Author: Dave Hoffman

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Executives Say the Funniest Things

The now week-old expose of disarray in the front-office of the Seattle Mariners contains many great tidbits.  From the discussions of nitpicking the fonts in a powerpoint deck, to the puffery about sabermetrics, it suggests that baseball teams’ front-offices look very much like the rest of corporate america.  And here’s the anecdote to prove it:

“[Team manager Eric] Wedge described how, starting in 2011, [team President Chuck] Armstrong would visit his office and gravely say things like: ‘Howard [Lincoln, the Mariner's CEO] sent me down here and … we’ve got to win.’

Wedge would shrug in agreement, telling him he wanted to win every night. But he’s like, ‘No, we’ve really got to win. We’ve got to go 5-2 on this trip. We’ve got to win tonight.’”

We’ve really got to win.  Most of the time, it’s more or less optional! Needless to say, in a universe where success is determined by quarterly returns and flexible GAAP accounting, this is exactly the kind of direction that leads to cooking the books.  Sadly for the Mariners, their success was harder to manufacture.

1

Stipulated Damages, Exculpatory Clauses and Unconscionability

On re-reading Discover Bank v. Superior Court (Cal. 2005) I found myself getting hung up on a conceptual problem you might be able to help me with.  The Discover Bank court considered the validity of class action arbitration waivers. Holding such waivers unconscionable as a matter of law, the court halted (that is, until Concepcion) arbitration’s inexorable conquest of consumer litigation.  The court reasoned was that such waivers presented issues of both procedural and substantive unconscionability.  Procedural, the waivers were default-forcing “bill stuffers” and consequently not meaningfully chosen.  Substantively, “they may operate effectively as exculpatory contract clauses . . . because . . . damages in consumer cases are often small . . and the class action is often the only effective way to halt and redress [wrongdoing.]“

The question I have is what distinguishes “exculpatory clauses” – typically thought to be against public policy – from ordinary “stipulated damages” clauses, which are subject to reasonableness review. I unaware of any scholarship that tries to define exactly what stipulated damages are (and are not). Consider two possibilities:

  • To the extent that stipulated clauses are broadly defined, so as, for example, to include bespoke procedure, courts’ permissive treatment of stipulated damage clauses would seem to then imply vastly more private-party control over remedies than the traditionally-narrow scope that the term stipulated damage implies.
  • But perhaps such clauses are narrowly defined – that is, the stipulation must relate only to damages flowing from the contract (i.e., a term that limited parties’ ability to seek specific performance would not count as a stipulated damages clause, nor would a waiver of damages for a tort). In that case the Discover Bank court’s categorical move is more defensible, but it’s not obvious that the line between damage and remedy makes sense analytically.

A third possibility is that stipulate damage reasonableness review is limited to scenarios where some remedies remain on the table, regardless of whether the remedy arises out of a claim related to the contract or not; the categorical public policy bar from Discover Bank applies when all remedies are precluded.  Discover Bank is, again, a bad case for that claim, since not all contract remedies were precluded, only those which would deter future harms.

Anyway, it’s a puzzle.  Thoughts?

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What Should We Be Working On? Empirical Civil Procedure Post CELS

Earlier this week, I argued that civil procedure empiricists are spending too much time on the Twiqbal problem.  That’s not the same as saying that Twiqbal is an unimportant set of cases.  It probably signals an important shift in federal pleading doctrine, and, arguably, some litigants we care about are being shut out of federal court. I mean to say merely this: the amount of attention paid to Twiqbal is exceeding its importance to litigants (over state and federal court).  Our focus is being driven largely by data availability and law professor incentives. We can do better.

