Volume 162

Essays

3-D Printing and Product Liability: Identifying the Obstacles

Nora Freeman Engstrom
162 U. Pa. L. Rev. Online 35 (2013)

3‐D printers—with the capacity to make three‐dimensional solid objects from digital designs—have arrived. Home 3‐D printers are already affordable (some are less than $1000), and, though these printers make mostly straightforward products, that's apt to change. A quick tour of the web reveals pictures of myriad “printed” objects, from the simple (a plastic vase), to the stunning (a bionic ear!), to the terrifying (an operational handgun dubbed “the Liberator”). Those within the industry have high hopes. Brook Drumm, the founder of one 3‐D printing company, for example, envisions “a printer in every home.” The New York Times has predicted that 3‐D printers will “become a part of our daily lives . . . much sooner than anyone anticipated.” Even President Obama has embraced this technology, declaring in his most recent State of the Union address that 3‐D printing “has the potential to revolutionize the way we make almost everything.” In short, though it's just in its infancy, 3‐D printing seems poised to transform the goods we buy, the products we use, and the world we inhabit.

Following any significant technological breakthrough, legal scholars, practitioners, and policymakers must consider how the innovation meshes with—or poses challenges to—our existing laws and system of governance. Will it fit? What must change? Where are the pitfalls and opportunities? 3‐D printing is no exception. The laws it implicates are numerous, and the challenges it poses are profound. To begin the inquiry in just one area, I attempt to apply contemporary product liability (PL) law to defective products printed from home 3‐D printers. This analysis suggests that if home 3‐D printing really does take off, PL litigation as we know it may, in large measure, dry up. And, if it doesn't, the technology threatens to unsettle the theoretical justification for product liability law's development.

In general, we have, and have long had, strict liability for defective products. In the words of the Third Restatement: “One engaged in the business of selling or otherwise distributing products who sells or distributes a defective product is subject to liability for harm to persons or property caused by the defect.” What are the implications for PL law, however, if Brook Drumm's hope of a printer in every home is even partially realized?

The first consequence is obvious and uncontroversial: many more individuals will make, in their kitchens and on their countertops, products that are complex, sophisticated, and dangerous. The second consequence is equally uncontroversial: over time, these hobbyist inventors will start selling some of the complex, sophisticated, and dangerous products they create, and certain individuals who purchase their creations will, unfortunately but inevitably, sustain injuries. The third consequence is, I think, surprising: in many instances, no one will be strictly liable for these injuries under current PL doctrine.

"Reverse" Patent Declaratory Judgment Actions: A Proposed Solution for Medtronic

Megan M. La Belle
162 U. Pa. L. Rev. Online 43 (2013)

The United States Supreme Court has taken an interest in shaping patent law in recent years, deciding many important cases, a number of which have involved special procedural rules created by the Federal Circuit. With the Court scheduled to hear Medtronic Inc. v. Boston Scientific Corp. in early November, this term is no exception. The issue in Medtronic is whether the burden of proof in patent declaratory judgment actions (DJ actions) should be on the patent owner (i.e., the defendant) to prove infringement or on the accused infringer (i.e., the plaintiff) to prove noninfringement. Ordinarily, the patent owner bears the burden of proving infringement, and the declaratory posture of a suit does not shift that burden. In Medtronic, however, the Federal Circuit created an exception for “MedImmune‐type” cases—that is, declaratory judgment actions where the plaintiff is a licensee in good standing—since the patent owner cannot counterclaim for infringement. “Because the declaratory judgment plaintiff is the only party seeking the aid of the court,” the Federal Circuit reasoned, it should bear the burden of proving noninfringement.

Medtronic and its supporting amici (including the United States) argue that the Supreme Court should reverse the opinion below because the Federal Circuit misallocated the burden of proof as a legal matter and because the Federal Circuit's rule undermines the policy goal of encouraging patent validity challenges. Without disputing Medtronic's position, this short Essay suggests, first, that Medtronic sweeps more broadly than the parties have acknowledged, and, second, that there may be an additional—and perhaps simpler—ground for reversing the Federal Circuit.

