Following Gordon's post yeseterday on the Penn State "nondeath penalty," I started thinking more about whether NCAA sanctions against Penn State are a good idea.
Now, I don't mean whether the sanctions are too harsh or will have collateral effects on innocent Penn State programs, students and alumni. Of course sanctions will have collateral effects, just as disclosure of the events at the heart of the sanctions did. The decline in the reputation of Penn State hurts employees, students and alumni. The financial penalty as well as lost revenue will result in a different academic budget that will affect the same groups. These effects are not super great reasons not to punish an organization. Many folks in our field think a lot about the merits of organizational sanctions, and the Penn State scenario is no different from the SEC levying fines against an investment bank or any other large firm that employees folks and has shareholders.
Here is why I'm concerned that NCAA sanctions aren't a great idea. What Sandusky did and his colleagues covered up was categorically different and categorically worse than having a slush fund for players (SMU); letting agents pay a player (USC); letting students trade autographed jerseys for cash (Ohio State); or letting boosters lavish players with cash, prostitutes and entertainment (Miami). All of those things are against the spirit of amateur sports, but they aren't things that require the devil to grow a new mouth for the accuseds to rot in. Giving someone money isn't per se a horrible thing; giving someone money in the context of collegiate athletics is. The heinous acts that occurred in and around the Penn State locker room are heinous in any context.
Let's picture this. SMU was banned from playing for 1987 and hosting home games for 1988 and lost 55 scholarships over 4 years for "X." Penn State was not banned from playing, was fined $60 million, banned from bowl games for 4 years and lost 40 scholarships over 4 years for "Y." Does that mean that the NCAA thinks that "X" is worse than "Y"? USC lost 30 scholarships over 3 years and was banned from bowl games for 2 years for "Z." Does the NCAA think that "Z" is 3/4 or 2/3 as bad as "Y"? Miami is still awaiting its sanction for allegations made in 2011 of "W." What if Miami gets a harsher penalty than Penn State? It has to get a harsher penalty than USC, and there's not a lot of real estate between USC's penalty and Penn State's penalty.
Do we really want to put the bad acts of the Penn State officers on the same spectrum as recruiting violations and payouts to players?
I don't mourn the fallout at Penn State due to the NCAA sanctions, but I am concerned with the symbolism.
The regulation-skeptical judges Henderson, Randolph, and Brown today claimed the first victim of the D.C. Circuit's new year, in a super-unthrilling case that at least included a reasonable standing ruling.
Poor FERC. That agency loses a lot in the court of appeals, and today in Southern California Edison v. FERC, it lost a case worth less than 20,000 dollars. Why'd SCE bother suing for that kind of money? The utility was miffed that FERC hadn't applied California law, which was the law of a service contract with the City of Corona, to its failure to invoice Corona for some higher than expected interconnection charges within a year. In other words, SCE wanted to be reimbursed for the late-filed charges, and thought its delay in filing the charges was immaterial under California law. FERC applied federal law in rejecting the reimbursement request, because, it noted, SCE eventually invoiced Corona for the charges on its FERC-filed rates. And FERC-filed rates are federal documents. Because "accepting FERC's choice of law argument would permit FERC to disregard a choice of law provision in any FERC-approved contract," the court ruled that FERC had to evaluate SCE's reimbursement claim under California law.
Thrillsville, right? No one ever said government contracting rocked at all times. In my view, the opinion is notable mostly for the nuts standing argument that FERC made. FERC argued that because SCE had delayed invoicing Corona beyond the contractual term, it didn't have standing to sue; SCE's injury was not traceable to FERC's interpretation of the contract, in other words, but to SCE's delay in invoicing. To me, that sounds like an effort to convert a merits defense (SCE billed too late to be paid) into a jurisdictional question. It's the sort of argument that, if credited, would keep a variety of basic breach of contract claims - the bread and butter of the first year of law school - out of court. And thankfully, the court rejected the claim, noting that "in reviewing the standing question, the court must be careful not to decide the questions on the merits."