I’m starting to make a genre of these “people should be writing about X not Y” posts.  Boy, that could get tiresome fast!  Luckily, no one actually has to listen to me except for the poor 1Ls.  In any event, it seemed useful to start a conversation about what topics are more worth writing about than Twiqbal. Use the comment thread below to generate a list and if there’s enough interest I’ll create a poll. To qualify, the topic has to be real-data-driven (i.e., not merely doctrinal analysis, not experimental, etc.); and there must be a way, in theory, to get the data.  For example,

  • Does law influence outcomes in small claims court?
  • How well do choice of law clauses work in state court?
  • When do attorneys matter?
  • What are the determinants of summary judgment grant rates in state courts?
  • Is there a way to get a handle on which cases are being “diverted” to arbitration or “carved-[back]-in“?

 

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CELS VII: Data is Revealing Part 2

 

Shouldn't it be "data are revealing?"

Shouldn’t it be “data are revealing?”

[This is part 2 of my recap of the Penn edition of CELS, promised here. For Part 1, click here.  For previous installments in the CELS recap series, see CELS IIIIVV, and VIVII.]

Where were we?  I know: throwing stink-bombs at a civil procedure panel!

At the crack of dawn saturday I stumbled into the Contracts II panel. Up first was Ian Ayres, presenting Remedies for the No Read Problem in Consumer Contracting, co-authored with Alan Schwartz.  Florencia Marotta-Wurgler provided comments.  The gist of Ayres’ paper is that consumers are optimistic about only a few hidden terms in standard-form contracts. For most terms, they guess the content right. Ayres argued that should be concerned only when consumers believe that terms are better than they actually are.  The paper  proposes that firms make such terms more salient with a disclosure box, after requiring firms to learn about consumer’s knowledge on a regular basis. Basically: Schumer’s box, psychologically-calibrated, for everyone.  Florencia M-W commented that since standard-form contracts evolve rapidly, such a calibrated disclosure duty might be much more administratively complex than Ayres/Schwartz would’ve thought.  A commentator in the crowd pointed out that since the proposal relies on individuals’ perceptions of what terms are standard, in effect it creates a one-way ratchet. The more people learn about terms through the Ayres/Schwartz box, the weaker the need for disclosure. I liked this point, though it appears to assume that contract terms react fairly predictably to market forces. Is that true?  Here are some reasons to doubt it.

Zev Eigen then presented An Experimental Test of the Effectiveness of Terms & Conditions.  Ridiculously fun experiment — the subjects were recruited to do a presidential poll. The setup technically permitted them to take the poll multiple times, getting paid each time.  Some subjects were exhorted not to cheat in this way; others told that the experimenters trusted them not to cheat; others were given terms and conditions forbidding cheating. Subjects exhorted not to cheat and trusted not to cheat both took the opportunity to game the system significantly less often than those presented with terms and conditions. Assuming external validity, this raises a bit of a puzzle: why do firms attempt to control user behavior through T&Cs? Maybe T&Cs aren’t actually intended to control behavior at all! I wondered, but didn’t ask, if T&Cs that wrapped up with different formalities (a scan of your fingerprint; a blank box requiring you to actually try to sign with your mouse) would get to a different result.  Maybe T&Cs now signal “bad terms that I don’t care to read” instead of “contract-promise.”  That is, is it possible to turn online T&Cs back into real contracts?

Next, I went to Law and Psych to see “It All Happened So Slow!”: The Impact of Action Speed on Assessments of Intentionality by Zachary C. Burns and Eugene M. Caruso. Bottom line: prosecutors should use slow motion if they want to prove intent. Second bottom line: I need to find a way to do cultural cognition experiments that involving filming friends jousting on a bike. I then hopped on over to International Law, where Adam Chilton presented an experimental paper on the effect of international law rules on public opinion. He used a mTurk sample.  I was a concern troll, and said something like “Dan Kahan would be very sad were he here.” Adam had a good set of responses, which boiled down to “mTurk is a good value proposition!”  Which it is.

