Legal Studies Research Paper Series

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Citation Stickiness

Kevin Bennardo and Alexa Chew
This Article is an empirical study of what we call citation stickiness. A citation is sticky if it appears in one of the parties’ briefs and then again in the court’s opinion. Imagine that the parties use their briefs to toss citations in the court’s direction. Some of those citations stick and appear in the opinion — these are the sticky citations. Some of those citations don’t stick and are unmentioned by the court — these are the unsticky ones. Finally, some sources were never mentioned by the parties yet appear in the court’s opinion. These authorities are endogenous — they spring from the internal workings of the court itself.

In a perfect adversarial world, the percentage of sticky citations in courts’ opinions would be something approaching 100%. The parties would discuss the relevant authorities in their briefs, and the court would rely on the same authorities in its decision-making. Spoiler alert: our adversarial world is imperfect. Endogenous citations abound in judicial opinions and parties’ briefs are brimming with unsticky citations.

So we crunched the numbers. We analyzed 325 cases in the federal courts of appeals. Of the 7552 cases cited in those opinions, more than half were never mentioned in the parties’ briefs. But there’s more — in the Article, you’ll learn how many of the 23,479 cases cited in the parties’ briefs were sticky and how many were unsticky. You’ll see the stickiness data sliced and diced in numerous ways: by circuit, by case topic, by an assortment of characteristics of the authoring judge. Read on!

-July 23, 2019

When Governments Promise to Prioritize Public Debt: Do Markets Care?

G. Mitu Gulati, Ugo Panizza, Mark C. Weidemaier and Grace Willingham
During the European sovereign debt crisis of 2011-13, some nations faced with rising borrowing costs adopted commitments to treat bondholders as priority claimants. That is, if there was a shortage of funds, bondholders would be paid first. In this article, we analyze the prevalence and variety of these types of commitments and ask whether they impact borrowing costs. We examine a widely-touted reform at the height of the Euro sovereign debt crisis in 2011, in which Spain enshrined in its constitution a strong commitment to give absolute priority to public debt claimants. We find no evidence that this reform had any impact on Spanish sovereign bond yields. By contrast, our examination of the U.S. Commonwealth of Puerto Rico suggests that constitutional priority promises can have an impact, at least where the borrower government is subject to supervening law and legal institutions.

-July 23, 2019

The Role of the CISG in Canadian Contract Practice: An Empirical Study

John F. Coyle
In much of the legal literature, the fact that the United Nations Convention on Contracts for the International Sale of Goods (CISG) has been ratified by so many nations constitutes incontrovertible evidence of its success. This narrative fails to account, however, for the fact that private parties can choose to exclude the CISG from their international sales contracts.

This Article draws upon a hand-collected dataset of contracts executed by public companies in Canada to show that these companies overwhelmingly choose to exclude the CISG from their international sales agreements. It also shows that these same companies are frequently unaware that selecting the law of a Canadian province can result in the application of the CISG and that few (if any) of these companies consciously select the CISG by selecting provincial law. While the Article turns up a few tantalizing hints that attorneys practicing in Quebec may be slightly more receptive to the CISG than attorneys practicing in the rest of Canada, the overall portrait that emerges is of a nation where this treaty is excluded by sophisticated actors in almost all cases. This finding raises important questions of whether the CISG is achieving its intended purpose of facilitating international trade.

-July 23, 2019

Restructuring Italian (or Other Euro Area) Debt: Do Euro CACs Constrain or Expand the Options?

Mark C. Weidemaier
This paper examines the intersection between two fundamental attributes of Euro Area sovereign debt. The first is that sovereigns tend to issue bonds governed by their own law, which makes a debt restructuring comparatively easy. The second is the standardized collective action clause (CAC) mandated for most sovereign bonds by the treaty establishing the European Stability Mechanism. These Euro CACs let a bondholder supermajority approve a debt restructuring in a vote that binds dissenters. How Euro CACs interact with local law advantage is one of the central legal uncertainties affecting debt restructuring in the Euro Area. History teaches that borrower governments can easily restructure local-law debt. But this intuition co-exists with a widespread sense that Euro CACs make it harder for governments to exploit the benefits of local law.

Using a hypothetical Italian debt restructuring as an example, this paper explains why Euro CACs do not, in fact, materially constrain a sovereign’s ability to change its local law to facilitate restructuring. Put simply: From a restructurer’s perspective, Euro CACs are the safe option, not the only one. A restructuring conducted via the CAC will leave no holdouts and will survive almost any legal challenge. But a sovereign that has issued local-law debt remains free to alter its law to facilitate restructuring, although it will encounter various legal constraints in doing so. These constraints, however, are not absolute; there is room for the prudent exercise of local law advantage. The paper closes by discussing implications for current reform efforts in the Euro Area, including efforts to revise the Euro CAC template.

