Law Commons^™

How Algorithmic Trading Undermines Efficiency In Capital Markets, Yesha Yadav

Vanderbilt Law School Faculty Publications

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 …

Functionally Suspect: Reconceptualizing 'Race' As A Suspect Classification, Lauren Sudeall

Vanderbilt Law School Faculty Publications

In the context of equal protection doctrine, race has become untethered from the criteria underlying its demarcation as a classification warranting heightened scrutiny. As a result, it is no longer an effective vehicle for challenging the existing social and political order; instead, its primary purpose under current doctrine is to signal the presence of an impermissible basis for differential treatment. This Symposium Article suggests that, to more effectively serve its underlying normative goals, equal protection should prohibit not discrimination based on race per se, but government actions that implicate the concerns leading to race’s designation as a suspect classification. For …

Judicial Review Of Agency Benefit-Cost Analysis, W. Kip Viscusi, Caroline Cecof

Vanderbilt Law School Faculty Publications

This Article evaluates judicial review of agency benefit-cost analysis ("BCA") by examining a substantial sample of thirty-eight judicial decisions on agency actions that implicate BCA. Essentially, the Administrative Procedure Act tasks federal courts with ensuring that federal agency action is reasonable. As more agencies use BCA to justify their rulemakings, the court's duty often requires judges to evaluate the reasonableness of agency BCAs. In this Article, we discuss the challenges that trigger judicial review of agency BCAs and the standards that govern the review. We then present specific examples of how courts analyze BCAs. Overall, we find many examples of …

Contextualizing Gay‐Straight Alliances: Student, Advisor And Structural Factors Related To Positive Youth Development Among Members, Matthew P. Shaw

Vanderbilt Law School Faculty Publications

Gay-straight alliances (GSAs) may promote resilience. Yet, what GSA components predict well-being? Among 146 youth and advisors in 13 GSAs (58% lesbian, gay, bisexual, or questioning; 64% White; 38% received free/reduced-cost lunch), student (demographics, victimization, attendance frequency, leadership, support, control), advisor (years served, training, control), and contextual factors (overall support or advocacy, outside support for the GSA) that predicted purpose, mastery, and self-esteem were tested. In multilevel models, GSA support predicted all outcomes. Racial/ethnic minority youth reported greater well-being, yet lower support. Youth in GSAs whose advisors served longer and perceived more control and were in more supportive school contexts …

The Myth Of The Condorcet Winner, Paul H. Edelman

Vanderbilt Law School Faculty Publications

There is consensus among legal scholars that, when choosing among multiple alternatives, the Condorcet winner, should it exist, is the preferred option. In this essay I will refute that claim, both normatively and positively. In addition, I will suggest that a different approach, based in behavioral economics, might be a more productive way to model the choices that legislatures make among multiple alternatives.

An Empirical Analysis Of Noncompetition Clauses And Other Restrictive Postemployment Covenants, Randall Thomas

Vanderbilt Law School Faculty Publications

Employment contracts for most employees are not publicly available, leaving researchers to speculate about whether they contain postemployment restrictions on employee mobility, and if so, what those provisions look like. Using a large sample of publicly available CEO employment contracts, we are able to examine these noncompetition covenants, including postemployment covenants not to compete ("CNCs" or "noncompetes'), nonsolicitation agreements ("NSAs"), and nondisclosure agreements ("NDAs'). What we found confirms some long-held assumptions about restrictive covenants but also uncovers some surprises.

We begin by discussing why employers use restrictive covenants and examining how the courts have treated them. We then analyze an …

Insider Trading In Derivatives Markets, Yesha Yadav

Vanderbilt Law School Faculty Publications

The prohibition against insider trading is becoming increasingly anachronistic in markets where derivatives like credit default swaps (CDS) operate. Lenders use these instruments to trade the credit risk of the loans they extend. By design, CDS appear to subvert insider trading laws, insofar as lenders rely on what looks like insider information to transfer or externalize the risk of a loan to another institution. At the same time, the harm caused by using insider information in CDS markets can depart radically from the harms envisioned under existing case law. In the traditional account of insider trading, shareholders systematically lose against …

Law And The Art Of Modeling: Are Models Facts?, Rebecca Haw Allensworth

Vanderbilt Law School Faculty Publications

In 2013, the Supreme Court made the offhand comment that empirical models and their estimations or predictions are not 'findings of fact" deserving of deference on appeal. The four Justices writing in dissent disagreed, insisting that an assessment of how a model works and its ability to measure what it claims to measure are precisely the kinds of factual findings that the Court, absent clear error cannot disturb. Neither side elaborated on the controversy or defended its position doctrinally or normatively. That the highest Court could split 5-4 on such a crucial issue without even mentioning the stakes or the …

