Faculty Scholarship Digest
On a regular basis, Dean Michaels prepares a memorandum summarizing recent scholarship published by members of the Moritz faculty. The College boasts 50+ faculty members with national and international reputations. The range of influential and innovative legal scholarly works produced by our distinguished faculty reflects a variety of perspectives, interests, and areas of expertise.
Cinnamon Carlarne (w/Daniel Farber), Law Beyond Borders: Transnational Responses to Global Environmental Issues, 1 TRANSNATIONAL ENVIRONMENTAL L. 13 (2012).
This article is an “editorial” in the first issue of a new journal published by Cambridge University Press devoted to the emerging field of transnational environmental law. Cinnamon is one of two American editors of the journal (Dan Farber, Univ. Cal. Berkeley, is the other), and they are joined by faculty from the London School of Economics, VU University of Amsterdam, University of Hong Kong, and University College London in this endeavor. Transnational environmental law studies how environmental law responds to the global nature of today’s environmental issues, with attention to law that does not come from “states” (e.g., European Union law) and, as some of the editors explain, to “the prominence of private actors as entities with some claim to legal and regulatory authority.” This peer-reviewed journal will be a leading platform in this rapidly growing field, creating “a space for bringing together the sometimes bifurcated bodies of literature exploring domestic and international environmental law,” as well as “‘the multilevel governance context in which contemporary environmental law unfolds.’”
After discussing the meaning and importance of the transnational perspective, Cinnamon and her co-author discuss global climate change as an issue that “cries out for a transnational analysis.” It is a global problem that stems from local sources and that “slices across traditional boundaries” in so many ways. Climate change also presents governance challenges, particularly in the area of climate change adaptation (climate change is happening so, while mitigation is one issue, dealing with it—“adaption planning”—is gaining prominence). Unlike mitigation efforts, which address a collective-action problem by centralized, top-down responses, adaptation “will require greater diversification and, often, decentralization of decision-making authority,” development of which is clearly a transnational concern. Cinnamon and her co-author discuss some of the tools theory can bring to this endeavor and the related contributions of the articles that are in this first issue of the journal.
Daniel Chow, China Under the Foreign Corrupt Practices Act, 2012 WISC. L. REV. 573 (2012).
The rise of China as a global economic power and the stepped up and aggressive enforcement of the Foreign Corrupt Practices Act (“FCPA”) by the Department of Justice (9 investigations in 2003, 29 in 2007, 74 in 2010) have created a treacherous terrain for multinational companies (“MNCs”). One by-product of China’s state-controlled economic system “is that many persons who might appear at first glance to be private persons” from doctors to low-level employees of a seemingly private business might qualify as “foreign officials” subject to the FCPA’s antibribery provisions under the DOJ’s interpretation of that statute. Coupled with the opacity to MNC senior management of the “petty commercial corruption” that is a part of “daily business in China,” this reality makes China a “trap for the unwary” when it comes to FCPA violations. In this article, Dan details the major elements of the FCPA as interpreted by the DOJ and demonstrates how “their application to China’s current political system and business culture could lead to a wide array of potential FCPA violations.” The article gets deep into the weeds of the FCPA; contractors and pass-through payments, “anything of value,” “foreign official,” and joint ventures are some of the terms and entities described.
Beyond highlighting the problem, however, the article also details how to solve it: specialized compliance programs for the China business entities of MNCs. This section begins with an MNC’s consideration of seeking compliance as opposed to ignoring the possible violations. Dan describes the likelihood and risks of detection, the strategic value of self-reporting of violations and the other reasons that, on balance, argue for a strong compliance program. The article then turns to some of the critical components of such a program. This starts with a forceful program rigorously enforced, “an effective . . . program” needs clear written rules about “unacceptable behavior, [to] institute controls that can detect such behavior, and . . . [to] enforce the rules by immediately terminating those employees that violate such rules and, in appropriate cases, reporting the employees to the PRC authorities.” In addition, a program must have a substantial due diligence component for investigating joint-venture partners, a robust program for handling demands for benefits by PRC officials (including role-playing training simulations and reporting to PRC authorities under new, Chinese FCPA-style laws), and seeking advance rule clarifications from the DOJ.