-August 16, 2019

Structural Rights and Incorporation

F. Andrew Hessick and Elizabeth Fisher
Under the selective incorporation doctrine, provisions in the Bill of Rights are applied against the states if they are fundamental to the American scheme of ordered liberty or deeply rooted in this nation’s history. By focusing solely on the importance of rights, this doctrine fails to account for the effect of incorporating a right on the states. This Article challenges this approach. It identifies a category of rights whose incorporation most deeply intrudes on state sovereignty. These rights do not simply create individual entitlements; they also have structural features by dictating which government institutions may exercise which government powers. These “structural rights” comprise the Fifth Amendment right to a grand jury, the Sixth Amendment right to a criminal jury, and the Seventh Amendment right to a civil jury. The Article argues that these rights should not be incorporated because the prerogative to allocate government powers is one of the core powers of state sovereignty, and the Fourteenth Amendment does not purport to strip the states of that power. In addition to protecting the state power to arrange government, adopting a theory against incorporating structural rights would explain the Court’s refusal to incorporate the grand jury and civil jury rights, as well as doctrinal anomalies surrounding incorporation of the criminal jury right.

Adopting the theory against incorporating structural rights would have several implications. The most significant is that it would result in the deincorporation of the Sixth Amendment right to a criminal jury. The consequence of this deincorporation is not only that the Constitution would not oblige states to provide juries in criminal cases but also that the doctrine announced in Apprendi v. New Jersey, which prohibits sentencing schemes that allowed judges to make factual findings altering the range of punishment, would no longer apply against the states.

-July 23, 2019

Korematsu, Hirabayashi, and the Second Monster

Eric L. Muller
In June of 2018 the Supreme Court repudiated its notorious 1944 decision in Korematsu v. United States upholding the mass removal of Japanese Americans from the West Coast. While some celebrated its demise and others doubted the Court’s sincerity, nobody paid attention to an equally odious decision that has hidden behind Korematsu: Hirabayashi v. United States. In that 1943 decision the Court unanimously upheld a lesser racial restriction on Japanese Americans, a dusk-to-dawn curfew. Like Korematsu, that decision has never been overruled, but unlike Korematsu, it has never been deeply scrutinized or pervasively condemned. Hirabayashi survives, providing potential cover for all manner of racial rules less burdensome than removal, such as surveillance, identity cards, or house arrest. This essay flushes Hirabayashi from the shadows, revealing it to be just as flawed as Korematsu, considerably more dangerous, and equally deserving of repudiation.

-July 12, 2019

Future Work

Jeffrey M. Hirsch
The Industrial Revolution. The Digital Age. These revolutions radically altered the workplace and society. We may be on the cusp of a new era—one that will rival or even surpass these historic disruptions. Technology such as artificial intelligence, robotics, virtual reality, and cutting-edge monitoring devices are developing at a rapid pace. These technologies have already begun to infiltrate the workplace and will continue to do so at ever increasing speed and breadth.

This Article addresses the impact of these emerging technologies on the workplace of the present and the future. Drawing upon interviews with leading technologists, the Article explains the basics of these technologies, describes their current applications in the workplace, and predicts how they are likely to develop in the future. It then examines the legal and policy issues implicated by the adoption of technology in the workplace—most notably job losses, employee classification, privacy intrusions, discrimination, safety and health, and impacts on disabled workers. These changes will surely strain a workplace regulatory system that is ill-equipped to handle them. What is unclear is whether the strain will be so great that the system breaks, resulting in a new paradigm of work.

Whether or not we are on the brink of a workplace revolution or a more modest evolution, emerging technology will exacerbate the inadequacies of our current workplace laws. This Article discusses possible legislative and judicial reforms designed to ameliorate these problems and stave off the possibility of a collapse that would leave a critical mass of workers without any meaningful protection, power, or voice. The most far-reaching of these options is a proposed “Law of Work” that would address the wide-ranging and interrelated issues posed by these new technologies via a centralized regulatory scheme. This proposal, as well as other more narrowly focused reforms, highlight the major impacts of technology on our workplace laws, underscore both the current and future shortcomings of those laws, and serve as a foundation for further research and discussion on the future of work.

