Current Print Issue

Vol. 163, Issue 5

  April 2015

Featured Article

Structure And Value In The Common Law

Shyamkrishna Balganesh & Gideon Parchomovsky
163 U. Pa. L. Rev. 1241 (2015).

Common law concepts have fallen into disrepute among legal theorists. The rise of Legal Realism in the early twentieth century marked a turning point in legal thought and analysis. One of the defining characteristics of the movement was complete disregard, not to say contempt, towards legal conceptualism. The founding fathers of the movement viewed the core concepts of the common law as devoid of any independent meaning or functional significance. They considered the common law’s conceptual edifice indeterminate and manipulable so as to render it altogether contingent on the working of the system. Walking along the same path, efficiency-minded scholars see the common law system as a collection of rules that are in reality motivated solely by the ideal of wealth maximization. In this view, legal concepts exist in the common law to further its economic goals, or are otherwise completely redundant. Legal philosophers, for their part, have chimed in as well, characterizing the common law’s concepts as embodying their own autonomous commitment to reason, which they see as altogether independent from the instrumental goals of the law. With the general move towards instrumentalism in American legal analysis and thinking, the net result has been that common law concepts are seen today as largely vestigial artifacts.

In this Article, we mount a defense of the common law’s architecture. We argue that the criticisms leveled by legal theorists at the common law’s extensive use of legal concepts are misguided. In treating the common law’s conceptual architecture as a contingent feature of the system, these criticisms fail to account for how the common law has endured over time and context, and in the face of changing social values and preferences. The persistence of the common law and its continuing vitality is in large measure attributable to the subtle balance that it achieves between stability and change, a balance for which it relies almost entirely on its conceptual structure. Our core thesis is that the common law’s commitment to its conceptual structure is in many ways the key to understanding not just how the common law works but, in addition, what the common law itself is.

Featured Comment

Prohibiting Sexual Orientation Discrimination In Public Accommodations: A Common Law Approach

Paul Vincent Courtney
163 U. Pa. L. Rev. 1497 (2015).

Although forty-five states have enacted statutes prohibiting discrimination in so-called “public accommodations”—broadly defined as those businesses offering “lodging, food, entertainment, or other services to the public"—the statutes of only twenty-one states and the District of Columbia explicitly prohibit sexual orientation discrimination by these businesses; the gay populations of twenty-nine states thus live without any affirmative statutory protection from discrimination in commerce. This Comment addresses the failure of these states to include gay people among those classes of persons protected by their public accommodations statutes. The presumption today is that businesses in twenty-nine states can discriminate against gay people with impunity—“that businesses, as property owners, have the right to exclude non-owners unless that right is limited by statute” and “to refuse to contract with anyone with whom they do not wish to deal unless required to do so by express statutory command.”

But the right to exclude is subject to certain limitations. For public accommodations, the right to exclude historically has been counterbalanced by a common law duty to serve. Over the course of the twentieth century, however, the common law duty to serve fell into disuse and was replaced by state and federal public accommodations statutes that prohibit businesses from denying service to statutorily defined protected classes. Because public accommodations statutes have come to supplant the common law duty in our modern legal consciousness, many now believe—mistakenly, I argue—that these statutes are the sole source of law proscribing discrimination in commerce, and that if these statutes do not specifically enumerate a class or characteristic as among those protected, then businesses may discriminate against that class or characteristic with impunity.

Recent scholarship has largely focused on proposals to expand state antidiscrimination statutes to encompass sexual orientation discrimination; political advocacy groups’ goals are similarly defined. But this Comment rejects the notion that gay people’s only hope for legal protection lies in statutory law. That certain states have not yet decided to extend statutory protection to gay people does not mean that those individuals are necessarily without legal recourse if a business should deny them service, or that enacting statutes is the only way to provide protection. As discussed above, a business’s right to exclude historically has been counterbalanced by a common law duty to serve. Claims based upon the foundational principles of this common law duty may offer gay people immediate protection against discrimination in states whose legislatures have failed to provide such protection expressly. This Comment argues that even in states that have not proscribed sexual orientation discrimination affirmatively by statute, such discrimination is nonetheless illegal as a violation of businesses’ common law duty to serve—and to not exclude arbitrarily—all customers.

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 Last updated: May 2, 2015


Comptroller v. Wynne: Internal Consistency, a National Marketplace, and Limits on State Sovereignty to Tax

Michael S. Knoll and Ruth Mason
163 U. Pa. L. Rev. Online 267 (2015).

On November 12, 2014, the U.S. Supreme Court heard oral argument in Comptroller of the Treasury v. Wynne. The case, which has already been called the Court’s most important state tax case in decades, asks how the dormant Commerce Clause restrains state taxation of individual income. Because Wynne lacks the usual indicia of “certworthiness,” the case raises the possibility that the Court will reshape the constitutional balance between the states’ sovereign interest in collecting taxes and the national interest in maintaining an open economy.

The challenge for the Court, whose dormant Commerce Clause rulings have attracted intense criticism, is to delineate clear limits on state taxation that promote a national market economy without unduly restricting the states’ taxing authority. In earlier writings, we developed a framework to resolve tax discrimination cases in a consistent and intuitive manner that provides states with broad flexibility while maintaining an open interstate market. In this Essay, we apply that framework to Wynne to demonstrate how Maryland’s current system violates the dormant Commerce Clause. We also describe how our approach addresses Maryland’s arguments and resolves many issues that seemed to trouble the Justices at oral argument.