Crazy standing argument, right? But don't blame FERC. Every government lawyer is contractually obligated to challenge the standing of the plaintiff in every DC Circuit case. And they're only obligated to do so because that court gets seduced by standing so frequently.
The opinion may be found here.
The always insightful Simon Lester observes that the latest sin case that the WTO may take up (we’ve already told you about Antiguan internet gaming) is the incipient American ban on clove cigarettes. Indonesia, where such cigarettes are both a staple, and, apparently, an export, thinks that banning cloves but not methols would constitute trade discrimination against foreign exporters.
And, in a recent decision that the Fifth Circuit called, ahem, “high stakes,” that court threw out the Secretary of the Interior’s effort to save the Indian gaming regulatory scheme held to be unconstitutional in the Seminole Tribe case. The Indian Gaming Regulatory Act required states to negotiate casino deals with Indian tribes under the management of a judge which, the Supreme Court held, violated the states' 11th amendment immunity from suit, in Seminole Tribe. The secretary then replaced the judicially managed negotiation with a negotiation process managed by Interior. But the 5th Circuit just concluded that the Act did not authorize the agency to substitute itself for a court: “Congress plainly left little remedial authority for the Secretary to exercise. … The Secretary may not decide the state's good faith; may not require or name a mediator; and may not pull out of thin air the compact provisions that he is empowered to enforce. To infer from this limited authority that the Secretary was implicitly delegated the ability to promulgate a wholesale substitute for the judicial process amounts to logical alchemy.” I generally don’t bother predicting cert grants, but I could see the government trying to obtain one here, and if it did, law clerks might find a follow up to Seminole Tribe – and an effort by the government to get around the impact of that decision without going to Congress for more legislative authority – to be quite exciting.
New Yorkers love their greenmarket produce. And rightly so this time of year, though the commitment to local gardens makes a March full of sauteed fiddlehead fern salads really dreary. Maybe that's why Hunts Point Market dealers often bribe USDA inspectors to show up particularly quickly when a shipment of actually fresh vegetables comes in, or, sometimes, to rate produce as worse than it really is, so that buyers can purchase low, and resell high.
In honor of tomato season, but unseasonably late in a schedule that usually features a summer off for the court, the D C Circuit recently barred a veteran Hunts Point outfit from participating in the USDA's Hunts Point inspection scheme. It agreed with the Department of Agriculture that one of the firm's vice presidents gave a USDA inspector fifty bucks every time he came for inspection, in exchange for which the inspector allegedly did what the firm wanted.
Fifty bucks ain't a lot of money. Which is why I note with slight sadness the passing of Kleiman & Hochberg, Inc, traduced by an employee with a too-close relationship with a regulator, and condemned to dealing, from this point forward, in uninspected fruits and vegetables. Could it possibly have been worth it to bribe the USDA on the penny ante level? The opinion may be found here.
The NRDC is having a good month, what with the injunction against the use of sonar by the navy in southern California (it may be bad for whales, and the appropriate environmental impact statement was not prepared, the court concluded), and the enjoining of exploratory drilling by Shell in Alaska (a, shall we say, not yet explored temporary order pending a mid-August hearing). Impact litigation against big institutions still thrives on the west coast.
I’m extraordinarily late to the party, but it’s worth noting. Career attorneys are resigning or publicly protesting the current Department of Justice leadership. The former actually has been happening for a while (and sometimes resignation is a hard-to-disaggregate mixture of annoyance and the temptations of early retirement). But the airing of grievances in newspapers is pretty novel. So, for that matter, is the willingness to cover it. One of the first of the recent wave to quit was the long serving head of the department’s Office of Information and Privacy, who in this interview describes his supervisors as too young and too ineffective. Here, by the way, is the latest report on information disclosure by DOJ; it is relatively positive.