-July 12, 2019

Consumer Protection After the Global Financial Crisis

Edward Balleisen and Melissa B. Jacoby
Like other major events, the Global Financial Crisis generated a large and diffuse body of academic analysis. As part of a broader call for operationalizing the study of crises as policy shocks and resulting responses, which inevitably derail from elegant theories, we examine how regulatory protagonists approached consumer protection after the GFC, guided by six elements that should be considered in any policy shock context. After reviewing the introduction and philosophy of the Bureau of Consumer Financial Protection, created as part of the Dodd-Frank Act of 2010, we consider four examples of how consumer protection unfolded in the crises’ aftermath that have received less attention. Our case studies investigate a common set of queries. We sought to identify the parties who cared sufficiently about a given issue to engage with it and try to shape policy, as well as the evolving nature of the relevant policy agenda. We also looked for key changes in policy, which could be reflected in various forms—whether establishing an entirely new regulatory agency, formulating novel enforcement strategies, or deflecting policy reforms.

The first of our case studies focuses on operations of the Federal Trade Commission in the GFC’s aftermath. Although the Dodd-Frank Act shifted some obligations toward the CFPB, we find that the FTC continued to worry about and seek to address fraud against consumers. But it tended to focus on shady practices that arose in response to the GFC rather than those that facilitated it. Our second case study examines the Congressional adoption of a carveout from CFPB authority for auto dealers, which resulted from strong lobbying by car companies worried about a cratering sales environment, and the aftermath of the policy. Here, we observe that this carveout allowed a significant amount of troubling auto lending activity to continue and expand, with potentially systemic consequences. Loan servicer misbehavior, particularly in the form of robosigning, is the focus of our third case study. Although Dodd-Frank did not explicitly address robosigning, the new agency it created, the CFPB, was able to draw on its broad authority to address this newly arising problem. And, because the CFPB had authority over student loan servicers, the agency could pivot relatively quickly from the mortgage context to the student loan context. Our fourth and final case study is the rise and fall of Operation Choke Point, an understandably controversial interagency program, convened by the U.S. Department of Justice, which, with the GFC fresh in mind, attempted to curtail fraudulent activities by cutting off access to online payment mechanisms. Here, we see an anti-fraud effort that was particularly vulnerable to a change in presidential administration and political climate because its designers had invested little effort in building public awareness and support for the program.

The Article concludes with an overall assessment and suggestions for other focal points for which our approach would be useful. The examples span a range of other domestic and global policy contexts.

-July 23, 2019

Automation and the Income Tax

Jay A. Soled and Kathleen DeLaney Thomas
Technological advancements are playing a transformative role in curtailing the need for labor. These very same forces are catapulting capital in the form of robotics, machinery, and intellectual property to the economic forefront. In virtually every sphere of human existence, labor’s decline and capital’s rise have been widely felt. In short, automation has become society’s new focal point.

Notwithstanding the magnitude of these changes, Congress appears committed to retaining its historic pattern of taxing labor income more heavily than it taxes income derived from capital. However, as technology continues to evolve and capital gradually eclipses labor’s role in the economy, a fundamental shift in the tax system will be needed to maintain a viable revenue stream.

This Article explores the ways that automation has impacted the tax system in terms of efficiency, fairness, and revenue. It concludes that our twentieth-century tax system is unsustainable in the twenty-first century. It then offers proposals for how policymakers should reform the tax law to account for labor’s decline and capital’s rise. Among other things, the technological era requires that all income — regardless of source — bear a similar tax burden.

-July 12, 2019

The Modern Case For Withholding

Kathleen DeLaney Thomas
Who is responsible for paying taxes to the government? Currently, the answer depends on one’s employment status. Employees enjoy the luxury of not having to think about tax remittance during the year because their employers withhold taxes from their paychecks. Non-employees, on the other hand, face a much more onerous system. They must keep track of and budget for taxes during the year, make quarterly remittances to the IRS, and may face penalties for failing to do so. Although this regime has been in place for many decades, there are several reasons why reform may be in order.

First, the independent contractor workforce is expanding, propelled in large part by the growth of the gig economy. This means an increasing number of taxpayers are earning income outside of employment that is not captured by withholding. Second, the rise of the Internet and other advances in technology has made withholding by third parties more efficient and less costly than was historically the case. Finally, advances in the social sciences have shed new light on why many taxpayers appear to prefer withholding and why it may serve to enhance overall welfare.

Accordingly, this Article proposes an expanded withholding regime that would condition withholding on the income of the payer, rather than on the employment relationship. Under such a regime, any business of a certain size paying more than a de minimis number of workers would be required to withhold taxes. To address cases where withholding would not be feasible, this Article also introduces the concept of “quasi-withholding.” Quasi-withholding would interject a private third party between the taxpayer and the IRS to facilitate tax payments and replicate the benefits associated with withholding. The third party could be a financial institution or a private business formed specifically to assist with tax remittance. Expanding withholding would vastly simplify the tax system for taxpayers, while enhancing revenue collection for the government, presenting a rare “win-win” opportunity for tax reform.

-July 12, 2019

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