Current Print Issue

Vol. 165, Issue 1

  December 2016


Featured Article

Consent Is Not Enough: Why States Must Respect the Intensity Threshold in Transnational Conflict

By
Oona A. Hathaway, Rebecca Crootof, Daniel Hessel, Julia Shu & Sarah Weiner
165 U. Pa. L. Rev. 1 (2016).

It is widely accepted that a state cannot treat a struggle with an organized non‐state actor as an armed conflict until the violence crosses a minimum threshold of intensity. For instance, during the recent standoff at the Oregon wildlife refuge, the U.S. government could have lawfully used force pursuant to its domestic law enforcement and human rights obligations, but President Obama could not have ordered a drone strike on the protesters. The reason for this uncontroversial rule is simple—not every riot or civil disturbance should be treated like a war.

But what if President Obama had invited Canada to bomb the protestors—once the United States consented, would all bets be off? Can an intervening state use force that would be illegal for the host state to use itself? The silence on this issue is dangerous, in no small part because these once‐rare conflicts are now commonplace. States are increasingly using force against organized non‐state actors outside of the states’ own territories—usually, though not always, with the consent of the host state. What constrains the scope of the host state’s consent? And can the intervening state always presume that consent is valid?

This Article argues that a host state’s authority to consent is limited and that intervening states cannot treat consent as a blank check. Accordingly, even in consent‐based interventions, the logic and foundational norms of the international legal order require both consent‐giving and consent‐receiving states to independently evaluate what legal regime governs—this will often turn on whether the intensity threshold has been met. If a non‐international armed conflict exists, the actions of the intervening state are governed by international humanitarian law; if not, its actions are governed instead by its own and the host state’s human rights obligations.


Featured Comment

Maybe Publius Was Right: Relying on Merger Price To Determine Fair Value in Delaware Appraisal Cases

By
Daniel E. Meyer
165 U. Pa. L. Rev. 153 (2016)

In this Comment, I argue that calls for reform to the appraisal remedy should be aimed at the Delaware Court of Chancery. The purpose of this Comment is not to express a normative judgment about the overall desirability of appraisal arbitrage; rather, I propose a shift away from the Chancery Court’s oft‐favored valuation technique, discounted cash flow (DCF) analysis, in appraisal cases arising out of certain third‐party, or arm’s‐length, transactions. The Chancery Court should instead rely on merger price as the best estimate of the “fair value” of an appraisal petitioner’s shares when (1) the inputs required for a DCF analysis are unreliable and (2) there has been a genuine market test.

Reliance on the merger price under these conditions would allay concerns on both sides of the debate. For proponents of appraisal arbitrage, this valuation approach does not impinge on shareholders’ ability to resort to the appraisal remedy by restricting their deadline to the record date. Additionally, the Chancery Court’s embrace of merger price would incentivize additional disclosure by target companies in order to demonstrate that the sale process was fulsome. For opponents of appraisal arbitrage, when there has been a genuine market test and a DCF analysis is unreliable, the use of merger price punishes appraisal petitioners when their claims are unwarranted (i.e., purely speculative investments aimed at low‐premium transactions). Appraisal arbitrageurs cannot profit from “buying into” a lawsuit when the merger price is used as fair value; they must bear litigation expenses and additionally may face a “synergy deduction,” as appraisal claimants cannot capture any value arising from the expectation of the merger. Thus, this approach to valuation would only encourage claims where there is real reason to believe that the price achieved in the merger was not “fair”—namely, in controlling shareholder and parent/subsidiary mergers—and would remove some uncertainty from third‐party mergers (the transactions that are the primary focus of M&A lawyers).


Online Exclusives
 Last updated: November 25, 2016


Essay

Spelling Out Spokeo

By
Craig Konnoth & Seth Kreimer
165 U. Pa. L. Rev. Online 47 (2016)

The modern law of Article III standing in federal courts constitutes an enduring conundrum. It rests on “an idea, which is more than an intuition but less than a rigorous and explicit theory, about the constitutional and prudential limits to the powers of an unelected, unrepresentative judiciary in our kind of government.” Over the years, efforts to capture that idea in doctrine have spawned cycles of refinement and reformulation. But as Justice Harlan observed in dissent at the beginning of the last cycle of reform, the process often threatens to “reduce[] constitutional standing to a word game played by secret rules.” In 1970, the Court unveiled a new touchstone for standing—the “injury in fact” requirement. Over the next four and a half decades—under the Burger, Rehnquist, and Roberts Courts—“injury in fact” became the “bedrock” Article III prerequisite for a party invoking the power of federal courts. Over one hundred Supreme Court cases turned on the presence or absence of “injury in fact,” festooning the bedrock with adjectives: adequate “injury in fact” was to be “personal and tangible,” “concrete and particularized,” “actual or imminent,” and/or “distinct and palpable.”

