Yuracko and Avraham, ‘Valuing Black Lives: A Constitutional Challenge to the Use of Race-Based Tables in Calculating Tort Damages’

In 2011, a young couple eagerly expecting the birth of their first child moved into an apartment in Brooklyn, New York, excited to have a new home for their growing family. Their child, a son, was born healthy soon thereafter. One year later, however, the couple received devastating news. A routine medical exam had detected lead in their young son’s blood. It turned out that the dust from lead paint in their new home had been quietly poisoning their baby. The family quickly moved out, but permanent damage to the baby’s central nervous system had been done. Over the next several years he would manifest significant cognitive delays as well as severe social and emotional impairments. The baby’s mother sued and the landlord was found negligent.

In calculating damages, the critical question for the jury was how much would this young child have earned over the course of his life had he not become injured. In answering this question, experts for both the plaintiff and the defendant took into consideration, albeit to different extents, the fact that the baby was Hispanic and used this fact to offer lower damage estimates than they would have had the baby been white. Relying on race-based data to calculate tort damages is, after all, standard practice. The only thing unusual about the case was that the judge, Jack Weinstein, of the Eastern District of New, refused to allow it.

Yuracko, Kim and Avraham, Ronen, Valuing Black Lives: A Constitutional Challenge to the Use of Race-Based Tables in Calculating Tort Damages (April 19, 2017). U of Texas Law, Law and Econ Research Paper No E569.

William Magnuson, ‘The Public Cost of Private Equity’

This Article presents a theory of the corporate governance costs of private equity. In doing so, it challenges the common view that private equity’s governance structure has resolved, or at least significantly mitigated, one of the fundamental tensions in corporate law, that is, the conflict between management and ownership. The Article argues that this widespread perception about the corporate governance benefits of private equity overlooks the many ways in which the private equity model, far from eliminating agency costs, in fact exacerbates them. These governance costs include compensation structures that incentivize excessive risk-taking, governance rights that provide investors with few avenues for effective information and control, and side agreements that allow for differential treatment of investors. Together, these arrangements create opportunities for private equity firms to extract rent from portfolio companies at the expense of their investors. After identifying the source of these problems, the Article proposes a set of reforms aimed at reducing the misalignments within the industry.

Magnuson, William J, The Public Cost of Private Equity (April 19, 2017). Minnesota Law Review, Volume 102 (2017 forthcoming).

Lewinsohn-Zamir, Ritov and Kogut, ‘Law and Identifiability’

Psychological studies have shown that people react either more generously or more punitively toward identified individuals than toward unidentified ones. This phenomenon, named the identifiability effect, has received little attention in the legal literature, despite its importance for the law. As a prime example, while legislators typically craft rules that would apply to unidentified people, judges ordinarily deal with identified individuals. The identifiability effect suggests that the outcomes of these two forms of lawmaking may differ, even when they pertain to similar facts and situations.

This Article is a preliminary investigation into the relevance of the identifiability effect for law in general, and for lawmaking in particular. Based on theoretical dis-cussion and the findings of two original experiments, the Article argues that this cognitive effect should be taken into account by policy makers and decision makers. While measures should be adopted to reduce the impact of the effect in certain circumstances, in others the effect may be harnessed to achieve favorable social goals. The analysis has normative implications for major legal debates, such as the choice between rules and standards and between different redistributive methods.

Lewinsohn-Zamir, Daphna, Ritov, Ilana, and Kogut, Tehila (2017) Law and Identifiability, Indiana Law Journal: Volume 92 : Issue 2 , Article 3.

Alan Butler, ‘Products Liability and the Internet of (Insecure) Things: Should Manufacturers Be Liable for Damage Caused by Hacked Devices?’

Despite the fact that discussions of liability for defective software go back more than forty years, there is no clear consensus on what theory governs liability for damage caused by ‘onnected devices’ (or the ‘Internet of Things’). However, the proliferation of IoT devices may be the catalyst for a new field of ‘connected devices’ products liability law, which could provide a good model for determining liability for several reasons. First, attacks on IoT devices can and have caused significant damage to property and are highly foreseeable given the widely acknowledged insecurity of connected devices and numerous high-profile attacks. Second, IoT devices are, in many cases, capable of being updated and secured remotely by the manufacturer, and patching well-known security flaws could significantly reduce the risk of future attacks. And third, holding manufacturers liable for downstream harms caused by their insecure devices is well aligned with the purposes of products liability law—to minimize harm by encouraging manufacturers (as a least-cost-avoider) to invest in security measures.

Butler, Alan, Products Liability and the Internet of (Insecure) Things: Should Manufacturers Be Liable for Damage Caused by Hacked Devices? (April 19, 2017). University of Michigan Journal of Law Reform, forthcoming.

Andrew Tuch, ‘The Limits of Gatekeeper Liability’

Gatekeeper liability – the framework under which actors such as law firms, investment banks and accountants face liability for the wrongs committed by their corporate clients – is one of the most widely used strategies for controlling corporate wrongdoing. It nevertheless faces well-recognized flaws: gatekeepers often depend financially on the clients whose conduct they monitor; to carry out their gatekeeping function, gatekeepers rely on individuals – often their employees – whose interests diverge from their own; and major transactions typically involve multiple gatekeepers, each with specific areas of expertise and information, which produces both gaps and overlaps in the gatekeeping net.