The Influence Of The Areeda-Hovenkamp Treatise In The Lower Courts And What It Means For Institutional Reform In Antitrust, Rebecca Haw Allensworth

Vanderbilt Law School Faculty Publications

It is often pointed out that while the United States Supreme Court is the final arbiter in setting antitrust policy and promulgating antitrust rules, it does so too infrequently to be an efficient regulator. And since the antitrust agencies, the Federal Trade Commission ("FTC") and the Antitrust Division of the Department of Justice ("DOJ"), rarely issue guidelines, and even more rarely issue rules or regulations, very little antitrust law is handed down from on high. Instead, circuits split, and lower courts must muddle through new antitrust problems by finding analogies in technologically and socially obsolete precedents. When faced with this …

Boards Of Directors As Mediating Hierarchs, Margaret M. Blair

Vanderbilt Law School Faculty Publications

In June of 2014, the board of directors of Demoulas Supermarkets, Inc.-better known as Market Basket, a mid-sized chain of grocery stores in New England-decided to oust the man who had been CEO for the previous six years, Arthur T. Demoulas.' Most likely, the board of directors did not anticipate what happened next: Thousands of employees, customers, and fans of Market Basket boycotted the stores and staged noisy public protests asking the board to reinstate "Arthur T., The reaction by employees and customers made what had been a simmering, nasty, intrafamily feud within the closely held Market Basket chain into …

Behavioral War Powers, Ganesh Sitaraman, David Zionts

Vanderbilt Law School Faculty Publications

A decade of war has meant a decade of writing on war powers. From the authority to start a war, to restrictions on fighting wars, to the authority to end a war, constitutional lawyers and scholars have explored the classic issues (war initiation, prosecution, and termination) through the classic prisms (text, history, and function) for a new generation of national security challenges. Despite the volume of writing on war powers and the urgency of the debates in the context of Iraq, Afghanistan, Libya, and Syria, war powers debates are widely seen as stagnant. We introduce a new set of perspectives …

Lessons From The Turn Of The Twentieth Century For First-Year Courses On Legislation And Regulation, Kevin M. Stack

Vanderbilt Law School Faculty Publications

This essay — part of a special journal issue on Legislation and Regulation and Regulatory State courses as core elements of the law school curriculum — approaches the debate over adopting these courses by looking back to the controversy stirred by teaching administrative law in law schools at the beginning of the twentieth century. This essay argues that sources of resistance to administrative law at that time not only help to explain the slow pace of adoption of “Leg-Reg” and “Reg-State” courses today, but also inform what material these new courses should cover. At the turn of the century, both …

Purposivism In The Executive Branch: How Agencies Interpret Statutes, Kevin M. Stack

Vanderbilt Law School Faculty Publications

After decades of debate, the lines of distinction between textualism and purposivism have been carefully drawn with respect to the judicial task of statutory interpretation. Far less attention has been devoted to the question of how executive branch officials approach statutory interpretation. While scholars have contrasted agencies interpretive practices from those of courts, they have not yet developed a theory of agency statutory interpretation. This Article develops a purposivist theory of agency statutory interpretation on the ground that regulatory statutes oblige agencies to implement the statutes they administer in that manner. Regulatory statutes not only grant powers but also impose …

The Interpretive Dimension Of Seminole Rock, Kevin M. Stack

Vanderbilt Law School Faculty Publications

A lively debate has emerged over the deferential standard of review courts apply when reviewing an agency's interpretation of its own regulations. That standard, traditionally associated with Bowles v. Seminole Rock & Sand Co. and now more frequently attributed to Auer v. Robbins, states that a court must accept an agency's interpretation of its own regulations unless the interpretation is "plainly erroneous or inconsistent with the regulation." This Article argues that a court's choice of method for interpreting regulations” including how it determines which agency interpretations are inconsistent with the regulation ” may be just as important, if not more …

Property Is The New Privacy, Suzanna Sherry

Vanderbilt Law School Faculty Publications

Richard Epstein’s new book, The Classical Liberal Constitution, is the latest entry in what might be called conservative foundationalist constitutional theory. The movement’s primary goal is to elevate judicial protection of economic rights to the same level that is currently accorded to non-economic or personal rights, and thus to make it much more difficult for the government to regulate economic activity. Freedom of contract, for these theorists, is on a par with freedom of speech, and property rights are as important as privacy rights. Epstein’s version of the theory, although sophisticated and nuanced, is ultimately unpersuasive for reasons I catalogue …