The litigants all appear to believe that the Federal Circuit's new exception is limited to MedImmune‐type suits, but Medtronic could be interpreted more expansively. In Medtronic, the Federal Circuit shifted the burden of proof to the accused infringer because the patent owner could not counterclaim for infringement. Yet, there are declaratory judgment actions outside the MedImmune context where an infringement counterclaim is also precluded. For instance, plaintiffs sometimes file “anticipatory” declaratory judgment actions before engaging in any potentially infringing activities. In these suits, the patent owner cannot counterclaim for infringement because no infringing activity has occurred. Under the logic of Medtronic, therefore, the burden of proof would shift to the plaintiff in this category of cases even though there's no license involved.

Whether limited to MedImmune‐type suits or not, the Federal Circuit's reasoning in Medtronic is significantly flawed. While it's true that patent owners cannot counterclaim for infringement in certain types of declaratory judgment actions, they may always counterclaim for a declaration of future infringement. In other words, the patent owner in Medtronic was not, as the Federal Circuit determined, precluded from “seeking the aid of the court”; instead, the owner could have asked the court to resolve the infringement question by filing a “reverse” declaratory judgment action against the accused infringer. Thus, the Federal Circuit's rationale for crafting this exception was wholly unjustified, and Medtronic should be reversed.

The Prudential Third-Party Standing of Family-Owned Corporations

Matthew I. Hall & Benjamin Means
162 U. Pa. L. Rev. Online 151 (2014)

On November 26, 2013, the Supreme Court agreed to decide whether for‐profit corporations or their shareholders have standing to challenge federal regulations that implement the Patient Protection and Affordable Care Act (ACA). At issue in the two cases consolidated for appeal, Hobby Lobby and Conestoga Wood Specialties, are regulations mandating that employers with fifty or more employees offer health insurance that includes coverage for all contraceptives approved by the Food and Drug Administration (FDA). The plaintiffs assert that providing certain types of contraceptive care would be contrary to their religious beliefs and allege, therefore, that the mandate violates the Religious Freedom Restoration Act of 1993 (RFRA) as well as the First Amendment's Free Exercise Clause.

The government does not dispute that the family owners of Hobby Lobby and Conestoga Wood Specialties are sincere in their religious objections. However, the mandate applies only to employers and imposes no direct duties upon corporate shareholders. Thus, a threshold issue in these cases and dozens of other pending cases involving for‐profit corporations is whether any plaintiff has standing to challenge the mandate. Some courts have concluded that religious objections to the mandate are simply nonjusticiable. Other courts have found standing, either by endorsing the novel proposition that a for‐profit business corporation is, itself, a person capable of religious exercise, or by allowing individual owners who have no personal obligations or liability under the ACA's mandate to nevertheless interpose a religious objection.

We offer a much simpler alternative: under well‐established exceptions to the prudential rule against third‐party standing, one party can sometimes assert the interests of a third party. Allowing Hobby Lobby and Conestoga Wood Specialties to litigate religious objections to the mandate on behalf of their shareholders obviates the need for the Court to venture into uncharted territory. The crucial insight is that the corporation's injury need not be religious in nature for the religious objections to the ACA regulations to be adjudicated. So long as the corporate plaintiff is injured economically by the regulations, it has standing under Article III to challenge them. At that point, the corporation's assertion of the constitutional or statutory rights of absent third parties is properly analyzed under the rubric of third‐party standing.

Could the SEC Save Basic Through Rulemaking?

Aneil Kovvali
162 U. Pa. L. Rev. Online 187 (2014)

Securities and Exchange Commission (SEC) Rule 10b‐5 forbids material misstatements or omissions in connection with the purchase or sale of a security. The federal courts have held that this rule implies a cause of action that permits private plaintiffs to recover damages where they can show that a misrepresentation or omission caused them to suffer a loss because they traded in reliance on it.

In Basic Inc. v. Levinson, the Supreme Court held that under certain circumstances, investor‐plaintiffs could satisfy the reliance requirement by invoking a rebuttable presumption. Under Basic's fraud‐on‐the‐market theory, anyone who purchases or sells a security traded on a market that efficiently incorporates information implicitly relies on the integrity of the security's market price. Thus, if the market price of such a security is affected by a misrepresentation, persons transacting in the security are presumed to have relied on that misrepresentation. The Basic presumption facilitates class actions, since it replaces individualized inquiries into whether each plaintiff was aware of and relied upon a misrepresentation with a common inquiry into the efficiency of the market and the nature of the misrepresentation. Because of the importance of class actions to the nation's securities regime, Basic has become a foundational securities law doctrine.

