Author Archive for dave-hoffman
Fair Use? A Poll
posted by Dave Hoffman
HLS grads Maddy Dodson and Stu Rees run a good law cartoon site, Stu’s Views. One of the cartoons they’ve created perfectly exemplifies a very popular theory of how the Delaware Corporate Law works. The cartoon is here.
Now I’d love to use the work in my corporations class, but Stu and Maddy have asserted on Stu’s Views that they have the right to license the presentation of the work for teaching purposes, at $25 a pop. By comparison, the price for a one-time presentation of the cartoon is $50, and the price to use it on this blog would have been $100.
Keep in mind that licensing the cartoon is fairly easy, but non-trivially expensive. What’s your view?
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February 27, 2012 at 2:39 pm
Posted in: Uncategorized
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Measurable Things
posted by Dave Hoffman
The Misleadingly Convenient Source of Information
A common criticism one reads of ELS is that “too much of the work is driven by the existence of a data set, rather than an intellectual or analytical point.” It’s ironic that this is the very critique that the realists made of traditional legal scholarship. Consider the great Llewellyn:
“I am a prey, as is every man who tries to work with law, to the apperceptive mass. I see best what I have learned to see. I am a prey, too — as are the others — to the old truth that the available limits vision, the available bulks as if it were the whole. What records have I of the work of magistrates? How shall I get them? Are there any? And if there are, must I search them out myself? But the appellate courts make access to their work convenient. They issue reports, printed, bound, to be had all gathered for me in the libraries. The convenient source of information lures. Men work with it, first, because it is there; and because they have worked with it, men build it into ideology. The ideology grows and spreads and gains acceptance, acquires a force and an existence of its own, becomes a thing to conjure with: the rules and concepts of the courts of last resort.”
Or to put it differently, all of our work – quantitative empiricists, doctrinalists, corporate finance wizards, administrative regulation parsers, legal philosophers, and derivative social psychologists alike – is driven by the materials at hand. For most lawyers and legal academics, appellate opinions are the most convenient pieces of information available; we use such opinions to create mental models of what the “law” is, and (ordinarily in legal scholarship) what it ought be. Indeed, whenever trial court opinions are cited, they are often discounted as aberrant or transitory, in part because they are known to be unrepresentative!
Why, you might wonder, is the convention of data-driven-scholarship a particular problem in quantitative empirical work? ELS’s detractors make three interrelated claims:
February 26, 2012 at 1:10 pm
Posted in: Behavioral Law and Economics, Empirical Analysis of Law
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Simple Justice and Blogging Exhaustion
posted by Dave Hoffman
Has Scott Greenfield retired from Simple Justice? Scott, who routinely tweaks law academics from his beloved trenches, writes:
“Recently, it’s struck me that some of the new blawgers have written posts that mirrored things I had written years earlier. They wrote good posts, and they did so without any clue that anyone had discussed the same issues before them. It dawned on me that I’ve gone through another circle, as happens when we get older. Every year, maybe day, new people come into the blawgosphere and it’s a rebirth, where everything old is new again. As this thought occurred to me, I realized that my work is now part of the old, forgotten blawgosphere. This is probably how it should be.
Five years in real time is a blink of the eye. In internet time, it’s an eternity. Thanks for reading, and keeping me honest. With that, I offer this concluding video.”
Scott’s commentators are bewildered. Was this a farewell post, written (uncharacteristically) in an obscure style? Was it some kind of publicity stunt? Who knows – you’ll have to click to find out!
Regardless, I empathize with Scott’s complaint. Though the Internet remembers everything you’ve done, what it reminds you most of all is that you are less than a speck in the eye of the multiverse. Everything you write has been (will be) written by someone else, and no one will know your name next month. You’ll find yourself drafting posts to reiterate points you’ve made before – not because you can express the idea any better, but because you’d like to climb a bit higher on the pile of sand in the hourglass. (In fact, I am 99% sure I’ve written this exact post before, but I can’t find it!)
