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  The Many Modern Sources of Business Law

  Colleen Honigsberg and Robert J. Jackson Jr.

  This book grapples with an important question that has largely eluded systematic study: whether American law is keeping up with the businesses it seeks to govern. The question is important, because the increasing pace of technological change naturally gives rise to the concern that the law—created and enforced by actors who lack innovators’ powerful incentives to adapt to changed markets—will fall behind, imposing unproductive rules from another era on modern businesses. From the common law of mergers and acquisitions to securities regulation, our colleagues’ chapters help us better understand how the law might adapt to better serve corporate law’s many constituents. In this chapter, we have a much less ambitious goal. We merely observe that, for many of today’s most innovative corporations, there are so many sources of what can be called corporate law—each the subject of different political economy, policy objectives, and institutional sources—that there cannot be said to be a single, unified business law for these firms. Instead, “business law” at these companies consists of a complex ecosystem of federal, state, and local rules, all of which can be expected to change in response to emerging business models. For that reason, we argue, understanding those interactions, and how the different sources of law can challenge companies by creating inconsistent pockets of law, is the true challenge for lawmakers who hope to ensure that law facilitates, rather than impedes, innovation. We begin by illustrating this idea through a contemporary case study of an innovative industry that emerged against the backdrop of existing law arguably designed for another era: marketplace lending. These fast-growing finance firms seek to match prospective borrowers to willing lenders, enabling fast, cost effective funding decisions, and are expected to issue over $150 billion in loans within the decade. Yet marketplace lenders face extraordinary uncertainty about the law that will govern their operations at both the federal and state levels. Indeed, as we explain, marketplace lenders cannot meaningfully be said to face a single, unified corporate law. We apply the insights from our case study of marketplace lending to the broader topic of this book: whether corporate law is keeping up with our economy’s most innovative firms. We explain that the concept of corporate law encompasses not only federal securities law and the work of Delaware’s famed judiciary but also a wide range of federal and state agencies tasked with protecting consumers, investors, and the broader public. For us, then, the question is not whether corporate law is keeping up with innovation; it is whether the interdependent evolution of the institutional sources of corporate law can be expected to produce an environment in which productive innovation will occur. Understanding the interplay between these different sources of regulation is critical, because confusion over the state of the law can, and often does, stifle socially valuable innovation. This chapter proceeds as follows. The next section describes the emergence of marketplace lenders and the uniquely complex legal challenges that have arisen in response to their business model. A later section explains how the marketplace-lending experience can inform our thinking about the evolution of the institutional sources of corporate law in response to innovation. Finally, we offer a brief conclusion.

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  International Investment Law and Arbitration: A Conceptual Framework

  Robert L. Howse

  Today, arguably, investor-state dispute settlement (ISDS) has become the most controversial form of international litigation (very recently rivalled perhaps by the International Criminal Court, which is facing a stark legitimacy challenge from a number of African states). Arbitration under the International Centre for the Settlement of Investment Disputes (ICSID) or UNCITRAL (The United Nations Commission on International Trade Law) allows an investor to sue a host state before an ad hoc arbitral tribunal for violations of bilateral investment treaties (BITs) or trade and investment agreements (e.g., the North American Free Trade Agreement (NAFTA)). If successful, the investor can enforce a monetary award against the host state in ordinary courts around the world. This regime has, more or less plausibly, been painted as a network of secret or “shadow” courts dominated by a clique of elite arbitrators motivated not by justice but by personal wealth acquisition, a system where multinational corporations unleash blue chip law firms on some of the poorest countries in the world, forcing multimillion dollar settlements or winning awards that are even larger, sometimes more than an impoverished nation’s entire annual budget for health, education and public security. The fear of such pay-outs has understandably had a chill effect on legitimate government regulation in many countries; inconsistently interpreted by arbitrators in different cases, the general norms in investment treaties have been read to go far beyond compensation for takings that aim to extract rents from investors and are likely inefficient, extending to regulatory changes that respond to many valid policy concerns but a negative economic impact on some particular foreign investor. Such criticisms have made headlines and influenced debates about globalization at the highest political levels in the United States, and Europe. In a letter to Members of Congress, over 200 academics in law and economics, including such distinguished scholars as Laurence Tribe and Joseph Stiglitz, made the following critique of ISDS: “Through ISDS, the federal government gives foreign investors and foreign investors alone the ability to bypass that robust, nuanced, and democratically responsive legal framework. Foreign investors are able to frame questions of domestic constitutional and administrative law as treaty claims, and take those claims to a panel of private international arbitrators, circumventing local, state or federal domestic administrative bodies and courts. Freed from fundamental rules of domestic procedural and substantive law that would have otherwise governed their lawsuits against the government, foreign corporations can succeed in lawsuits before ISDS tribunals even when domestic law would have clearly led to the rejection of those companies’ claims. Corporations are even able to relitigate cases they have already lost in domestic courts. It is ISDS arbitrators, not domestic courts, who are ultimately able to determine the bounds of proper administrative, legislative, and judicial conduct. This system undermines the important roles of our domestic and democratic institutions, threatens domestic sovereignty, and weakens the rule of law. In addition to these fundamental flaws that arise from a parallel and privileged set of legal rights and recourse for foreign economic actors, there are various flaws in the way ISDS proceedings are meant to be conducted in the TPP. In short, ISDS lacks many of the basic protections and procedures of the justice system normally available in a court of law. There are no mechanisms for domestic citizens or entities affected by ISDS cases to intervene in or meaningfully participate in the disputes; there is no appeals process and therefore no way of addressing errors of law or fact made in arbitral decisions; and there is no oversight or accountability of the private lawyers who serve as arbitrators, many of whom rotate between being arbitrators and bringing cases for corporations against governments. Codes of judicial conduct that bind the domestic judiciary do not apply to arbitrators in ISDS cases.” In September 2015, in the context of the negotiations between the European Union and the United States on the Trans Atlantic Trade and Investment Partnership (TTIP), the European Commission proposed to address public outrage at investor-state arbitration through inventing an alternative judicial system for the settlement of investment disputes. The judicial system would initially be incorporated (instead of arbitration) in bilateral agreements of the EU such as TTIP, but eventually would be replaced by a multilateral tribunal for the settlement of investment disputes.