But Basic has also faced substantial criticism. This criticism bubbled over in Amgen Inc. v. Connecticut Retirement Plans & Trust Funds, where four Justices signaled their willingness to reconsider Basic. Soon after, the Supreme Court granted certiorari in Halliburton Co. v. Erica P. John Fund, Inc., and is set to decide the continuing validity of Basic this Term. The existing regime for enforcement of the securities laws is thus under serious threat, and the question for the SEC is whether the agency can do anything about it. The SEC has signed on to an amicus brief urging the Court to reaffirm Basic, but the agency's Section 10(b) rulemaking authority suggests that it may have a more powerful tool at its disposal.

This Essay considers the SEC's capacity to defend Basic. Although the question is close, there are substantial grounds for skepticism of the SEC's power in this area. Absent a rulemaking, it seems unlikely that the SEC's position will command material deference from the Supreme Court. Rulemaking may not change this outcome. Although several scholars have concluded that the SEC has rulemaking authority over the private right of action inferred from Rule 10b‐5, the terms of Congress's grant of rulemaking authority to the SEC suggest that it has not been delegated such authority. However, if the SEC can clear that hurdle, it may succeed in obtaining its favored result.

Aereo and Copyright’s Private-Public Performance Line

Glynn S. Lunney, Jr.
162 U. Pa. L. Rev. Online 205 (2014)

The Copyright Act of 1976 provides to copyright owners the exclusive right to perform their copyrighted works publicly, but not the exclusive right to perform their works privately. As a result, to determine whether any given performance infringes a copyright owner's exclusive rights, we must draw a line between public and private performances. The current line between public and private performances is more a historical accident, coupled with historical path dependence, than a rational attempt to advance copyright's purposes.

On January 10, 2014, the Supreme Court granted certiorari in American Broadcasting Cos. v. Aereo, Inc. By doing so, the Court has seized an opportunity to bring some rationality to copyright's line between public and private performances. In this pending case, the respondent, Aereo, uses thousands of tiny antennae to capture television broadcast signals, which then transmit the signals to its subscribers over the Internet. The question presented is whether Aereo “publicly performs” the copyrighted works carried in the television broadcast signals that are captured and retransmitted.

The following explores the historical background and the Second Circuit's analysis of the Aereo case, then develops the argument for distinguishing public and private performances by focusing on whether the intermediary at issue is likely to have market power.

Applause for the Plausible

Brandon L. Garrett
162 U. Pa. L. Rev. Online 221 (2014).

Why has the word “plausible” come to define federal civil litigation? In recent years, the U.S. Supreme Court supplemented longstanding pleading standards under the Federal Rules of Civil Procedure, which require a “short and plain statement of the claim,” to additionally require that all civil pleadings state a claim that is “plausible.” In Bell Atlantic Corp. v. Twombly, the Court rejected other possible words that might describe the newly tightened pleading standard, such as “reasonable” or “probable.” To the dismay of many judges, lawyers, and other observers, the Court did not define “plausible,” except to add that “plausible” pleadings “nudge[] their claims across the line from conceivable to plausible.” In Ashcroft v. Iqbal, the Court again did not define “plausible,” except to assert that a “plausible” claim must not be “conclusory” in nature. This Essay explores the complex and contradictory meanings of the word “plausible.”

Furthermore, this Essay applauds the Supreme Court's selection of such an equivocal and conflicted word as the gateway to federal civil litigation. As I describe, “plausible” means “fair” or “reasonable,” but perhaps only in a superficial sense; what is “plausible” might in fact be “specious” or used as a “pretext.” The word is immune to careful definition. Because of its ambiguity, it was well selected to expand judicial discretion to dismiss civil cases. In specific areas of federal civil litigation, the Court has recently broadened judges' discretion to dismiss a wide range of civil petitions: civil rights claims, habeas petitions, class action certification petitions, and more. In those contexts, the Court uses words like “reasonable” in ways that bend their meaning, suggest more objectivity than warranted, and create genuine confusion between doctrines by using the same word in different ways.