After lunch it was off to a blockbuster session on Legal Education. There was a small little paper on the value of law degrees. And then,  Ghazala Azmat and Rosa Ferrer presented  Gender Gaps in Performance: Evidence from Young Lawyers. They found that holding all else equal, young women lawyers tend to bill somewhat fewer hours than men, a difference attributable to being less likely to report being highly interested in becoming partners while spending more time on child care.  What was noteworthy was the way they were able to mine the After the JD dataset. What seemed somewhat more troubling was the use of hours billed as a measure of performance, since completely controlling for selection in assignments appeared to me to be impossible given the IVs available.  Next, Dan Ho and Mark Kelman presented Does Class Size Reduce the Gender Gap? A Natural Experiment in Law. Ho and Kelman found that switching to small classes significantly increases the GPA of female law students (eliminating the gap between men and women). This is a powerful finding – obviously,it would be worth it to see if it is replicable at other schools.

The papers I regret having missed include How to Lie with Rape Statistics by Corey Yung (cities are lying with rape statistics); Employment Conditions and Judge Performance: Evidence from State Supreme Courts by Elliott Ash and W. Bentley MacLeod (judges respond to job incentives);  and Judging the Goring Ox: Retribution Directed Towards Animals by Geoffrey Goodwin and Adam Benforado.  I also feel terrible having missed Bill James, who I hear was inspirational, in his own way.

Overall, it was a tightly organized conference – kudos to Dave Abrams, Ted Ruger, and Tess Wilkinson-Ryan.  There could’ve been more law & psych, but that seems to be an evergreen complaint. Basically, it was a great two days.  I just wish there were more Twiqbal papers.

 

 

6

CELS VIII: Data is Revealing, Part 1.

 

"If you are going to mine my data, at least have the courtesy of displaying predictive probabilities!"

“If you are going to mine my data, at least have the courtesy of displaying predictive probabilities!”

[This is part 1 of my recap of the Penn edition of CELS, promised here.  For previous installments in the CELS recap series, see CELS III, IV, V, and VI, VII.]

Barry Schwartz might’ve designed the choice set facing me at the opening of CELS. Should I go to Civil Procedure I (highlighted by a Dan Klerman paper discussing the limits of Priest-Klein selection), Contracts I (where Yuval Feldman et al. would present on the relationship between contract clause specificity and compliance), on Judicial Decisionmaking and Settlement (another amazing Kuo-Chang Huang paper). [I am aware, incidentally, that for some people this choice would be Morton's. But those people probably weren't the audience for this post, were they.] I bit the bullet and went to Civ Pro, on the theory that it’d be a highly contentious slugfest between heavyweights in the field, throwing around words like “naive” and “embarrassing.”  Or, actually, I went hoping to learn something from Klerman, which I did. The slugfest happened after he finished.

In response to a new FJC paper on pleading practices, a discussant and a subsequent presenter criticized the FJC’s work on Twiqbal. The discussant argued that the FJC’s focus on the realities of lawyers’ practice was irrelevant to the Court’s power-grab in Twombly, and that pleading standards mattered infinitely more than pleading practice.  The presenter argued that the FJC committed methodological error in their important 2011 survey, and that their result (little effect) was misleading. The ensuing commentary was not restrained. Indeed, it felt a great deal like the infamous CELS death penalty debate from 2008. One constructive thing did come out of the fire-fight: the FJC’s estimable Joe Cecil announced that he would be making the FJC’s Twombly dataset available to all researchers through Vandy’s Branstetter program. We’ll all then be able to replicate the work done, and compare it to competing coding enterprises. Way to go, Joe!

But still, it was a tense session.  As it was wrapping up, an economically-trained empiricist in the room commented how fun he had found it & how he hoped to see more papers on the topic of Twombly in the future. I’d been silent to that point, but it was time to say something.  Last year in this space I tried being nice: “My own view would go further: is Twiqbal’s effect as important a problem as the distribution of CELS papers would imply?” This year I was, perhaps impolitically, more direct.

