise in the world. Of the nearly twenty-one million trafficking victims, approximately 4.5 million are victims of some form of sex trafficking. Although human trafficking primarily takes place outside of the developed world, the International Labour Organization estimates there are some 1.5 million trafficking victims in developed countries. In particular, as many as 17,500 foreign nationals are trafficked into the United States annually. However, the …

The Litigation Budget, Jay Tidmarsh

Vanderbilt Law Review

Because of fears that litigation is too costly, reduction of litigation expenses has been the touchstone of procedural reform for the past thirty years. In certain circumstances, however, the parties have incentives--both rational and irrational--to spend more on a lawsuit than the social benefits that the case provides. Present and proposed reform efforts do not adequately address these incentives, and, in some instances, exacerbate the parties' incentives to overspend. The best way to ensure that the cost of a lawsuit does not exceed the benefits that it provides to the parties and society is to control spending directly: to require …

Criminal Asset Forfeiture And The Sixth Amendment After "Southern Union" And "Alleyne:" State-Level Ramifications, Brynn Applebaum

Vanderbilt Law Review

The Founding Fathers thought the jury-trial right was so fundamental to our system of justice that they included it in the Sixth Amendment of the United States Constitution. The right to trial by jury serves to protect criminal defendants against government overreaching by ensuring that they will be judged by their fellow citizens.' And as a whole, our system of justice and our citizenry have remained committed to the jury trial. But since the Founding, the Supreme Court has narrowed the application of the Sixth Amendment's guaranty.

Two decades ago, the Supreme Court decided in Libretti v. United States that …

The Sins Of Innocence In Standing Doctrine, Elise C. Boddie

Vanderbilt Law Review

Should reverse discrimination plaintiffs always be able to challenge race-conscious selection policies in court? Conventional standing doctrine requires plaintiffs to show that the contested policy or practice has caused a concrete, personal harm. Yet in affirmative action cases, courts seem to have quietly dispensed with this required showing. The Supreme Court's decision in Fisher v. University of Texas is a prime example. The university illustrated that the white plaintiff would not have been admitted whatever her race. Yet the Court completely ignored the standing inquiry, reinforcing the significant confusion among courts and scholars alike about the cognizability of racial injury. …

A Tale Of Two Jurisdictions, Alan M. Trammell

Vanderbilt Law Review

The Supreme Court has recently clarified one corner of personal jurisdiction-a court's power to hale a defendant into court-and pointed the way toward a coherent theory of the rest of the doctrine. For nearly seventy years, the Court has embraced two theories of when jurisdiction over a defendant is permissible. The traditional theory, general jurisdiction, authorizes jurisdiction when there is a tight connection between the defendant and the forum. The modern theory, specific jurisdiction, focuses more on the connection between the lawsuit itself and the forum. Although the two theories should have developed in tandem, the doctrine has become a …

The Geography Of Bankruptcy, Laura N. Coordes

Vanderbilt Law Review

Companies routinely file bankruptcy cases in venues that have no meaningful connection to the company, its operations, or its stakeholders. This practice (1) divorces bankruptcy and venue from their ties to location; (2) disrupts the fundamental balance underlying the Bankruptcy Code by shifting the focus exclusively to the needs of sophisticated parties; and (3) shuts out parties who have a right to participate in bankruptcy proceedings, which contravenes due process and raises fairness concerns. To solve these problems, this Article proposes new procedures that mandate a thorough discussion of venue considerations in bankruptcy cases. By requiring parties to justify their …

Voting Squared: Quadratic Voting In Democratic Politics, Eric A. Posner, E. Glen Weyl

Vanderbilt Law Review

Conventional democratic institutions aggregate preferences poorly. The norm of one-person-one-vote with majority rule treats people fairly by giving everyone an equal chance to influence outcomes but fails to give proportional weight to people whose interests in a social outcome are stronger than those of other people. This problem leads to the familiar phenomenon of tyranny of the majority. Various institutions that have been tried or proposed over the years to correct this problem-including supermajority rule, weighted voting, cumulative voting, "mixed constitutions," executive discretion, and judicially protected rights-all badly misfire in various ways, for example, by creating gridlock or corruption. This …

Desperate Times Call For Desperate Measures: States Lead Misguided Offensive To Enforce Sales Tax Against Online Retailers, Ricky Hutchens

Vanderbilt Law Review

It is a near universal experience. An individual wants to purchase an item. He shops around to find the best price. After a diligent search, he realizes that if he makes the purchase online, he can avoid being charged sales tax on the item. Depending on the price of the item and the tax rate, the savings can be substantial- sometimes enough to justify paying for shipping. But many consumers fail to consider another consequence: choosing an online retailer effectively denies tax revenue to a buyer's home state. In the United States, state governments have three basic options for generating …