Steven M. Davidoff (w/Caroline M. Gentile & Paul L. Regan), Irreconcilable Differences: Director, Manager and Shareholder Conflicts in Takeover Transactions, 36 DEL. J. CORP. L. vii (2011).
This brief article is the introduction to a symposium issue of the Delaware Journal of Corporate Law that Steven organized. The symposium conference brought together scholars, judges, attorneys, investment bankers, and other industry participants for an in-depth discussion of Delaware law and takeover conflicts, and the introduction follows the usual course of providing an overview of the publications that followed. Delaware courts have grappled with principle-agent problems for more than a century, yet the issues these problems present remain unsettled, particularly in the takeover context. “As markets become more complex, old methods of reviewing and ameliorating conflicts may no longer be efficient,” the organizers note, but the substitutes for judicial monitoring raise potential problems of their own, and the authors collected for this discussion provide a variety of insights in this area.
Steven M. Davidoff (w/Matthew D. Cain), Form Over Substance: The Value of Corporate Process and Management Buy-Outs, 3 DEL. J. CORP. L. 849 (2011).
Management buy-outs of publicly traded companies (“MBOs”) have been controversial for decades. Opponents claimed that management’s privileged position allowed them to seize gains at shareholder expense, while proponents argued their efficiency as a result of decreased agency costs and the appropriate incentives created for management. As this debate has waxed and waned, however, the level of judicial review has remained relatively constant, with such transactions “reviewed under the ordinary state statutory conflict of interest transaction rules.” In this article, Steven and his co-author start with the premise that some regulation of MBOs is needed given management’s conflict-of-interest and attempt to answer empirically (by a study of MBOs announced between 2003 and 2009) whether the best means of protecting shareholders is judicial review or some combination of ex ante procedures (e.g., a special committee of the Board to evaluate bids), and, if the latter, which procedures.
The results of their study confirm the hypothesis that management can unduly influence the buy-out process to their personal benefit, but also that process mechanisms can serve as a significant offset to this problem. Competitive contracts and the use of special committees lead to larger offer premiums in MBOs, and competitive contracts are associated with low premium bid offers failing. They also demonstrate that while these pre-transaction procedural protections produce higher premiums (to be clear, a good thing) the availability of judicial review under the “entire fairness” doctrine (the Delaware judicial review standard for MBOs) was not related to offer premium. Hence the article’s title: procedural mechanisms such as special committees and competitive contracts (“form”) were actually better than judicial review of the merits (“substance”) in producing efficient transactions.
Larry T. Garvin, Globe Refining Co. v. Landa Cotton Oil Co. and the Dark Side of Reputation, 12 NEV. L.J. 659 (2012).
This article was a part of a symposium on the worst Supreme Court decisions of all-time. Larry concedes that his entry was no Dred Scott or Korematsu, and may not even be the worst contracts decision of all-time, though it certainly is worthy of the “Hall of Shame.” So why Globe Refining? “Because, in its modest way, it shows how a determined and brilliant judge can foul up the law with even an unpromising set of facts.” And, in this case, that judge was Oliver Wendell Holmes, Jr.. Globe Refining dates back to the pre-Erie days of substantive federal common law, and Justice Holmes used this unremarkable contract dispute (Globe Refining alleged that Landa failed to provide the oil Globe Refining had contracted to buy) to establish a new and wrong-headed requirement for the recovery of contract damages that persisted with surprising strength simply because of the reputation of the opinion’s author.