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  The Institutions of TPP11: Back to the Future?

  Robert L. Howse

  This chapter canvasses the institutions of the Trans-Pacific Partnership (TPP)—left entirely unchanged in TPP11—to assess their cumulative potential to contribute to ties of solidarity among regulatory elites and consequently foster (mega)regional integration. The promise of treaty institutions as conduits of sanguine economic integration, the narrative championed by TPP’s architects, is contrasted with a more critical account in which plurilateral institutions are seen to serve as mechanisms to advance particular economic interests in the face of opposition in the almost-universal trade governance institutions such as the World Trade Organization (WTO). This “divide and conquer” strategy, so the argument goes, dominates in TPP’s institutions, which remain generally weak and unconnected to existing frameworks in Asia and beyond. But they also vary significantly between stronger mechanisms primarily for business interests and almost entirely aspirational efforts in more social areas such as environment, labor, and development.

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  Democracy’s Deficits

  Samuel Issacharoff

  History confounds certainty. Barely a quarter century after the collapse of the Soviet empire, it is democracy that has entered an intense period of public scrutiny. The election of President Trump and the Brexit vote are dramatic moments in a populist uprising against the post-war political consensus of liberal rule. But they are also signposts in a process long in the making, yet perhaps not fully appreciated until the intense electoral upheavals of recent years. A percentage or two change in the Brexit vote, or a few tens of thousands of votes cast differently in a few key states in the United States, would certainly have postponed the confrontation but would not have altered the fundamental concerns. With the realignment of the Dutch and French elections, the emergence of a hard-right populism in Hungary and Poland, and the mushrooming of anti-governance alliances in Italy and Spain, deeper questions must be asked about the state of democracy. Italy may have had 44 governments in a 50-year span, but power rotated among a familiar array of parties, personalities and policies—until now. At issue across the nuances of the national settings is a deep challenge to the core claim of democracy to be the superior form of political organization of civilized peoples. It is odd, and highly dispiriting, to have to engage this question so soon after democracy seemed ascendant as never before. With the collapse of the Soviet Union and its empire, the twentieth century concluded with democracy having defeated its two great authoritarian rivals, and the popular election of governments spread across a greater swath of the Earth than ever before. Francis Fukuyama’s embellished claim that the end of history was upon us accurately captured the sense that electoral democracy alone seemed to lay claim to political legitimacy. Further, the opening to democracy invited economic liberalization, and the resulting market exchanges were allowing huge masses to rise from poverty, even in hold-out autocratic states like China or Vietnam. Clearly the era of democratic euphoria has ended. The rise of Islamic terrorism and the failure of the Arab Spring were certainly warning shots, but grave as these might be, they did not challenge the core of democratic government. The inevitable trade-off between security and liberty that accompanies external threats to democratic regimes is a serious challenge and can itself compromise core legitimacy. But democracies that withstood what Philip Bobbitt terms the long wars of the twentieth century were unlikely to come undone in the face of enemies who sought to target civilians, but were in no position to pose a sustained military threat of any kind. Even the problematic military engagements in Afghanistan or Iraq bitterly divided democratic societies but did not threaten an epochal confrontation with democracy itself. Instead, the current moment of democratic uncertainty draws from four central institutional challenges, each one a compromise of how democracy was consolidated over the past few centuries. The four I wish to address are: first, the accelerated decline of political parties and other institutional forms of popular engagement; second, the paralysis of the legislative branches; third, the loss of a sense of social cohesion; and fourth, the decline in state competence. While there are no doubt other candidates for inducing anxiety over the state of democracy, these four have a particular salience in theories of democratic superiority that make their decline or loss a matter of grave concern. Among the great defences of democracy stand the claims that democracies offer the superior form of participation, of deliberation, of solidarity and of the capacity to get the job done. We need not arbitrate among the theories of participatory democracy, deliberative democracy, solidaristic democracy or epistemic democratic superiority. Rather, we should note with concern that each of these theories states a claim for the advantages of democracy, and each faces worrisome disrepair.

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  Tax and Human Rights: The Moral Valence of Entitlements to Tax, Sovereignty, and Collectives

  Mitchell A. Kane

  This chapter assesses the rightful claims of developed and developing countries to portions of the “international tax base.” Existing revenue in developed country coffers and incremental revenue from possible reform of the international tax system are not substitutes. There is a massive difference between developed countries redirecting a portion of existing revenue toward the redress of human rights shortfalls in developing countries on the one hand, and a restructuring of the basic understanding of international tax entitlements such that developing countries have a superior claim to revenues as their own in the first instance on the other. The chapter then proposes three possible ways in which we might rethink tax policy: a recasting of the basic source-residence dichotomy that deeply pervades the existing approach to international taxation; a consideration of tax policy with an eye to duties that nations may hold with respect to one another; and a rethinking of the role of corporate incidence analysis in tax policy.

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  Preface

  Benedict Kingsbury

  TTechnical standardization policy has been animated for more than a century by pursuit of efficiencies from interoperability, and also in recent decades by active facilitation of economic and innovation gains achievable through competitive markets benefiting from network effects. Science and technology studies (STS) or Foucaldian power-knowledge frameworks diversify this perspective, animating inquiry into ways in which standards enact power allocations, distinguish as well as unify, exclude as well as normalize. National security priorities and geopolitical considerations add additional layers, as do state industrial or protectionist policies. Whether and how to take account of wider societal interests and state interests affected by standards and standardization processes, and what allocative mechanisms or compensatory remedies should accompany the distributional effects and externalities (positive and negative) of standards, are public policy questions that manifest themselves also in public law, but in the fragmentary and uneven ways traced in this lucid and thoughtfully constructed book. Whereas the companion volume examines intersections of political economy and law in the relations of technical standards to patents and the relations of standards and patents to antitrust or competition law, the present volume traverses other topics of technical standardization law with private– public implications that, if for the most part less litigated, are nonetheless fundamental. By “law” the contributors tend to mean formal law (state/national law, or inter-governmental law), in contrast to social norms or other forms of normative ordering with law-like features. The term “regulation” may be deployed to encompass this wider range of normative orderings. While the organizing frame of the book is technical standardization and formal law, the specificity of this frame in fact enables the book to shed much light on relations between standardization and regulation more broadly.

