Posted by: steveschaus | 17th Aug, 2021

Wells – The Personification of the Partnership

Post by Andrew Verstein

As Paul Miller recently observed, New Private Law scholars have largely hewed to tort, property, contract, or fiduciary law. Comparatively little attention has been devoted to business entities such as corporations and partnerships. Yet without the NPL label, there is fascinating work underway that is well worth the attention of this blog’s readers. As an exhibit, I commend Harwell Wells’s new paper (forthcoming in the Vanderbilt Law Review)  “The Personification of the Partnership.”

Wells’s focus is the familiar debate over entity ontology. Do entities “exist” or are they fictions, reducible to the sum of their members? For corporations, this debate is normative (overrule Citizens United!) or conceptual (does a corporate ‘intend’ things, for the purposes of specific-intent crimes?), but there is no plausible doctrinal debate. Corporations are legal persons. By contrast, the ontological status of partnerships has been in active flux for more than a century. Nineteenth century jurists like Story and Kent rejected the legal personhood of partnerships, but by the end of the century, elite opinion had shifted decidedly toward recognizing the partnership as its own legal person. Dean Ames drafted the Uniform Partnership Act to firmly endorse the entity view. But then Ames died, and his successors redrafted the UPA to be ambivalent about whether and to what extent the partnership is an entity distinct from the set of its partners. The UPA remains the law of many commercially important states such as New York. Litigation under UPA partnership law is often litigation about entitization.  

Wells sheds new light on partnership ontology by excavating the forgotten reasons why the UPA drafters refused to endorse the entity view partnership, despite its endorsement by Ames and other leading advisors. The answer is a peculiar braiding of doctrine, normativity, and conceptualism: legal practitioners came to view the partnership as the corporation’s moral superior, in terms of the ethical relationships the form supported in its participants. Partnerships linked partners in a way that made them better people, and corporations risked the opposite.

This critique was rooted in entity ontology. Partners were inspired to live up to a high standard because they were in direct privity with their coadventurers and creditors. People want to do right by those they are connected to. And if there is a moral failing, they must own it as their own. By contrast, a corporation intermediates the relationship between all corporate patrons. Two investors are nothing to each other, they are only something to the corporation. Likewise, the shareholder to the corporate creditor. It is easier to take liberties with people to whom you do not hold some special and direct relationship.

Wells describes how American lawyers believed that partnership could spin privity into decency – but not if the partnership was just a corporation with funny voting and profit rules. The partnership had to be nothing, or else it was nothing special.

 

Post by Henry Smith

I have just read and greatly enjoyed this wonderful new book by Joe Kearney and Tom Merrill about the shaping of the Chicago Lakefront. Sometimes this shaping is literal (or littoral?), because Kearney and Merrill embed a highly expert and engagingly written history of the legal controversies surrounding the Lakefront with a social and even geographical account. Human activity impacted the actual Lakefront not just through landfill, over which some controversies, sometimes even violent ones, were fought, but even through efforts by various landowners to promote accretion. As the title reflects, a central part of the story is occupied by the public trust doctrine and the famous Illinois Central case of 1892, and Kearney and Merrill have done an incredible detective job to root out the story of how the Lakefront Act of 1869 (granting submerged lakefront land to the railroad) was passed. They investigate how much corruption was there, down to who ate dinner with whom on the night before passage!

What is especially impressive is how the various legal controversies interacted with each other in a semi-contingent way. While the authors maintain a wide lens—the characters involved range from Cap Streeter, to the Catholic Potawatomis, to Montgomery Ward and the well-heeled business elite on Michigan Avenue—the story, from railroad yards to museums to parks, is ultimately one of elites getting their way over other elites. They also draw measured lessons from this sweeping history about how the law is and is not important and how its ultimate effects on the common good are semi-predictable at best. This is a richly-textured history that will appeal to legal experts and laypeople alike. And for anyone who has lived in Chicago, it will make one appreciate the city in new ways. This is perfect summer reading, even if one can’t find one’s way to the beautiful beaches on the Chicago Lakefront to do it.

