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Vol. 163, Issue 7

  June 2015

Featured Article

The Constraint Of Legal Doctrine

Shyamkrishna Balganesh
163 U. Pa. L. Rev. 1843 (2015).

As the dominant approach to legal analysis in the United States today, Legal Realism is firmly ensconced in the way scholars discuss and debate legal issues and problems. The phrase “we are all realists now” is treated as cliché precisely because it is in some ways taken to state an obvious reality about the mindset of American legal scholars. While Legal Realism came to represent a variety of different views, all of these views embodied a common theme, namely, the belief that legal doctrine is “more malleable, less determinate, and less causal of judicial outcomes” than is traditionally presumed. Judges in this view are taken to decide cases based on what they consider “fair” under the circumstances, “rather than on the basis of the applicable rules of law.” Judicial reasoning, the Realists argued, was rarely ever the “constrained product of legal doctrine and legal materials alone.” A hallmark of Legal Realism was therefore pervasive “skepticism” about the constraining effect of legal doctrine on judicial opinions and scholarly critiques of judge‐made law. The constraint of legal doctrine was thus believed to be mythical.

In a variety of substantive areas, judicial opinions continue to speak the language of legal doctrine, and legal doctrine remains the “currency” of legal analysis. Judges—at least on the face of things—appear as constrained or unconstrained by legal doctrine today as they appeared to be prior to the influence of Legal Realism. Consider a pair of copyright cases as an example. In 1908, the Supreme Court decided White‐Smith Music Publishing Co. v. Apollo Co., and held that a manufacturer of perforated piano rolls did not commit copyright infringement, since the rolls were not “copies” for the purposes of copyright law. In arriving at its conclusion, the Court looked to prior nonbinding case law, legislative intent, its own construction of the statute, and the common understanding of the term “copy.” The only express suggestion of constraint in the Court's opinion is its observation—in dicta—that if the prior case law had been of a “binding character” it would have “preclud[ed] further consideration of the question.” Now, contrast this with a case decided by the Court in 2014, American Broadcasting Co. v. Aereo, Inc. The question before the Court was whether a service that re‐transmitted free broadcasting content to subscribers over the Internet had committed copyright infringement by engaging in a “public performance” for the purposes of copyright law. In answering the question in the affirmative, the Court justified its conclusion entirely by reference to the legislative history of the statute's definitions of “public” and “perform” and its own reconstruction of Congress's regulatory intent underlying the statute.

The similarity in style and reasoning in the two opinions is stark and real. Both speak the language of formal legal doctrine, both make reference to precedent (when available), both defer to Congressional “intent” and purpose, and both rely as best as possible on the text of the statute. One was crafted in a pre‐Realist era and the other well after the dominance of Legal Realism. Their puzzling parallelism highlights the central questions that this Symposium set out to answer: Does legal doctrine in fact continue to “constrain” judicial reasoning, even after almost every participant in the legal system today has come into contact with the central premise of Legal Realism (i.e., the supposed myth of doctrinal constraint)? Are there ways of reconciling courts' post‐Realist use of legal doctrine with the core insights of Legal Realism? How uniform—across the law—is this apparent continuity in the use of legal doctrine?

Instead of seeking to answer these questions in the abstract as philosophical inquiries, the Symposium instead chose to have leading legal scholars, each from a different substantive area of law, reflect on the role of legal doctrine in their respective areas of expertise. Our hope was that having scholars reflect on this issue by reference to their own fields of expertise would address the question of “doctrinal constraint” in the American legal system organically and trans‐substantively. The areas chosen were drawn from both federal and state law, statutory and common law, and represented areas traditionally characterized as public law and private law. Some scholars chose to reflect on the question by looking at their field as a whole, while others reflected on the issue through specific cases, rules, or problems unique to their particular field.

Featured Comment

Dangerous Liaisons: Criminalization Of “Relationship Hires” Under The Foreign Corrupt Practices Act

Shinjini Chatterjee
163 U. Pa. L. Rev. 1771 (2015).

On August 17, 2013, the New York Times published a front page story on JPMorgan Chase & Co. that cast the firm at the center of an international bribery scandal and sparked a media firestorm. The article reported that the U.S. Securities and Exchange Commission (SEC) had opened a bribery investigation into the firm's hiring practices in China pursuant to the Foreign Corrupt Practices Act (FCPA), a statute that regulates bribery and public corruption in foreign countries. The story continued to garner national attention in the weeks following the article's release, especially after the Department of Justice (DOJ) joined the SEC's investigation. At the center of the controversy was the unusual nature of the investigation itself: unlike most FCPA bribery investigations, which target financial payments to foreign officials in exchange for business advantages, the central issue underpinning the JPMorgan investigation was the firm's apparent practice of hiring well-connected children of Chinese business and political leaders. More specifically, the government's investigation targeted the firm's “Sons and Daughters” program in China, a hiring program that allegedly favored children of Chinese owners of state-controlled enterprises in China. JPMorgan purportedly relied on this hiring process to gain a competitive advantage in China, where state-owned enterprises dominate the economy.