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  Introduction: The Essence, Significance, and Problems of the Trans-Pacific Partnership

  Benedict Kingsbury, David M. Malone, Paul Mertenskötter, Richard B. Stewart, Thomas Streinz, and Atsushi Sunami

  The Trans-Pacific Partnership (TPP) is the first fully formed attempt at a new type of geopolitical and economic ordering project we call megaregulation. This introduction draws on the volume’s thirty further chapters to distill TPP’s essence and critically appraise its significance in the Asia-Pacific and beyond. TPP’s megaregulatory project uses the treaty-institutional form to open space for transnational business operations and prescribe liberal-type reforms of regulatory states and of their relations to markets. It also carries glimmers of a megaregionalism, but one largely lacking in imagination of a shared social or ecological future. TPP’s extensive coverage implicates, but TPP does not very much address, concerns over distribution, inequality, labor, environment, development, and national futures and nationalism which became more and more evident in national and international politics during and after the years of its negotiation. Drawing together themes from the book sheds some light on thinking about possible futures of economic ordering.

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  The Trans-Pacific Partnership as Megaregulation

  Benedict Kingsbury, Paul Mertenskötter, Richard B. Stewart, and Thomas Streinz

  The Trans-Pacific Partnership (TPP) brings into legal effect a new form of inter-governmental economic ordering and regulatory governance on an extended “megaregional” scale. This chapter proposes the concept of “megaregulation” as a way to understand what is distinctive about TPP and about the particular type of governance project which it partly pioneered. Megaregulation as exemplified by TPP is characterized by five features. First, it comprehensively covers commercial flows in goods, services, capital, and data. Second, its broad aim is to create a generalized freedom to operate for large corporations and their affiliates across the set of national markets covered by the treaty. Third, as its method, megaregulation employs regulatory alignment—nudging and shaping both the substance and the processes of national regulatory systems. Fourth, megaregulation involves a large but not universal (like the WTO) scale in volume of covered economic activity and creates significant gravitational pulls and emulatory pressures for third parties. Fifth, megaregulation takes the treaty-institutional form which prescribes detailed rules and empowers some inter-governmental or transnational institutions and the communities of practice spawning around them. TPP’s specific version of megaregulation further advances an ordo- or neo-liberal vision of the state and its relation to markets that deliberately builds out contrasts with China’s party-state economic ordering, thereby giving it lasting geopolitical and geoeconomic relevance.

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  On the Representativeness of Constitutional Courts: How to Strengthen the Legitimacy of Rights Adjudicating Courts without Undermining Their Independence

  Mattias Kumm

  Constitutional courts, like legislatures, are representative institutions. But in virtue of what are they representative and what are the variables that might raise their level of representativeness, without unduly undermining the impartiality and independence that is required for courts to successfully play this role? The chapter distinguishes between four complementary dimensions of representativeness: volitional, identitarian, argumentative, and vicarious. I argue that it is not desirable to increase courts’ volitional representativeness (strengthening the electoral link between judges and the people). Even though identitarian representativeness is important in contexts of historical practices of exclusion, the focus of constitutional designers should not be limited to these factors. Other normatively salient variables that should be the focus of constitutional designers include argumentative representativeness, implicating questions of methodology, and style and structure of judicial opinions. Furthermore, vicarious representativeness, which concerns the constitutional embeddedness of judicial institutions in the political system and, more specifically, the mechanisms that allow political branches to challenge decisions of courts should be among the factors on which attention is focused.

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  In Defense of Liberal Feminism

  Sylvia A. Law

  In its original eighteenth-century form, liberal democratic theory did not recognize the full humanity or citizenship of either women or people of color. Nonetheless, women have mobilized liberal values and tools to build an increasingly feminist world. This chapter traces two centuries of accomplishment and failure. The chapter begins by describing liberal feminism and tracing the connections between classic liberalism and feminism in the United States from their roots in the eighteenth century to the present day. It explores the methodologies of liberal feminism, including legal reform, scholarship, cultural and societal changes, and grassroots organization. It then examines three challenges confronting liberal feminism in the twenty-first century: women’s ongoing lack of reproductive justice, pervasive sexual harassment and acute disparity in the distribution of income and opportunity. It concludes that liberal rights are essential in constructing a just society, but not by themselves sufficient to assure human flourishing and solidarity.

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  8A. Competition

  Daryl Lim, Thomas M. Cotter, Eleanor M. Fox, Milan Kristof, Suzanne Munck, Maureen K. Ohlhausen, and Thomas D. Pease

  Topics covered may include antitrust concerns over large tech companies, data sharing as an antitrust remedy, recent agency enforcement, antitrust liability for post-sale restrictions, "pay-for-delay," the Biologic Patent Transparency Act, sham petitioning, Noerr issues, injunctions and antisuit injunctions in FRAND litigation, collective royalty setting and Makan Delrahim's "New Madison" approach, and Qualcomm's "no license, no chip" strategy.