In this paper, I assess a recently proposed strategy intended to address the core challenges that afflict gatekeeper liability. Proposed by Professor Stavros Gadinis and Mr Colby Mangels in ‘Collaborative Gatekeepers’, 73 Washington and Lee Law Review 797 (2016), the strategy would require gatekeepers to report their suspicions of wrongdoing by their clients to regulators – a duty that is analogous to rules that have proven effective in anti-money laundering regulation. I assess the proposal’s likely effectiveness by, first, distinguishing it from conventional gatekeeping regimes. I argue in favor of the proposal but suggest that its success is likely to depend on the particular ways in which it interacts with conventional gatekeeper regimes – because the proposal would be overlaid on these existing regimes, rather than amending or replacing them. I also examine the basic difficulty in justifying any gatekeeper liability regime that stems from the need to establish its superiority over more direct forms of liability – namely, individual and enterprise liability – a task that hinges on the satisfaction of numerous complex conditions that cannot be established – easily, or at all (at least to the satisfaction of those inclined to oppose new liability regimes). Arguing that the Gadinis-Mangels proposal nevertheless holds strong promise, I suggest an extension designed to overcome defects associated with the fragmentation of the gatekeeping net that results from the presence of multiple gatekeepers in major business transactions.

Tuch, Andrew F, The Limits of Gatekeeper Liability (April 3, 2017). 73 Washington and Lee Law Review Online 619 (2017); Washington University in St Louis Legal Studies Research Paper No 17-04-01.

‘Compensation Following Fatal Stabbing: Human Rights And The CICA: “Double Recovery” Not Allowed’

“The decision of the Upper Tribunal in VG v CICA [2017] UKUT 0049 (AAC) is important reading for anyone involved in advising in fatal claims. In essence a High Court action was rendered valueless because the damages awarded were offset by the CICA. It shows the need to think long and hard before issuing civil proceedings when there may be an easier (and cheaper) alternative of an application under the Criminal Injuries Compensation Scheme …” (more)

[Zenith PI, 19 April]

Gold and Miller, ‘Fiduciary Duties in Social Enterprise’

This chapter examines theoretical and practical issues relating to fiduciary administration in social enterprise. It argues that social enterprise often calls for fiduciary administration on a hybrid model, combining elements of service-type administration and governance-type administration. Like standard service-type situations, social enterprise calls for administration in the interests of a defined constituency (ordinarily, shareholders). However, hybridity is introduced through the commitment to general public-oriented purposes that distinguish social enterprise from conventional business organizations. We will show that, contrary to common opinion, the fiduciary hybridity found in social enterprise is neither unique nor unworkable. We will briefly discuss other examples of hybrid fiduciary relationships and institutions, and we will explain the value of hybridity and how problems attributed to it are, or may be, resolved.

Gold, Andrew S and Miller, Paul B, Fiduciary Duties in Social Enterprise (April 11, 2017). Forthcoming in: J Yockey and B Means, eds, The Cambridge Handbook of Social Enterprise Law (Cambridge: Cambridge University Press).

Richard Lewis, ‘Industrial Injuries Compensation: Tort and Social Security Compared’

This article highlights aspects of the tort system of compensation for personal injury in the UK by comparing the provision made for workers under the state’s industrial injury scheme. The relative significance of the two schemes has rarely been considered and has not been dealt with in any UK law journal. Although lawyers are ever-present in tort claims, they have little involvement with applications for social security benefit. Partly as a result, there is a stark contrast between the voluminous literature on the common law, on the one hand, and the very limited information about statute-based workers’ compensation on the other. This article tries to redress the balance by bringing the industrial scheme back into the spotlight. Comparisons are made of entitlement under both systems and the value of the compensation they provide. The industrial scheme is shown to pay benefits which, in the long term, can often exceed the lump sum paid in tort. A wide range of statistics is used to illustrate the relative importance and practical effect of the two regimes. In tracing the history of worker’s compensation the enduring significance of the industrial scheme is revealed together with other findings which may surprise those familiar only with litigation at common law.

Lewis, Richard, Industrial Injuries Compensation: Tort and Social Security Compared (April 19, 2017).

‘Brexit: Contracts’

“Given that the exit from the EU will not entail any change in the currency of the UK, there are fewer issues about existing contracts than would be the case if a member of the Eurozone left the EU. However there are still a number of issues for contracting parties to address. A key question is whether a particular contract can be terminated as a result of a UK exit from Europe, particularly as the changed commercial landscape may prompt contracting parties to reassess their current contract arrangements and look for ways to exit those contracts which are no longer required or profitable …” (more)

[Oxford Business Law Blog, 21 April]

ME Newhouse, ‘Two Types of Legal Wrongdoing’

This article proposes a two-standard interpretation of Immanuel Kant’s Universal Principle of Right that tracks the two ways – civil and criminal – in which actions can be legally wrong. This article demonstrates in three ways that the principle is a plausible and resilient account of the essential distinction between civil and criminal wrongdoing. First, the Universal Principle of Right correctly identifies attempted crimes as crimes themselves even when they do not violate the rights of any individual. Second, it justifies our treatment of reckless endangerment as a crime by distinguishing it from ordinary negligence, which traditionally is not. Third, it justifies differences between the way in which we determine criminal punishments and the way in which we measure civil remedies. Moreover, as interpreted, the Universal Principle of Right offers a Kantian standard for criminal wrongdoing that is compelling enough to inform future philosophical inquiries into the nature and limits of the state’s criminal lawmaking authority.

Newhouse, ME, Two Types of Legal Wrongdoing (February 21, 2017). Legal Theory, Vol 22, 2017.