Law Commons^™

The Case For Noncompetes, Jonathan M. Barnett, Ted Sichelman

University of Chicago Law Review

Scholars and other commentators widely assert that enforcement of contractual and other limitations on labor mobility deters innovation. Based on this view, federal and state legislators have taken, and continue to consider, actions to limit the enforcement of covenants not to compete in employment agreements. These actions would discard the centuries-old reasonableness standard that governs the enforcement of these provisions, often termed “noncompetes,” in all but four states (notably, California). We argue that this zero-enforcement position lacks a sound basis in theory or empirics. As a matter of theory, it overlooks the complex effects of contractual limitations on labor mobility …

The Spectrum Of Procedural Flexibility, Ronen Avraham, William H.J. Hubbard

University of Chicago Law Review

Sometimes the rules let you change the rules. In civil procedure, many rules are famously rigid—for example, neither the parties nor the judge can stipulate to subject matter jurisdiction—but closer inspection yields many ways that judges or parties (individually or by agreement) can change procedural defaults, such as the number of depositions, trial by judge or jury, or sometimes even jurisdiction. Whether the judge or parties have “flexibility” to change the rules of the game is an important, but understudied, aspect of procedure.

This Article is the first to document the full spectrum of procedural flexibility—the varied and sometimes surprising …

The Executive Judgment Rule: A New Standard Of Dismissal For Qui Tam Suits Under The False Claims Act, Nathan T. Tschepik

University of Chicago Law Review

Under the 1986 amendments to the False Claims Act, whistleblowing has be-come big business. The Act’s qui tam provision empowers private parties, called relators, to bring suit on behalf of the government for frauds committed against it—and to receive substantial portions of that recovery. Relying on the award-sharing provision to draw out relators with inside knowledge of complex and well-hidden frauds, the government uses these qui tam suits as a critical part of its regulatory policy. The recent history of the Act shows that it has done this to great effect: the government recovers billions of dollars annually from fraudulent …

The Golden Share: Attaching Fiduciary Duties To Bankruptcy Veto Rights, Yiming Sun

University of Chicago Law Review

Under bankruptcy law, a debtor cannot enter into a binding agreement with a creditor to not file for bankruptcy in the future. However, creditors can in effect prevent a corporate debtor from filing for bankruptcy by obtaining a special “golden share” in the debtor and exercising the right to veto its bankruptcy concomitant with such a share. Currently, courts decide whether to invalidate a golden share veto right based on whether the right is equivalent to a bankruptcy waiver. However, the current rule may lead to either underdeterrence of bad faith vetoes or discouragement of good faith corporate decision-making.

This …

The Case For “Unfair Methods Of Competition” Rulemaking, Rohit Chopra, Lina M. Khan

University of Chicago Law Review

A key feature of antitrust today is that the law is developed entirely through adjudication. Evidence suggests that this exclusive reliance on adjudication has failed to deliver a predictable, efficient, or participatory antitrust regime. Antitrust litigation and enforcement are protracted and expensive, requiring extensive discovery and costly expert analysis. In theory, this approach facilitates nuanced and factspecific analysis of liability and well-tailored remedies. But in practice, the exclusive reliance on case-by-case adjudication has yielded a system of enforcement that generates ambiguity, drains resources, privileges incumbents, and deprives individuals and firms of any real opportunity to participate in the process of …

Labor Antitrust’S Paradox, Hiba Hafiz

University of Chicago Law Review

Growing inequality, the decline in labor’s share of national income, and increasing evidence of labor-market concentration and employer buyer power are all subjects of national attention, eliciting wide-ranging proposals for legal reform. Many proposals hinge on labor-market fixes and empowering workers within and beyond existing work law or through tax-and-transfer schemes. But a recent surge of interest focuses on applying antitrust law in labor markets, or “labor antitrust.” These proposals call for more aggressive enforcement by the Department of Justice (DOJ) and Federal Trade Commission (FTC) as well as stronger legal remedies for employer collusion and unlawful monopsony that suppresses …

The Arc Of Monopoly: A Case Study In Computing, Randal C. Picker

University of Chicago Law Review

The world we live in today is defined by three great arcs. The first is the world of semiconductors and the innovation characterized by Moore’s law, the second is the creation of ubiquitous wireless access, and the third is the emergence of the internet platform. In that context, this Essay looks at government claims of monopolization in telecommunications and computing by considering past antitrust actions against AT&T, IBM, and Microsoft. Early antitrust actions against AT&T and IBM of course long predated the rise of the Chicago School, but later actions against AT&T and IBM overlapped that rise as did the …

The Effective Competition Standard: A New Standard For Antitrust, Marshall Steinbaum, Maurice E. Stucke

University of Chicago Law Review

America’s failing antitrust system is, in large part, to blame for today’s market power problem. Lax antitrust law and enforcement have allowed troubling trends like corporate consolidation to remain unchallenged, further embedding our skewed economy. In highly concentrated markets, individuals have limited choice and little power to pick their price, quality, or provider for the goods and services they need; workers are met with powerful employers and have little agency to shop around or bargain for competitive wages and benefits; and suppliers can’t reach the market without paying powerful intermediaries or succumbing to acquisition.