Posted by: steveschaus | 11th May, 2021

CFP: Workshop on Private Law & Emerging Technology

We are excited to invite legal scholars to participate in a virtual Workshop on Private Law and Emerging Technology cosponsored by Harvard’s Project on the Foundations of Private Law, Yale’s Information Society Project, and Yale’s Center for Private Law. This Workshop will be a forum for in-depth engagement with works-in-progress at the intersection of private law, technology policy, and the societal changes engendered by widespread adoption of new technologies. Rather than identifying sui generis policy proposals for specific ills, we are interested in determining how our systems of private law and private ordering are affected by, provide solutions for, and influence technological change. As part of private law, we include property, contracts, torts, equity, as well as intellectual property and commercial law, among others. This remote Workshop is scheduled for three consecutive Fridays in September 2021: Sept. 3, 10, & 17 from 1­–3PM (Eastern). For more information, please see the attached PDF. To submit an abstract for consideration, please send one of less than 600 words to cfp.isp@yale.edu with the subject “Submission for Private Law & Emerging Tech CFP” by June 13. For any other questions, please contact João Marinotti (jmarinot [at] iu [dot] edu).

Posted by: steveschaus | 4th May, 2021

Equity as Meta-Law

Post by Henry Smith 

A paper of mine on equity long in the works (and under different titles) is now out as Henry E. Smith, Equity as Meta-Law, 130 Yale L.J. 1050 (2021). Here is the abstract:

With the merger of law and equity almost complete, the idea of equity as a special part of our legal system or a mode of decisionmaking has fallen out of view. This Article argues that much of equity is best understood as performing a vital function. Equity and related parts of the law solve complex and uncertain problems—including interdependent behavior and misuses of legal rules by opportunists—and do so in a characteristic fashion: as meta-law. From unconscionability to injunctions, equity makes reference to, supplements, and sometimes overrides the result that law would otherwise produce, while primary law operates without reference to equity. Equity operates on a domain of fraud, accident, and mistake, and employs triggers such as bad faith and disproportionate hardship to toggle into a “meta”-mode of more open-ended scrutiny. This Article provides a theoretical account of how a hybrid law, consisting of relatively simple and general primary-level law and relatively intense and directed second-order equity can regulate behavior better through these specialized modes than would homogeneous law alone. The Article tests this theory on the ostensibly most unpromising aspects of equity, the traditional equitable maxims, as well as equitable fraud, defenses, and remedies. Equity as meta-law sheds light on how the fusion of law and equity spawned multifactor balancing tests, polarized interpretation, and led to the confusion of equity with standards, discretion, purely public law, and “mere” remedies. Viewing equity as meta-law also improves on the tradeoff between formalism and contextualism and ultimately promotes the rule of law.

The Edmond J. Safra Center for Ethics at Tel Aviv University is happy to announce its call for Post-Doctorate and Doctoral Fellowship applications for the academic year 2021-22. We encourage applicants from all disciplines and fields, including economics, social sciences, business, the humanities, and the law. Please check our website — or a PDF version of the Post-Doc announcement — for more information. Deadline for submission of all application materials: Feb 8, 2021. Application materials should be sent by e-mail to: safracen@tauex.tau.ac.il

Post by Andrew Gold, John Goldberg, Daniel Kelly, Emily Sherwin, and Henry Smith

We have some good news – The Oxford Handbook of the New Private Law has just been published (Oxford; Amazon)! 

The Handbook offers exciting developments in scholarship dedicated to the study of private law in general, and to the New Private Law (“NPL”) in particular. The NPL movement embraces the traditional common law subjects (property, contracts, and torts), and also adjacent, more statutory areas, such as intellectual property and commercial law. It includes important areas that have been neglected in the United States but are beginning to make a comeback. These include unjust enrichment, restitution, equity, and remedies. “Private law” can also mean private law as a whole, raising issues such as the public-private distinction, the similarities and differences between the various areas of private law, and the institutional framework supporting private law – including courts, arbitrators, and even custom.

