Black Metropolis Research Consortium
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Nonparty Interests in Contract Law
Get PDFContract law has one overarching goal: to advance the legitimate interests of the contracting parties. For the most part, scholars, judges, and parties embrace this party primacy norm, recognizing only a few exceptions, such as mandatory rules that bar enforcement of agreements that harm others. This Article describes a distinct species of previously unnoticed contract law rules that advance nonparty interests, which it calls “nonparty defaults.”
In doing so, this Article makes three contributions to the contract law literature. First, it identifies nonparty defaults as a judicial technique. It shows how courts deviate from the party primary norm with surprising frequency through a variety of default rules, interpretation practices, and remedies. These defaults are meant to protect nonparties’ interests and benefit society at large. Second, it develops a normative account as to when common law courts adjudicating contract disputes are a suitable forum to identify and advance nonparty interests. Finally, it documents and explains the surprising durability of nonparty defaults, which the parties could, but rarely do, disclaim
Open Access, Interoperability, and DTCC’s Unexpected Path to Monopoly
Get PDFFor markets characterized by significant economies of scale, scholars and policy- makers o�en advance open-access and interoperability requirements as superior to both regulated monopoly and the breakup of dominant firms. In theory, by compelling firms to coordinate in the development of common infrastructure, these requirements can replicate the advantages of scale without leaving markets vulnerable to monopoly power. Examples of successful coordination include the provision of electricity, intermodal transportation, and credit-card networks.
This Article offers a qualification to this received wisdom. By tracing the Depository Trust and Clearing Corporation’s path to monopoly in the U.S. securities clearing and depository markets, it demonstrates that open-access and interoperability requirements can serve as instruments by which dominant firms obtain and entrench their monopoly power. Specifically, by imposing high fixed costs to connect to common infrastructure, allowing dominant firms to dictate the direction and pace of innovation and investment, and reducing the scope for product differentiation, these requirements can prevent smaller firms from competing with their larger rivals. In these ways, open access and interoperability can exacerbate the very problems they were designed to address.
Our analysis helps to explain why important components of our financial infrastructure have become too big to fail. It also helps explain why, despite their highly concentrated structure, U.S. securities clearing and depository markets still exhibit relatively high levels of innovation and in- vestment. More broadly, our analysis offers a cautionary tale for policymakers seeking to employ open-access and interoperability requirements to curb growing market power in Big Tech, social media, finance, and elsewhere. Open access and interoperability are unlikely to constrain market power unless larger firms are unable to dictate decisions about innovation and investment, and unless the costs of building, maintaining, and connecting to common infrastructure are allocated in a way that does not discriminate against smaller firms. Where this is not possible, open access and interoperability are unlikely to forestall monopoly control, though they might still improve market efficiency by exposing incumbents to the threat of new entry
Food Aid Cargo Preference: Impacts on the Efficiency and Effectiveness of Emergency Food Aid Programs
No full textThis paper examines the impact of cargo preference requirements, which create market power for US-flagged ships, on the effectiveness of the Food for Peace emergency food aid program of the US Agency for International Development (USAID). We find that cargo preference requirements increase real ocean transportation costs per metric ton by 68 percent for packaged-goods shipments and 101 percent for bulk-commodity shipments. These differences in cost impacts appear to be associated with differences in the impacts of the mandate on market concentration in the packaged-goods and bulk-commodity shipment markets. These higher costs reduce USAID’s capacity to serve millions of families each year
The Visibility Trap
Get PDFIn August 2021, the Indiana Court of Appeals prohibited a transgender teenage boy (H.S.) from changing the gender marker on his birth certificate. Because he was fifteen at the time, his parents had filed the petition on his behalf.1 As his parents testified, changing the gender marker on a young trans person’s birth certificate is more than a formality. It makes it possible for them to obtain a passport and driver’s license that match their identity, helping to avoid incongruities in gender regulation that can run the gambit from confusing to dangerous.2
The appellate panel was split. Legally speaking, the case turned on applying the “best interests” test to the evidence presented.3 But beneath that legal question was an epistemological conflict over the definition of gender and the circumstances under which it can change. The trial court judge and appellate panel members disagreed not only on these questions but, by extension, over which sources of gender knowledge to credit as authoritative. The case did not necessarily depend on interpretation of gender, but it reveals how the courtroom can be a crucible where competing epistemologies from medicine, public discourse, and lived experience collide.