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  Knowledge Commons

  Michael J. Madison, Brett M. Frischmann, and Katherine J. Strandburg

  This chapter provides an introduction to and overview of the knowledge commons research framework. Knowledge commons refers to an institutional approach (commons) to governing the production, use, management, and/or preservation of a particular type of resource (knowledge). The research framework supplies a template for interrogating the details of knowledge commons institutions on a case study basis, generating qualitative data that may be used to support comparative analysis. The framework was introduced to the literature by Madison et al. (2010) as a framework for researching ‘constructed cultural commons,’ a shorthand for shared resources composed primarily of products of the human mind, namely knowledge and information in scientific domains, domains related to arts and culture, and resource domains defined largely by their human-generated character and their intangibility. That shorthand has been refined in later work into the phrase ‘knowledge commons’, aligning the focus of the research with an earlier introduction by Ostrom and Hess (2007) to themes raised by ‘knowledge commons.’ Other research on related topics has characterized such resources as ‘information commons’, ‘intellectual commons’, ‘cultural commons’, ‘socio-technical’ commons, and ‘new commons’. Subdomains of research in these domains include scholarship on ‘data commons’, ‘research commons’, ‘spectrum commons’, and ‘scientific commons’. The word ‘commons’ has been applied for rhetorical effect to a variety of ideological and institutional forms, such as the ‘Creative Commons’ licensing enterprise. Those rhetorical applications of ‘commons’ terminology are not addressed here. For the purposes of this chapter, and to render the research framework inclusive and meaningful in a broad, comparative sense, the term knowledge refers to all of the domains identified in the previous paragraph and therefore to a broad set of intellectual, scientific, technical, and cultural resources. Differences among the domains and among the resources within them may be significant. Knowledge, information, and data may be different from each other in meaningful ways. The research framework described here is sufficiently flexible to permit researchers to capture both their commonalities and their differences in their respective ecological contexts. For similar reasons related to inclusiveness, potentially narrower definitions of relevant goods are avoided. Neither this chapter nor the framework limit its approach to precise distinctions among private goods, public goods, club goods, and/or toll goods. Commons refers to a form of community management or governance of a shared resource. Governance involves a group or community of people who share access to and/or use of the resource and who manage their behavior via an established set of formal and information rules and norms. ‘The basic characteristic that distinguishes commons from noncommons is institutionalized sharing of resources among members of a community’. Commons does not denote the resource, the community, a place, or a thing. Commons is the institutional arrangement of these elements and their coordination via combinations of law and other formal rules and social norms, customs, and informal discipline. Community or collective self-governance of the resource by individuals who collaborate or coordinate among themselves effectively is a key feature of commons as an institution. Self-governance may be and often is linked to other formal and informal governance mechanisms. Technological and other material constraints may play important roles in the constitution and governance of knowledge commons. Knowledge commons thus refers to the institutionalized community governance of the creation, sharing, and preservation of a wide range of intellectual and cultural resources. This chapter briefly describes the motivations for creation of the knowledge commons research framework. It reviews the content of the framework, indicating where appropriate how the framework builds on, but is distinguishable from, its most important antecedent, Ostrom’s Institutional Analysis and Development (IAD) framework. This chapter briefly summarizes tentative conclusions from case study research completed to date and indicates important directions for future research.

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  Knowledge Commons

  Michael J. Madison, Katherine J. Strandburg, and Brett M. Frischmann

  “Knowledge commons” refers to an institutional approach (commons) to governing the production, use, management, and/or preservation of a particular type of resource (knowledge). “Commons” refers to a form of community management or governance. It applies to a resource, and it involves a group or community of people who share access to and/or use of the resource. “The basic characteristic that distinguishes commons from noncommons is institutionalized sharing of resources among members of a community”. Commons does not denote the resource, the community, a place, or a thing. “Commons” is the institutional arrangement of these elements and their coordination via combinations of law and other formal rules; social norms, customs, and informal discipline; and technological and other material constraints. Community or collective self-governance of the resource, by individuals who collaborate or coordinate among themselves effectively, is a key feature of commons as an institution, but self-governance may be and often is linked to other formal and informal governance mechanisms. More detail is supplied below. For the purposes of this chapter, “knowledge” refers to a broad set of intellectual and cultural resources. There are important differences between various resources captured by such a broad definition. For example, knowledge, information, and data may be different from each other in meaningful ways. But an inclusive term is necessary in order to permit knowledge commons researchers to capture and study a broad and inclusive range of commons institutions and to highlight the importance of examining knowledge com mons governance as part of dynamic, ecological contexts (see Benkler, 2013 and Cohen, 2006 on the importance of understanding the cultural environments in which knowledge resources are produced and used). Prior attempts to use “cultural environment” were cumbersome. For similar reasons related to inclusiveness, potentially narrower definitions of knowledge goods are avoided; in addressing resources, this chapter does not limit its discussion to precise distinctions among private goods, public goods, club goods, and/or toll goods. The resource set includes information, science, knowledge, creative works, data, and other related resources. “Knowledge commons” thus refers to the institutionalized community governance of the sharing and, in some cases, creation of a wide range of intellectual and cultural resources. This chapter provides an overview of efforts to develop and apply a research framework to investigate knowledge commons on a systematic basis, across a diverse range of contemporary and historical cases and across cases that are both supported by modern information technologies and those that pre-date or that operate independently of those technologies.

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  Remote Control: TPP’s Administrative Law Requirements as Megaregulation

  Paul Mertenskötter and Richard B. Stewart

  The Trans-Pacific Partnership (TPP) includes many and varied administrative law obligations for the parties’ domestic regulation and administration which form an integral part of its megaregulation project. These treaty requirements for regulatory procedures operate as instruments of transnational remote control by empowering private actors to use the procedures to pursue and defend their interests in other states. To create this remote control, TPP uses rules and structures for regulatory decision-making that reflect a US understanding of administrative law and its implicit regulatory capitalist model for the structuring of state–market relations. To explain how remote control works, we synthesize McNollgast’s conception of regulatory procedures in the purely domestic context as instruments of political control and Putnam’s theorization of international treaty negotiations as a two-level game. We show how procedural obligations in TPP are designed to stack the deck to favor certain interests—business firms rather than environmental and social interests—and why treaty negotiators may find it easier to agree on procedures than on substantive commitments.