Despite substantial confusion over the choice of the word “plausible” to govern pleading in federal civil litigation, at least one can say that the word itself captures the essence of the problem rather than disguising it. Whether the resulting discretion conferred on district judges is itself warranted or desirable is a very different question, and a matter of real concern. Because “plausibility” pleading enhances judicial discretion, the meaning of “plausible” may increasingly depend on judicial practice and the litigation contexts where the word is used. Nonetheless, rather than viewing the word selection as an accident or a misplaced reference, I suggest that the word was deliberately chosen to be deeply . . . plausible.

Responses

Whose Conception of Insurance?

Steven M. Klepper
162 U. Pa. L. Rev. Online 83 (2013)

Professor Abraham's new Article, Four Conceptions of Insurance, offers an invaluable overview and critique of four modern conceptions of insurance. He cautions that “the particular lens through which we view insurance law cannot tell us what principles should govern or what policy choices to make.” But who is the “we” in that statement? This Response focuses on three overlooked groups with an important interest in such governing principles and policy choices. First, Abraham mentions insurance brokers only briefly, describing how large insurance brokers can negotiate policy terms. But brokers, large and small, play an important role in deciding which available insurance a policyholder purchases. Second, any discussion of homeowners insurance should include mortgage holders, who require mortgagors to purchase insurance and whose interest in the scope of coverage is equal to or greater than the homeowner's. Third, within the construction industry, general contractors seek to transfer risk to their subcontractors, who must purchase liability policies naming general contractors as “additional insureds.” The contract model, which looks to the intent of the insurer and the subcontractor, as expressed in the policy language, preserves the expectations of the parties to the contract. In examining each of these three overlooked groups' interests in an insurance transaction, we may discover that the contract model, so frequently maligned in the academic literature, is not so bad after all.

Communications Privacy for and by Whom?

Ryan Calo
162 U. Pa. L. Rev. Online 231 (2014)

Professor Orin Kerr has proposed an elegant new thought experiment in his piece, The Next Generation Communications Privacy Act. The Article efficiently relays the history and structure of the Electronic Communications Privacy Act of 1986 (ECPA), a law that “grants Internet users a set of statutory privacy rights that limits the government's power to access a person's communications and records.” The Article then ably diagnoses what is wrong with ECPA today—namely, that changes in technology and constitutional law over the last quarter century have rendered ECPA outdated. Finally, the Article proposes four plausible principles to guide Congress were it to write a new electronic communications privacy statute from scratch, rather than reform ECPA at the margins, as contemporary advocates propose.

Professor Kerr's argument is clear, forceful, and fundamentally sound in the sense that his conclusion follows from his premises. The Article also makes a series of quiet assumptions, however, that readers may find controversial.

First, the Article reads as though ECPA exists only to protect citizens from public officials. According to its text and to case law, however, ECPA also protects private citizens from one another in ways any new act should revisit. Second, the Article assumes that society should address communications privacy with a statute, whereas specific experiences with ECPA suggest that the courts may be better suited to address communications privacy—for reasons Professor Kerr himself offers. Finally, the Article addresses ECPA in isolation from the Foreign Intelligence Surveillance Act of 1978 (FISA), which seems strange in light of revelations that our government systematically intercepts and stores its citizens' electronic communications under FISA's auspices. Put another way, The Next Generation Communications Privacy Act succeeds marvelously on its own terms, but not necessarily on everyone else's. Worse still, we do not benefit from Professor Kerr's powerful insights regarding the issues he omits.

A Tale of Two Studies: The Real Story of Terrorism Finance

Richard Gordon
162 U. Pa. L. Rev. Online 269 (2014)

I was pleased when I saw that the University of Pennsylvania Law Review had published a new article on terrorism financing, especially when I saw that my friend and frequent collaborator Jason Sharman was an author. But my pleasure turned to puzzlement, then to dismay, as I delved into it.

The Article, entitled Funding Terror, consists of three parts. The first is primarily a discussion of what we already know about terrorism financing, focusing on the use of shell companies (not easy to define, but, more or less, companies that have no independent operations, significant assets, ongoing business activities, or employees) by terrorists, and on steps recently taken by countries to reduce the threat of terrorism. This first part repeatedly asserts that terrorists use shell companies to facilitate their nefarious activities and discusses how the United States and other jurisdictions have responded by trying to prevent terrorists from doing so.