I should know. This is my tenth year blogging! I started at Cravath in summer of 2002, when I created a small blog on constitutional law with a friend. When I joined Temple in 2004, I switched to Prawfsblawg, and then to CoOp, which has been my blog home since the fall of 2005. In that time, I’ve written several thousand posts (like Scott). Very little I’ve written has managed to stick. On this blog, and others, things I’ve said in the past are repeated with no awareness that I once said them. How could they not be? There’s nothing new under the sun, and the very point of blogging is to get to not do preemption checks! Of late, this blogging ennui, and despair about the possibility of productive conversation on some topics, has made me less motivated to blog, though I think it’s a temporary lull.
I’ve managed to stick with it this long mostly because I find blogging to be an ideal outlet for small ideas, which I wouldn’t write about in articles, and which I’d prefer to have some evidence of having came up with. That’s not a utiliarian position. I doubt that blogging has made me a better scholar. I don’t think my blog posts have made a bit of difference in public debates. (It might have, but the effect is incidental and contingent, not by design.) I certainly don’t think that Concurring Opinions has built a deep virtual community (cf. Volokh) to play with. (Maybe we should?) When I look around, I can think of only a few examples of law professors whose blogging has moved the needle. Then again, the same is true of long-form scholarship! Blogging is a cheap form of self-expression, and it’s nice to own my own printing press. It is as simple as that.
I thought I’d let this serve as an open thread for folks who’ve been at this for more than five years. What keeps you going?
February 21, 2012 at 2:06 pm
Posted in: Blogging
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Dockets and Data Breach Litigation
posted by Dave Hoffman
Alessandro Acquisti, Sasha Romanosky, and I have a new draft up on SSRN, Empirical Analysis of Data Breach Litigation. Sasha, who’s really led the charge on this paper, has presented it at many venues, but this draft is much improved (and is the first public version). From the abstract:
In recent years, a large number of data breaches have resulted in lawsuits in which individuals seek redress for alleged harm resulting from an organization losing or compromising their personal information. Currently, however, very little is known about those lawsuits. Which types of breaches are litigated, which are not? Which lawsuits settle, or are dismissed? Using a unique database of manually-collected lawsuits from PACER, we analyze the court dockets of over 230 federal data breach lawsuits from 2000 to 2010. We use binary outcome regressions to investigate two research questions: Which data breaches are being litigated in federal court? Which data breach lawsuits are settling? Our results suggest that the odds of a firm being sued in federal court are 3.5 times greater when individuals suffer financial harm, but over 6 times lower when the firm provides free credit monitoring following the breach. We also find that defendants settle 30% more often when plaintiffs allege financial loss from a data breach, or when faced with a certified class action suit. While the compromise of financial information appears to lead to more federal litigation, it does not seem to increase a plaintiff’s chance of a settlement. Instead, compromise of medical information is more strongly correlated with settlement.
A few thoughts follow after the jump.
February 19, 2012 at 1:33 pm
Posted in: Economic Analysis of Law, Empirical Analysis of Law, Privacy, Privacy (Consumer Privacy), Privacy (ID Theft), Privacy (Law Enforcement), Privacy (Medical)
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An Argument Against the Traditional Structure of the Civil Procedure Course
posted by Dave Hoffman
(Data Source: Examining the Work of State Courts: An Analysis of 2009 State Court Caseloads; Federal Court Management Statistics: 2009)
(Update: Fixed a typo in the figure. See the comment thread.)
February 16, 2012 at 2:47 pm
Posted in: Civil Procedure
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Veil Piercing Is Probably Not the Most Litigated Issue in Corporate Law
posted by Dave Hoffman
I was reading through Bob Thompson’s excellent year-in-review list of corporate law scholarship, and was struck the number of articles discussing veil piercing. With a few exceptions, each of those articles claims, based on Bob’s opus, that veil piercing is the “most litigated issue in corporate law.” Heck, even Wikipedia’s page on the veil makes that assertion.
In Disputing Limited Liability,* Christy Boyd and I disagree that veil piercing is really dominates corporate litigation. As we noted:
“[Robert] Thompson [in his Cornell Law Review Article] compared the incidence of the term “veil piercing” in opinions to the incidence of terms like “hostile takeover,” declining to broaden the search to more common terms like “fiduciary duty” Id. at 1036 n.1. But, as this Article will show, “litigated” cases begin with complaints. Westlaw‘s pleadings database contains 2071 federal and state complaints potentially making veil piercing allegations between 2000 and 2005. A similar search for “(loyalty disloyalty) /s (director* officer)” returned 2405 complaints.”
