Is the Public Utility Holding Company Act a Model for Breaking Up the Banks That Are Too-Big-to-Fail?
Roberta S. Karmel
Volume 62, Issue 4, 821-864
During the financial crisis of 2007–08 and the debates on regulatory reform that followed, there was general agreement that the “too-big-to-fail” principle creates unacceptable moral hazard. Policy makers divided, however, on the solutions to this problem. Some argued that the banking behemoths in the United States should be broken up. Others argued that dismantling the big banks would be bad policy because these banks would not be able to compete with universal banks in the global capital markets, and in any event, breaking up the banks would be impossible as a practical matter. Therefore, better regulation was the right solution. This approach was generally followed in the financial reform legislation that was passed.
In the past, the United States has taken a variety of approaches to reining in banks. These include capital constraints, geographical restrictions, activities restrictions and conflict of interest restrictions. The primary techniques for reining in big banks recently enacted by Congress were increasing capital requirements, walling off proprietary trading and/or derivatives trading from commercial banking, and creating a resolution regime for failed financial institutions.
One approach that has not been tried or even seriously discussed with regard to the big banks is the approach that was used to break up the utility pyramids created during the 1920s, that is the antitrust approach utilized in the Public Utility Holding Company Act of 1935. This targeted and highly effective regulatory framework empowered the Securities and Exchange Commission to dismantle and simplify the corporate structures of the utilities without destroying them. This Article argues that this approach should be considered as a solution to the too-big-to-fail problem since it combines deconcentration, capital limits, activities restrictions and conflict of interest restrictions as an alternative to antitrust regulation, outside of adversarial prosecutorial case development.
Righting the Historical Record: A Case for Appellate Jurisdiction over Appeals of Sentences for Reasonableness Under 28 U.S.C. § 1291
Briana Lynn Rosenbaum
Volume 62, Issue 4, 865-922
This Article is the first to analyze critically the jurisdictional basis for the Supreme Court’s mandate in United States v. Booker that all courts of appeals review the length of criminal sentences for “reasonableness.” The availability of appellate review has expanded greatly since the Booker opinion, and, indeed, recent research shows that the number of sentence appeals has risen. Unfortunately, the Court did not explain the jurisdictional basis for its expanded “reasonableness review.” The omission is not trivial. For decades, federal courts have held that courts of appeals do not have jurisdiction to review the length of criminal sentences. This view has been especially entrenched since 1984, when Congress created the Federal Sentencing Guidelines and a corresponding “limited” right to appeal sentences. The Supreme Court may not increase the jurisdiction of these courts; the Constitution gives this power to Congress alone. This Article revives the scholarship on the historical and legislative underpinnings of appellate review of criminal sentences in an attempt to find a justification, if any, for Booker’s expanded appellate review. The Author concludes, as have other scholars, that the courts of appeals have had jurisdiction under 28 U.S.C. § 1291 to review the length of sentences since at least 1891, and additionally argues that this jurisdiction survived the Federal Sentencing Guidelines. The Supreme Court in Booker created an entirely new type of sentencing decision, a purely discretionary decision, that lies outside the federal Guidelines system and, thus, outside that system’s limited appellate review. Accordingly, at least for these types of purely discretionary sentencing decisions, § 1291 remains the basis for jurisdiction over Booker reasonableness appeals.
The Myth of “Conquered Provinces”: Probing the Extent of the VRA’s Encroachment on State and Local Autonomy
Volume 62, Issue 4, 923-1002
This Article advances the controversial thesis that the preclearance provision under section 5 of the Voting Rights Act (VRA) is not as intrusive as is generally assumed. It shows that the architecture of the preclearance regime is consistent with “new institutionalist” models of administration that favor devolution and learning through monitoring and disclosure. The Article thereby counters the unchallenged view— articulated in Supreme Court jurisprudence, the legislative record, and scholarship— that the U.S. Department of Justice’s authority to object to state and local election law changes under the preclearance regime has amounted to a heavy-handed intervention into state and local lawmaking processes.
More immediately, the Article speaks to the Supreme Court’s likely reconsideration of the constitutionality of the VRA as no longer “congruent and proportional to an ongoing constitutional violation” under the standard advanced in City of Boerne v. Flores. It argues that the purported “federalism costs” of the preclearance regime should not weigh as heavily in the constitutional balance as many have suggested.