The second part of the Article presents an experimental study regarding the circumstances under which lawyers and certain other persons known as corporation service providers will assist different types of clients in setting up companies in different jurisdictions. The study finds that forming an anonymous shell company is not difficult, despite increased regulations following September 11—results that are “disconcerting and demonstrate that we are far from a world that is safe from terror.” While the quality of the study is excellent, its relevance to terrorism finance hinges on the accuracy of the conclusions in the first part of the Article—that terrorists use shell companies. Based on the results discussed in the second part, the third part draws conclusions about whether the jurisdictions identified in the second part are more likely to facilitate terrorism and whether domestic or international law governing the setting up of shell companies is more successful as a deterrent to the formation of those companies by terrorists. Again, the relevance of this third part is tied to the conclusions of the first part.

If it were true that terrorists regularly used shell companies, it might make sense to dedicate additional resources to stopping them, including requiring corporation service providers to do a better job of detecting when their clients are really bad guys. Because, as the Article correctly notes, shell companies can be used for legitimate as well as illegitimate purposes, government must take care to fight the bad guys without overly impeding the good; as a result, the rules must be more nuanced and therefore difficult to enforce than would be the case if shell companies were simply banned altogether. However, given that the resources to prevent bad guys from doing bad things are necessarily finite, shifting resources to initiatives intended to stop terrorists from setting up or using shell companies necessarily means shifting them from somewhere else. But if that somewhere else is actually stopping bad guys, and if the assertion that terrorists use shell companies is false, the result could actually harm antiterrorism efforts.

I don't know if existing antiterrorist financing efforts are effective or efficient, nor do I know if efforts to try to stop terrorists from using shell corporations would actually pay off—though I have my doubts. But more importantly, I'm fairly sure that no one knows—except maybe the terrorists themselves. Pretending we do could result in policy changes built largely on myth, which is usually not a good idea. Unfortunately, it is a myth to claim that we know terrorists are using shell companies to finance terrorism. That this myth masquerading as truth made it into one of the nation's most respected law reviews is, in my view, unfortunate.

Reconciling Equal Protection Law in the Public and in the Family: The Role of Racial Politics

Dorothy E. Roberts
162 U. Pa. L. Rev. Online 283 (2014).

In Constitutional Colorblindness and the Family, Katie Eyer brings to our attention an intriguing contradiction in the Supreme Court's equal protection jurisprudence. Far from ending race‐based family law rules with its 1967 decision, Loving v. Virginia, the Court has ignored lower courts' decisions approving official uses of race in foster care, adoption, and custody decisions in the last half century. Thus, as Eyer observes, “during the same time that the Supreme Court has increasingly proclaimed the need to strictly scrutinize all government uses of race, family law has remained a bastion of racial permissiveness.”

Scholars who oppose race‐matching in the family law context object to the lower courts' failures to implement the colorblind mandate that the Supreme Court has set forth in its affirmative action decisions. Eyer adds that the Supreme Court itself has contravened its constitutional colorblindness narrative by deliberately failing to require strict scrutiny in family law decisionmaking. The Justices carefully crafted their opinion in Palmore v. Sidoti—a child custody case—to avoid constitutionally proscribing other official uses of race in child placement decisionmaking, especially in adoption cases. Furthermore, the Court has denied certiorari in family law cases where lower courts blatantly defied the principle of constitutional colorblindness. Although the Justices have yet to explicitly approve race‐based rules in the family law context, their actions and archival Supreme Court documents reveal a sub rosa divergence from their expressed colorblind principles.

What explains this stark dichotomy between the Supreme Court's equal protection jurisprudence in the affirmative action context and the family law context? I argue that, after examining the racial politics underlying decisions made by the Court's race conservatives, their approaches to race in public and private realms are not as contradictory as they first appear.

