Law Commons^™

Liu And The New Sec Disgorgement Statute, Andrew N. Vollmer

William & Mary Business Law Review

In early 2021, Congress enacted a new statute for enforcement cases brought by the Securities and Exchange Commission. The new statute resolved important questions about the availability of disgorgement as a remedy in SEC enforcement cases, but it created other questions. The purpose of this Article is to discuss one interpretive issue that is already arising in the federal courts of appeals.

That interpretive issue is whether “disgorgement” as authorized by the new statute must abide by equitable limitations the Supreme Court imposed on disgorgement relief in SEC cases in Liu v. SEC, 140 S. Ct. 1936 (2020). The …

Rules Of Regularity: An Empirical Quest For Commercial Certainty In Arbitration, Cornelis J.W. Baaij

William & Mary Business Law Review

The U.S. Supreme Court justifies the broad enforceability of arbitration agreements with the notion that arbitration expands parties' autonomy to contract for an efficient alternative to court proceedings. Unfortunately, the current practice of both domestic and cross-border commercial arbitration does not fully live up to these expectations. It is crucial to both autonomy and efficiency theories of contract law that adjudicatory decision-making is predictable so parties can tailor their contracts accordingly. However, commercial arbitration's prevailing culture of confidentiality and lack of stare decisis diminishes commercial certainty. To bring the reality of commercial arbitration closer to the Supreme Court's reasoning, this …

Brick By Brick: Deconstructing Pyramid-Like Companies By Requiring Disclosures From Multilevel Marketing Schemes, Alex Chumbley

William & Mary Business Law Review

Multilevel marketing companies ("MLMs") have thrived in the internet era as participants are able to market their products to their friends and followers on social media sites. Further, periods of high unemployment, such as during the COVID-19 pandemic, have led to increased enrollment in these companies. However, very few people actually make any money from selling for these companies. Beyond that, almost half of those who participate lose money due to the enrollment costs. This Note examines past case law surrounding MLMs and critiques the current regulations in place that fail to ensure that new participants are making a fully …

Independent Craft Breweries Struggle Under Distribution Laws That Create A Power Imbalance In Favor Of Wholesalers, Daniel Croxall

William & Mary Business Law Review

Independent craft breweries are facing historic challenges under the COVID-19 pandemic. To make matters worse, many states prohibit a brewery from terminating a distribution contract with a wholesaler absent statutorily defined “good cause,” which typically means fraud, bankruptcy, or other illegal conduct. In this context, lagging sales or poor distribution performance are not grounds for a brewery to terminate a distribution contract. This means that it is nearly impossible, legally or financially, for an independent craft brewery to terminate a distribution contract with an unsatisfactory wholesaler. In essence, states have statutorily tipped the balance of power in favor of distributors …

Understanding The Economic And Political Effects Of Trump's China Tariffs, Daniel C. K. Chow, Ian M. Sheldon

William & Mary Business Law Review

Although President Trump has persistently claimed that China is paying billions of dollars in tariffs imposed on Chinese imports to the United States, empirical evidence indicates that U.S. consumers are bearing the cost of the tariffs: $51 billion in increased prices and a net loss of $7.2 billion to the U.S. economy. The unilateral power-based approach to trade used by the Trump Administration has also resulted in unexpected economic and political costs in key Midwestern states that helped propel Trump to the U.S. presidency in 2016. These costs have led to reverses for the Trump Administration in the mid-term elections …

In Conspicuous Terms-- Arbitration Agreements For The Modern Reasonable App User, Michelle Dunbar

William & Mary Business Law Review

Two recent decisions regarding the validity of arbitration agreements in mobile apps have come to opposite conclusions despite utilizing the same legal standard and concerning the same app—Uber. While the Federal Arbitration Act strongly favors the validity and importance of arbitration agreements, it appears that judge’s subjectivity based on common knowledge and understanding of apps is influencing the outcome of cases concerning the validity of these arbitration agreements. To the modern app user, are these terms really inconspicuous? For businesses, this could mean that instead of competing in an already saturated app market by enhancing their design and integrating branding …