Note – Preserving Dignity in Due Process
Sara B. Tosdal
Volume 62, Issue 4, 1003-1036
Procedural due process is a guarantee of fairness. Fundamentally, this guarantee requires notice and an opportunity to be heard. Procedural protections from arbitrary state action vary according to the context of each case, and protections in administrative actions are distinct from those provided in formal judicial proceedings. The administrative state developed to address a pressing need: how to govern and regulate when the three branches of government lack the capacity to efficiently and effectively administer an everevolving society. But as society has developed and expanded, individuals have more frequently interacted with the administrative state, in turn necessitating the expansion of procedural due process into an area of law that prioritizes efficiency over individual rights.
Both the United States Supreme Court and the California Supreme Court have addressed this tension, but with different emphases. Where the U.S. Supreme Court applies a narrow constitutional threshold for rights implicating procedural protections, the California Supreme Court applies a more expansive threshold, with a particular focus on the dignity of the individual confronted with an adverse state action. Where the U.S. Supreme Court uses a three-factor balancing test for procedural adequacy, the California Supreme Court has articulated a four-factor balancing test that recognizes a person’s dignitary interest in procedural protections against the state.
However, California’s due process analysis has been applied haphazardly, at best, leading to confusion amongst appellate courts. This Note argues that uneven application of the doctrine stems from unclear guidance from the California Supreme Court in the first instance and, ultimately, demeans the dignitary interest. After outlining the federal and state frameworks and explaining the misapplication of the California due process tests by the state’s courts, this Note urges a clearer definition of the due process trigger and more vigorous consideration of the dignitary interest in order to achieve a truer appreciation for and greater protection of an individual’s position before a state actor.
Note – Privacy and Security During Life, Access After Death: Are They Mutually Exclusive?
Volume 62, Issue 4, 1037-1064
The Internet has transformed the way we live our lives. What we have not yet fully realized is how it will impact what happens after we die. Specifically, the migration of financial services online, and the corresponding elimination of paper records, will hamper access to a decedent’s financial assets and may eliminate knowledge of their existence entirely. This Note explores how federal financial and internet privacy laws affect the disclosure of a person’s private financial information and offers solutions for reconciling lifetime privacy interests and the desire for access after death.
Don’t Forget Due Process: The Path Not (Yet) Taken in § 2254 Habeas Corpus Adjudications
Justin F. Marceau
Volume 62, Issue 1, 1-66
Countless articles and judicial opinions have been devoted to the task of deciphering the scope and application of the limitations on habeas corpus relief announced in the Anti- Terrorism and Effective Death Penalty Act of 1996 (AEDPA). Over the past ten years courts and scholars have developed an intricate framework of analysis for nearly every subsection of § 2254. The decade-long process of interpretation and commentary has been characterized by questions of statutory meaning and federalism that appear to be as irresolvable for courts as they are intriguing to academics. But in the rush to sort out the minutiae of the AEDPA, the hallmarks of our legal system—basic due process and constitutional supremacy—have been overlooked. This Article aims to re-focus the debate.
The application and discussion of the AEDPA’s limitations on relief has devolved into a bitter argument over the meaning of a statute which lacks a discoverable meaning, much less an obvious or plain meaning. It is statutory esotericism or statutory obfuscation much more than it is statutory interpretation. The discussion has become so technical and specialized, not to mention politically polarized, that we are at risk of permanently overshadowing the historical and constitutional underpinnings of the Great Writ. The goal of this Article is to recast and simplify the habeas debate and achieve some much needed common ground. The thesis is simple: Where the aggregate of available state proceedings fail to provide a meaningful corrective process such that federal constitutional issues are not “fully and fairly” adjudicated, it is necessary for the federal courts to review the federal claims de novo. Deference to a procedural abyss is avoided. This modest procedural proposal is compelled by due process through a celebrated line of cases, and yet in the frenzy to interpret § 2254—in working out all of the (e)(2)s and the (d)(1)s—we have forgotten due process. It is time to return to it.
Liability for Unconscious Discrimination? A Thought Experiment in the Theory of Employment Discrimination Law
Patrick S. Shin
Volume 62, Issue 1, 67-102
Recent scholarship in employment discrimination law has wrestled with the problem of unconscious bias and its implications for antidiscrimination law. This Article addresses what some might regard as a naïve question: Should actions influenced by unconscious bias be regarded as discrimination under Title VII? The question might be considered naïve because any proposal for liability based on unconscious bias would surely be unripe for present implementation, and because there is no accepted method either for detecting such bias in individual cases, or for determining whether such bias actually influenced a person’s decisionmaking. But these practical considerations provide no answer to the fundamental issue that underlies the question. Does unconsciously biased action fall within the legal concept of actionable discrimination? To reach that important issue, I devise a thought experiment that brackets practical problems of proof and squarely raises what I regard as the hard question for theorizing about unconscious discrimination. Should an employment action give rise to liability when that action was provably affected by the actor’s unconscious bias with respect to a statutorily protected classification, even when the actor consciously acted only on legitimate, nondiscriminatory reasons? The payoff of the thought experiment is not only a clearer picture of the theoretical commitments entailed by liability based on unconscious bias, but also a keener understanding of our currently prevailing notions of actionable discrimination.