Foresight Bias In Patent Law, Sean B. Seymore

Vanderbilt Law School Faculty Publications

Much of patent reform has focused on efforts to make it harder to obtain and enforce low-quality patents. The most straightforward way to achieve this goal is to raise the substantive standards of patentability. What is often ignored in discussions about raising patentability standards is that high-quality inventions can slip through the cracks. What is more troubling is that sometimes this happens because of bias. This Article draws attention to foresight bias, which occurs when a decision-maker lets over-pessimism and an oversimplified view of the future influence the patentability determination. Foresight bias leads to a patent denial regardless of the …

Environmental Law In Austerity, J.B. Ruhl, James Salzman, Jonathan Nash

Vanderbilt Law School Faculty Publications

Given the political dynamic in play at the national level, with the country evenly split between Republicans and Democrats, and incumbent Tea Party and other politicians highly critical of the EPA, there is no reason to think this trend in decreasing environmental budgets will change any time soon. In some states the trend is even more pronounced. Fiscal austerity has become the new norm. The interesting questions are whether this matters for environmental law, how it matters, and what it means going forward.

Behavioral Public Choice: The Behavioral Paradox Of Government Policy, W. Kip Viscusi

Vanderbilt Law School Faculty Publications

Although government agencies increasingly use behavioral irrationalities as a justification for government intervention, the paradox is that these same government policies are also subject to similar behavioral inadequacies across a broad range of policies. This article develops an analysis of behavioral public choice in which we recognize that government officials are human and subject to behavioral anomalies and to public choice incentives that could further lead to welfare-reducing policies. Moreover, the existence of behavioral failures by the general public will lead to public pressures on government agencies to foster policies in response to these behavioral inadequacies. This article presents a …

America's Disposable Youth: Undocumented Delinquent Juveniles, Karla M. Mckanders

Vanderbilt Law School Faculty Publications

Through discriminatory rhetoric state and local officials construct delinquent juvenile immigrant youth as the embodiment of a threat to public safety and American values. Accordingly, alleged delinquent undocumented immigrant children who have spent the majority of their lives in the United States, are subjected to discrimination and exclusionary practices, which enable lessened protections under the law. This article critically analyzes how undocumented delinquent youth, mainly Latino males, are constructed through the various narratives of immigrant children that are perpetuated by the media and policymakers, and how this impacts their treatment within the juvenile justice and immigration systems. Central to this …

Beyond Gridlock, Michael P. Vandenbergh, Jonathan A. Gilligan

Vanderbilt Law School Faculty Publications

Private climate governance can achieve major greenhouse gas (“GHG”) emissions reductions while governments are in gridlock. Despite the optimism that emerged from the Earth Summit in Rio de Janeiro, Brazil in 1992, almost a quarter century later the federal legislative process and international climate negotiations are years from a comprehensive response. Yet Microsoft, Google and many other companies have committed to become carbon neutral. Wal-Mart has partnered with the Environmental Defense Fund to secure 20 million tons of GHG emissions reductions from its suppliers around the world, an amount equal to almost half the emissions from the US iron and …

Stemming The Rising Risk Of Credit Inequality, Francesca L. Procaccini

Vanderbilt Law School Faculty Publications

In the wake of the devastating effects of the global financial crisis and the collapse of the national housing market, non-profit organizations, private citizens, and government agencies have increasingly filed discrimination lawsuits against creditors and mortgage lenders for extending credit to minority borrowers on terms less favorable than those offered to white borrowers with similar risk profiles. These lawsuits argue that creditors pursued discriminatory policies, which, although neutral on their face, have had an adverse and indefensible “disparate impact” on minority borrowers in violation of numerous antidiscrimination laws, including the Equal Credit Opportunity Act (ECOA).