Now, as Bob kindly wrote me in response, our argument is somewhat unfair. After all,we’re counting different things, at different times, before different courts. But still, I don’t think there’s much evidence at all that the veil is really the most litigated issue in cases that generally deal with corporate law problems. (I say “generally” because a truly narrow definition of “corporate law” would, in my view, be limited to problems that the internal affairs doctrine covers, and in some states would consequently would exclude veil piercing altogether). On the other hand, I don’t think Christy and I have made the case that classic loyalty claims are the most commonly litigated issue either. The problem of generalizing to find the “most litigated issue” turns out to be complex.
The problem, as always, turns on sample selection. Most state court dockets are plainly inaccessible - and state court opinions are collected in a much more biased way than federal opinions. As a Westlaw representative told me in 2009, they tend to collect non-Supreme state court opinions from urban centers, focusing on material that they believe will be of interest to lawyers, or when the court clerk has brought an opinion to their attention. The result is that our understanding of the practice of an individual state’s corporate law are biased by the black-sheep opinions we can see. Why would we think that drawing any inferences from that dataset could let us answer the question of “what is the most litigated corporate law issue”? I’d prefer to trust practice bulletins – trying to track what corporate lawyers believe to be common problems. In those materials, veil piercing is relatively rarely discussed. However, since practice bulletins may be dominated by the defense bar, one has to account for the fact that most veil piercing cases are actually brought against very small companies, who might not be represented, and certainly are unlikely to be represented by an attorney with sufficient time on her hands to contribute to a Bar newsletter. Thus, in general I think we can learn very little from veil piercing’s relative presence in opinions, or relative absence in the Bar literature.
An exception is Delaware, which has a robust docketing system, a court practice of writing opinions in almost every case, and thorough Westlaw coverage of both the Chancery’s and Supreme Court’s outputs. Now I’m not the most attentive reader of that stream of data, but my sense is that corporate litigation in Delaware is heavily biased toward fiduciary & M&A claims, while veil piercing almost never comes up. Here again we have to be careful about generalizing: Delaware, being notoriously hostile to veil piercing allegations, probably isn’t the place we’d want to go to know how most state courts act. But if Delaware & Nevada host the majority of corporations in this country which will generate corporate litigation (arguably, they do), and if both jurisdictions are veil friendly, I don’t see how it’s possible to conclude that veil piercing litigation is all that common. Or to put it another way: we have no idea what the most common litigated corporate law issue is, but it probably is not veil piercing.
Veil piercing cases are, however, highly colorful, which may explain the doctrine’s continuing attraction for scholars.
[Update: Steve Bainbridge writes about this post "A better question might be "who gives a sh*t?". Nice. Very nice. I suppose I care, mildly, because it might be that attention better spent on other issues in corporate law, like someone's ... nontraditional ... theories of director primacy, has instead been diverted to veil piercing on the theory that piercing is more practically important than it is. And because if if you search the web, you'll find dozens of companies puffing this exact claim to sell you their incorporation products and advice. Or it might be that the question is worth asking simply for love of the game.]
* DLL happens to be on Bob’s corporate law articles of 2011 list. In case you were wondering if I am trying to bias the electoral pool by blogging about the article, shame on you. I would never stoop so low.
February 15, 2012 at 1:55 pm
Posted in: Corporate Finance, Corporate Law
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Lifecycles and the Firm
posted by Dave Hoffman
As Joan Hemingway nicely illustrated, firms ought to disclose facts about their managers which are likely to influence stock purchasing decisions, even if those facts are otherwise private and personal. Now, from a different direction, comes further evidence of the point that managers’ self-interested goals can influence their firm’s disposition. In CEO Preferences & Acquisitions, Jenter and Lewellen take a look at the relationship between CEO retirement and “the incidence, the pricing, and the outcomes of takeover bids.”
“Mergers frequently force target CEOs to retire early, and CEOs’ private merger costs are the forgone benefits of staying employed until the planned retirement date. Using retirement age as an instrument for CEOs’ private merger costs, we find strong evidence that target CEO preferences affect merger patterns. The likelihood of receiving a takeover bid increases sharply when target CEOs reach age 65. The probability of a bid is close to 4% per year for target CEOs below age 65 but increases to 6% for the retirement-age group, a 50% increase in the odds of receiving a bid. This increase in takeover activity appears discretely at the age-65 threshold, with no gradual increase as CEOs approach retirement age. Moreover, observed takeover premiums and target announcement returns are significantly lower when target CEOs are older than 65, reinforcing the conclusion that retirement-age CEOs are more willing to accept takeover offers. These results suggest that the preferences of target CEOs have first-order effects on both bidder and target behavior.”