War and Peace in the Jury Room: How Capital Juries Reach Unanimity
Scott E. Sundby
Volume 62, Issue 1, 103-154,
Using data from the Capital Jury Project, this Article takes a close look inside the jury room at the process by which capital juries reach a unanimous verdict at the penalty phase. The Article first examines the relationship between first ballot voting patterns and the ultimate sentence, then explores the dynamics of group interaction in achieving unanimity. In particular, by using the jurors’ own narratives, the piece delves into the psychological process and arguments through which the majority jurors persuade the holdouts to change their votes. This process is especially intriguing because individual juries do not, of course, have any training in how to deliberate and reach unanimity, and yet they are strikingly similar from case to case in how they convert holdouts to the majority position (with striking differences between the dynamics of juries that reach a verdict of death and those that return a sentence of life without parole). Using the
closing argument in the death penalty case of Susan Smith (a mother who did the unthinkable, killing her two children by driving them into a lake and then trying to cast blame on a mysterious black man), the Article concludes by examining how a closing argument might address many of the pressures that affect holdouts.
Note – A Reasonable Alternative to the Reasonable Alternative Design Requirement in Products Liability Law: A Look at Pennsylvania
Volume 62, Issue 1, 155-184
The manner in which design defects should be defined has caused more controversy than any other area of products liability law. The Restatement (Third) defines a product design as defective when the foreseeable risks of harm from using a product could have been avoided if the manufacturer had used a reasonable alternative design. This definition departs from the Restatement (Second), which defines defective products as unreasonably dangerous if the product fails to meet the expectations of consumers. Without so stating, the Restatement (Third) essentially changes products liability law from a regime of strict liability to one of negligence.
The debate is most unsettled in Pennsylvania. The Pennsylvania Supreme Court currently follows the approach of the Restatement (Second), holding that negligence has no place in determining whether a product is defective and, instead, modeling liability based on consumer expectations. In 2007, however, the Third Circuit predicted that the Pennsylvania Supreme Court would adopt the Restatement (Third) and apply a fault-based standard to determine liability in products liability cases. The Pennsylvania Supreme Court granted certiorari in a case to decide whether it should apply the Restatement (Third); however, in 2009, it dismissed the appeal as improvidently granted. As a result, the products liability law in Pennsylvania is in flux.
I argue that instead of following either of the Restatements, courts should apply strict liability, in which manufacturers are liable for foreseeable harm caused by their products, regardless of
whether the product was deemed “defective.” Although defect will not serve as a limitation on liability, manufacturers will be protected under my proposal by the affirmative defenses of negligent use or assumption of risk. By eliminating the elusive concept of defect from products liability, liability will be more predictable and will better reflect the costs of product use.
Note – Invalidating Gene Patents: Association for Molecular Pathology v. U.S. Patent & Trademark Office
Volume 62, Issue 1, 185-220
Biotechnology companies and research institutions have patented thousands of genes based on the idea that a gene in an isolated and purified form is a patentable invention. The biotechnology industry has since grown to a multibillion dollar industry using gene patents as a basis for targeting new drugs, researching genetic disease, and developing diagnostics. One company, Myriad Genetics, faces the threat of having their patents invalidated because of their monopolistic use of their patents on human breast cancer genes. In Association for Molecular Pathology v. U.S. Patent & Trademark Office, the district court found Myriad’s gene patents invalid and unenforceable. If upheld, the decision will invalidate all patents on human genes and potentially many
other patents on isolated and purified natural products, having far-reaching implications for health, science, and biotechnology.
This Note questions the district court decision in Association for Molecular Pathology to grant the plaintiffs standing to sue Myriad and the United States Patent & Trademark Office and to invalidate gene patents under existing case law. Opponents of gene patents argue that genes are products of nature and are therefore not patentable subject matter under § 101 of the Patent Act. However, circuit courts have consistently endorsed the principle that isolated and purified products of nature are still inventions and patentable subject matter in certain circumstances. Although the patentability of human genes under § 101 had not been addressed by courts until now, human genes have been upheld as patentable under other requirements of the Patent Act. Because
invalidating gene patents will not likely remedy the monopolistic effects of gene patents, this Note reviews several legislative approaches that could serve as a more appropriate vehicle to address the harms that gene patents cause.