Last Term, in Spokeo, Inc. v. Robins, a short‐handed Court endeavored to bring order to the adjectives. The case generated more than three‐dozen amicus briefs from the defense bar, the business establishment, and the technology sector arrayed against those from academics, public interest advocates, and consumer protection organizations. In resolving the arguments, Justice Alito’s majority opinion distinguished between the requirement of “particularized” injury and the requirement of “concrete” injury and established the proposition that a plaintiff might demonstrate “injury in fact” that is “concrete” but “intangible.” The opacity of these categories refreshes Justice Harlan’s worry about “word game[s] played by secret rules.” In what follows, we seek to parse the rules of Spokeo so that, even if fuzzy, they are a bit less secret. We derive from the cryptic language of Spokeo a six‐stage process (complete with flowchart) that represents the Court’s current equilibrium. We put each step in the context of standing precedent, and demonstrate that while Spokeo added structure to the injury in fact doctrine, each stage of the analysis adds play in the joints, leaving future courts and litigants substantial room for maneuver


Response

Things Left Unsaid, Questions Not Asked

By
Peter L. Strauss
164 U. Pa. L. Rev. Online 293 (2016)
Responding to Cass R. Sunstein, The Most Knowledgeable Branch

The University of Pennsylvania Law Review’s symposium on executive discretion is an important undertaking, but it is remarkable for several silences—for things left unsaid on this important subject—and for questions not asked. First, although the Constitution’s “Take Care” Clause is extensively discussed, the one power Article II gives the President over domestic administration—to require the “Opinion, in writing” of the heads of the agencies Congress has invested with administrative duties—is not. Second, the discussion of the President’s undoubted but possibly constrained authority to remove officials of whose actions he disapproves omits discussion of the difference between the strictly political discretion enjoyed by some officers in some functions, and the law‐constrained discretion enjoyed by others. Third, discussion of the executive branch’s clear advantages in dealing with complex, technological issues of fact, as compared to Congress and the courts, omits discussion of the possibility that the opaqueness of the executive’s internal functioning may prevent understanding of the extent to which electorally driven politics, not technical expertise, controls its actions. And finally, the empirical exploration of the public’s attitude toward possible differences between presidential oversight and presidential control frames its questions in a manner likely to have predetermined its outcome, and in considering the impact on public perceptions does not address the possible impact on administrators’ behavior of their understanding whether the President’s views have only political or (rather) legal bearing on the issues statutes say they are to decide. This Response addresses each topic in turn.


Case Note

Of Laundering and Legal Fees: The Implications of United States v. Blair for Criminal Defense Attorneys who Accept Potentially Tainted Funds

By
Philip J. Griffin
164 U. Pa. L. Rev. Online 179 (2016).

“In the common understanding, money laundering occurs when money derived from criminal activity is placed into a legitimate business in an effort to cleanse the money of criminal taint.” 18 U.S.C. § 1957, however, prohibits a much broader range of conduct. Any person who “knowingly engages” in a monetary transaction involving over $10,000 of “criminally derived property” can be charged with money laundering under § 1957.

Because § 1957 eliminates the requirement found in other money laundering statutes that the government prove an attempt to commit a crime or to conceal the proceeds of a crime, § 1957 “applies to the most open,

above‐board transaction,” such as a criminal defense attorney receiving payment for representation. In response to pressure from commentators, Congress passed an amendment two years after § 1957’s enactment defining the term “monetary transaction” so as to exclude “any transaction necessary to preserve a person’s right to representation as guaranteed by the sixth amendment to the Constitution.”

The statutory safe harbor found in § 1957(f)(1) has successfully immunized defense attorneys from money laundering prosecutions. However, United States v. Blair raised concerns among the criminal defense bar because of its holding that an attorney‐defendant was not entitled to protection under § 1957(f)(1). In Blair, an attorney‐defendant was convicted of violating § 1957 for using $20,000 in drug proceeds to purchase two $10,000 bank checks to retain attorneys for associates of his client. Noting that Sixth Amendment rights are personal to the accused and that Blair used “someone else’s money” to hire counsel for others, the Fourth Circuit held that his actions fell “far beyond the scope of the Sixth Amendment” and were not protected by the safe harbor. In his strongly‐worded dissent, Chief Judge Traxler criticized the court for “nullif[ying] the § 1957(f)(1) exemption and creat[ing] a circuit split.”

This Case Note discusses the implications of Blair for the criminal defense attorney who accepts potentially tainted funds and proposes a solution to ameliorate its unintended consequences. First, Part I provides relevant background information by discussing the money laundering statutory framework, the criticisms leveled at the framework as it was written, the Congressional response to that criticism, and § 1957(f)(1)’s application up until Blair. Next, Part II describes the Blair decision in detail and examines its implications. Part III then proposes a novel solution to the problems it created. Finally, the Case Note concludes with a brief word of practical advice for the criminal defense bar.