Case Notes

The Future of Recess Appointments After the Decision of the D.C. Circuit in Noel Canning v. NLRB

James M. Hobbs

President Obama outraged congressional Republicans in early 2012 when he used his recess appointment power to name the first Director of the Consumer Financial Protection Bureau (CFPB) and three new members to the National Labor Relations Board (NLRB). The President made the appointments despite pro forma Senate sessions specifically designed to prevent him from filling the positions. Partisans from both sides of the aisle immediately jumped in. Were these intrasession recess appointments an example of the President “arrogantly circumvent[ing] the American people . . . . [in] a sharp departure from a longstanding precedent”? Or were the pro forma sessions nothing more than a “gimmick” created to threaten “the President's constitutional authority to make appointments to keep the government running”?

Barely a year later, the D.C. Circuit Court of Appeals waded into the debate when it decided Noel Canning v. NLRB. In a “bombshell” ruling that has been described as “surprisingly broad,” the panel unanimously declared the President's appointments to the NLRB unconstitutional. Of the three other federal appellate courts to consider the scope of the recess appointment power, all have reached conclusions wholly opposite to that of Noel Canning. The reasoning of the D.C. Circuit's decision would have invalidated the majority of recess appointments made by U.S. presidents from Ronald Reagan forward.

The logic of Noel Canning, which draws heavily on a formalistic reading of the original meaning and purpose of the power, significantly narrows the scope of the Recess Appointments Clause in a manner that could “virtually eliminate the recess appointment power for all future presidents at a time when it has become increasingly difficult to win Senate confirmation for nominees.” Previous courts placed greater value on the functional, government‐enabling benefits of an expansive reading of the clause. Both interpretations are reasonable, but they also reflect the differing value judgments of the deciding courts.

Noel Canning created a clear circuit split on a critical constitutional issue, and the Supreme Court recently granted certiorari. Now the Court must balance the same values and make its own determination as to the future of recess appointments. The outcome of Noel Canning is incredibly difficult to predict. The Court could resolve the case in a number of different ways, and the various fundamental issues at stake cannot be divided easily along ideological lines.

Part I of this Note explores how courts have interpreted the Recess Appointments Clause in the past. Part II recounts the underlying facts of Noel Canning and outlines the arguments of the D.C. Circuit's majority and concurring opinions. Part III considers the implications of the D.C. Circuit's ruling for the NLRB and CFPB, and discusses the Supreme Court's decision to grant certiorari in this case.

Retroactivity, Strickland, and Alien Criminal Defendants: How the Chaidez Decision Raised More Questions Than It Answered

Danielle R. Acker Susanj
1

When the United States Supreme Court decides to hear a case, it does not grant certiorari simply on the case itself—it chooses to answer a “question presented” by that case. So in Chaidez v. United States, the Court granted certiorari on the question “whether the principle articulated in Padilla [v. Kentucky] applies to persons whose convictions became final before its announcement.” But in answering that question, Chaidez left unanswered—and raised—even more questions.

In the 2010 landmark case Padilla v. Kentucky, the Court declared that defense lawyers must inform noncitizen criminal defendants of the removal consequences of pleading guilty. In the years that followed, federal and state courts grappled with—and ultimately split over—whether Padilla applied only to defendants whose cases were still on direct appeal, or also to those whose convictions were final before Padilla. The Supreme Court granted certiorari in Chaidez, and, in an opinion authored by Justice Kagan, upheld the Seventh Circuit's ruling that Padilla established a “new rule” not available retroactively.

But the Court's ruling did not address several of the difficult questions that come up in retroactivity analysis, particularly for any rule premised on Strickland v. Washington. It also left many questions open for alien petitioners who seek relief from their convictions. Part I of this Note discusses how the Court has traditionally handled the retroactive application of rules to habeas petitioners and how the issue arose after Padilla. It summarizes the Teague rule for retroactivity and the problem the Padilla decision posed for lower courts determining its retroactive application. Part II discusses the Chaidez decision and notes the various policy and practical concerns implicated (and ignored) in its retroactivity analysis. Part III notes the open questions that persist after Chaidez—particularly for petitioners whose lawyers affirmatively gave them wrong information at the time they pleaded guilty—and examines where the Court may be heading with its recent plea jurisprudence. Finally, Part III also questions how long Teague and Strickland can function together, as new norms in criminal procedure evolve, become prevailing, and ultimately gain recognition from courts.