Statutory Interpretation in the Roberts Court’s First Era: An Empirical and Doctrinal Analysis
Anita S. Krishnakumar
Volume 62, Issue 2, 221-296
This Article examines the Roberts Court’s statutory cases from its 2005–2008 Terms, beginning with cases decided after January 31, 2006, when Justice Alito joined the Court, and concluding with cases decided on June 29, 2009, when Justice Souter retired. The Article’s approach is both empirical and doctrinal, in that it (1) presents descriptive statistics illustrating the Court’s and individual Justices’ rates of reliance on fourteen different tools of statutory construction, and (2) engages in doctrinal analysis of the Court’s statutory cases, highlighting discernable patterns in the individual Justices’ interpretive approaches. The Article makes two significant contributions to the field of statutory interpretation. First, it identifies an interpretive divide that seems to be doing significant work in the Roberts Court’s statutory cases—a divide that perhaps best can be described as one between “legal-landscape coherence” on the one hand, and “statute-specific coherence” on the other. “Legal-landscape coherence” refers to an interpretive approach that focuses on the legal framework surrounding the statute at issue and seeks the statutory construction that fits most coherently into the existing legal structure; while “statute-specific coherence” refers to an interpretive approach that focuses on the individual statute at issue and preferences the statutory construction that creates an internally consistent and coherent policy across like situations and across time. The Article maps out the Justices’ theoretical divide in detail and shows how the divide translates into stark empirical differences in the Justices’ individual rates of reliance on particular interpretive canons and tools.
This Article breaks new ground by uncovering an important difference in the form of practical considerations that different Justices tend to reference. Specifically, the Article demonstrates that the landscape-coherence Justices tend to focus on the administrability of an interpretation—that is, its effect on judicial resources, the difficulty of implementing it, and the clarity and predictability of the rule created; while the statute-specific Justices tend to focus on the constancy of the policy effected by an interpretation—for instance, whether it fosters a consistent application of the statute over time, the arbitrariness of the policy created, and the justness of the interpretation. The Article concludes with two case studies illustrating how the Roberts Court’s interpretive divide operates in practice and with a discussion about the theoretical implications of the divide.
From Arms Race to Marketplace: The Complex Patent Ecosystem and Its Implications for the Patent System
Colleen V. Chien
Volume 62, Issue 2, 297-356
For years, high-tech companies have amassed patents in order to deter patent litigation. Recently, a secondary market for patents has flourished, making it more likely that patents that would otherwise sit on the shelf will end up in the courtroom. This Article explores the current patent ecosystem, which includes both “arms race” and “marketplace” paradigms, in depth. I distinguish “patent-assertion entities,” entities that use patents primarily to obtain license fees rather than to support the development or transfer of technology, from other types of non-practicing entities. I contrast the patent arms race, whose goal is to provide entities with the freedom to operate, with the marketplace, through which entities have leveraged their freedom to litigate. I detail the participation of product companies as well as non-practicing companies and their intermediaries in the marketplace, and trace the diverse “pathways” traveled by patents from a diversity of sources including failed startups and product companies like Micron, to entities like Round Rock and Intellectual Ventures.
Several implications follow. First, the failure of the patent arms race to deter lawsuits from patent assertion entities as well as practicing companies in certain cases means that defensive strategies must be reconceptualized to include new tactics—including prevention, disruption, and coordination—for securing freedom to operate. In addition, if stockpiles of unused patents patent continue to fall into the hands of patent-assertion entities, defensive patenting may ironically have the net effect of increasing, rather than decreasing, litigation risk. Second, conventional notions of patent value need to be revised. The same patent has a much greater “exclusion value”—which I define as the value likely to be extracted from the patent—when held by a patent-assertion entity rather than a company vulnerable to countersuit. A better understanding of what drives the exclusion value rather than the intrinsic value of a patent might help companies predict and potentially avoid technical areas where patent assertion is most likely. Finally, recent history suggests trying to change the system by changing patentee behavior directly, rather than only through legal changes, for example by encouraging quality patenting, improving coordination between patent defendants, and creating a nonprofit organization to accept patent donations in order to encourage companies to make their unused patents available to the public, rather than to patent-assertion entities.