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  Discrimination and Subordination

  Sophia Moreau

  There is something particularly compelling about the idea that discrimination is wrong when and because it unjustly subordinates some people to others. The kinds of discrimination that usually give rise to the greatest moral indignation involve the creation or perpetuation of different classes of people, with some having a superior status and others an inferior one, in circumstances where we think that everyone ought to have an equal status. Consider, for instance, the Jim Crow laws, which turned African Americans into second-class citizens; or dress codes for waitresses or female retail employees that mark them out as sexual objects, lacking the full and independent agency that we ascribe to men. Moreover, the idea that unjust subordination can help to explain the wrongness of certain forms of discrimination does not just have a hold on our moral imaginations. It is also deeply rooted in the law. Both the United States’ Fourteenth Amendment and the constitutional equality rights in Section 15 of the Canadian Charter of Rights and Freedoms have been understood—by courts, and also by academics—as prohibiting government policies that subordinate people based on certain traits.1 And of course, when private sector anti-discrimination law was first developed in these two countries in the 1960s and 1970s, it was treated as a form of quasi-criminal law that aimed to eliminate acts of prejudicial subordination, acts that deliberately denied certain privileges or benefits to members of certain social groups on the grounds that these groups were less worthy than others. But what exactly does unjust subordination involve? And how do discriminatory acts and policies work to subordinate certain social groups and to sustain their subordination? It is the aim of this chapter to answer these questions. Most of the legal scholars who analyze discrimination in terms of its contribution to subordination invoke a relatively under-specified, intuitive idea of subordination. For instance, when Owen Fiss first urged that the US Equal Protection Clause was best interpreted not as preventing arbitrary classifications but as eliminating unfair subordination, he suggested that subordination was a “status harm” that involved perpetuating the lower social position of persistently disadvantaged social groups. But it was not his aim to develop a general account of what that status harm involved. More recently, Reva Siegel and Joel Balkin have examined the ways in which courts, in cases of discrimination, are motivated by concerns with “social stratification” and “the secondary social status of historically oppressed groups.” But they do not explain in detail what “social stratification” involves. Their interest is largely in charting how concerns about social stratification motivate judges to adopt particular legal doctrines and to decide certain cases in certain ways. My aim in this chapter is different. It is to develop a philosophical account of subordination, one that can help us understand some of the ways in which different forms of discrimination subordinate people, and the reasons why they might be wrong, in virtue of contributing to such subordination. I will not try to specify a set of individually necessary and jointly sufficient conditions for social subordination. But I shall lay out in some detail four conditions that seem to be satisfied in most cases where the subordination of a certain group persists across different social contexts for some extended period of time and seems unjust. I shall do this in Section 3 of the chapter. Section 4 will consider how discrimination contributes to subordination, so understood. The scholars of discrimination law who come closest to offering a philosophical analysis of subordination and of how discrimination subordinates are expressivists Deborah Hellman, Elizabeth Anderson, and Richard Pildes. They have argued that an act is wrongfully discriminatory when it subordinates a person to others in the sense that the act demeans her, or sends the message that she is of less value than others. I shall consider Hellman’s account in Section 2 of the chapter. While this account is extremely helpful in drawing our attention to the ways in which discriminatory acts send messages about the inferior status of certain groups, I shall suggest that, at least in its current form, the account is too individualistic. It focuses too much on the individual power dynamic between the discriminator and the discriminatee, when in fact we need to look at the relative amounts of power possessed by the different social groups to which these people belong. I shall also argue that expressivism offers us too narrow an understanding of sub- ordination. Subordination is not only a function of the social messages sent by particular acts or policies. Rather, it is kept in place by a variety of effects that discriminatory acts have on different social groups, such as perpetuating differences in power and authority between them and rendering certain social groups or their needs invisible in certain contexts.

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  The Formality of Contractual Obligation

  Liam B. Murphy

  I argue in this chapter that all of contract law is formal in content. I first develop and defend the sense of content formality that I have in mind and then turn to argue that contract law is formal in that sense. Even if I am unpersuasive on the second claim, I hope that the notion of formality I develop will seem illuminating. It is striking that content formality, my focus, is hardly at all mentioned in the several rather exhaustive discussions of form and substance in the law of obligations to be found in this volume. My starting point is the account of content formality introduced by Patrick Atiyah and Robert Summers in Form and Substance in Anglo-American Law, along with their account of interpretive formality for the sake of contrast. I will also draw on Lon Fuller’s celebrated discussion of formality in contract in his 1941 article ‘Consideration and Form’. Like Fuller, I will use US enforceability doctrine for my main examples. A legal rule has greater content formality, according to Atiyah and Summers, to the extent that it is shaped by fiat and/or the extent to which it is under- or over-inclusive with respect to its objectives.3 An obvious example of a rule shaped by fiat would be the rule still found in several US states that contracts under seal are subject to an extended statute of limitations period of 20 years. An example of a rule over-inclusive with respect to its objective is the Statute of Frauds requirement of the Uniform Commercial Code that applies to contracts for the sale of goods valued at $500 or more. This is over-inclusive because it renders unenforceable some actual and well-considered exchange agreements. Atiyah and Summers note that it is not always easy to tell whether a rule has high content formality, because it is not always easy to see what the purposes of the rule are. This is a crucial point that I will spend some time with. Atiyah and Summers’ own account of content formality is inadequate, however. Before turning to develop an alternative account of content formality, it will be helpful to consider interpretive formality in some detail, in order to bring the distinctiveness of content formality into clearer focus. Interpretive formality is a matter of the resources that may legitimately be used in interpreting a rule – there is high interpretive formality if the interpreter is limited to the semantic content of the rule and is not permitted to read it in light of its understood purposes, or in light of other substantive concerns such as background principles of law or morality. Atiyah and Summers rightly note that ‘Legal systems vary greatly in the degree to which they permit interpreters to go behind the verbal expression of the law and thus engage in reasoning that is more substantive than formal in deciding what the law itself is in the first place’. One of the main arguments of their book is that the US allows for much more substantive interpretation by judges than does England. Ben Chen and Jeffrey Gordon in Chapter 16 of this volume argue persuasively that there has been some convergence over the last 30 years, in part due to the rise of textualist statutory interpretation in the US. It nonetheless remains true that interpretation of contract law’s common-law rules in state and federal courts in the US is strongly substantive, sometimes startlingly so. As for statutes, the most important one for contract law, the Uniform Commercial Code (UCC), itself stipulates that it ‘must be liberally construed and applied to promote its underlying purposes and policies’ and it goes on helpfully to list them.