James Park’s Duke Law Journal article has a vision of the choice for SEC regulators between rules and principles:
“Rulemaking reflects the mentality that securities regulation is a technical enterprise that should be left to experts who have created a comprehensive, efficient, administrative scheme. Principles-based enforcement actions reflect the demand that regulators punish conduct violating principles reflecting public values. For the most part, the regulated prefer a predictable regulatory regime, which rulemaking provides, while the public prefers decisive responses, which can be provided by principles-based enforcement actions.”
Effective December 1, certain new amendments to the Federal Rules of Civil Procedure and Appellate Procedure will bow to the realities of the electronic age. Amendments to the FRCP address electronic discovery. Rule 32.1 of the FRAP will now allow attorneys in federal courts to cite to unpublished opinions as of December 1. However, as Howard Bashman points out in this Law.com article, attorneys may only cite to unpublished opinions from cases decided January 1, 2007 or later. Therefore, the unpublished opinions that were "unpublished" before January 1 will be relegated to the Island of Misfit Opinions for perpetuity. For more on the history of 32.1, see this old post.
In case you've missed it, new Conspirator Ilya Somin and (old Conspirator) Eugene Volokh have been having some fun debating whether anyone can articulate a valid reason for prohibiting certain activities in places open to the public (like parks, streets, etc.), such as nudity, sexual activity, urination, and smoking. And, "it's yucky" isn't a valid reason. Although my sensibilities bristle at little at the thought, I have to admit that it is difficult to come up with a consistent, Constitutional theory for regulation beyond "I don't like it, and no thinking person would want that." Check it out, and please, please come up with something!
The debate reminded me of some posts earlier on the Conspiracy between David Bernstein and Orin Kerr about whether it was necessary/appropriate/relevant to explore whether certain law schools were open to libertarian-minded students. And why would schools not be open to libertarian views? I'm not defending it, but for some reason I think most of us get to law school so rigid in our thinking that it's hard to have an open mind when someone says in class "Yes, I think people should be able to contract themselves into slavery" (someone in my Contracts class) or "There is no reason to prohibit public sexual acts." So the speaker of those statements, which could provide for rich, intelligent exploration, becomes "the guy who said people should be able to contract themselves into slavery"). These statements seem to be arguing for a reality that has a big YUCK factor, and so others turn away. I'm glad to see that the blogosphere can revel in these discussions.
But please, someone come up with a very persuasive reason to prohibit public nudity. At least here in Wisconsin.
Inside Higher Ed. has a story about economics graduate students at UVa who may face permanent expulsion for cheating. The cheating incident here was finding the answers to problems in their textbook that were available online and sharing them with one another. The students did not alert the professor that the answers were available online. At UVa, there is only one punishment for violating the Honor Code: permanent expulsion.
I would like to know the more facts before I described this homework incident as "cheating." What if the answers were in the back of the book, but the professor didn't know that they were. On the first assignment, students handed in their answers, which they copied from the back of the book, or perhaps checked against the answers in the back of the book. Is that cheating? Was the website with the answers hosted by the publisher, so it looked more like a study guide, or was it hosted by an anonymous student who had figured out the answers or maybe secured a copy of the teacher's manual? What did the syllabus say about study guides or Internet websites? I think that to one generation, finding answers on a website has the same degree of difficulty as breaking into a teacher's office desk drawer, and therefore requires the same criminal mental state. I would say that finding problem answers on the Internet has the same degree of difficulty as flipping to the back of the book.
I've had conversations like this with academics before, and usually the response is "they know it's cheating" or "everyone knows what cheating is." I'm not sure that's true anymore. When I was in junior high, using a calculator was cheating. It's not anymore. Having someone check your spelling before you turn in your senior theme used to be cheating, but using spellcheck is not.
Food and financial services share one problem: that it is very difficult to set up any regulatory system which will allow consumers to understand and measure the risks they are undertaking in making decisions about what foods to eat and what financial products to buy. The Acting Comptroller of the Currency, Julie Williams, has been suggesting that, at least in the context of disclosures about credit card terms it would be a good idea if financial regulators could follow the same sort of approach to disclosure that the FDA uses to disclosure of information about food products:
Why should consumers today get more effective disclosure when they buy a bag of potato chips than when they make substantial financial commitments for financial products and services?