As described by Larry, Global Refining began with a rather egregious procedural error in applying the rules of diversity jurisdiction (presumably to enable Justice Holmes to address his pet substantive issue), the purely procedural elements of which were a departure from prior law and were subsequently ignored. Substantively though, (and as a piece of finding the amount in controversy insufficient for diversity jurisdiction) Globe Refining introduced the “tacit agreement” test for recovery of contract damages, in addition to the limitation of foreseeability famously expounded in Hadley v. Baxendale. Under the “tacit agreement” test, liability must be set in terms that the breaching party “would have assented to if they had been presented to his mind.” Although prior to Global Refining, the “tacit agreement” test was not followed in the United States and was only sporadically followed in England, Holmes’ endorsement gave it immediate momentum that, though eventually beaten back by Williston, the Restatements, the UCC and other critics, “survives to this day . . . as the law of a few states and an influence on the law of still more.” The article details the reasoning of both aspects of the case and analyzes in detail its subsequent treatment and effect. Why did Holmes do it? It matched his theory of contract, and Larry points to the perils of applying “a juridical method without regard to the actual facts and law at issue” as one of the lessons of the case. He also, notes, however, a long correspondence between Holmes and his friend Frederick Pollock in which they debated contract theory and in which Holmes crowed that he had the opportunity to address the issue in Globe Refining and “I done it,” thus, Larry notes, playing the ultimate trump on his friend.
Ric Simmons, The New Reality of Search Analysis Four Trends Created by New Surveillance Technologies, 81 MISSISSIPPI L.J. 991 (2012).
The Fourth Amendment set constitutional limits on the government’s ability to intrude in private affairs for law enforcement purposes, and this article identifies technological advance as the most important change for the issues in this area since the adoption of the Bill of Rights. At the title indicates, Ric identifies four trends stemming from these important changes to the world, which have simultaneously made criminal action both more devastating and more difficult to detect on the one hand, and made the scope and ease of governmental intrusion much greater on the other.
Ric argues that the challenges of regulating new technologies have regularly led the Supreme Court to erroneous decisions, which has led to Congressional intervention through legislation that regulates both law enforcement and private (potentially criminal) use of technology. From the Federal Communications Act of 1934 to the Patriot Act of 2001 and onward, courts now have a tangle of statutory law to deal with in addition to constitutional analysis. The article cites two other trends that it attributes in part to this first trend of legislative intervention: (i) a long-standing binary approach (search=probable cause requirement; not a search=no-Fourth Amendment concern) has been increasingly supplanted by a sliding scale of regulation, a process begun with the Court’s “reasonable suspicion” test in Terry v. Ohio but accelerated by legislative standards in the three and a half decades since, and (ii) increased deference to legislative standards by the courts, even to the extent of adaption of legislative tests constitutional jurisprudence. Finally, Ric notes a number of problematic formal tests and reasoning that courts have employed as a result of inadequate understanding of new technologies such as treating Fourth Amendment rights as coterminous with property rights or concluding that disclosure to any third-party eliminates all Fourth Amendment privacy interests.
Daniel C.K. Chow (w/Edward Lee), INTERNATIONAL INTELLECTUAL PROPERTY, PROBLEMS CASES AND MATERIALS (2d ed.) (West 2012).
Over the past fifteen years or so, International Intellectual Property has gone from a niche offering that a few law schools provided to a staple of an intellectual property curriculum, and Dan and Ed’s casebook holds an important place in the field. This second edition keeps the materials current in this rapidly evolving field, both adding new developments and trimming that which is no longer current.
In terms of substance, the book covers the most important treaties and conventions in intellectual property, the growing importance of intellectual property in economic development and international business, and issues relating to developing countries and leading economies around the world. Thus, the book includes material from the United States and Canada, Latin America, Asia, and Africa. From securing trademarks under the Madrid Protocol to patents under the Patent Cooperation Treaty, this book has it covered.
Dale A. Oesterle, THE LAW OF MERGERS AND ACQUISITIONS (4th ed.) (West 2012).