A few thoughts.
1. As Brian Quinn noted, this is exactly what seemed to be going on in Smith v. Van Gorkom.
2. The paper includes a nice set of confounding controls, but it’d be useful to have compared founding- with non-founding-CEOS. At least anecdotally, one hears often of the founding CEO seeking cash out his sweat in a swan-song merger – and that kind of behavior seems less pernicious than a caretaker selling the company to pad her nest. In the authors’ defense, I’d imagine thatin this fortune 500 dataset there weren’t many such originating great leaders.
3. It’d be surprising if this common-sense result wasn’t already priced into the acquiring company’s shares, which might make it difficult to truly control for a recent rise in company performance against the market basket.
4. But if #3 isn’t right, I have a strong sense that I know what my new investment strategy would like. Someone want to start a corporate-executive retirement watch list with me? There are models available.
February 10, 2012 at 7:42 pm
Posted in: Corporate Law
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Can’t the Supreme Court Just Say No to Cameras?
posted by Dave Hoffman
It’s been widely reported that SB.1945, if passed, would compel the Supreme Court to televise its proceedings. Here’s the relevant bill text:
‘The Supreme Court shall permit television coverage of all open sessions of the Court unless the Court decides, by a vote of the majority of justices, that allowing such coverage in a particular case would constitute a violation of the due process rights of 1 or more of the parties before the Court.”
Two questions.
(1) This seems badly drafted to me. What does “television coverage” mean for the purposes of this bill? Does it mean that the camera gets to swivel between Justices and the attorney? That it can face the wall? But more interestingly,
(2) What ifthe Supreme Court just says no? The Marshall of the court reports to the Chief, not to the President or the Congress. What is the Coult were simply to decide, as a body, that it didn’t feel bound by another branch’s wishes on how to conduct its proceedings? Obviously, this would never actually happen. But imagine a different case, where the Congress prescribed wig-wearing? Or how long arguments would last? Or brief length or content? I recall a Larry Tribe con law exam in which the Congress wrote a law the required the court to decide its constitutionality in a matter of days. That struck me as unlikely to survive scrutiny. Similarly here, there’s a plausible separation of powers argument that the Congress doesn’t have the right to tell the Court how to run its house. That’s precisely what Mike Dorf argued in this column, and it’s surprising to me that so few mainstream journalists have picked up the objection. (But see this Scotusblog discussion.) Basically, if I were the Court and I didn’t want to be on TV, I’d consider telling Congress to go pound sand. They don’t have an army either.
February 10, 2012 at 1:40 pm
Posted in: Constitutional Law, Supreme Court
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The Psychology of Contract Precautions
posted by Dave Hoffman
Tess Wilkinson-Ryan (Penn) and I have a new draft paper up on SSRN: The Psychology of Contract Precautions. From the abstract:
“This research tests the intuition that parties to a contract approach each other differently before the contract is formed than they do once it is finalized. We argue that one of the most important determinants of self-protective behavior is whether the promisee considers herself to be in negotiations or already in an ongoing contract relationship. That shift affects precaution-taking even when it has no practical bearing on the costs and benefits of self-protection: the moment of contracting is a reference point that frames the costs and benefits of taking precautions. We present the results of three questionnaire studies in which respondents indicate that they would be more likely to protect their own interests—by requesting a liquidated damages clause, by purchasing a warranty, or by shopping around to ensure the best deal—when the contract is not yet finalized than they would when they understand the agreement to be finalized. We discuss competing explanations for this phenomenon, including both prospect theory and cognitive dissonance. Finally, we explore some doctrinal implications for work on disclosure, modification, and promissory estoppel.”
The paper is a part of a new literature on the moral psychology of contracting — see, e.g., Suckers, Obligations, Liquidated Damages. That said, it’s been quite a long time in production — I think we first started working on it in 2008 — and I’m thrilled to finally get it out in the open. It’s in draft form, so any comments you might have would be most welcome.