This idea is based in part on what the UK's Financial Services Authority has been saying about consumer disclosures recently:
the OCC also took the unusual step several months ago of submitting a comment letter to the Federal Reserve Board on its Advance Notice of Proposed Rulemaking related to credit card disclosures, discussing both the development of the FDA’s “Nutrition Facts” label and the efforts of the Financial Services Authority (FSA) in the United Kingdom to develop revised disclosures for a variety of financial products.
Simplified disclosure of this sort works better for standardised products than for others. The Financial Services Authority publishes comparative tables which allow consumers to compare some of the basic terms on which some financial products are offered. But the FSA is also working on developing a system for risk ratings or risk warnings for managed investment products (referred to, for example in last week's paper on Wider Range Retail Investment Products ). I'm not convinced that this sort of simplified disclosure really works very well even for potato chips, but I do like the idea of thinking hard about improving disclosures for consumers of financial products.
In doing some research on the differences between attorney malpractice and the much rarer broker malpractice, I've been looking at stockbroker websites. I have this impression that those Sunday afternoon commercials for stockbrokers are fairly overt, promising implicitly that these firms will guide you through with expert advice that you can trust. However, investors can't sue brokers for faulty advice or a faulty plan unless the plan is patently "unsuitable" based on the investor's proclaimed "suitability." But, if a broker says that Enron is going to go sky high, and then it doesn't, that's too bad. Brokers aren't guarantors; you knew the risks. However, if you went to see an estate planning attorney and asked for a plan to save on estate taxes, and the plan ended up being stupid, you might have a malpractice case. (Note: broker malpractice case law is hard to find, given the securities arbitration scheme that leaves no precedential paper trial. Aaaargh for me.)
Anyway, stockbroker websites are very interesting. Even the "individual investor" pages really focus on the fact that your investing strategy is your investing strategy. They will give you some tools and resources to create and implement that strategy, but it's yours. For example, Merrill Lynch tells you "[f]rom establishing objectives to setting strategy, implementing the solutions and then regularly reviewing progress, your Financial Advisor can help as you implement your own strategies for success." Charles Schwab tells you "[t]hat's why we give you greater control over everything from the investments you make to the accounts you open to the type of advice and service you desire." Is this investor empowerment or liability avoidance?
I cannot imagine a law firm touting on its website that the firm will help individual plaintiffs or estate planning clients "implement your own strategies"? (On the BakerBotts estate planning page, that firm declares, "A detailed working knowledge of the estate tax leads to the successful development, implementation, and defense of the most sophisticated and effective estate plans for our clients." You don't have to develop and implement the plan, we'll do it for you. What about a physician that advertised that his practice "gives you greater control over everything from the medications you take to the type of diagnosis and treatment you desire."
Last week, Vic at A Taxing Blog made this statement (in comparing my thoughts on regulatory entrepreneurs to Larry Ribstein's):
My hunch is that Larry usually dislikes regulation, and Christine usually thinks more regulation is needed. Of course, both Larry and Christine would surely agree that it depends on the circumstances: regulation that protects inefficient government monopolies are bad; regulation that protects widows and orphans from the sharks at Enron is good.
This has caused me to do some soul-searching. I would not have described myself as a pro-regulation kind of person. On this blog, I often urge for additional regulation, but generally in areas that are already regulated. So, the additional regulation is needed to fix a flawed regulatory scheme. Does that make me pro-regulation? Anyway, to prove that I am not pro-regulation, I have found two great examples of regulations that should be abolished or nipped in the bud, as the case may be:
1. The Texas House of Representatives' regulation of the content of high school cheerleading; and
2. The prohibition by ordinance against my cat wandering free every once in awhile in the Village of Whitefish Bay, Wisconsin.