If All Investment Banks Are Conflicted, Why Blame Barclays? An Examination of Investment Bank Fee Structures and Del Monte Foods

Bonnie White

In February 2011, Vice Chancellor Laster held in In re Del Monte Foods Co. Shareholders Litigation that the Del Monte Foods board of directors breached its duty of care to the Del Monte stockholders by failing to identify and guard against its investment banker Barclays' conflicts in a merger transaction with Blue Acquisition Group. The court identified four instances of misbehavior throughout the sale process: (1) Barclays met secretly with potential bidders to solicit interest in acquiring Del Monte before the company was up for sale, and prior to being hired as the company's sell‐side advisor; (2) once the company was up for sale, Barclays facilitated a relationship between two competing bidders in violation of confidentiality agreements between the bidders and the company; (3) Barclays planned to and in fact did obtain the company's permission to provide the acquirers' financing; and (4) subsequent to the approval of the merger agreement, Barclays conducted the go‐shop despite an agreement to finance the acquirers. And how did the Del Monte board breach its duty? It didn't stop Barclays.

What could the board have done differently? The court explained that, despite having relied in good faith on Barclays' independence and expertise, the Del Monte board breached its duty of care by failing to realize that Barclays had pieced together a deal resulting in its earning more than forty million dollars in fees from its dual role. The board, according to the court, should have recognized that Barclays suffered from a conflict of interest as it stood on both sides of the transaction by providing both sell‐side advice and buy‐side financing. I argue in this Note, however, that Barclays, and indeed all sell‐side advisors, face a serious conflict of interest in standing on even one side of the transaction—by receiving success fees contingent on the consummation of a merger. For that reason, it is unclear whether the Del Monte decision imposed on boards of directors a duty to identify conflicts that are more serious than those ordinarily accepted in the investment banking industry, or merely a duty to fully disclose all conflicts. But considering the facts of Del Monte, I argue that the possibility of obtaining permission to provide buy‐side financing is just another conflict shared by all full‐service investment banks, and that additional disclosure would not have changed the outcome of the case. As a result, I conclude that Delaware courts should either (1) accept that investment bankers are necessarily conflicted when working on the sale of a corporation or (2) require a fundamentally different fee structure for investment bankers working on such a sale, and ultimately advocate for the elimination of success fees and staple financing.

This Note proceeds as follows: In Part I, I describe investment banking services provided in the sale of a corporation and common fee structures used in those services. In Part II, I contextualize Del Monte with respect to relevant case law, and in Part III, I describe the facts of the case. In Parts IV and V, respectively, I present the claims brought against the Del Monte board as well as the Delaware Court of Chancery's response to those claims. Part VI describes the consequences of the court's holding for Del Monte and Blue Acquisition Group. Finally, in Part VII, I argue that Barclays' conflicts were no more significant than the conflicts that exist for nearly all full‐service investment banks, and that, for this reason, additional disclosure would not have affected the outcome. I do make the caveat that the Del Monte board did breach its duty of care by permitting Barclays to conduct the go‐shop after Barclays had committed to provide the acquirers' financing. Finally, I analyze the standard for investment bank conflicts going forward and advocate for eliminating success fees and staple financing altogether.

“I’ll Take Form Over Substance for $800, Trebek”: Why Blueford Was Too Rigid and How States Can Properly Provide Double Jeopardy Protection

Warren M. Klinger

In August 2009, Arkansas tried Alex Blueford for the murder of a one‐year‐old child. Blueford was charged with capital murder, which included three lesser offenses: first‐degree murder, manslaughter, and negligent homicide. After deliberation, a jury of Blueford's peers reported to the trial judge that it unanimously opposed the charges of capital and first‐degree murder, yet despite the protection offered by the Double Jeopardy Clause of the Fifth Amendment, Arkansas attempted to retry Blueford on those charges. Notwithstanding persuasive arguments from Blueford's counsel, the Supreme Court held that Blueford was never acquitted of either charge and was therefore not protected from retrial under the Double Jeopardy Clause.