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  Sexual Liberty and Criminal Law Reform: The Story of Griswold v. Connecticut

  Melissa Murray

  Estelle Griswold, the Executive Director of the Planned Parenthood League of Connecticut (PPLC), could not have been more delighted. Just two days after she opened a Planned Parenthood birth control clinic at 79 Trumbull Street in New Haven, Connecticut, two police detectives were knocking on the door, seeking permission to search the premises. For most, the prospect of welcoming police scrutiny would be unfathomable. But police scrutiny is exactly what Griswold and Lee Buxton, a Yale Medical School obstetrician and the clinic’s medical director, hoped for when the clinic opened its doors on November 1, 1961. Just a few months earlier, the United States Supreme Court had dismissed a constitutional challenge to Connecticut’s birth control ban on the ground that, although the law was on the books, it was rarely enforced—a crucial fact that “deprive[d] these controversies of the immediacy which is an indispensable condition of constitutional adjudication.” Despite the Court’s pronouncement, Griswold and Buxton knew that the 1879 Connecticut law, which proscribed both using contraception and counseling others about contraception, was a real imposition in the lives of Connecticut citizens, and not simply a case of “harmless, empty shadows.” Although the law was rarely enforced against private physicians, who often prescribed contraception to their patients, it was used to prevent the operation of publicly-available birth control clinics that would make contraception accessible to those without the means to secure private medical care. And because the state allowed a health exception to the law, which permitted condoms, but not oral contraceptives or diaphragms, to be sold throughout the state, the ban also imposed particular burdens on Connecticut women. With these harms in mind, Griswold and Buxton opened their clinic in the hope that “someone will complain and that the State Attorney in New Haven will act to close the center.” Now, as she ushered Detectives Blazi and Berg into her office, Griswold could not contain her excitement. In the ninety-minute police interview, she did most of the talking. As Blazi took notes, Griswold eagerly proffered multiple copies of the clinic’s literature and pamphlets, all of which scrupulously detailed the clinic’s services and operations (including the procedure for fitting and instructing women in the use of a diaphragm and contraceptive jelly). Throughout the interview, she made clear her strong hope that she would be charged and prosecuted for violating the law, thereby creating the ideal conditions for a constitutional challenge. On November 10, she got her wish. Circuit prosecutor Julius Maretz issued arrest warrants for Griswold and Buxton. Accompanied by one of their lawyers, Catherine Roraback, the pair appeared at police headquarters that afternoon to surrender. Their crime? Aiding and abetting the violation of the Connecticut statute by providing women with instruction on and materials for contraception. Although it would require her arrest and a criminal prosecution, in the end, Estelle Griswold achieved her desired outcome. In 1965, the Supreme Court’s decision in Griswold v. Connecticut struck down the Connecticut birth control ban and famously announced a right to privacy emanating from the “penumbras” of various constitutional guarantees. Since then, Griswold’s logic has underwritten a broader commitment to reproductive rights—one that has expanded the right to contraception, secured a woman’s right to choose an abortion, and paved the way for legal recognition of same-sex marriages. For a case that stands at the core of the constitutional law canon, Griswold is surprisingly spare—the majority opinion occupies a mere seven pages in the U.S. Reports. Critically, its spareness is not limited to its length. Griswold’s logic, some have argued, is conceptually underdeveloped, inviting a multitude of interpretations. For some, Griswold is a meditation on the relationship between enumerated and unenumerated rights. For others, it is a reproductive rights case, laying a foundation for greater recognition of bodily autonomy. It has also been cast as a sex equality case, underscoring the gendered nature of the Connecticut contraceptive ban and gesturing toward the relationship between privacy and equality. For still others, it stands as a warning about the perils of judicial overreaching and creating rights out of whole cloth. This Essay offers an alternative interpretation of Griswold—one that has been woefully overlooked. Although we have come to regard it as a constitutional law case, or as a reproductive rights case, at bottom, Griswold was a criminal law case. Put differently, despite the majority’s discussion of penumbras and privacy, Griswold was, first and foremost, a case about prosecutions and policing. The challenged Connecticut statute carried a criminal penalty; and, critically, Griswold and Buxton were arraigned, charged, and tried before a court for violating it. More importantly, Griswold was not simply a decision conjured out of whole cloth, as critics have suggested. Rather, it was a case born of and rooted in a criminal law reform movement that sought to design limits on the state’s authority to police and enforce sexual mores. In this regard, Griswold and Buxton’s constitutional challenge was not merely about expanding access to birth control, but also part of a broader effort to reimagine the state’s use of criminal law as a means of enforcing moral conformity. Although criminal law has routinely been used to mark the boundary between licit and illicit sex, not all uses of the criminal law for regulating sex and sexuality have been viewed as desirable. Generally, the use of criminal law for marking and punishing coercive and nonconsensual sex has been deemed acceptable and appropriate, while criminal law’s use in marking and punishing consensual sex—particularly between two adults—has encountered more skepticism. The facts of Griswold bear this out. In overlooking Griswold’s criminal law antecedents, we have neglected this important aspect of the case and its legacy. This Essay recovers this history and situates Griswold in this historical debate about the scope and limits of the state’s authority to use the criminal law to enforce moral and sexual conformity. Expanding Griswold’s narrative to include its ties to the criminal law reform movement brings into focus the concerns about contraceptive access that predated Griswold—and continue to shape the contemporary debate over public funding for contraception. As importantly, the contrast between the 1960s, when the state used the criminal law to curtail contraceptive access and use, and the present, when contraceptive use is lawful but access to contraception remains uneven, calls into question decriminalization’s efficacy as a means of law reform.