Our Essay offers an alternative to …

The Chicago School’S Limited Influence On International Antitrust, Anu Bradford, Adam Chilton, Filippo Maria Lancieri

University of Chicago Law Review

Beginning in the 1950s, a group of scholars primarily associated with the University of Chicago began to challenge many of the fundamental tenants of antitrust law. This movement, which became known as the Chicago School of Antitrust Analysis, profoundly altered the course of American antitrust scholarship, regulation, and enforcement. What is not known, however, is the degree to which Chicago School ideas influenced the antitrust regimes of other countries. By leveraging new datasets on antitrust laws and enforcement around the world, we empirically explore whether ideas embraced by the Chicago School diffused internationally. Our analysis illustrates that many ideas explicitly …

The Chicago School And The Forgotten Political Dimension Of Antitrust Law, Ariel Katz

University of Chicago Law Review

An economically oriented and technocratic view of antitrust has dominated the discipline’s practice and scholarship for the last four decades. Under this view, attributed in large part to the rise of the Chicago School, questions of legality ought to be decided exclusively on the basis of supposedly objective economic analysis, which does not admit any consideration or insight other than those that economists and other experts trained in the field can analyze. Lately, prominent voices from both the political left and right have begun attacking this mainstream view and calling for an enhanced role for antitrust law in mediating a …

Chicago And Its Discontents, Timothy J. Muris, Jonathan E. Nuechterlein

University of Chicago Law Review

This symposium began with a call for papers “reassessing the validity of the Chicago School’s assumptions about competition and considering whether a more aggressive approach to antitrust enforcement is now warranted.” That framing uncritically accepts the premises of antitrust’s new populist movement: first, that “the Chicago School” marked an abrupt break from prior academic analysis of antitrust law, and second, that its adherents shared a common positive agenda fundamentally at odds with robust antitrust enforcement. Both of those premises are false. The Chicago School represented a logical continuation of the antitrust analysis developed over the preceding decades, and its members …

Startup Acquisitions, Error Costs, And Antitrust Policy, Kevin A. Bryan, Erik Hovenkamp

University of Chicago Law Review

Startup acquisitions by dominant incumbents, especially in high tech, have recently attracted significant attention. Many researchers and practitioners worry about harms to competition or innovation. However, there has been very little antitrust enforcement in this area. This is emblematic of a prominent feature of modern antitrust law: a strong preference for erring on the side of nonenforcement. A leading rationale for this preference is the claim that market power self-corrects by attracting new entrants who discipline incumbents.

As a result, plaintiffs generally face very demanding evidentiary requirements, which are particularly hard to satisfy in the case of startup acquisitions. A …

What’S In Your Wallet (And What Should The Law Do About It?), Natasha Sarin

University of Chicago Law Review

In traditional markets, firms can charge prices that are significantly elevated relative to their costs only if there is a market failure. However, this is not true in a two-sided market (like Amazon, Uber, and Mastercard), in which firms often subsidize one side of the market and generate revenue from the other. This means consideration of one side of the market in isolation is problematic. The Court embraced this view in Ohio v American Express, requiring that anticompetitive harm on one side of a two-sided market be weighed against benefits on the other side.

Legal scholars denounce this decision, which, …

The Architecture Of A Basic Income, Miranda Perry Fleischer, Daniel Hemel

University of Chicago Law Review

The notion of a universal basic income (UBI) has captivated academics, entrepreneurs, policymakers, and ordinary citizens in recent months. Pilot studies of a UBI are underway or in the works on three continents. And prominent voices from across the ideological spectrum have expressed support for a UBI or one of its variants, including libertarian Charles Murray, Facebook co-founder Chris Hughes, labor leader Andy Stern,and—most recently—former President Barack Obama.Although even the most optimistic advocates for a UBI will acknowledge that nationwide implementation lies years away, the design of a basic income will require sustained scholarly attention. This Article seeks to advance …

