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Microsoft\u27s Cost-Sharing Arrangement: Frankenstein Strikes Again
No full textThis paper performs a forensic analysis of Microsoft Corporation’s transfer pricing cost sharing arrangement based on forensic economic analysis of public and information, including Microsoft’s SEC and foreign country regulatory filings, documents disclosed during a recent federal court trial, materials published by Microsoft, and information from former insiders interviewed for this paper, and other sources. The paper finds that Microsoft appears to have violated U.S. transfer pricing laws in 2009 and later years, in ways that caused its transfer pricing cost sharing arrangement with its Irish, Singaporean and Puerto Rican affiliates under U.S. tax laws to be invalid. However IRS had never detected this and has never to date challenged Microsoft’s non-compliance with the transition rules contained in the 2009 Section 1.482-7(m)(1) regulations or sought to examine Microsoft’s periodic adjustment calculations that it should have maintained since 2009. These tax violations and Microsoft’s invalid cost sharing arrangement mean that Microsoft is subject to a periodic adjustment, if triggered by its U.S. and foreign profit results. This paper shows that such a periodic trigger occurred as early as 2009 and a periodic adjustment (including penalties of 40% and interest since 2009) calculated by this paper estimates that Microsoft could owe the IRS as much as 15.6 billion – an amount representing only around 9% of this possible financial liability. This periodic adjustment is not limited by any statute of limitations as long as the arrangement continues or the covered intangibles continue to be exploited. The IRS however has historically not enforced the periodic adjustment regulations of Section 1.482-7(i)(6) since they became effective on January 5, 2009. Microsoft’s non-compliance with these regulations and its exposure to this tax risk has never to our knowledge been reflected in its SEC filings
Telegraph Torts: The Lost Lineage of the Public Service Corporation
Get PDFAt the turn of the twentieth century, state courts were roiled by claims against telegraph corporations for mental anguish resulting from the failure to deliver telegrams involving the death or injury of a family member. Although these “telegraph cases” at first may seem a bizarre outlier, they in fact reveal an important and understudied moment of transformation in the nature of the relationship between the corporation and the public: the role of affective relations in the development of the category of the public utility corporation. Even as powerful corporations were recast as private, rights-bearing, profit-making market actors in constitutional law, a significant minority of rural state courts deviated from the common law to impose liability for mental anguish on negligent telegraph corporations. They did so on the basis that telegraph companies bore a duty to protect the emotional wellbeing and family connections of their customers. In this, courts gave voice to the popular view, voiced by telegraph users and promoted by the companies themselves, of the telegraph corporation as a faithful servant of individual families and communities. In so doing, they embedded the historical and popular perception of the corporation as “servant” into the definition of “public service.”
This Article exposes the private law of the public service corporation and the noneconomic dimension of the legal category of “public utility.” Current scholarship has focused on how turn-of-the-century jurists developed the category of “public utility” or “public service” corporation to justify state economic regulations that would otherwise infringe on corporations’ newfound constitutional rights. The telegraph cases reveal a concurrent and complementary development in tort law: the imposition of affective responsibilities on certain corporations as well. Illuminating this doctrine offers an example of how the public utility category could be mobilized to protect the emotional as well as economic wellbeing of the public today
Collusive Prosecution
Get PDFIn this Article, we argue that increasingly harsh collateral consequences have surfaced an underappreciated and undertheorized dynamic of criminal plea bargaining. Collateral consequences that mostly or entirely benefit third parties (such as other communities or other states) create an interest asymmetry that prosecutors and defendants can exploit in plea negotiations. In particular, if a prosecutor and a defendant can control the offense of conviction (often through what some term a “fictional plea”), they can work together to evade otherwise applicable collateral consequences, such as deportation or sex-offender registration and notification. Both parties arguably benefit: Prosecutors can leverage collateral consequences to extract greater punishments and defendants can avoid consequences they view as particularly burdensome. But these benefits can come at a cost to others who are not at the bargaining table. We contend that “collusive prosecution” of this sort can be pernicious, as may be the case when sex-offender registration and notification laws are in play, but it also has potential to be socially attractive. Accordingly, we sketch a normative framework for evaluating collusive prosecution as a matter of prosecutorial ethics. We draw on the emerging field of public fiduciary theory to characterize prosecutors’ ethical duties to varied—and often conflicting—beneficiaries. We suggest that programmatic uses of collusive prosecution may be fair and reasonable in a common immigration context, but collusive prosecution designed to relocate sex-offense registrants likely fail these conditions. Ultimately, we offer a suite of reforms that may be useful for policing collusive prosecution without banning the practice outright
2023 Winter Class Schedule
Get PDFClass schedule for the 2023 Winter semester at the University of Michigan Law Schoo
Christianity and Economic Law
No full textFrom the first century forward, Christian thinkers and authorities have espoused many dierent views of economics, regulation, the role of the state, and economic law. Christian thought on economic regulation underwent systematic scholarly exposition during the Scholastic, Reformation, and modern eras, culminating in a wide array of perspectives on the role of markets and the government’s regulatory role. From Thomas Aquinas on just price theory to Martin Luther on cartelization and predatory pricing and Adam Smith on the nature of the market’s “invisible hand,” Christian and Christian-inuenced thinkers worked out the ethical and moral implications of contracts, usury, exchange, and the role of government in economic matters. Christian thinkers thus laid the foundations for the modern economic world. However, in the modern era, Enlightenment rationalism, empiricism, and academic specialization gradually displaced a distinctive Christian inuence on economic law. Even though many Christians continue to work on matters of economic law, modern scholarship on market regulation shows little evidence of an ongoing, expressly Christian inuence. However, recent trends in political, social, and academic interests regarding economic law— particularly those related to the fallibility of human decision-making and wealth inequality—oer renewed opportunities for productive engagement by Christian thought
Modernizing Notice of Breach Rules to Preserve Contract Remedies
Get PDFRecently, the legal community has scrutinized the capacity of mandatory arbitration rules to deter or foreclose claims for breach of contract. But little attention has been paid to express and constructive notice of breach rules that are just as effective at foreclosing contractual remedies. While four-year statutes of limitations are typically viewed as the default cutoff time for breach of contract claims, contracting parties, particularly buyers of goods, must act much sooner to preserve their legal remedies. It is now common practice for sellers to require notice of breach within days or weeks of their performance as an express condition precedent to buyers’ right to a remedy.