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  Sectionalism, the Fourteenth Amendment, and the End of Popular Constitutionalism

  William E. Nelson

  The social changes and human and economic costs of the Civil War led to profound legal and constitutional developments after it ended, not least of which were the Fourteenth and Fifteenth Amendments and the many laws devised to protect the civil rights of newly freed African Americans. These amendments and laws worked for a while, but they were ineffective or ineffectively enforced for more than a century. In Ending the Civil War and the Consequences for Congress, contributors explore how the end of the war both continued the trauma of the conflict and enhanced the potential for the new birth of freedom that Lincoln promised in the Gettysburg Address. Collectively, they bring their multidisciplinary expertise to bear on the legal, economic, social, and political aspects of the aftermath of the war and Reconstruction era. The book concludes with the reminder of how the meaning of the war has changed over time. The Civil War is no longer the “felt” history it once was, Clay Risen reminds us, and despite the work of many fine scholars it remains contested.

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  The Law of Democracy and the European Court of Human Rights

  Richard H. Pildes

  This chapter provides a systematic exploration of the European Court of Human Rights’s (ECHR's) decisions in cases involving the structure of the democratic process. These “law of democracy” cases pose some of the most conceptually difficult and politically charged cases even for domestic courts, let alone for a supranational court tasked with enforcing democratic rights across the diverse ways the member states have structured and institutionalized their democratic systems. In the ECHR’s doctrinal terms, the legal question is how much of a “margin of appreciation” the Court should recognize for the member states to interpret and apply democratic rights in differing ways across their different systems of democracy. Focusing on the Court’s decisions regarding regulation of political advertising, access to the vote, and the spending of money to influence electoral outcomes, the chapter concludes that the Court in recent decades has recurringly entered into these areas with bold initial decisions, only to be forced to back down in response to the powerful political backlash such interventions have spawned, particularly in certain member states. This pattern suggests that a supranational court has trouble mobilizing the political legitimacy required to sustain acceptance of its decisions involving such morally powerful issues.

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  When Are IP Rights Necessary? Evidence from Innovation in IP's Negative Space

  Kal Raustiala and Christopher J. Sprigman

  The law and economics of intellectual property has long rested on a foundational, if implicit, premise: that intellectual property (IP) law is best understood by studying how legal rules operate in actual markets for creative work. To understand copyright, for instance, scholars have explored copyright-dependent fields such as music, film, and publishing, seeking to understand how copyright law shapes innovation in these particular contexts. In other words, IP scholars have generally studied creative fields that rely on IP. The assumption that we best understand a body of legal rules by looking at the fields they directly address is eminently reasonable and seemingly so obvious that, until recently, it was almost never questioned. Yet this way of analysing the effects of IP is incomplete. IP rules are purposive; the core goal and rationale of IP is to incentivize creative and innovative production. Put differently, IP rights are granted and enforced by the state because they are believed to have significant effects on behavior, spurring innovation that would not occur in their absence. Thought of this way, looking only at the creative fields that IP law addresses is misguided. It leaves open, or at least incomplete, a host of important and fascinating questions. Can innovation flourish in the absence of IP protection? Can market incentives, psychological factors, social norms, first-mover advantages, or any number of other causes, including path-dependency or even happenstance, serve as whole or partial substitutes for IP rights? And is it possible that, under some conditions and in some industries, IP protection is counterproductive—that is, it inhibits more innovation than it promotes? To answer these questions, we must look beyond the space affirmatively covered by IP law. We must look instead at what we call the ‘negative space’ of IP. By ‘negative space’ we mean those creative and innovative fields that, for historical, doctrinal, or other reasons, are not addressed by IP law. In fashion, cuisine, tattoo artistry, professional magic, financial services, sports, and many other innovative endeavors, IP rights are absent or highly limited. IP as a causal variable either is out of the picture or is marginalized, even if IP rights sometimes apply as a formal matter. As a result, these fields provide an illuminating and sometimes arresting take on the relationship between IP and innovation. In this chapter, we explore the concept of IP’s negative space and the scholarship that has begun to grow around it. This literature is barely more than a decade old, but in important ways it has shaped how scholars today think about IP. The negative space literature is predominantly focused on copyright, but there is no reason it cannot apply to at least some industries that are within the domain of patent, which shares copyright’s incentive justification. Because the underlying rationales for trademark are so different, insights for trademark law are more limited. But the reverse is not true. One implication of much of the negative space scholarship is that the role of brands and marks in shaping innovation and innovative industries may be quite powerful, especially in those fields where copyright and patent are absent or weak. In the remainder of this chapter we first briefly define the concept of negative space. We then explore what has been learned thus far, surveying the growing range of research into ‘intellectual production without intellectual property’. We conclude with an assessment of this line of inquiry and offer some key questions for future research.