Indeed, volumes of evidence now …

The Origins Of Legislation, Ganesh Sitaraman

Vanderbilt Law School Faculty Publications

Although legislation is at the center of legal debates on statutory interpretation, administrative law, and delegation, little is known about how legislation is actually drafted. If scholars pay any attention to Congress at all, they tend to focus on what happens after legislation is introduced, ignoring how the draft came to exist in the first place. In other words, they focus on the legislative process, not the drafting process. The result is that our account of Congress, the legislative process, and the administrative state is impoverished, and debates in statutory interpretation and administrative law are incomplete. This Article seeks to …

Regulatory Exit, J.B. Ruhl, James Salzman

Vanderbilt Law School Faculty Publications

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, the topic of exit has barely been touched in administrative law scholarship. 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 …

Revitalizing Dormant Commerce Clause Review For Interstate Coordination, Jim Rossi, Alexandra B. Klass

Vanderbilt Law School Faculty Publications

Interstate coordination presents one of the most difficult challenges for American federalism as well as for energy markets and policy. Existing laws vest the approval of large-scale energy infrastructure projects such as interstate oil pipelines and high-voltage, interstate electric transmission lines with state and local levels of government. At the same time, state siting and eminent domain regimes routinely enable and even encourage state regulators to hold out from approving interstate infrastructure projects, hobbling any hope for interstate coordination. This Article analyzes how judicial review under dormant Commerce Clause principles and doctrine can promote better interstate coordination by discouraging regulatory …

The End Of Class Actions?, Brian T. Fitzpatrick

Vanderbilt Law School Faculty Publications

In this Article, I give a status report on the life expectancy of class action litigation following the Supreme Court's decisions in Concepcion and American Express. These decisions permitted corporations to opt out of class action liability through the use of arbitration clauses, and many commentators, myself included, predicted that they would eventually lead us down a road where class actions against businesses would be all but eliminated. Enough time has now passed to make an assessment of whether these predictions are coming to fruition. I find that, although there is not yet solid evidence that businesses have flocked to …

Back To The Future, Michael A. Newton

Vanderbilt Law School Faculty Publications

This essay refocuses the debate over autonomous weapons systems to consider the potentially salutary effects of the evolving technology. Law does not exist in a vacuum and cannot evolve in the abstract. Jus in bello norms should be developed in light of the overarching humanitarian goals, particularly since such weapons are not inherently unlawful or unethical in all circumstances. This essay considers whether a preemptive ban on autonomous weapons systems is likely to be effective and enforceable. It examines the grounds potentially justifying a preemptive ban, concluding that there is little evidence that such a ban would advance humanitarian goals …

Marijuana Localism, Robert A. Mikos

Vanderbilt Law School Faculty Publications

The states have wrested control of marijuana policy from the federal government, but they risk losing some of their newfound power to another player: local governments. Hundreds of local communities are now seeking to establish their own marijuana policies, from legalization to prohibition and a variety of idiosyncratic regulatory schemes in between. These local efforts raise one of the most important and unresolved questions surrounding marijuana law and policy: What authority, if any, should states give local governments to regulate marijuana? This Article provides some guidance on this question. It starts by identifying two competing considerations that help determine whether …

Why Choose? A Response To Rachlinski, Wistrich & Guthrie, Terry A. Maroney

Vanderbilt Law School Faculty Publications

In "Heart Versus Head," Rachlinski, Guthrie, and Wistrich present experimental findings suggesting that judges sometimes rule on the basis of emotion rather than reason. Though there is much of value in their findings, they have presented a false choice. The experiments do offer strong evidence that judges' decisions can be influenced by the "affect heuristic," insofar as they show that prompting generalized feelings of good/bad and like/dislike can sway legal rulings that ought to be answered entirely on traditionally legalistic grounds. However, the experiments do not speak more broadly to the influence of judicial emotion, which is a far more …

Form Vs. Function In Rule 10b-5 Class Actions, Amanda M. Rose

Vanderbilt Law School Faculty Publications

The Supreme Court’s widely anticipated decision last term in Halliburton Co. v. Erica P. John Fund, Inc. did little to change the fundamental landscape of securities fraud litigation in the United States. Rule 10b-5 class actions premised on the “fraud-on-the-market” presumption of reliance may still be brought, although it is now clear that defendants may present evidence of lack of price distortion to rebut that presumption at the class certification stage. Halliburton does, however, raise a variety of new questions that will keep plaintiffs’ lawyers and defense counsel fighting for years to come. Determining the answers to these questions will …

Authors, Online, Daniel J. Gervais

Vanderbilt Law School Faculty Publications

The fate of professional creators is a major cultural issue. While specific copyright rules are obviously contingent and should be adapted to the new realities of online distribution and easy reuse, professional authorship remains necessary. I also believe that to be a professional author, creators need time, which, in turn, does require some form of payment. We need healthy financial flows to allow professional authors to make a decent, market-based living. This requires a move away from one-size-fits-all copyright and the resulting "tug of norms" that requires a shift of the entire policy package to the benefit of one category …