This dynamic echoes a central theme in Vice Patrol: Cops, Courts, and the Struggle over Urban Gay Life before Stonewall, an important new work of legal history by Professor Anna Lvovsky.4 Vice Patrol is a study of antihomosexual policing in U.S. cities between the fall of Prohibition and the Stonewall Rebellion. It expands historical understanding by following antihomosexual enforcement through the rungs of the legal system—from municipal police tactics to appellate review at the Supreme Court. Beyond these contributions to the history of sexuality, however, the book reveals how public discourse filters into and through the judiciary.
Visibility is the clarion call of LGBT politics, but Vice Patrol scrambles the signal. Lvovsky takes familiar moments of gay visibility as her starting point, showing how media attention hardened stereotypes about gay culture. Those stereotypes had a curious afterlife in the legal system, leading to “epistemic gaps” between enforcement institutions.5 On her account, courts did more than showcase public debates over the nature of homosexuality: they “directly intervened” by “applying the weight of the law to recognize certain claims as authoritative over others—to establish binding truths about queer social and sexual practices.”6 By elaborating on this process, Lvovsky reveals the “regulatory underside” to gay cultural visibility.7 As French philosopher Michel Foucault quipped almost fifty years ago, “[v]isibility is a trap.”8
Vice Patrol offers a novel history of the visibility trap. It integrates interventions in legal history, history of sexuality, and queer theory with remarkable ease. Lvovsky brings new insight to a question that has puzzled scholars across several fields: Why and how does cultural representation lead to increased state repression? Blending impressive archival research with sophisticated theoretical analysis, Lvovsky follows cultural knowledge into the legal system to offer a fresh diagnosis of the problem and how it develops. In her discovery of “epistemic gaps,” she uncovers a key mechanism of the visibility trap.9 Disagreements between the police and the courts, not internal consensus about the purpose and object of regulation, enable legal regimes to “maintain and even expand their power over policed groups.”10 On this account, epistemic gaps are the missing piece to understanding how the visibility trap actually works. Part I of this Book Review draws out the book’s primary arguments to elaborate this theory, offering additional context for non-specialists and pressing on a few of the claims. Part I also reveals a latent argument in Vice Patrol about visibility itself, showing how Lvovsky brilliantly disentangles the forms of cultural salience, stereotype, and self-representation that often fly under the banner of “visibility.”
In Part II, the Review tests Lvovsky’s visibility theory against contemporary transgender visibility politics. Reading antitransgender policing and transgender civil rights struggles through Vice Patrol gives us a new way to understand how regulated people can harness knowledge about their communities to influence its path through legal institutions. Recognizing the limits of visibility, Vice Patrol suggests that strategic unintelligibility can be an important tool to fight repression
Toward a Centralized Hatch-Waxman Venue
Get PDFPharmaceutical litigation often begins when a generic drug company files an application to have its generic drug approved by the FDA. That application is received by the FDA in the District of Maryland. To “submit” it is a statutory act of patent infringement under the Hatch-Waxman Act. Establishing venue in subsequent Hatch-Waxman litigation can be complex because HatchWaxman litigation often involves simultaneous and independent lawsuits against many generic applicants. A Hatch-Waxman plaintiff might reasonably attempt to consolidate litigation in a single district court; Hatch-Waxman defendants might reasonably resist consolidation in the plaintiff’s preferred venue. Recent Supreme Court and Federal Circuit case law has narrowed venue options for Hatch-Waxman plaintiffs. This Comment argues for an interpretation of Hatch-Waxman’s statutory act of patent infringement and the patent venue rules that moves toward a centralized venue for Hatch-Waxman litigation in the District of Maryland
Competing Views on The Economic Structure of Corporate Law