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  Majority of the Minority Approval in a World of Active Shareholders

  Edward B. Rock

  Majority of the minority (MOM) approval is one of the key devices used in corporate law systems around the world to control controlling shareholder conflicts of interest. Taking Delaware corporate law’s treatment of conflicted control transactions as a laboratory, I investigate how MOM approval functions in the presence of active shareholders (both hedge funds and actively managed mutual funds). I approach this question as follows. In Part I, I review the uses made of the MOM device, in general and in Delaware. In Part II, I survey the justifications given for reliance on MOM approval as a “cleansing device,” and review criticisms of the use. In Part III, I provide a broad overview of the use of MOM provisions in going private transactions in the United States and then look closely at three deals that involved MOM and active shareholders: Carl Icahn’s opposition to the Dell buyout; T. Rowe Price’s opposition to the Oracle/Netsuite merger; and GAMCO, T. Rowe Price and ClearBridge’s opposition to the Dolan’s 2007 going private proposal at Cablevision. In Part IV, I consider the implications of the case studies for Delaware corporate law’s reliance on MOM, and for the utility of MOM more generally. I close with a brief conclusion. In doing so, I ask a number of questions. First, what are the potential benefits of MOM approval? Are these realistic expectations? Second, does the presence of large, active shareholders make things better, worse or leave things as they are? In particular, if active shareholders make MOM approval more effective, does it make it sufficiently effective that we might want to give it more significance than we traditionally have? If it makes things worse, does it make things sufficiently worse that we should avoid MOM approval? Third, are the inadequacies or infirmities of MOM approval, alone or combined with other cleansing devices, such that we want to maintain a place for judicial review of the fairness of the transaction? To what extent does existing doctrine preserve the role of equity review?

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  Empowered Participatory Jurisprudence: Experimentation, Deliberation and Norms in Socioeconomic Rights Adjudication

  César Rodríguez-Garavito

  Many European constitutions expressly affirm that they are “social states” (Sozialstaat), and/or contain lists of fundamental social rights or directive principles. The EU constitutional framework also recognises the fundamental nature of social rights. However, this protection remains partial, limited and uncertain. This was not a problem when background economic and political factors favoured the expansion of the post-war welfare states. But austerity is different. This is not to dismiss the value of the limited degree of social rights protection that exists in European constitutional systems. It affirms the role of the state in securing “social citizenship,” opens up room for courts to interpret core constitutional principles such as dignity and equality with reference to the ideal of “social citizenship,” to read legislation in a socially protective manner, and to develop the type of “baseline standards” jurisprudence exemplified by the Hartz IV judgment of the German Constitutional Court. However, beyond that, courts have been unwilling to intervene in areas where breaches of baseline standards are not at issue.

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  Antitrust Enforcement in the US and the EU: A Comparison of The Two Federal Systems

  Daniel L. Rubinfeld

  (and regulatory authority more generally) be centralized and to what extent should the authority be delegated to lower levels of government? While this question has implications worldwide, I will use the European Union and the US as the focal point of my analysis. The underpinnings of the antitrust enforcement structure are different in the two federal systems. In the US, the driving force is the state action exemption doctrine, based on the common law, which spells out instances in which the center can enforce its federal antitrust statutes against anticompetitive state and local regulation. In the EU, however, the driving force is the principle of subsidiarity, which delegates powers to Member States unless a strong case can be made that the externalities are so substantial as to require actions from the center. Fortunately, the normative question at issue here has been analyzed previously by a number of authors, the primary of whom is my colleague Eleanor Fox. No one is better situated to analyze this issue than Professor Fox, since she has devoted a substantial part of her academic career to the study of comparative antitrust analysis. While seeing pros and cons, Eleanor claims that the EU has it (more or less) right. In the EU, federalism trumps the Member States – Member State authorities have a duty to take on Member State laws that run counter to the interests of the Union. Whereas, in the US, we must rely on a less than clear set of guidelines that flow from state action case law and the dormant commerce clause of the US Constitution. Moreover, as Professor Fox has pointed out, the US gives too much weight to state sovereignty (e.g., the Eleventh Amendment prohibits suits in federal courts by citizens against states). In her view, the federal government should have greater authority to intercede when state actions affect national interests. I offer a somewhat different perspective. While it may require a further statutory intervention, the US, as a fully formed political and economic system, has the ability to improve its federalism antitrust oversight. The same cannot be said of the EU, which is neither fully formed politically (witness the problems of Greece and Italy, Brexit, and a failure to deal coherently with the immigration problem) nor economically (witness the inability of the EMU to deal with the downturn of the European economy and a series of significant economic shocks). It has, however, had a relatively integrated/federal EU antitrust policy for decades and antitrust enforcement has one through various reforms, chiefly with decentralization and the adoption of Regulation 1/2003. In the section that immediately follows, I briefly review the principle of subsidiarity and the state action exemption doctrine. Following that, I describe several of the important differences between the US and the EU; I explain why the two enforcement systems are unlikely to achieve convergence with respect to the antitrust enforcement of regulatory activities; I conclude with several suggestions for possible reform.

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  Rendition in Extraordinary Times

  Margaret L. Satterthwaite and Alexandra M. Zetes

  This chapter examines the legal norms governing informal transfers and detentions in the era of global realignment, and sets out a minimum standard that must be upheld whenever a state renders an individual, no matter how extraordinary the context. Rendition is the transfer of an individual from the custody of one state to another without the benefit of a regular process by the rendering country. The applicability of the protections concerning transfers of custody from one state to another in the context of armed conflict in which states are cooperating pursuant to collective defense regimes or peacekeeping operations within the borders of a single state have been subject to intense debate. Relevant procedural norms have been articulated in the context of detention and formal transfer as well as in relation to the substantive norms concerning transfers to a risk of grave abuse.

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  Interrogating the Relationship Between “Legally Defensible” Tax Planning and Social Justice

  Daniel N. Shaviro

  This chapter assesses where the ethical lines should be drawn around what constitutes “legally defensible tax planning,” given social justice imperatives. Because tax minimization by wealthy individuals and profitable corporations does not involve blatant fraud, one cannot simply call for “good corporate tax behavior” and criticize the ethics of those tax professionals who aid and abet the fraud. The tax-reducing strategies of super-rich individuals and highly profitable corporations commonly qualify as what will be called “legally defensible.” This term, however, covers tax planning that may vary across a range in at least three important dimensions: likelihood of legal correctness; consistency with legislative or regulatory intent; and ordinary course of business versus carefully contrived.