Even in the absence of express notice rules, state laws require that buyers provide notice to sellers within a reasonable timeframe when they discover, or should have discovered, the breach. Failure to provide proper notice bars all buyers’ remedies. In effect, failure to satisfy the technical requirement of notice routinely produces forfeiture of contract remedies for the buyer. Such a forfeiture is contrary to the foundational doctrinal promise of adequate remedies for breach, anti-forfeiture rules, and the substantial performance rule for constructive conditions.
Judges adjudicating notice defenses rely on an antiquated legal framework, crafted more than a century ago in a vastly different commercial environment. When the notice requirement was codified in 1906, it impacted merchant buyers who contracted directly with sellers for specific goods. Caselaw shows that sellers raised a notice defense when they sued buyers for the contract price, and that buyers sought an offset to damages by arguing that sellers provided defective goods. In the early twentieth century, courts routinely granted the damages offset for breach of promise, even when notice was untimely. Now, notice issues often arise in adhesive transactions in which buyers contract with downstream sellers of mass-produced goods such as vehicles, food products, dietary supplements, drugs, and medical devices. Sellers are usually aware of the breach or face no repercussions from buyers’ failure to provide notice. Product testing, customer complaints, post-sale audits, lawsuits, regulatory policing, and warranty software or warranty claims often give sellers actual notice of their defective performances. Yet judges continue to insist on individualized and particularized notice from each buyer. Judges theorize that sellers will be robbed of their legal rights to cure or settle claims, prepare defenses, or know their terminal point of liability, even though sellers’ curative or defensive interests are unimpaired.
This judicial insistence on notice in the current commercial environment ignores how sellers and buyers respond to breach events. It also incentivizes sellers to fabricate and market defective products because only a small percentage of buyers will complain, and even fewer will satisfy the notice rule. This Article proposes that judges adjudicate notice defenses within the broader framework of the parties’ agreement, contract doctrine, and new commercial realities. Specifically, it proposes that judges require sellers to prove material harm when they seek to forfeit buyers’ substantive remedies on technical notice-failure grounds. This new standard would provide uniformity in the law and replace the ad hoc exceptions judges have used to avoid the harsh effects of pre-suit notice. A notice-prejudice requirement would also encourage sellers to create better products and honor the warranties they provide when marketing their goods
Got Lead in Your Water? The Bipartisan Infrastructure Law May Be Poised to Help
Get PDFHumans have no known safe level of exposure to lead. Blood lead levels have devastating consequences, especially for children, affecting their brain development and almost every organ in their bodies. Various government organizations have enacted measures to combat lead contamination in drinking water and its dangerous human health consequences by replacing lead service lines. At the federal level, the Environmental Protection Agency promulgated the Lead and Copper Rule Revisions, which requires states to replace lead service lines. At the state level, governments have programs to fund the replacement of lead service lines in their communities, but these funds often fall short of their needs. While these efforts have reduced the problem of lead contamination in drinking water, many of the remaining lead service lines in the U.S. are found buried under aging cities, often with low-income populations. Litigation brought by public interest groups has spurred faster replacement, but this has only been deployed in a handful of cities. The greater leverage point is increased federal funding to eradicate the problem. In 2021, the U.S. Congress passed the Bipartisan Infrastructure Law, signed by President Biden. It included a historically large increase in supplemental funds for the replacement of lead service lines over five years. In early 2023, the Biden-Harris Administration announced a campaign to get lead out of water and accelerate the pace of the solutions. This article examines the scope of the problem of replacing lead service lines in states in the Great Lakes region, the cost estimates of financing their replacement, and the decisions states need to make now to access and effectively spend federal money from the Bipartisan Infrastructure Law to remove lead from the water of the nation’s disadvantaged communities
Preface to Legal Comm. & Rhetoric: JALWD
Get PDFWe celebrate the Twentieth Volume of Legal Communication & Rhetoric: JALWD! This volume reveals and discusses opportunities for growth and new frontiers in the field of legal communication. ChatGPT makes its first impact on the journal with former Editor-in-Chief Ian Gallacher\u27s essay, and we invited ChatGPT to help with the preface. ChatGPT\u27s response to write a preface for a journal volume with a theme of opportunities for growth and new frontiers in the field of legal communication was a bit over the top (which could have been tempered with a revised prompt)