Get PDFWritten for a symposium issue celebrating the thirty-year anniversary of the publication of The Economic Structure of Corporate Law by Frank Easterbrook and Daniel Fischel (“E&F”), this Essay discusses the interaction of my research over the years with their writings. During the period in which the book and articles were written, and in the many years since then, I have paid close attention to E&F’s writings in my research in the economics of corporate governance. Indeed, a significant part of my research in this field engaged closely with E&F’s writing and reached conclusions that substantially differed from theirs. Below I discuss this engagement of my work with E&F’s writings, and our respective approaches, in five corporate research areas: (i) takeover policy and rules; (ii) contractual freedom in corporate law; (iii) state competition in the provision of corporate law rules; (iv) efficiency and distribution in corporate law; and (v) corporate purpose
Shadow Contracts
Get PDFThis project explores side letters in private market funds. Side letters, separate agreements between a fund and an investor, act as an invisible amendment to the main contract. This article introduces a new use case for side letters: impact investments, where funds target social, as well as financial, returns. Using a hand-collected data set, we examine the scope and role of side letters in this growing space. Side letters as “shadow contracts” demonstrate the Easterbrook/Fischel theories in action, namely that parties “write their own tickets,” tailoring agreement terms to their specific needs within the framework of corporate governance rules. Expressing preferences and constricting manager power through contracts is even more important when managers serve dual goals. However, side letters come with costs, including direct transactional fees and indirect costs such as additional complexity, slower adoption of best practices, and hidden hierarchies that advantage some parties to the detriment of others. The solution? Standardization and transparency. Common side letter provisions, such as information rights and advisory committees, should be addressed in the main agreement to reduce costs, increase transparency, and push contract innovations out of the shadows. Further, in line with recent SEC proposed rules, side letters should be disclosed
The Win-Win That Wasn’t: Managing to the Stock Market’s Negative Effects on American Workers and Other Corporate Stakeholders
Get PDFEasterbrook and Fischel’s work suggests that society as a whole would achieve the best results if corporate leaders focused only on raising stock prices, leaving other institutions to tend to all other interests. But the idea that making societally important corporations govern to the whims of the stock market would be a win-win for investors, other corporate stakeholders, and our society as a whole has proven incorrect. At bottom, Easterbrook and Fischel failed to contend with the real- world realities that allow investors to profit by shifting distributions and political power to themselves, while shifting costs and risks to workers, creditors, consumers, and taxpayers. In this Article, prepared for a Symposium celebrating Easterbrook and Fischel’s work, we evaluate Easterbrook and Fischel’s predictions and find that their failures are attributable to flaws in their assumptions about corporate influence over the political process and the extent to which stockholders could not succeed unless the corporation respected other stakeholders and society
The Power of Attorneys: Addressing the Equal Protection Challenge to Merit-Based Judicial Selection
Get PDFMany states use merit-based judicial selection to limit political influence on state courts. Under merit selection, an independent, nonpartisan commission screens candidates for any open judgeship, sending a slate of finalists to the governor. Because the governor may appoint only from these approved finalists, merit selection constrains the ability of political officials to stack the courts with partisan judges.
Yet not all are convinced of merit selection’s merit. Critics of merit selection have assailed the role attorneys play in selecting some of the commission’s members. Though the details vary by state, ordinarily a minority of commissioners must be attorneys, and these attorney commissioners are elected by their fellow members of the state bar. Some argue that, by denying nonattorneys the ability to participate in these closed elections, merit selection violates the Equal Protection Clause of the Fourteenth Amendment. In particular, critics point to the vote-denial aspect of the Supreme Court’s “one person, one vote” principle, which holds that whenever a state charters an election of a public official who exercises general governmental power, all qualified voters must be allowed to participate.
This Comment responds to the equal protection challenge to merit selection. It argues that merit selection is constitutional by way of multiple exceptions, both recognized and implicit, to the “one person, one vote” principle. And though critics of merit selection often couch their arguments in prodemocratic terms, this Comment argues that merit selection—like the “one person, one vote” principle—promotes rather than thwarts the will of the people