Kill Cammer: Securities Litigation Without Junk Science, J. B. Heaton

William & Mary Business Law Review

Securities litigation is a hotbed of junk science concerning market efficiency. This Article explains why and suggests a way out. In its 1988 decision in Basic v. Levinson, the Supreme Court endorsed the fraud on the market presumption for securities traded in an efficient market. Faced with the task of determining market efficiency, courts throughout the nation embraced the ad hoc speculations of a first-mover district court that proclaimed, in Cammer v. Bloom, how to allege (and presumably prove) facts that would do just that. The Cammer court’s analysis did not rely on financial economics for its notions, but instead …

How Google Perceives Customer Privacy, Cyber, E-Commerce, Political And Regulatory Compliance Risks, Lawrence J. Trautman

William & Mary Business Law Review

By now, almost every business has an Internet presence. What are the major risks perceived by those engaged in the universe of Internet businesses? What potential risks, if they become reality, may cause substantial increases in operating costs or threaten the very survival of the enterprise?

This Article discusses the relevant annual report disclosures from Alphabet, Inc. (parent of Google), along with other Google documents, as a potentially powerful teaching device. Most of the descriptive language to follow is excerpted directly from Alphabet’s (Google) regulatory filings. My additions about these entities include weaving their disclosure materials into a logical presentation …

How Well Do We Treat Each Other In Contract?, Aditi Bagchi

William & Mary Business Law Review

One of the important contributions of Nathan Oman’s new book is to draw focus onto the quality of the relationships enabled by contract. He claims that contract, by supporting markets, cultivates certain virtues; helps facilitate cooperation among people with diverse commitments; and produces the wealth that may fuel interpersonal and social justice. These claims are all plausible, though subject to individual challenge. However, there is an alternative story to tell about the kinds of relationships that arise from markets--i.e., a story about domination. The experience of domination is driven in part by the necessity, inequality, and competition enjoined by markets, …

Contract Law And The Common Good, Brian H. Bix

William & Mary Business Law Review

In The Dignity of Commerce, Nathan Oman offers a theory of contract law that is largely descriptive, but also strongly normative. His theory presents contract law’s purpose as supporting robust markets. This Article compares and contrasts Oman’s argument about the proper understanding of contract law with one presented over eighty years earlier by Morris Cohen. Oman’s focus is on the connection between Contract Law and markets; Cohen’s connection had been between Contract Law and the public interest. Oman’s work brings back Cohen’s basic insight, and gives it a more concrete form, as a formidable normative theory with detailed prescriptions.

Contract, Promise, And The Right Of Redress, Andrew S. Gold

William & Mary Business Law Review

This Essay reviews Nathan Oman’s recent book, The Dignity of Commerce. The book is compelling, and it makes an important and original contribution to contract theory—a contribution that insightfully shows how markets matter. Yet, in the course of developing a market-centered justification for contract law, The Dignity of Commerce also downplays the significance of consent and promissory morality. In both cases, the book’s argument is problematic, but this Essay will address questions of promissory morality. Oman contends that promise-based accounts struggle with contract law’s bilateralism and with its private standing doctrine. Yet, promissory morality is a very good fit …

A Pragmatist’S View Of Promissory Law With A Focus On Consent And Reliance, Robert A. Hillman

William & Mary Business Law Review

This Article discusses Professor Nate Oman’s excellent new book, The Dignity of Commerce, which makes an impressive case for how markets can produce “desirable” outcomes for society. In addition to a comprehensive account of what he calls “virtues” of markets, such as their tendency to produce cooperation, trust, and wealth, the book is full of useful and persuasive supporting information and discussions.

Oman is not only a fan of markets, but he asserts that markets are the “center” of contract theory, and provide its normative foundation. Elaborating, Oman concludes that “contract law exists primarily to support markets” and that …

Markets And Morals: The Limits Of Doux Commerce, Mark L. Movsesian

William & Mary Business Law Review

In this Essay on Professor Oman’s beautifully written and meticulously researched book, The Dignity of Commerce, I do three things. First, I describe what I take to be the central message of the book, namely, that markets promote liberal values of tolerance, pluralism, and cooperation among rival, even hostile groups. Second, I show how Oman’s argument draws from a line of political and economic thought that dates to the Enlightenment, the so-called doux commerce thesis of thinkers like Montesquieu and Adam Smith. Finally, I discuss what I consider the most penetrating criticism of that thesis, Edmund Burke’s critique from …