The New Private Law aims to bring a new outlook to the study of private law by moving beyond reductively instrumentalist policy evaluation and narrow, rule-by-rule, doctrine-by-doctrine analysis, so as to consider and capture how private law’s various features fit and work together. This movement has also begun resuscitating the notion of private law itself in the United States and has brought an interdisciplinary perspective to the more traditional, doctrinal approach often seen in Commonwealth countries. The Handbook embraces a broad range of perspectives to private law – including philosophical, economic, historical, and psychological perspectives – yet it offers a unifying theme of seriousness about the structure and content of private law. It will be an essential resource for legal scholars interested in the future of New Private Law scholarship, and also to scholars interested in private law more generally.

Posted by: steveschaus | 11th Nov, 2020

Gold – The Right of Redress

Post by Andrew Gold

I’m writing to put in a quick word about my new book, The Right of Redressnow published in the Oxford Legal Philosophy Series. (Here is a poster for the book, which includes a discount code.) Corrective justice theories of private law often focus on a wrongdoer’s obligation to fix his wrong.  I suggest, however, that private law can instead be understood in terms of a right holder’s right to redress the wrong she suffered.  This difference in perspective helps illuminate a range of private law features that are often obscured by other approaches.

Here is an example from the text, at page 1:

Imagine a case in which you have just purchased a unique and expensive gift for a family member.  As you leave the store, a stranger approaches and steals your shopping bag from you, taking the gift and fleeing.  You run after the thief, calling out for help.  Fortunately, the thief is not as fast you are, and he stumbles so that you have a chance to grab the bag back.  You also see that there are no police in sight and, if the thief gets away, your gift will never be recovered.  Is it morally acceptable for you to grab the bag back?  If you successfully take your bag back, is that a kind of justice?

Notice that this case is not about holding someone accountable for their wrongdoing, as is often emphasized in civil recourse theories.  Nor is it about when someone has standing to demand responsive conduct.  For that matter, this is not a genuine case of self-defense.  Your right to take back your bag involves a different set of moral and legal phenomena.  In my view, it also involves a distinctive kind of justice.  I will argue that understanding when this kind of justice is appropriate (and deserving of legal support) can then shed light on contract law, tort law, fiduciary law, unjust enrichment, and equity.  I will also offer a public fiduciary account of the state’s role in facilitating this kind of justice.  Lastly, I will conclude with an assessment of various modern features of private law, ranging from class actions, to litigation finance, to arbitration.

For further context, a draft of the Introduction chapter is available at SSRN.

I would very much welcome any thoughts on the book’s argument!

 

Posted by: sambeswick | 13th Jul, 2020

Retroactive Rights of Action

By Samuel Beswick, Assistant Professor, Peter A. Allard School of Law, The University of British Columbia

I recently suggested on Balkinization that a storm seems to be brewing concerning the place of non-retroactivity doctrine (also called the doctrine of “prospective overruling”) in federal law. Non-retroactivity doctrine attempts to define the temporal scope of novel judgments based on whether they embody “old” law or establish “new” law. In short: if a court’s decision is based on pre-existing law, it will govern disputes retroactively in the ordinary way. If, on the other hand, a judgment makes “new” law, it may apply only prospectively to future cases. Prospectivity tends to be favored when the potential fiscal or administrative fallout of a new precedent exceeds what a court thinks the defendant should bear.

Seemingly abandoned by the Supreme Court in the early 1990s, recent judgments raise questions about whether the doctrine should be revived.

Consider two examples. Bostock v. Clayton County held that firing someone for being homosexual or transgender amounts to sex discrimination under Title VII of the Civil Rights Act of 1964. Janus v. AFSCME held that the deduction of union agency fees from nonconsenting public-sector employees violates the First Amendment. Were these holdings premised on the constitutional law that existed before the dates they were handed down? Or did these judgments make “new” laws that determine rights for the future but that do not apply to past cases?

In a forthcoming article in the Yale Law Journal, I argue that non-retroactivity doctrine’s “old” law versus “new” law framing rests on a false dichotomy. Judicial precedent is inherently retroactive. Those who suffered rights-violations before the dates Bostock and Janus were, respectively, handed down seemingly have good legal grounds for pursuing remedies from the courts.

