Volume 163, Issue 5 
April 2015
Articles

Structure and Value in the Common Law

Shyamkrishna Balganesh & Gideon Parchomovsky

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.


Helping Buyers Beware: The Need for Supervision of Big Retail

Rory Van Loo

Since the 2008 financial crisis, consumer regulators have closely supervised sellers of credit cards and home mortgages to stamp out anticompetitive practices. Supervision programs give financial regulators ongoing access to sophisticated firms’ internal data outside the litigation process. This often enables examiners to identify and correct harmful conduct more rapidly and effectively than would be possible using publicly available information and cumbersome legal tools.

Consumers spend four times more on retail goods than on financial products. The retail sector’s dominant firms—such as Amazon, Walmart, Unilever, and Kraft—employ large teams of quantitative experts armed with advanced information technologies, huge volumes of data, and in‐store experimentation to develop behavioral economics–related practices analogous to those seen in consumer finance. The empirical data suggest those practices in the aggregate may significantly harm all households, costing even a family at the poverty line hundreds of dollars annually. Yet unlike in consumer finance, regulators have declined to supervise sellers of retail goods.

This Article argues for wider adoption of the financial sector’s emerging—though largely unarticulated—paradigm that views regulatory supervision of firms as central to consumer protection. That paradigm suggests the consumer goods sector needs the inverse of what consumer finance needed in the wake of the 2008 crisis. Then, Congress created the Consumer Financial Protection Bureau to provide more consumer protection because regulators had previously focused excessively on supervising financial institutions to ensure firms’ safety and soundness. In contrast, the consumer goods sector has a regulatory body—the Federal Trade Commission’s (FTC) Bureau of Consumer Protection—that focuses solely on consumer protection but does not supervise firms. Fortunately, congressional action would not be required for the FTC to develop a supervision program. The agency’s leadership would simply need to exercise the authority that Congress long ago granted.


Presidential Settlements

Adam S. Zimmerman

Large groups regularly turn to the White House to resolve complex disputes collectively, much like a class action. These presidential settlements go back as far as the early Republic and were particularly popular in the Progressive Era, when President Teddy Roosevelt famously brokered settlements among private groups following a rash of accidental injuries and deaths in mining, rail, and even football. More modern variants include mass compensation schemes like the Holocaust victim settlement, the Pan Am 103 settlement, and the BP oil spill settlement brokered by Presidents Bill Clinton, George W. Bush, and Barack Obama, respectively. In each case, the President helped resolve a sprawling class action–like dispute among warring parties while advancing a broader executive agenda. Just as the President has extended power over the administrative state, presidential settlements demonstrate the growth of executive authority in mass dispute resolution to provide restitution for widespread harm.

But this use of executive power creates problems for victims purportedly served by presidential settlements. When the President settles massive private disputes, the President resolves them like other forms of complex litigation but without the oversight, transparency, and participation thought necessary to resolve potential conflicts of interest among the victims. The President’s other duties aggravate conflicts with groups who may rely entirely on the settlements for relief.

This Article recommends that the President adopt complex litigation principles to reduce conflicts of interest, increase transparency, and improve public participation in White House–driven settlements. Envisioning the President as the “settler-in-chief,” this Article also raises new questions about how the coordinate branches of government, as well as actors inside the White House, may regulate executive settlements consistent with the separation of powers.


Comments

Modernizing Class Action Cy Pres Through Democratic Inputs: A Return to Cy Pres Comme Possible

Chris J. Chasin

Forty-five years ago, the ancient doctrine of “cy pres” was lifted from the pages of trust law and applied, for the first time, to the class action context. Cy pres stood for the proposition that, when the explicit purpose of a charitable trust became impossible, the court should look to the testator’s intent and apply the trust to its next best use. In the class action context, cy pres was an equitable “patch” necessitated by the expanding scope of the class action mechanism at the state and federal levels. Generally, the concept has come to mean that when distributing damages to an individual class member is impossible or impractical, the court should use those damages for the benefit of the class at large.

However, the current class action litigation system does not consistently follow this standard. Cy pres awards lack the procedural and adversarial protections needed to ensure their fairness and accuracy. Courts, even when trying to apply cy pres for the benefit of the member class, are poorly suited to decide how best to benefit the class. And, unfortunately, cy pres awards are all too often diverted to general charity or directed to charitable projects of interest to the judge or lawyers involved in the case. These outcomes deprive class members of the benefits of their suit and cast a pallor of impropriety on the class action mechanism.

Fortunately, a remedy exists and can be deployed discretionarily without legislation or amendment to the Federal Rules. Because cy pres aims to approximate the benefit that individual damages would provide to class members, courts should ask the class how best to utilize cy pres awards. Through a crowdsourced, democratic voting process, courts could seek the input of identified class members at low marginal cost. This mechanism would add a democratic element to the cy pres process and largely obviate potential or perceived ethical violations. Moreover, it would improve judicial accuracy in awarding cy pres funds, enabling more of their compensatory value to flow to the injured class. This proposal modernizes class action cy pres while honoring its ancient origins by returning to cy pres’s core goal: adhering as closely as possible to the intended outcome.


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

Paul Vincent Courtney

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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