I conceded that analyzing the effect of Twombly/Iqbal wasn’t a trivial problem. But if you had to make a list of the top five most important issues in civil procedure that data can shed light on, it wouldn’t rank.* I’m not sure it would crack the top ten.  Why then have Twiqbal papers eaten market share at CELS and elsewhere since 2011? Some hypotheses (testable!) include: (1) civil procedure’s federal court bias; (2) giant-killing causes publication, and the colossi generally write normative articles praising transsubstantive procedure and consequently hate Twombly; (3) network effects; and (4) it’s where the data are. But these are bad reasons. Everyone knows that there is too much work on Twombly. We should stop spending so much energy on this question. It is quickly becoming a dead end.

So I said much of that and got several responses. One person seemed to suggest that a good defense of Twiqbal fixation was that it provided a focal point to organize our research and thus build an empirical community. Another suggested that even if law professors were Twiqbal focused, the larger empirical community was not (yet) aware of the importance of pleadings, so more attention was beneficent. And the rest of folks seemed to give me the kind of dirty look you give the person who blocks your view at a concert. Sit down! Don’t you see the show is just getting started?

Anyway, after that bit of theatre, I was off to a panel on Disclosure. I commented (PPT deck) on Sah/Lowenstein, Nothing to Declare: Mandatory and Voluntary Disclosure leads advisors to avoid conflicts of interestThis was a very, very good paper, in the line of disclosure papers I’ve previously blogged here. The innovation was that advisors were permitted to walk away from conflicts instead of being assigned to them immutably. This one small change cured disclosure’s perverse effect. Rather than being morally licensed by disclosure to lie, cheat and steal, advisors free to avoid conflicts were chastened by disclosure just as plain-vanilla Brandeisian theory would’ve predicted.   In my comments, I encouraged Prof. Sah to think about what happened if advisors’ rewards in the COI were returned to a third party instead of to them personally, since I think that’s the more legally-relevant policy problem. Anyway, definitely worth your time to read the paper.

Then it was off to the reception. Now, as our regular readers know, the cocktail party/poster session is a source of no small amount of stress. On the one hand, it’s a concern for the organizers. Will the food be as good as the legendary CELS@Yale? The answer, surprisingly, was “close to it”, headlined by some grapes at a cheese board which were the size of small apples and tasted great.  Also, very little messy finger food, which is good because the room is full of the maladroit.  But generally, poster sessions are terribly scary for those socially awkward introverts in the crowd. Which is to say, the crowd. In any event, I couldn’t socialize because I had to circle the crowd for you. Thanks for the excuse!

How about those posters?  I’ll highlight two. The first was a product of Ryan Copus and Cait Unkovic of Bolt’s JSP program. They automated text processing of appellate opinions and find significant judge-level effects on whether the panel reverses the district court’s opinion, as well as strong effects for the decision to designate an opinion for publication in the first instance. That was neat. But what was neater was the set of judicial base cards, complete with bubble-gum and a judge-specific stat pack, that they handed out.  My pack included Andrew Kleinfeld, a 9th circuit judge who inspired me to go to law school.  The second was a poster on the state appellate courts by Thomas Cohen of the AO. The noteworthy findings were: (1) a very low appeal-to-merits rate; and (2) a higher reversal rates for plaintiff than defendant wins at trial. Overall, the only complaint I’d make about the posters was that they weren’t clearly organized in the room by topic area, which would have made it easier to know where to spend time.  Also, the average age of poster presenters was younger than the average age of presenters of papers, while the average quality appeared as high or higher. What hypotheses might we formulate to explain that distribution?

That was all for Day 1. I’ll write about Day 2, which included a contracts, international law, and legal education sessions,  in a second post.

 

*At some point, I’ll provide a top ten list.  I’m taking nominations.  If it has federal court in the title, you are going to have to convince me.

5

Your Daily Provocation

From Daniel McCarthy:

“As a guideline, originalism clearly has merits: it leaves most politics to the political branches, even if it might not succeed in leaving all politics to them; and it may encourage, at least up to the point, a degree of modesty on the part of the judge—relative, that is, to theories that loudly assert the scope that judges actually have in rendering opinions. In some ways, originalism and the broader backlash against the activism of the pre-Rehnquist court may have disguised just how bad the alternatives could be: the Supreme Court has been less adventurous in the last 30 years, and conservatives who remember how adventurous it was earlier in the 20th century may be frustrated that the danger they perceive isn’t felt as strongly by someone like me.

