• Selected
• Entire List

Abstract:
This Article challenges the leading formal economic analysis of negligence rules in tort law. That analysis, which is meant both (1) to justify negligence rules over no-liability and strict-liability rules on theoretical grounds and (2) to provide a framework for understanding whether victims or injurers should bear the costs of an accident when both parties are innocent and have behaved carefully, is widely accepted by leading law-and-economics scholars, but its applicability is limited in several important respects.

Indeed, despite the common wisdom that tort law represents a triumph for the deductive economic analysis of law, tort law has resisted explanation through simple economic models. This does not mean economic reasoning is irrelevant to tort law, but it means that commentators should be cautious in accepting formal deductions about tort law. The purpose of this Article is to illuminate the limits of economic reasoning as a principled basis for tort law.

tort, negligence, law and economics, injurer, victim, bilateral precaution, activity levels

Abstract:
This article identifies modern economic formalism in contract law as little more than an incorrect argument for rational ignorance in courts. Distinct from other varieties of contract formalism, modern economic formalism rests on the notion that information beyond the text of contracts is a valuable interpretive aid -- but not valuable enough to justify its costs, at least for rational, risk-neutral parties.

In this article, I challenge the leading argument for this kind of formalism, made by Alan Schwartz and Bob Scott. Most fundamentally, Schwartz and Scott's noted argument conflates probability with uncertainty, and as a result is fundamentally circular. Their argument also draws untenable distinctions between gap-filling and interpretation, and it fails to recognize that under the strong assumptions it adopts, contracting parties would be unlikely to litigate disputes in the first place.

contracts, interpretation, formalism, rational ignorance, law and economics

Abstract:
This Article develops an approach to constructing the meaning of prior court cases that is more helpful than formalistic, conventional distinctions between concepts like "holdings" and "dicta." Instead of trying to classify judicial announcements into categories, courts should engage in a broader interpretive inquiry when confronting prior cases. Determining what a judicial opinion stands for requires determining the intent that motivated the opinion, as carefully understood in light of the factual and argumentative context that gave rise to it.

Under this view of precedent, binding common law arises in large part from principles explicated after considering facts. Viewing precedent in this way indicates a generally unrecognized danger from fact-unbound precedents - that is, legal rulings by courts that cannot sensibly be tied to the facts of particular cases. Such unbound precedents arise chiefly in the context of statutory interpretation. The Article suggests several solutions to this problem, including a statutory-interpretation-avoidance maxim and a proposal that courts should not consider themselves obliged in all cases to answer the statutory questions that underlie parties' dispute.

interpretation, precedent, facts, holdings, dicta

Abstract:
This paper (an early-stage draft) is part of a series that aims to displace the dominant economic conceptions of negligence law.

The goal of this paper is to provide one possible moral foundation for this effort, based on the contractualism of T.M. Scanlon. The central conclusion is that violating the expectations of others may violate rights in more situations than commentators traditionally suppose (at least where those expectations are reasonable, though whether a non-circular definition exists for that kind of reasonableness is insufficiently explored in this draft of the paper).

tort, negligence, morality, expectations, reasonableness, Scanlon, contractualism

Abstract:
Herbert Morris's "fair-play" account of retributivism explains punishment as an attempt to restore a fair balance between burdens and benefits. Benefits accrue unfairly to offenders from their crimes, and punishment imposes corresponding burdens. Because of the necessary interval between crime and punishment, however, events following an offender's crime may restore a fair balance between burdens and benefits before the state can effect punishment. This article explores the implications of such events on the justice of punishment under a fairness-based theory.

More specifically, this article considers several classes of situations in which an offender's position has changed since the occurrence of a crime such that punishment may be unjust. These situations fall into two broad categories: (1) those in which the offender has suffered a burden as a result of the crime from a source other than punishment by the state, and (2) those in which an offender does not retain any "benefit" from her crime at the time punishment would be imposed. Punishment in either of these situations may be unjust under an account that depends on a comparison between benefits from crime and burdens from punishment.

fair play, criminal theory, punishment, benefits, burdens, time

Abstract:
In the United States, a social norm discourages people from vindicating at least some of their rights in court. However, if courts are an instrument of justice and of sound public policy -- for instance, if they provide fair compensation for injured parties and efficient incentives for potential injurers -- then a norm against using courts is puzzling.

This Comment explores and evaluates explanations for the norm against litigation; the Comment's goal is to provide a plausible account of the norm. Accordingly, the Comment is largely descriptive, but normative implications may follow from my exploration; for instance, to the extent that an explanation of the norm is plausible, the explanation may help to frame the debate about tort reform in the United States.

The Comment serves also as a test of prominent "law and social norms" theories; for example, reductions of social norms to signal-based theories are shown to fail to account for the norm against litigation.

law and social norms, litigation, justice, efficiency, mercy, courts

Abstract:
This is a short response to a recent essay by Omri Ben-Shahar ("A Bargaining Power Theory of Default Rules," 109 Colum. L. Rev. 396 (2009)). It is part of a broader forthcoming analysis of contract interpretation.