The first edition of Dale’s Mergers and Acquisitions casebook, published in 1991, was a path-breaking early entrant in an emerging field. This fourth edition, in a rapidly changing field, not surprisingly contains a great deal of new material. What it retains is Dale’s distinctive style and approach. Corporate acquisitions, Dale notes, “are some of the most heavily regulated events in all of American law,” and they bring to bear myriad disparate bodies of law: contracts, corporate, securities, tax, antitrust, labor, ERISA, accounting rules, and (sometimes) environmental, products liability, debtor-creditor, bankruptcy, and other regulatory subjects. So, rather than a distinct doctrinal area, Mergers and Acquisitions focuses on a “deal” and the relevant segments of multiple areas of doctrine. Unlike a majority of doctrinal courses, Mergers and Acquisitions also has a transactional focus rather than a litigation focus.
Dale brings his wide-ranging expertise, persistent focus on current issues, and sheer joy for the subject to these updated materials that have benefitted from his two decades of teaching Mergers and Acquisitions. In addition to the casebook, Dale wrote a teacher’s manual with an on-line version updated with new events in Mergers and Acquisitions and power point slides for the class, with diagrams on the cases in the casebook.
Joseph B. Stulberg, Tony, in Eric M. Galton and Lela P. Love eds, STORIES MEDIATORS TELL (American Bar Association 2012).
As the editors of this volume explain, while every litigator has a supply of “war stories,” tales from mediators are much less common because of the confidentiality requirements that underlie mediation. By collecting stories from mediators (some of them partly fictionalized to preserve confidentiality), the editors hope to advance understanding about the nature and successes of mediation. The book is divided into sections such as “The Principle of Unknowability,” “Staying in the Middle Without Judgment or Favoritism,” and “Listening for the Undercurrents.”
Josh’s chapter, Tony, comes in a section titled “Addressing Issues That Litigation Cannot.” It is a riveting story. Tony was an African-American student at a Catholic parochial school at the end of his senior year. The school, located in a largely segregated suburb, offered four full-tuition scholarships to promote economic and racial diversity, and one of these scholarships had allowed Tony to attend. Tony was also an outstanding athlete and headed to a Big Ten college on a football scholarship. Only final exams of senior year remained. A school tradition at the end of each academic year was an “open mic” assembly, at which students could express their feelings about the school. Josh writes that Tony was first to the mic and said “Father O’Brien. Teachers. Classmates. I just want to say this: After four years at this place, I think that all of you are still a bunch of motherf****** racists.” Father O’Brien (the head of school) immediately ended the assembly and told Tony, “You are dismissed from this school. Immediately. . . . Get out. . . . If you want to finish high school, you will get a GED.” Josh tells the story of the escalating tensions and events that followed, and the mediation and resolution it produced. The story concludes with Josh’s reflections on several issues prominent in the story, including the role of the mediator and the importance of confidentiality, adding additional insight to a very powerful story.
Larry T. Garvin (w/the late E. Allan Farnsworth), Farnsworth on Contracts 2012-2 (Walters Kluwer 2012).
The supplement to the famous three-volume contracts treatise crossed the 1,000 page threshold earlier this year and constitutes a stunning compendium of information. This midyear update includes new material on questions both large (how many states have adopted amended Article 2) and small (whether sending out a resume can create an implied-in-fact contract).
John B. Quigley, Camp David Accords, in MAX PLANCK ENCYCLOPEDIA OF PUBLIC INTERNATIONAL LAW (Oxford 2012).
This is a substantial entry in a leading encyclopedia of international law. The entry begins with a mis en scène of the Camp David Accords—Carter, Begin, Sadat, 1978, the Middle East of that time, its politics and tensions, all come rushing back. John describes the two “framework agreements” that came from the meeting at Camp David, “one to deal with Egypt-Israel issues, the other with Palestine issues.” After describing the remarkable mediation role of the United States in this process, John details the aftermath of the accords, which included as relative successes an Israel-Egypt Peace Treaty in 1979, Israel’s withdrawal from the Sinai, diplomatic relations between Israel and Egypt and the pathway for a similar agreement with Jordan in 1994. Yet the accords “failed to achieve the grand purpose pursued by the U.S. of achieving an overall resolution of the Arab-Israel conflict, and in particular of gaining a resolution of the Palestine question that had been on the UN agenda since the 1940s.”