My positive argument advances in two stages. The first stage invokes John Goldberg and Ben Zipursky’s theory of rights of action to show that novel rights of action will always precede their elucidation in novel judgments. This is inevitable: a novel judgment can only follow the filing of a (novel) claim. As the Supreme Court put it in Danforth v. Minnesota, “the underlying right necessarily pre-exists [the Court’s] articulation of the new rule.” I build on my previous work on the discoverability of mistakes of law to explain when it is that novel rights of action can be taken to have ripened or accrued, opening the door for plaintiffs’ legal action.

The second stage considers the limits on retroactive adjudication. Retroactivity does not mean perpetually reviving old disputes to be decided under more favorable novel precedent. Rights of action face many temporal constraints. In McGirt v. Oklahoma, the final judgment of the 2019/20 term, Justice Gorsuch observed that important doctrinal limits include “procedural bars, res judicata, statutes of repose, and laches, to name a few.” Laches, I argue, has untapped potential as a safety valve to ensure justice in the face of novel precedent. For example, while retroactivity might justify the claims in the Janus II litigation for restitution of past-paid union agency fees (as Will Baude contends), the doctrine of laches might justify limiting such plaintiffs to a recovery period much shorter than that provided by statutes of limitation (thereby partially protecting union coffers).

In light of the limits on rights of action already recognized in law, non-retroactivity doctrine is superfluous. That is a sufficient reason to abandon it. But there is further reason to denounce it: the doctrine is, I contend, unprincipled on its merits and a source of confusion over the precedential authority of judgments. Retroactivity is an inescapable aspect of adjudication that should be embraced.

Posted by: sambeswick | 20th May, 2020

Knowledge & Normative Convergence in Property Law

Post by Malcolm Lavoie.

One of the most intriguing features of New Private Law scholarship is its recognition that diverse normative accounts often converge in explaining core private law doctrine. For instance, the right to exclude as an incident of ownership can be understood in consequentialist terms as a means of accounting for information costs, or alternatively in deontological terms as a way to protect a sphere of individual autonomy. Similarly, aspects of tort law that have traditionally been conceptualized in non-consequentialist terms, such as the bilateral nature of tort obligations as a relationship between the doer and sufferer of a wrong, can also be explained on economic grounds when an account of information costs is introduced. In these examples, consequentialist accounts of the law (in both cases, work by Henry Smith) converge with deontological approaches in explaining the basic structure of private law.

A recent article of mine exploring the implications of an under-appreciated justification for property rights provides an interesting (and unanticipated) example of this kind of convergence. In outlining a consequentialist argument, I came to a new understanding of an approach to property doctrine that had previously primarily been understood in deontological terms.

My article is about the ways in which property systems decentralize decision-making about physical resources. Property rights devolve decision-making authority to a dispersed pool of owners, who in many cases have local knowledge relevant to their resources. This local knowledge can take many forms. For instance, it may include knowledge about the physical characteristics of the resource, local conditions relevant to the use of the resource, the needs and preferences of those who are likely to use the resource, or local norms relevant to its use. Importantly, this kind of knowledge is often held by those who are in close physical proximity to the thing, or involved in an activity with it. The owner of a house, for instance, is often better positioned than anyone else to know how its rooms are best allocated, what repairs are most urgent, and what renovations would be most useful, along with many other questions dependent on physical context.

Since it is often difficult and costly for others to acquire and act upon this kind of knowledge, for instance through a centralized bureaucracy, effective resource management requires a means of recognizing decision-making authority exercised by parties with local knowledge. Property rights have traditionally served this function, channeling valuable local knowledge into decision-making about resources. Owners often have local knowledge or are well-positioned to acquire it. This argument can supply a complementary justification for the institution of private property. By channeling local knowledge into decision-making, property rights can yield better decisions and better outcomes according to a range of consequentialist criteria.

The argument that property rights help owners to take advantage of local knowledge is not novel, having been made most prominently by F.A. Hayek (though elements of it are also present in work by Harold Demsetz and Robert Ellickson). While Hayek was focused on the role of property in facilitating coordination in a market economy, I argue that the knowledge-channeling function of property is actually much more basic and generalizable than that, applying even in cases, such as with respect to inalienable resources, where owners do not interact with markets. For instance, an Indigenous community with title to land may not engage in commercial transactions with the land, but can nevertheless draw on local knowledge in making decisions about the use and management of the land.