February 7, 2012 at 4:29 pm
Posted in: Contract Law & Beyond
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Welcome Guest Blogger Brishen Rogers
posted by Dave Hoffman
I’m pleased to welcome my colleague Brishen Rogers as a guest for the next month.
Brishen joined Temple’s faculty in 2010, and teaches torts, employment discrimination, and a seminar on current issues in labor law. Prior to joining the Temple faculty, Brishen was a Climenko Fellow and Lecturer on Law at Harvard Law School.
Brishen’s scholarship draws on the social sciences and liberal political theory to better understand the role of law in constituting and regulating paid work relationships, with a particular focus on issues of concern to low-wage workers. One current project explores the role of law and social norms in shaping workers’ preferences towards unionization; another explores the proper role for minimum workplace entitlements in an egalitarian liberal state. His work has been published in the Harvard Law Review Forum, and the Berkeley Journal of Employment and Labor Law, among others.
Brishen received his J.D., cum laude, from Harvard Law School and his B.A., with high distinction from the University of Virginia. Prior to law school, he worked as a community organizer promoting living wage policies and affordable housing, and spent several years organizing workers as part of SEIU’s “Justice for Janitors” campaign.
Welcome!
January 30, 2012 at 11:41 am
Posted in: Administrative Announcements
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Higher Education Costs: What Could The Federal Government Do?
posted by Dave Hoffman
President Obama’s State of the Union glossed on a topic that’s quite relevant to the recent debates about legal education:
“Of course, it’s not enough for us to increase student aid. We can’t just keep subsidizing skyrocketing tuition; we’ll run out of money. States also need to do their part, by making higher education a higher priority in their budgets. And colleges and universities have to do their part by working to keep costs down. Recently, I spoke with a group of college presidents who’ve done just that. Some schools re-design courses to help students finish more quickly. Some use better technology. The point is, it’s possible. So let me put colleges and universities on notice: If you can’t stop tuition from going up, the funding you get from taxpayers will go down. Higher education can’t be a luxury— it’s an economic imperative that every family in America should be able to afford.”
As political pap goes, this is as good as any. But I’d go a step further to ask how the government could help keep down costs, apart from threatening to take away subsidies. Costs have many drivers, including rising student demand for particular kinds of campus amenities, legacy benefit costs that plague all large-scale employers, and rising health costs. But the biggest factor is faculty salaries. Given tenure (which affects law schools disproportionately because of our accreditor’s monopoly) it might seem like this is a wicked problem. Maybe it is, but the President could have called for the Congress to make a small change in law that might make a real difference: repeal that portion of the ADEA which prohibits mandatory retirement ages for university professors.
As is well-known, the federal government prohibits mandatory retirement policies except when age is a bona fide occapational requirement or when the person is a qualifying executive. 29 U.S.C. §§623(f), 631(c). An exception for tenured employees, including professors, was phased out in 1993. (The law phasing out the exception passed in 1986). As this study predicted, the impact on research universities in particular is severe, as an increasingly high percentage of workers stay on the job after age 70. Why does this matter? If teaching and/or scholarship decreases after many years on the job – and there is some evidence that they do – universities have few remedies given tenurial job protections for under performing employees. In today’s economy, with an increasingly volatile stock market, and unpalatable health insurance choices, we’d probably also expect that fewer faculty will retire voluntarily in the future than they used to. Thus, many institutions will find it hard to reduce costs by reducing faculty sizes (or paying less per person by replacing older, more expensive, employees with younger, cheaper, ones.) We will deliver fewer educational goods, at higher costs.
Now there are good reasons for prohibiting mandatory retirement in general. But I’ve never understood why those reasons translate when you’ve got a tenured faculty who often exercise more self-government than law firm partners. In any event, given the economic realities of the moment, lumping faculty in with other workers feels like a luxury students can no longer afford.