Make Up For Lost Time And Money: Using The Lanham Act To Regulate The Cosmetic Industry, Maria Monastra

William & Mary Business Law Review

In recent years, the cosmetic industry has experienced an increase in litigation brought on by consumers in their efforts to protect themselves from cosmetics that are either unsafe or falsely advertised. The Supreme Court of the United States’ discussion in POM Wonderful v. Coca-Cola Co. of the Lanham Act, the United States’ principal false advertising statute, clarified the breadth and depth of allowable lawsuits brought under the statute in matters which also concern the Food, Drug, & Cosmetic Act (FDCA). The case centered on a detailed discussion of the issue of federal preemption. Although the decision directly involved only the …

Does Contract Law Need Morality?, Kimberly D. Krawiec, Wenhao Liu

William & Mary Business Law Review

In The Dignity of Commerce, Nathan Oman sets out an ambitious market theory of contract, which he argues is a superior normative foundation for contract law than either the moralist or economic justifications that currently dominate contract theory. In doing so, he sets out a robust defense of commerce and the marketplace as contributing to human flourishing that is a refreshing and welcome contribution in an era of market alarmism. But the market theory ultimately falls short as either a normative or prescriptive theory of contract. The extent to which law, public policy, and theory should account for values …

Close The Waste Loopholes: Reassessing Commercial Item Regulations In Federal Procurements, Jim R. Moye

William & Mary Business Law Review

Classifying an item as commercial reduces the government’s ability to ask for information to determine whether prices are fair or reasonable, based on the assumption that these prices would e shaped by market forces. Since changes in procurement laws in the 1990s, contractors seem to want all items, as well as the entities that sell these items, to be listed as commercial. Contractors push for items to be labeled as commercial so they can avoid nearly all oversight and transparency requirements, which often results in the government buying blindly.

The “Legal” Marijuana Industry’S Challenge For Business Entity Law, Luke Scheuer

William & Mary Business Law Review

In recent years, many states have legalized the use and sale of marijuana for medical or even recreational purposes. This has led to the booming growth of a “legal” marijuana industry. Businesses openly growing and selling marijuana products to the consuming public face some unusual legal hurdles. Significantly, although the sale of marijuana may be legal at the state level, it is still illegal under federal law. This Article explores the conflict between state and federal marijuana laws from a business entity law perspective. For example, managers owe a fiduciary duty of good faith to their businesses and equity holders. …

Courts Gone “Irrationally Biased” In Favor Of The Federal Arbitration Act?—Enforcing Arbitration Provisions In Standardized Applications And Marginalizing Consumer-Protection, Antidiscrimination, And States’ Contract Laws: A 1925–2014 Legal And Empirical Analysis, Willy E. Rice

William & Mary Business Law Review

Spanning nearly forty years, the Supreme Court has issued multiple decisions and stated categorically that “judicial hostility to arbitration” was the sole impetus behind Congress’s decision to enact the Federal Arbitration Act of 1925. In fact, before the FAA, systemic trade-specific problems and practices generated heated disputes and widespread litigation among merchants and trade organizations. Thus, to arrest those constituents’ concerns, Congress enacted the FAA. Briefly, under the FAA section 2, arbitration is mandatory if a contractual arbitration provision is valid and a controversy “arises out of the contract.” However, common-law rules of contract formation are equally clear: Standing alone, …

Spirit Airlines, Inc. V. Northwest Airlines, Inc.: A Case For Increased Regulation Of The Airline Industry, Erica Wessling

William & Mary Business Law Review

The relatively short history of the airline industry is characterized by sudden shifts and divergent standards that attempt to negotiate a complex market. High demand, uniqueness of service, and difficulty of market entry render the market particularly susceptible to monopolization among competitors. Recently, the rise of the low-cost carrier business model has exposed high barriers to entry into the airline market. In attempts to remedy the harm against both prospective market entrants and consumers, lowcost carriers have levied price predation claims against entrenched legacy airlines. Due to the difficulty in negotiating the divide between predatory behavior and lawful competition, courts …