Texas Bar Rules Referendum
Normally, Texas Disciplinary Rules of Professional Conduct, which apply to members of the Texas Bar, are considered and adopted by the Texas Supreme Court. End of story. However, the Texas Supreme Court has issued a referendum to the members of the Texas Bar on two proposed rule changes. The referendum ends on December 20. Being out of the Texas Bar loop for awhile, I can only imagine that these rules generated much controversy and comment to make the court withdraw their previous approval of these rules in lieu of the referendum.
The first rule change is to TDR 1.04, which previously allowed for a "forwarding fee" to be paid to a lawyer who merely referred a client to another lawyer without doing any substantive work for that client.
If the rule change passes, fees may only be divided if the client agrees to the division and the division must either reflect the true allocation of work among the two lawyers or must be accompanied by joint responsibility for the representation. In the court's order issuing the referendum, the court noted that currently Texas is the only jurisdiction whose rules allow for the payment of a pure referral fee.
The second rule change concerns lawyer advertising and has many facets. The two changes that I found interesting were (1) an attorney may not advertise a previously won dollar judgment unless the ad also discloses how much the client actually pocketed after attorney's fees and costs and (2) attorneys may not use actors in ads. I remember seeing an ad for the local plaintiff's attorney in Lubbock, Texas on the back of the phone book (one phone book -- residential, business, and yellow) with a picture of a lovely, blonde family of four only to see the same lovely family pose in an ad in Houston for a completely different service. Disillusionment is hard.
Over the past week, I have been listening to The Kalahari Typing School for Men by Alexander McCall Smith on my way to and from work. This is not a fast-paced thriller, and it doesn't grab you like The Da Vinci Code. It is a leisurely stroll through Botswana, with an expert guide.
Last night, I laughed out loud at a scene in which the protagonist, Mma Precious Ramotswe (head of The No. 1 Ladies' Detective Agency), was attempting to procure the address of a pensioner's widow from a government bureau. The man behind the counter denied her request for the address, stating that it was against the rules. Mma Ramotswe sized up the situation and concluded that there was no sense in trying to convince the man that her request was reasonable, that the rules were not really intended to cover her situation, because stupid people cannot make nuanced distinctions of that sort. As a result, they become sticklers for the rules.
She eventually overcomes his objections by creating confusion about the rule. She pretends to cite the rules manual, chapter and verse, and asserts that the prohibition governs only the names of pensioners, not their addresses. Of course, she ultimately succeeds in confusing the hapless clerk and gets her address.
This reminded me of a parking ticket that I paid last week. The University of Wisconsin Traffic Control Office fined me $40 for parking behind the law school on the Saturday after Christmas (December 27) at 5:00 pm. That my official parking spot is a 10-minute walk from the law school, that I was transporting three large bags of books to my office, and that I timed the visit as I did to avoid the possibility of disruption were all lost on the enforcement officer. And the person who reviewed my appeal. A rule is a rule, after all.
It may seem a bit unseemly for a law professor to be complaining about law enforcement in this way, but we law professors can be an ornery bunch. Rules often seem like wonderful tools for social control, but rules rarely regulate behavior in exactly the way we want. That is, they almost inevitably penalize in cases where a penalty is not desirable (overinclusive), or they fail to reach cases that they should (underinclusive). Sometimes, the same rule is both overinclusive and underinclusive. As you might expect, rules tend to be modified repeatedly (see, for example, the tax code), but this is more a game of cat and mouse than progressive evolution.
We also rely to varying degrees on prosecutorial discretion (e.g., the parking officer could have elected to let my transgression pass, but she didn't). But this is problematic, too, because prosecutors will be biased (nothing personal ... we all are). In some instances (e.g., blacks and the death penalty), the results can be very troubling.
Regulation is a tough business, and Mma Ramotswe's skill in manipulating the system captures nicely the advantage of being smart. Still, as my parking ticket illustrates, the bureaucrats do sometimes have their revenge.