January 25, 2012 at 2:01 pm
Posted in: Economic Analysis of Law, Education, Law School
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Walker v. City of Birmingham
posted by Dave Hoffman
On tap today in civil procedure: the dispiriting Walker case, in which Justice Stewart holds that the collateral bar rule trumps the First Amendment. It’s a terrific case to teach early in the semester, and scheduling it immediately after MLK Monday can be especially gripping. In Duncan Kennedy’s framing (from The Reproduction of Hierarchy), Walker is a hot, hot case, which makes students quite angry, but leaves them ultimately unsure on how to channel that anger in a legally appropriate manner. Shouldn’t MLK and the ministers have petitioned the court even though it was futile? Isn’t Justice Stewart sort of right that such general rules can’t abide small exceptions, lest we fail to “pay for the civilizing hand of law”? Surely there’s an argument that courts, who lack armies, require special solicitude which the executive and legislative branches don’t.
Well, I’m not so sure about the merits of those arguments, but I recognize what effect they are likely to have on 1Ls. As Kennedy wrote:
“Most students can’t fight the combination of cold cases and hot cases. The cold cases are boring, but you have to do them if you want to be a lawyer. The hot cases cry out for response, seem to say that if you can’t respond you’ve already sold out, but the system tells you to put away childish things, and your reaction to the hot cases is one of them. Without any intellectual resources, in the way of knowledge of the legal system and of the character of legal reasoning, it will appear that emoting will only isolate and incapacitate you.”
January 17, 2012 at 5:03 pm
Posted in: Civil Procedure
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Interesting Facts You Learn From Reading Supreme Court Opinions
posted by Dave Hoffman
“‘Golds’ are permanent or removable mouth jewelry, also referred to as ‘grills.’ See Mouth Jewelry Wearers Love Gleam of the Grill, South Florida Sun-Sentinel, Feb. 4, 2007, p. 5, 2007 WLNR 2187080. See also A. Westbrook, Hip Hoptionary 59 (2002) (defining a ‘grill’ as a ‘teeth cover, usually made of gold and diamonds’). -Thomas, J., dissenting in Smith v. Cain.
January 10, 2012 at 11:00 am
Posted in: Supreme Court, Weird
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To a Worm In Horseradish, the World is Horseradish
posted by Dave Hoffman
I can across this saying recently in a post about the perils of blogging by Todd Henderson. It allegedly is a Yiddish proverb, made popular in a speech by Malcolm Gladwell. I’m actually not so sure it’s a real piece of Yiddishkeit. None of my (Hungarian) Yiddish-speaking relatives have heard of it, and I can’t find the real Yiddish version anywhere. Rather, I think the expression is best sourced to Isaac Bashevis Singer, who wrote an English short story with the expression in the title, and who used variants in several other pieces. (If anyone knows different, please feel free to comment.)
Anyway, it’s a useful expression for someone who feels trapped by a bad situation. I thought I’d pass it along. It’s an illustration, incidentally, of how bizarre associations can make writing more vivid. (What’s the worm doing in horseradish? Why horseradish? Are worms kosher for Passover?) It’s also a useful reminder, in this new year, that it’s pretty bad to be a worm in horseradish.
January 3, 2012 at 7:31 pm
Posted in: Weird
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R.I.P. Larry Ribstein
posted by Dave Hoffman
Larry Ribstein, who died earlier this week, was a galvanic force as a scholar and blogger. I join those who’ve expressed sadness and loss at his untimely passing. I figured I’d add two comments.
As others have commented, Larry always told you when he thought you were being an idiot. When I presented one of my early empirical papers at an otherwise warm-and-friendly Canadian Law and Economics conference, Larry provided comments from the audience that had me wanting to go back to running fire drills at Cravath. My god, how he schooled me! But he was basically right, and it was business, not personal. Some years later, he provided crucial encouragement on a new (better?) empirical paper. Praise felt twice as good coming from him. What a teacher he must have been!
Second, I’ve recently read his book (coauthored with Erin O’Hara) The Law Market. I think it’s simply amazing – provocative, and in some ways as mind-opening as Stuntz’s Collapse of American Criminal Justice. Law and economics has lost a great and unique voice.
December 25, 2011 at 9:52 pm
Posted in: Empirical Analysis of Law
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Transactional Internships in the Summer after the First Year
posted by Dave Hoffman
A number of students have recently asked me about opportunities to work in transactional practice in the summer after their 1L year. That kind of job search is challenging, as the typical kind of 1L practice revolves around planning for or resolving litigation (i.e., government agency litigation interns, judicial interns, public service interns). Indeed, I imagine that a large plurality of law students who obtain a legal internship this summer (paid or not) will end up writing some kind of multi- or 50-state survey litigation memorandum.