The rest of this Essay proceeds as follows. After providing the factual and legal background of the case, we show that the contested Maryland income tax regime fails the Court’s long-standing internal consistency test and so would be struck down were the Court to apply that test. We then respond to Maryland’s three major arguments why the Court should not apply the internal consistency test. Drawing on our earlier work, we first show that Maryland’s principal claim, that its tax law does not discourage cross-border commerce because residents are taxed at the same rate on in-state and out-of-state income, whereas non-residents are taxed at a lower rate on in-state income and not at all on out-of-state income, is not dispositive. Maryland’s argument should not prevail because economic analysis shows that the comparison of tax rates that Maryland offers is too simplistic to reveal whether the Maryland tax system discourages cross-border commerce. Second, Maryland claims that any interference with the Wynnes’ cross-border commerce stems from the interaction of different states’ tax systems rather than Maryland’s tax regime alone. This claim is wrong, and we show that Maryland’s tax system would burden interstate commerce even if no other state imposed taxes. Third, we show that Maryland’s claim that a decision for the taxpayer would allow residents with out-of-state income to free-ride on Maryland’s public services is overstated because the internal consistency test provides states with wide flexibility to tax.

The arguments in Wynne largely followed the outline above, with an important exception. The taxpayer argued that the dormant Commerce Clause requires Maryland to eliminate double taxation of their interstate commerce for the simple reason that Maryland is their state of residence. But the Court’s dormant Commerce Clause doctrine does not clearly support the interpretation that the state of residence must eliminate double taxation. Nor is such an interpretation needed for the Wynnes to win their case. Rather than requiring elimination of double taxation, the dormant Commerce Clause prohibits states from discriminating against interstate commerce. We show that Maryland discriminates against interstate taxation, and this discrimination would persist even if no other states imposed taxes. It is, therefore, independent of any double taxation that arises under the Maryland tax, and it is also independent of any action other states take. Double taxation is not the focus of the dormant Commerce Clause, and avoiding double taxation is not the same as not discouraging cross-border commerce. As we show, a state can discourage cross-border commerce even though there is no double taxation, and double taxation can occur without discouraging cross-border commerce.

Case Note

There’s A TV App For That: Putting The “Neutral” Back In Net Neutrality For The App-Based Television Future

Lindsay Fritchman
163 U. Pa. L. Rev. 299 (2015).

In 2013, Netflix became the first non-TV network to win an Emmy. Did this event signal the beginning of the end for the traditional cable television experience and the classic television networks? In an age of consumer cord-cutting, where streaming video accounts for fifty percent of peak Internet traffic and viewers want to choose which show they watch instead of which channel, the future of television is likely to come in the form of apps. Instead of a cable box, TVs would be plugged directly into an Internet connection. Instead of tuning into live channels, a TV’s main interface would be a wide selection of apps. Consumers could select the Netflix app and choose from its range of TV shows and movies, or select the NBC app to access any content from that network.

This exciting future comes at the height of the debate over “net neutrality.” The phrase “net neutrality” refers to the general principle of equal treatment for all Internet content, or, as one oft-cited definition phrases it: “all like Internet content must be treated alike and move at the same speed over the network.” However, a number of disparate ideas fall under the net neutrality umbrella, and these ideas have very different economic implications for consumers and providers. This Case Note argues that some of the principles of net neutrality should be enforced, while others are more likely to hinder innovation and economic growth. I begin by differentiating the separate concepts of net neutrality.

The debate over net neutrality has recently grown more fervent. In Verizon v. FCC, the D.C. Circuit cast the future of net neutrality into question by vacating the Federal Communication Commission’s (FCC) 2010 Open Internet Order on the grounds that the FCC had treated ISPs like common carriers. The FCC responded by adopting the 2015 Open Internet Order, which reclassified ISPs as common carriers and imposed a strict form of net neutrality. However, this Case Note argues that this strict version of net neutrality could result in the exact opposite of the outcome that the FCC seeks. Instead, a more nuanced version of net neutrality could better accomplish the Commission’s goals and provide better results for consumers.


King v. Burwell and the Validity of Federal Tax Subsidies Under the Affordable Care Act

Eric J. Segall & Jonathan H. Adler
163 U. Pa. L. Rev. Online 215 (2015).

Set for oral argument on March 4, 2015, King v. Burwell brings to the Supreme Court yet another challenge to the Affordable Care Act (ACA). The King plaintiffs cite 26 U.S.C. § 36B to attack the validity of certain federal health insurance subsidies provided by the Internal Revenue Service (IRS) through the ACA. Specifically, because § 36B authorizes subsidies for low-income taxpayers who purchase health insurance from an “Exchange established by the State,” the plaintiffs allege that such subsidies are not valid on exchanges operated by the federal government where the states refused to operate a state-sponsored exchange. Given that the federal government operates exchanges in thirty-four states, the Supreme Court’s ruling will potentially affect nearly ten million taxpayers nationwide.

Professors Eric Segall and Jonathan Adler debate the merits of King v. Burwell, and each suggests how the Court should rule. Professor Segall argues that the Court should follow the IRS’s interpretation of § 36B—namely, that federal tax subsidies are available in a state with a federally operated exchange, because the law allows the federal government to operate the “Exchange established by the State.” Professor Segall emphasizes that Chevron deference requires the Court to defer to the IRS interpretation. In response, Professor Adler contends that Chevron deference is unnecessary because the statutory language is clear: an “Exchange established by the State” cannot be an exchange established by the Department of Health and Human Services. Professor Adler argues that, given the unambiguous language in the statute, the Court need not defer to the IRS interpretation and should rule for the plaintiffs.