Although most media reports on the JPMorgan investigation characterize it as an unusual approach for the government, probes into corporate hiring practices are part of an increasingly apparent trend in FCPA enforcement. About eight months after the JPMorgan investigation began, DOJ and the SEC sent letters to at least five other financial institutions, requesting information on their hiring practices in Asia. Federal agencies have justified these types of “relationship hire” investigations as well within the scope of the FCPA. The FCPA prohibits the exchange of “anything of value” with foreign officials for any “improper advantage”—language that appears to encompass offers of employment to relatives of foreign officials. Critics of the FCPA's application to relationship hires have questioned the government's reading of the Act's language, characterizing it as an “aggressive” interpretation.

Despite the publicity surrounding the JPMorgan scandal, very little scholarship has examined relationship hires as an issue that defines and tests the limits of future FCPA enforcement. This Comment begins this discussion by analyzing both the rationale for the government's application of the FCPA to relationship hires and the implications of this type of FCPA enforcement.

Online Exclusives
 Last updated: October 5, 2015


What Does Voluntary Tax Compliance Mean?: A Government Perspective

J. T. Manhire
164 U. Pa. L. Rev. Online 11 (2015).

If government statistics are correct, almost all of us engage in what the Internal Revenue Service (IRS) calls “voluntary tax compliance.” One of the IRS's principle goals is to maximize this voluntary compliance. For example, the IRS has an official policy stating that civil tax penalties are primarily designed and imposed against taxpayers to encourage voluntary compliance. Closing the “tax gap,” the difference between the tax properly due and the amount the IRS receives through voluntary compliance, is a persistent problem for the IRS. In most congressional reports, the IRS emphasizes voluntary taxpayer compliance as a foundational principle of the U.S. tax system.

Yet, most taxpayers do not believe they have a choice when it comes to filing and paying their taxes. There is often a great deal of confusion and consternation when taxpayers discover that the IRS refers to this annual filing ritual as “voluntary.” What does voluntary compliance mean? Does it mean taxpayers can volunteer to file returns and pay taxes, as one might volunteer to make a charitable donation? Does it mean taxpayers do not have to comply with the tax laws if they do not feel like it? How can it be a federal crime to not file or pay taxes if compliance is voluntary? This is a very real problem for taxpayers, as demonstrated by U.S. Tax Court cases litigating taxpayer confusion over the meaning of voluntary compliance. Additionally, at times the Tax Court has taken a very stern position on noncompliance, to the detriment of confused taxpayers.

To the common ear, the term “voluntary compliance” may seem an odd, even Pickwickian, turn of phrase. It implies that compliance with the federal tax laws is voluntary. The Tax Court, however, has labeled such an interpretation as “arrogant sophistry.” Taxpayers have a legal obligation to comply with the tax laws, just as they are obligated to comply with all rules that carry the force and effect of law. Penal sections of the tax code reinforce this obligation. Therefore, the government's position is that voluntary compliance means that taxpayers behave in a way required by law, but without direct compulsion from the IRS.

Still, this definition does not comport with the current use and understanding of the word “voluntary.” The modern connotation implies an act done because one wants to do it, not because one has to. A voluntary act is an unrestricted act in the absence of a pre‐existing obligation. Since taxpayers have a legal obligation to act in accordance with the internal revenue laws, tax compliance is anything but voluntary in this sense.

This Essay offers a government perspective as to why the IRS uses this perplexing term. After investigating (and dismissing) a possible literal defense, the Essay surveys the IRS's history to see why voluntary compliance is such a critical part of the U.S. tax system. The Essay then recommends changing the term from voluntary to cooperative compliance to retain the government's meaning while lessening taxpayer confusion.


The “Equity Of The Statute” And Copyright Law: Three Critiques

Michael A. Carrier
163 U. Pa. L. Rev. Online 383 (2015).
Responding to Shyamkrishna Balganesh & Gideon Parchomovsky, Equity's Unstated Domain: The Role Of Equity In Shaping Copyright Law

In their ambitious Article, Shyam Balganesh and Gideon Parchomovsky seek to make sense of the Supreme Court's recent copyright jurisprudence. The authors articulate an “equity of the statute” that allows courts “to extend or restrict the otherwise clear words of a statute to give effect to the statute's ‘ratio or purpose.’” They also find, in some tension, that copyright law is indeterminate, as “a close reading of the [Copyright Act] reveals hardly any guidance” on how to apply it.

Whether copyright law is clear or indeterminate, the authors conclude that “the Court's stated objective [i]s to bring the substantive content of copyright doctrine in line with its own conception of copyright's principal values and ideals.” The authors contend that the “equity of the statute” allows the Court to effectuate copyright's “primary purpose,” which is to balance the “utilitarian ideal of encouraging creativity” with “the public's need for access.”

The authors lament that “constant technological change” has “required copyright law to update the applicability of its core goals and ideals to new situations” but that “[t]he formal content of its statutory directives has routinely proven to be outdated, and legislative reforms have often proven to be an inadequate means of redress.” They are heartened, however, that the Court “has effectively determined the equity of the copyright statute's substantive content,” which has “protect[ed] the normative integrity of our copyright system.” Finally, the authors find that the Court applies “adjectival equity” in “preserv[ing]” its “flexibility for the future.”

In this response, I offer three critiques of the Article. First, the notion of an “equity of the statute” designed to promote copyright's incentives/access paradigm does not provide the most persuasive explanation of the cases. Second, the authors' “adjectival equity” cases are not best explained by preserving judicial flexibility. Third, two of the three cases involving technology do not present a “successful ‘updat[ing]’” of copyright doctrine.

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.