In addition to outlining the knowledge-channeling function of property, my article also discusses the ways in which this approach can help us understand property doctrine, including notably the agenda-setting authority of owners. Larissa Katz has previously argued that the exclusive right of an owner to set the agenda for a resource is the essential feature of ownership. Katz makes the argument primarily in descriptive terms, claiming that agenda-setting authority for a resource is more central to the idea of ownership than other incidents, such as the right to exclude. To the extent that Katz grounds her theory in a normative justification, it is in non-consequentialist, autonomy-oriented terms: An owner’s agenda-setting authority upholds important personal autonomy interests of the owner.

Katz does not seek to justify her theory on consequentialist grounds (as far as I am aware). And indeed, the most prominent consequentialist accounts of property rights may seem unpromising for this purpose, given that they tend to emphasize the right to exclude as the most significant feature of property rights. Besides arguments based on the information costs created by the property system itself, alluded to above, other consequentialist arguments for property also emphasize the right to exclude. For instance, one argument holds that property rights create incentives to work and produce by ensuring that the products of one’s labour are not appropriated by others. Why sow today when someone else can come along and reap tomorrow? Having a property interest in the crops helps solve this problem by removing the threat of the interloper. Another argument is that property rights avoid the overuse of resources that would occur under an open-access regime. Why limit one’s own use of a resource when there is no assurance that others will do the same? Again, property can provide an answer, by allowing an owner to control access. According to both of these arguments, it is the right to exclude that provides the decisive shift in incentives, helping to align them with what is socially optimal. Other incidents of ownership serve a subsidiary function. They are allocated to the owner because it usually makes the most sense for these rights and powers to be in the same hands as the party with the right to exclude.

This is where the normative convergence I alluded to earlier comes in. The local knowledge argument for property puts agenda-setting, rather than exclusion, at its core. A property interest can serve to channel local knowledge into resource-based decision-making only if the owner has the authority to make agenda-setting decisions about that resource. To the extent that property is justified by its ability to devolve decision-making to parties who are or who are likely to become knowledgeable about their resources, it is the owner’s agenda-setting authority that is central to the argument. Other incidents of ownership, such as the right to exclude, are often useful in upholding the owner’s agenda-setting authority, but they are not as central to the argument as agenda-setting authority. An owner can channel her local knowledge into decisions about the resource without exercising the right to exclude, but not without exercising agenda-setting authority.

I don’t pretend to have thought through all of the implications of this consequentialist justification for Katz’s theory of ownership. For now, I will simply observe that this seems to provide another example of converging normative accounts of private law doctrine. Like the right to exclude, the agenda-setting authority of owners can be understood as central to the concept of ownership based on both consequentialist and non-consequentialist normative arguments. An understanding of the law previously conceptualized primarily in autonomy-oriented terms can also be given a consequentialist framing. Interestingly, like the other examples of convergence identified above in the work of Henry Smith, this one too depends on taking knowledge and information seriously.

Posted by: sambeswick | 24th Jan, 2020

Obligations X ~ July 14–17, 2020 ~ Harvard Law School

We are pleased to announce the website launch for the Tenth Biennial Conference on the Law of Obligations: http://obligationsx.wpengine.com/

The conference is co-hosted by Harvard Law School and Melbourne Law School, and is being co-convened by John Goldberg, Andrew Robertson and Henry Smith. 

The conference theme, Private Law Inside and Out, is intended to provoke discussion about the inside and outside of private law. The conference will focus on the contrast between ‘internalist’ and ‘externalist’ perspectives on the law in this field. It will also consider the boundaries and relationships between private law and morality, private law and economic efficiency, and private law and other policy goals. A central aspiration of this iteration of Obligations is to give private law scholars working in different intellectual traditions an opportunity to identify previously underappreciated overlaps and synergies, and thereby help to break down methodological barriers to an improved understanding of the field.

We look forward to hosting speakers and attendees in July.

Older Posts »

Categories