The Emperor’S New Clothes: How The Judicial System And The Housing-Mortgage Market Have Turned A Blind Eye To The Destruction Of The Negotiability Of Mortgage Promissory Notes, Roy D. Oppenheim, Jacquelyn K. Trask-Rahn

William & Mary Business Law Review

This Article examines the common notions of negotiable instruments as they relate to the modern day promissory note in the context of residential mortgage lending. The Article further addresses the destruction of the negotiability of such promissory notes through various undertakings added for the benefit of the banking industry, often to the detriment of a borrower. The use of negotiable instruments commenced in the 1800s in England as a way of ensuring a fluid market between trades as there was no fiat currency system in place. The fundamental purpose behind the concept of negotiability was subsequently abrogated by the modernization …

Tobacco Advertising And The First Amendment: Striking The Right Balance, Arlen W. Langvardt

William & Mary Business Law Review

With the enactment of the Family Smoking Prevention and Tobacco Control Act of 2009, Congress launched a major expansion of its regulatory efforts regarding tobacco advertising and promotion. The Act restricts advertising in various ways, featuring a requirement for updated textual versions of health warnings long required for cigarette packages, as well as a requirement that cigarette advertisements must be accompanied by prominently displayed color graphic images to be designed by the U.S. Food and Drug Administration (FDA).

The Act’s advertising restrictions and the color graphics requirement have been challenged on First Amendment grounds, as has an FDA regulation setting …

Waiving The Duty To Mitigate In Commercial Leases, Jacqueline Sandler

William & Mary Business Law Review

This Note examines a largely unexplored consequence of jurisdictions adopting a default duty to mitigate for commercial leases: whether a contract provision waiving the duty should be enforced. Only a few courts across the country have addressed the waiver issue in a commercial setting. At least two different appeals courts have enforced a waiver clause and claim that public policy supports their decision. In contrast, a federal court has stated the opposite—that public policy demands waiver provisions be void. Another state has outright voided all waiver clauses by statute. Courts that have enforced waivers have asserted that commercial parties have …

Clashing Policies Or Confusing Precedents: The "Gross Negligence" Exception To Consequential Damages Disclaimers, Michael Pillow

William & Mary Business Law Review

Consequential damages can easily amount to millions of dollars. Commercial parties often disclaim consequential damages in their contracts. This Article posits that such disclaimers between commercial parties under the Uniform Commercial Code (UCC) should not be found unenforceable based on gross negligence. Article 2 of the UCC promotes the policy of freedom of contract. Consistent with that policy, section 2-719 of the UCC provides that contractual consequential damages disclaimers should be enforceable absent a finding of unconscionability. This Article analyzes the interplay among UCC section 2-719, “public policy” exceptions to enforcing limitations of liability, and the law of gross negligence. …

Explaining "Bait-And-Switch" Regulation, David Adam Friedman

William & Mary Business Law Review

“Bait and switch” can describe a range of commercial behaviors common in the everyday marketplace, but virtually ignored in the academic literature. The traditional definition of unlawful bait and switch applies to insincere offers to sell one item in order to induce the buyer to purchase another. Certain sellers have historically employed bait-and-switch tactics, including urban retailers, aluminum siding companies, and supermarkets.

Colloquially, this definition can also cover lawful or other borderline sales tactics, including the use of teaser rates or low introductory pricing, or even “free offers.” Even common lawful tactics, like the deliberate routing of customers past other …

The Rise Of Urban Agriculture: A Cautionary Tale – No Rules, Big Problems, Matthew V. Bradshaw

William & Mary Business Law Review

This Note identifies the underlying cause of the collapse of the family farm, namely the failed effort of the U.S. Government to save it through the institution and ongoing promulgation of the Farm Bill. Through subsidy and direct payment regimes, federal legislation has enabled large commodity producers to enjoy protection from market risk while squeezing out smaller growers. Because of growing consumer distrust in large-scale agricultural production, the urban agriculture movement and nontraditional market systems continue to grow in popularity and footprint across the United States. Many municipalities have already recognized the vast benefits that an urban agriculture regime can …