Blueford embodies two distinct yet related propositions. First, the Court held that the jury foreperson's report that the jury was unanimous in opposing capital and first‐degree murder charges did not constitute an acquittal as to those charges. Second, and more crucially, the Court determined that the trial judge was not required to allow the jury to give effect to that unanimous vote—either by issuing partial verdict forms or polling the jury—before finding that “‘circumstances manifest[ed] a necessity’ to declare a mistrial.” In “cases in which the mistrial was justified by ‘manifest necessity, ’” the Double Jeopardy Clause does not bar retrial. Accordingly, the Court concluded that the Double Jeopardy Clause did not prevent the state from retrying Alex Blueford, or a similarly situated defendant, for murder.

Critics asserted that the Supreme Court's decision to give Arkansas a “second shot” at convicting Blueford of murder directly contravened the core principles of the Fifth Amendment's Double Jeopardy Clause: that the state should not be allowed to repeatedly attempt to convict individuals for the same alleged offense, and that the finality of judgments is of paramount importance to the smooth functioning of the judicial system. So great was the Framers' fear of this oppressive practice that they expressly protected against it in the Bill of Rights.

Did the Court actually give states the “proverbial second bite at the apple” in violation of the Double Jeopardy Clause or is there more to this case? The discrete issue in Blueford is not so much about interpreting the Double Jeopardy Clause as it is about convoluted jury forms and instructions. Part I of this Note provides an overview of double jeopardy jurisprudence. Part II discusses the Blueford decision and analyzes its strengths and weaknesses, including the Court's rigid application of past precedent without consideration for the policy behind the Clause or the practical implications of its decision. Part III offers solutions to the problem of the acquittal‐first instructions presented in Blueford, including eliminating “convict‐on‐any‐or‐acquit‐on‐all” jury forms and requiring judges to provide partial verdict forms or to poll a jury before declaring a mistrial due to a hung jury.

Debates

The Constitutionality of Stop-and-Frisk in New York City

David Rudovsky & Lawrence Rosenthal
162 U. Pa. L. Rev. Online 117 (2013)

Stop-and-frisk, a crime prevention tactic that allows a police officer to stop a person based on "reasonable suspicion” of criminal activity and frisk based on reasonable suspicion that the person is armed and dangerous, has been a contentious police practice since first approved by the Supreme Court in 1968. In Floyd v. City of New York, the U.S. District Court for the Southern District of New York ruled that New York City’s stop-and-frisk practices violate both the Fourth and Fourteenth Amendments. Professors David Rudovsky and Lawrence Rosenthal debate the constitutionality of stop-and-frisk in New York City in light of Floyd and Judge Shira A. Scheindlin’s controversial removal from the case. Professor Rudovsky argues that Floyd shows the important role of data and statistical analysis in assessing the constitutionality of stop-and-frisk procedures. He contends that empirical evidence regarding both the factors for and outcomes of stops and frisks in New York demonstrates that either the legal standard is too permissive or police-stop documentation is not truthful. In response, Professor Rosenthal argues that Judge Scheindlin erred in failing to consider evidence of stop-and-frisk’s efficacy—evidence indicating that the NYPD’s stops are based on reasonable suspicion, a standard considerably less demanding than “preponderance of the evidence.” Additionally, Rosenthal argues that Judge Scheindlin should have considered differential offending by race or other potentially nondiscriminatory explanations for the higher stop rates of minorities.

Off-Label Drug Promotion and the First Amendment

Stephanie M. Greene & Lars Noah
162 U. Pa. L. Rev. Online 239 (2014)

Off-label promotion—pharmaceutical manufacturers’ marketing of FDA-approved drugs for unapproved uses—is considered a First Amendment right by some, a threat to the safety and effectiveness of pharmaceutical drugs by others. Although off-label prescription is legal and often beneficial, the Federal Food, Drug, and Cosmetic Act (FDCA) and corresponding FDA regulations effectively prohibit off-label promotion. The FDA can look to statements by pharmaceutical representatives as evidence of a drug’s intended use, thereby placing manufacturers that promote off-label in a Catch-22: the drug will be subject to the FDCA’s misbranding provisions if manufacturers add labeling instructions for that intended use, but also if they fail to add those instructions. To legally promote a new intended use, pharmaceutical companies must satisfy the FDA’s rigorous approval process. In United States v. Caronia, the Second Circuit Court of Appeals ruled that the FDCA could not be interpreted to prohibit truthful, off-label promotion.

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