But I remain skeptical. Jurisprudence is an area where I find very little conservative self-examination as searching as that on display in various schools of economics and foreign policy. Indeed, traditionalists and libertarians who reject conservative-movement talking points on economics or foreign policy sometimes sound like just like Rush Limbaugh or Bill Kristol when it comes to the courts. This consensus may exist for a good reason—because it’s formed around a correct doctrine—but it may just mean that the best minds of the right have yet to turn sufficient attention to this area.”

McCarthy doesn’t add the more cynical supposition that criticism of originalism on the right is a sure way off the greased (federalist) career path that the last thirty years has carved out. But the buried argument in this paragraph is worth excavating: the success of the counterrevolution has blinded those who came after to how adventurous – and wrong – the original Warren-court’s premises about judicial and national power and competency turned out to be. A version of this argument is now the CW, at least in some circles.  And so I wonder…how many lawyers born after 1970 would actually want to live in a world governed by Earl Warren and his band again? Could it possibly be more than 20%?

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CELS 2013: Up Close and Personal.

This weekend is CELS VIII, to be held at Penn Law.  As our readers know, it’s my practice to provide a summary of the conference – or at least those bits I attend. (See here for CELS VII and links to 3-6). This year is no different. You can find the program and papers up on a very, very cool looking webpage here. I intend to go to everything, including the talk by Bill James.  Who I hope will spend his time talking about my extensive writings on the interaction of sabermetrics and ELS.  But who likely will talk about how the Red Sox are awesome and the Phillies are not.

6

The Economics of the Baby Shortage: A Horrifying Counter-example

In Landes and Posner’s famous, The Economics of the Baby Shortage, the authors consider the possibility that baby buyers are likely to self-selecting monsters.  Not so, they argue, as

“Moreover, concern for child abuse should not be allowed to obscure the fact that abuse is not the normal motive for adopting a child.  And once we put abuse aside, willingness to pay money for a baby would seem on the whole a reassuring factor from the standpoint of child welfare. Few people buy a car or television set to smash it.  In general, the more costly a purchase, the more care the purchaser will lavish on it.”

I’ve always found these lines to be particularly bizarre  (even in the context of an otherwise famously provocative, probably misleading, essay). In any event, they came to mind when a student in my L&E class forwarded on this chilling story.

“KIEL, Wisconsin, Sept 9 (Reuters) – Todd and Melissa Puchalla struggled more than two years to raise Quita, the troubled teenager they’d adopted from Liberia. When they decided to give up the 16-year-old, they found new parents to take her in less than two days – by posting an ad on the Internet…”

Read More

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IRBs and Mission Creep?

I’ve written several times in the past about the intersection of IRBs and the legal academy. (Blogging; Caselaw Research; Zach Schrag interview) Consider this an update in that series.

My university (Temple) has an interesting set of new IRB guidelines. Essentially, Temple’s IRB (for all subjects) is now requiring department head sign-off for all protocols:

“In addition to the PI, every individual listed on the approval route on an IRB submission is required to approve the submission before it can reach the IRB for review. The electronic approval takes the place of a hard copy signature. Department Heads and all research personnel are required to approval Initial Submissions. Individuals can also be manually added to the approval route. Everyone listed on the approval route must view and approve the submission in order for it to reach the IRB. Please see the instructions for Providing Approval in eRA on the IRB’s website.”

When I inquired as to why this regulation was required, I was told that department heads knew the financial health & needs of the institution, and would therefore be able to tell if particular projects’ execution was financially possible.  Because department heads are best positioned to know if research is too expensive (and consequently that human subjects wouldn’t be cared for), IRB review will be denied if they refuse to sign the application. The IRB acknowledged that the regulation was not required by HHS regulations or the common rule, but was essentially a way to improve the quality of the University’s research.