Professor Ben-Shahar argues that evidence of bargaining power should inform courts when they fill contractual gaps. I make several observations in response: (1) a significant portion of Ben-Shahar's argument applies not to gaps but to other kinds of contractual questions, and it has less force for gaps; (2) reliable evidence about bargaining power is often unavailable; (3) contracts should not be interpreted, generally speaking, based on an analysis of how parties have divided contractual surplus, because an intent regarding general surplus division does not follow from evidence regarding specific surplus divisions; and (4) even when one party is strong enough to apparently dictate terms, there is no good general reason to allow it to dictate specific terms ex post. In principle, my analysis is not meant to refute Professor Ben-Shahar's general line of reasoning but to suggest that bargaining power, though important theoretically, is unlikely to be useful as an independent interpretive aid in contract law.

contracts, interpretation, gaps, bargaining power

Abstract:
There is both confusion and tragedy in the structure of American corporate law. The confusion arises because the basic purpose of modern corporations is broad, debatable, and in any event hard to enforce through law. Corporations are usually said to exist for the benefit of their shareholders, but state corporate-governance statutes provide for the broad possibility that corporations can serve other goals, and in any event corporate directors and managers usually have extremely broad discretion to set corporate policy. Moreover, even to the extent that promoting shareholder value does drive corporate policy, shareholders do not speak with one voice: they often have different perspectives on the time-frame for their investments, different politics, and different financial status. Existing law's solution is to allow corporate managers to speak with one voice, ostensibly for the shareholders' benefit.

The tragedy arises because corporate law, in seeking to serve shareholders, rarely tries to determine what shareholders in fact want, instead assuming that their preferences are simple and uniform. The result is a tendency toward reductionistic abstractions that happen to match those that prevail among economic analysts of law. For example, shareholders, it is said, seek (perhaps exclusively) to maximize personal wealth. One this assumption is made, views like Milton Friedman's -- that "the social responsibility of business is [more or less exclusively] to increase its profits" -- become seemingly inevitable. In turn, corporate law charters entities that may well harm the very groups that they are meant to serve, and it entrenches the academic rational-actor model in subtle but inappropriate ways.

This paper has a straightforward goal: to decrease the confusion and tragedy in corporate law, and thereby appropriately limit managers' discretion, by describing a new mechanism by which shareholders' preferences can be aggregated. My goal is not somehow to capture shareholders' preferences perfectly; indeed, the aggregation of multiple parties' preferences always requires some abstraction, reduction, and compromise. Nor is my goal here to eliminate all need for managerial discretion, to excessively cabin managers, or to vastly increase the regulation of corporations. Instead, this paper aims to outline a new mechanism by which shareholders can express several kinds of preferences at little cost and with little danger of encountering the problems from which existing means for empowering shareholders supposedly suffer.

The mechanism I propose is simple, at least in form: shareholders should be able to vote on matters of general import, rather than only on individual, company-specific propositions. To implement this voting, shareholders should have access to a standardized menu-through their brokers, mutual funds, pensions, and similar accounts-of potential specific restrictions on corporate conduct, as well as the opportunity to specify certain advisory preferences (like those concerning the timeframes of their investments). With the opportunity to cast "standing orders" for an entire investment portfolio at once, shareholders would have less of an incentive to ignore their opportunities to help govern corporations; they would not need to acquaint themselves with the features and special problems of each company whose shares they own, to read lengthy proxy solicitations or shareholder policy proposals, or otherwise to devote an amount of time on an individual company that is disproportionate to their relatively small stake in the company. Similarly, the general voting I describe (in contrast with company-specific voting) reduces the risks that proponents of managerial power assign to shareholder ballot proposals and other mechanisms that empower shareholders-the risk of undue influence by self-interested groups of shareholders. General voting on the level of whole brokerage or mutual-fund accounts, too, need have little detrimental effect on corporate efficiency, because it need only enforce significant prohibitions and socially salient policies, of the kind that regulatory agencies are already sensitive to in reviewing shareholder ballot measures; it does not threaten to bog down corporate boards in operational debates with shareholders or to undermine corporate managers' abilities to discharge their duties.

corporations, shareholder voting, managerial power, dodge v. ford, finra

Abstract:
One significant but commonly unrecognized problem with the social-scientific analysis of law is that it often suggests rules that simply cannot be put into practice. This does not have to be so; economic analysis, for instance, can enlighten legal doctrine in helpful and practical ways. But too often, high-level deductive analyses of law seem to forget that judges have to decide real cases, and the analyses ignore the practical operational limits of courts and of litigation. Distinctions and conclusions that look sensible or even compelling in the abstract often fail to translate to real cases.

My goal in pointing out this trend is not only to criticize several significant law-and-economics analyses but also to provide a map of potential pitfalls to aid similar kinds of analysis in the future.

There are several reasons that the normative conclusions of law-and-economics scholars are often inoperable. Perhaps the most significant arise from limits on information to which courts or private parties have access -- limits to which formal analysis is often (as a positive matter) insensitive, even though it need not be. Thus, for instance, as others have persuasively shown, the "theory of efficient breach" in contract law fails because it assumes that a promisor has full access to information about the value of contractual performance to a promisee. Other reasons for a disconnect between analysis and implementation are that social-scientific scholarship often suggests rules that require intractable ex post classification or framing and rules that would demand unrealistically complex analysis from courts.

law and economics, social science, formal analysis, administrability, operability