The Origins Of Substantive Due Process, Ilan Wurman

University of Chicago Law Review

In the antebellum nineteenth century, courts often voided legislative acts for substantive unreasonableness or for exceeding the scope of legitimate police powers. Contrary to the assertions of a number of modern scholars, however, this tradition does not support the concept of economic substantive due process. Courts voided municipal acts exceeding the scope of legitimate police powers on two grounds—the law of delegation and the law of municipal corporations—that did not apply to acts of state legislatures. The states themselves were limited to reasonable exercises of the police power only when their asserted authority came into potential collision with federal constitutional …

Some Doubts About “Democratizing” Criminal Justice, John Rappaport

University of Chicago Law Review

The American criminal justice system’s ills are by now so familiar as scarcely to bear repeating: unprecedented levels of incarceration, doled out disproportionately across racial groups,and police that seem to antagonize and hurt the now-distrustful communities they are tasked to serve and protect. Systemic social ailments like these seldom permit straightforward diagnoses, let alone simple cures. In this case, however, a large, diverse, and influential group of experts—the legal academy’s “democratizers”—all identify the same disease: the retreat of local democratic control in favor of a bureaucratic “machinery” disconnected from public values and the people themselves. Neighborhood juries, for example, internalize …

The Common Ownership Trilemma, José Azar

University of Chicago Law Review

This Essay argues that it is impossible to achieve the following objectives simultaneously: (i) portfolio diversification, (ii) shareholder representation, and (iii) competition. In an economy in which everyone holds the market portfolio, all companies have the same shareholders. If, in addition, firms act in the interest of their shareholders (in other words, if the agency problem is solved), the equilibrium outcome is equivalent to an economy-wide monopoly. When managers are entrenched, however, the anticompetitive effects of common ownership are mitigated, yet they only disappear completely in the extreme case that managers are fully insulated from shareholder dissent. The trilemma highlights …

The Chicago Obsession In The Interpretation Of Us Antitrust History, William E. Kovacic

University of Chicago Law Review

No abstract provided.

A Network Theory Of Patentability, Laura G. Pedraza-Fariña, Ryan Whalen

University of Chicago Law Review

Patent law is built upon a fundamental premise: only significant inventions receive patent protection while minor improvements remain in the public domain. This premise is indispensable for maintaining an optimal balance between incentivizing new innovation and providing public access to existing innovation. Despite its importance, the doctrine that performs this gatekeeping role—nonobviousness— has long remained indeterminate and vague. Judicial opinions have struggled to articulate both what makes an invention significant (or nonobvious) and how to measure nonobviousness in specific cases. These difficulties are due in large part to the existence of two clashing theoretical frameworks, cognitive and economic, that have …

The Limits Of Good Law: A Study Of Housing Court Outcomes, Nicole Summers

University of Chicago Law Review

The enactment of the warranty of habitability in the early 1970s was hailed as a revolution in tenants’ rights. Reversing centuries of legal precedent, the doctrine established that a tenant’s obligation to pay rent is contingent upon the landlord’s obligation to maintain the premises in good repair. Today, nearly fifty years later, scholars and advocates frequently observe that the law has not lived up to the potential originally envisioned. Yet these observations have been based on weak empirical evidence. This Article presents the results of the first rigorous empirical study on the effectiveness of the warranty of habitability. Based on …

Exclusionary Advertising? The Case For Cautious Enforcement Of 42 Usc § 3604(C) Against Minority-Language Housing Advertisements, Emily A. Vernon

University of Chicago Law Review

Section 804(c) of the Fair Housing Act (FHA), codified at 42 USC § 3604(c), prohibits advertisements that “indicate[ ] any preference” on the basis of race, national origin, and other protected categories. The text of the FHA, however, is ambiguous regarding its applicability to the language in which housing advertisements appear, raising the specter of potential liability in communities where residents speak and write in multiple languages. Using Chicago’s Chinatown as a case study, this Comment examines whether the exclusive use of Chinese-language advertisements for housing in Chinatown violates § 3604(c). I begin by enumerating a series of factors that …

Tort Liability And The Risk Of Discriminatory Government, Ehud Guttel, Ariel Porat

University of Chicago Law Review

When individuals and firms fail to invest in adequate care, the government often steps in, taking costly measures to restore safety or mitigate harm. Under such circumstances, a question arises as to whether the government can demand recovery for its costs. For many years, the answer has been negative; tort law has persistently refused to render negligent individuals and firms liable for governmental expenditures. Yet recently, the law changed markedly. Recognizing that the no-liability regime subsidizes faulty behavior, an increasing number of jurisdictions have established the right of public entities to sue for reimbursement of costs. Against this backdrop, this …