However, there are transactional opportunities – at law firms (though these are hard to secure for 1Ls); in general counsel’s offices (same objection); in government; and, in particular, in tax and estate planning small practices. I thought I’d open up a thread for folks to share ideas/experiences with transactional practice in the first summer. If you had a great job, please tell us about it and what you did. If you’ve ideas for networking of job search, let’s make a public good of them.
December 8, 2011 at 1:26 pm
Posted in: Law Practice, Law Student Discussions
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Nondisclosure, Non-disparagement, and Contract Law
posted by Dave Hoffman
In light of some of my previous posts on nondisclosure clauses and their enforceability, I thought readers might enjoy the following story:
“Robert Lee visited a dentist, Stacy Makhnevich, because he was suffering from a severe toothache, caused by a painful infected cavity. She refused to treat him until he signed a so-called “privacy” contract, which included a clause preventing him from posting negative reviews of her online. [The clause read: "Patient will not denigrate, defame, disparage, or cast aspersions upon the Physician; and (ii) will use all reasonable efforts to prevent any member of their immediate family or acquaintance from engaging in any such activity."]
More specifically, the contract stated that Lee would not publish adverse comments about Makhnevich’s performance online, and that he would assign the copyright of any online commentary that he did make to her (presumably so that she could have such commentary quickly and directly taken down if she found it objectionable).
Lee signed the contract. But later—after receiving a hefty bill for service that he viewed as problematic—he posted negative reviews of the dentist on Yelp.com and DoctorBase.com, despite the contract’s ban on such postings.
The Yelp.com review said: “Avoid at all cost! Scamming their customers!” The DoctorBase.com review was similar.
Lee claims that Makhnevich then– in an attempt to enforce the contract—tried to get Lee’s negative reviews taken down from the review sites. He alleges that she also started billing him $100, as a fine, for every day the reviews remained on the Internet. Moreover, Lee alleges, she refused to send copies of his billing records to him so that he could seek reimbursement from his insurer. Makhnevich also sent Lee a notice threatening a lawsuit. In response, Lee filed a lawsuit of his own.
Lee’s lawsuit calls the contract he signed invalid under state law as an unconscionable contract. The lawsuit also alleges that posting one’s own commentary on a website such as Yelp.com or DoctorBase.com constitutes “fair use” under the copyright laws.
In the suit, Lee asks that the agreement that he and other patients signed with his dentist be declared void and unenforceable, and that she be barred from requiring assent to these agreements by future patients.”
So many great issues here — the penalty/liquidated clause damage term; the privacy/nondisclosure nexus; the unenforceability argument coupled with a lurking first amendment claim. The story claims there’s even a consideration defense, though I can’t see how that’s really present on these facts.
As I’ve expressed before, I think these kinds of nondisclosure agreements are more difficult to enforce and obtain damages from than most conventional accounts would have it, and that they often function, like liquidated damages in general, to compel parties to engage in behavior that a court would not actually order. This case seems like a good test of my theory. I’m very glad that the Center for Democracy and Technology has taken up the battle.
(H/T: Reader T.G.)
December 6, 2011 at 1:52 pm
Posted in: Contract Law & Beyond, First Amendment
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Paying People Not To Use Talk To Their Cellphones’ Virtual Assistants in Public
posted by Dave Hoffman
The NYT isn’t entirely worthless. There’s a cute technology piece up on how irritated the reporter and his friends-on-the-street are by people who talk to their iPhone’s Siri when they could just as easily text. As the Times puts it, this is a problem of unfelt externalities:
“James E. Katz, director of the Center for Mobile Communication Studies at Rutgers, said people who use their voices to control their phones are creating an inconvenience for others — noise — rather than coping with an inconvenience for themselves — the discomfort of having to type slowly on a cramped cellphone keyboard. Mr. Katz compared the behavior with that of someone who leaves a car’s engine running while parked, creating noise and fumes for people surrounding them.”