To me this is a deeply problematic requirement. Academic freedom is a slogan which almost always signifies rent seeking. But here, there are significant risks that the IRB could be used as a way to cloak gamesmanship inside of departments.  Imagine that you are on the outs from your boss. She or he can now simply refuse you the right to do research by stating that the department can’t support it.  The IRB enforces that refusal, with its full array of punitive sanctions. What avenue of relief could you possibly have, apart from an incredibly cumbersome university grievance process, or a First Amendment lawsuit against the University?

Ultimately I dropped my objections to the regulation and got sign-off, in large part because I trust the powers that be.  Also, who wants to poke the bear?  But I thought I’d throw it out there to see whether any of you have seen similar regulations, and whether (or not) they’ve been challenged successfully.

2

The Dignity of the Minimum Wage?

[A brief note of apology: it's been a terrible blogging summer for me, though great on other fronts.  I promise I'll do better in the coming academic year. In particular, I'd like to get back to my dark fantasy/law blogging series. If you've nominations for interviewees, email me.]

WorkDetroitThis is one I’ve been meaning to write for a while.

One of the major lessons of the cultural cognition project is that empirical arguments are a terrible way to resolve value conflicts. On issues as diverse as the relationship between gun ownership and homicide rates, the child-welfare effects of gay parenting, global warming, and consent in rape cases, participants in empirically-infused politics behave as if they are spectators at sporting events. New information is polarized through identity-protective lenses; we highlight those facts that are congenial to our way of life and discounts those that are not; we are subject to naive realism.  It’s sort of dispiriting, really.  Data can inflame our culture wars.

One example of this phenomenon is the empirical debate over minimum wage laws. As is well known, there is an evergreen debate in economics journals about the policy consequences which flow from a wage floor.  Many (most) economists argue that the minimum wage retards growth and ironically hurts the very low-wage workers it is supposed to hurt. Others argue that the minimum wage has the opposite effect. What’s interesting about this debate -to me, anyway- is that it seems to bear such an orthogonal relationship to how the politics of the minimum wage play out, and the kinds of arguments that persuade partisans on one side or another. Or to put it differently, academic liberals in favor of the minimum wage have relied on regression analyses, but I don’t think they’ve persuaded many folks who weren’t otherwise disposed to agree with them. Academic critics of the minimum wage too have failed to move the needle on public opinion, which (generally) is supportive of a much higher level of minimum wage than is currently the law.

How to explain this puzzle?  My colleague Brishen Rogers has a terrific draft article out on ssrn, Justice at Work: Minimum Wage Laws and Social Equality. The paper urges a new kind of defense of minimum wages, which elides the empirical debate about minimum wages’ effect on labor markets altogether. From the abstract:

“Accepting for the sake of argument that minimum wage laws cause inefficiency and unemployment, this article nevertheless defends them. It draws upon philosophical arguments that a just state will not simply redistribute resources, but will also enable citizens to relate to one another as equals. Minimum wage laws advance this ideal of “social equality” in two ways: they symbolize the society’s commitment to low-wage workers, and they help reduce work-based class and status distinctions. Comparable tax-and-transfer programs are less effective on both fronts. Indeed, the fact that minimum wage laws increase unemployment can be a good thing, as the jobs lost will not always be worth saving. The article thus stands to enrich current increasingly urgent debates over whether to increase the minimum wage. It also recasts some longstanding questions of minimum wage doctrine, including exclusions from coverage and ambiguities regarding which parties are liable for violations.”

I’m a huge fan of Brishen’s work, having been provoked and a bit convinced by his earlier work (here) on a productive way forward for the union movement. What seems valuable in this latest paper is that the minimum wage laws are explicitly defended with reference to a widely shared set of values (dignity, equality). Foregrounding such values I think would increase support for the minimum wage among members of the populace.  The lack of such dignitary discussions in the academic debate to date has level the minimum wage’s liberal defenders without a satisfying and coherent ground on which to stand. Worth thinking about in the waning hours of Labor’s day.