The piece goes onto claim that eventually, we’re get used to this noise pollution. Perhaps we will! But if we don’t, there are options other than anti-nuisance regulation. After all, there are competing rights here: the right to speak so you don’t have to confront your inability to text without typos and the right not to hear what the person next to you on the subway wants for dinner. Now, we could ban Siri-like Apps in public places. But, as all good Coasians know, there’s another option. We could decide that the Siri-ans should have the right to speak wherever they are: irritated hearers can simply pay the offending speaker not to talk into their iPhone in public. In fact, I wonder if Apple could perhaps make an App for that. Call it the “Shut Down Nearby Siris For Five Minutes Auction App.” People could list the price at which they’d agree to be paid to be silenced; irritated listeners could either pay that price or bid at a lower rate. If hearers and speakers matched, we’d achieve (in the Article’s words) the socially efficient outcome: back to the “old days when people just texted in public.”
December 3, 2011 at 1:08 am
Posted in: Behavioral Law and Economics, Economic Analysis of Law
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Does the Secured Transactions Course Make Sense?
posted by Dave Hoffman
I’ve never taught Secured Transactions, so I’ll start by saying that the following is purely speculative and subject to correction.
We had a job candidate come through at some point this Fall who generally is interested in the field of commercial law. That person mentioned in passing that although they were more than willing to teach the traditional secured transactions course, in their opinion it wasn’t well structured. Why? Not, as the navel-gazer might imagine, because the field of commercial law is supposedly intellectually dead. Rather because the traditional secured transaction course is too narrowly conceived — it usually is limited in coverage to personal property security interests under Article 9. But many security interests that matter to lawyers aren’t held on movable property. Since secured is ordinarily the foundational course for the commercial curriculum, students are left starting on too narrow a footing in understanding bankruptcy and bank regulation. It’s even worse than having a corporations course that excludes LLCs. Because of its technicality, ST is traditionally so difficult to teach that many students are turned off to the idea of commercial law practice at all.
Again, I don’t know much about this area of law. I never took ST in law school, I haven’t taught it, and (worse) I haven’t even read a ST syllabus at my current institution. But it struck me as an interesting thought, at least worth airing. It’s related to concerns I have about the general corporate curriculum — is “corporations” really a subject that ought to be taught in a single course, or is it really a merger of too many (or too few) legal principles that have glommed together over time. It’s also related to concerns that one might have about continuing to use the increasingly outdated, purportedly uniform, UCC to teach when States’ adopted versions are moving ever-further-away from that ideal.
December 2, 2011 at 11:54 pm
Posted in: Bankruptcy, Contract Law & Beyond, Corporate Finance, Corporate Law, Law School (Teaching)
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Kahan on Science & Law School Education
posted by Dave Hoffman
At the Cultural Cognition Blog, Dan Kahan introduces a new project:
“I’ve been asked to be part of an NAS working group that will develop a proposal on how science should figure in the training of lawyers. I’m going to put together a memo that outlines my own initial views and distribute it shortly before the first meeting (in mid January). Below is a condensed account of the points and themes that my memo will stress. But my ideas are provisional & formative; indeed, I share them to invite your reactions, which I expect to stimulate and educate my own thinking.
I welcome feedback not only on the substance but also on what to include in an annotated bibliography, the germ of which appears after the narrative section. The bibliography is not meant as a syllabus for a course; some of the items would no doubt be assigned in the sort of “forensic science literacy” course I am describing, but mainly I am trying to compile sources that help make the spirit & philosophy of such an offering more vivid for memo readers.”
The remainder of the post, which talks about the components of science training for lawyers, is both provocative (in the best sense) and illuminating. I figured it’d be of interest to our readers, especially in light of the recent discussion on this blog regarding the relationship between legal scholarship, legal education, and the practice of law. (And in light of the responses in the HLR Forum to Dan’s forward, one of which claimed to hear in Dan’s work “the sounds of an earlier era, the era when Progressives believed that scientific expertise could be called upon to resolve normative questions that divided the nation …”) In the blog post, Dan argues that the key task of law schools in here is to teach students to “recognize what constitutes sound forensic science and what doesn’t. A model course should instruct students in the general concepts and procedures that one must understand in order to perform this recognition task reliably, including principles of validity; elements of probability; and methods of inquiry (more on these below).” This conception of scientific legal education is, I think, linked with Dan’s famous speech on the core role that judgment and recognition generally plays in legal education.
In any event, check it out and contribute to the project!
December 2, 2011 at 11:46 pm
Posted in: Law School
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