- “Businesses Warn Fear of Lawsuits Could Stall Rebooting of Economy” [Andrew G. Simpson, Insurance Journal; New York Times (“liability companies could face if employees were to get sick after returning to work”); Eugene Volokh (Jim Salzman proposal on assumption of risk legislation, and the constitutional angle)]
- Emergency declaration triggered liability protections for people and enterprises responding to outbreak [Andrew Bayman, Geoffrey Drake, and Mark Sentenac, King & Spalding; Jim Beck, Drug & Device Law] 2005 pandemic-preparedness bill’s liability protections were inevitably assailed by Sen. Edward Kennedy and Public Citizen [Tyler Cowen]
- “Protect the Doctors and Nurses Who Are Protecting Us; They need immunity from lawsuits and prosecution for triage decisions.” [I. Glenn Cohen, Andrew Crespo, and Douglas White, New York Times; Erik Larson, Bloomberg]
- “Class Actions During COVID-19” [Frank T. Spano and Elizabeth M. Marden, Polsinelli]
- From before the crisis: “New York Holds that Registration to do Business does not Constitute Consent to General Personal Jurisdiction” [Stephen McConnell, earlier here and here]
- More from before the crisis: Federalist Society debate between Brian Fitzpatrick and Ted Frank on Fitzpatrick’s new book The Conservative Case for Class Actions; trucking business reels under huge verdicts [Matt Cole, Commercial Carrier Journal, parts one and two, earlier here, etc.] Ex-client sues Houston’s “Car Wreck Clyde” charging case running and other no-nos [Brenda Sapino Jeffreys, Texas Lawyer] In Florida, “‘Inconspicuous’ political cash helped trial lawyers notch wins against insurers” [Matt Dixon and Arek Sarkissian, Politico]
A professor’s academic career seems about to take off — until suddenly a sexual-harassment allegation against her triggers an investigation that knocks it off the rails. Who filed the complaint, and why? There proceeds to unfold a bizarre and unsettling story of what to universities and their federal overseers can pass for due process [Sarah Viren, New York Times Magazine; Robby Soave, Reason]
Thanks to Daniel Takash of Captured Economy for this one: “Some good news emerging from silly litigation: Solid Oak Sketches, which holds the rights to several tattoos featured on NBA players (yes, you can copyright a tattoo) failed in its suit against 2K games for the depictions of the tattoos in the NBA 2K games. The court found that the use of the designs was not infringing because the use of the work in the video game was transformative, the degree of copying was not substantial, and that the game makers had a non-exclusive (albeit non-implied) license to the use of the tattoos when they were using the likeness of the NBA players depicted.”
- “However peaceable we might be in our intentions, our assembling is a physical threat. Our judgments about liberty, I think, need to reflect that.” [Eugene Volokh on freedom of assembly during an epidemic] Suits against quarantine seldom prevail [Chris Dolmetsch and Malathi Nayak, Bloomberg/Claims Journal] Quarantine and public health measures set important precedents in overcoming judges’ suspicion of delegations of power [Keith Whittington]
- If the federal government decided it wanted to block movement between different states to combat virus transmission, where would it get the legal authority, and what means could it lawfully use? [Gene Healy, Cato] The constitutional background on freedom to travel, as well as search and seizure, during an epidemic [Volokh]
- “The common law also appears not to be a good alternative. One can imagine the litigation nightmare if everyone who got the virus attempted to identify and sue some defendant for damages.” [Tim Brennan, Truth on the Market]
- Cracking down on putatively deceptive accounting practices, SEC penalized “‘bill-and-hold’ transaction orders in which a product is not immediately delivered to its customer.” And that was terrible news for anyone in the business of trying to build public health stockpiles — of vaccines, equipment, PPE — that might be needed in a contagious-disease emergency [John Berlau, CEI] Better than compulsory purchase orders: “Using Purchase Guarantees and Targeted Deregulation to Boost Production of Essential Medical Equipment” [Caleb Watney and Alec Stapp, Mercatus Center]
- Flashpoints include drive-in services, curfews, ID and quarantine of churchgoers: “Religious Freedom Clashes With Public Health Enforcers” [Elizabeth Nolan Brown]
- “FDA Denaturing Rules Are Toxic for Small Distillers” [Jacob Grier]
My new piece at the Washington Examiner examines how government responses to the last crisis impede response to the next one. The post-9/11 TSA checkpoint system, for example, “is now the one point in air travel where a virus-fearing traveler is least able to avoid prolonged physical or face-to-face contact with a stranger, as well as the… commingling of high-touch personal items on communal trays.” With the COVID-19 crisis, the old rules requiring banks to report “suspicious” transactions are causing all sorts of problems as ordinary customers radically change their banking habits. Worse, “Know Your Customer” regs rationalized on anti-terrorism grounds have become a bottleneck to processing thousands of applications for short-term funds from small businesses not previously known to the bank. Verifying KYC information on a small business, even if it’s got access to all its files, can take a month. Who’s supposed to wait that long amid today’s crisis? (more from colleague Diego Zuluaga on the rules’ failings)
I conclude: of the many good reasons for deregulation, one “is that it bolsters resilience when systems [like banks] are asked to cope with complex new perils.”
A Seattle law forces landlords to rent to whatever would-be tenant, however odious, is first in line. That’s a violation of fundamental rights and a compensable taking, argues the Cato Institute’s certiorari amicus brief in Yim v. City of Seattle [Ilya Shapiro, Trevor Burrus, and Sam Spiegelman; earlier here, here, and here]
- Twenty years ago, some unions campaigned to make telecommuting illegal. Imagine if they’d managed to stop it [Reason 20 years ago feature, quoting my column back then]
- “Surge in working from home raises cyber exposure issues” [Judy Greenwald, Business Insurance]
- Provision slipped into CARES Act: mid-sized businesses that take a loan under the program would not be legally permitted to resist unionization [F. Vincent Vernuccio, Mackinac Center]
- Another effect of California’s awful AB5: interfering with availability of health care in parts of rural California that rely on itinerant medical contractors [K. Lloyd Billingsley, Independent Institute; earlier here, here]
- From before the crisis: insights into where federal Department of Labor is headed [speech by Secretary Eugene Scalia, teleforum with Jonathan Berry and Cheryl Stanton, both Federalist Society events] I’m quoted on the Trump administration record on labor issues, though to state the obvious my evaluation of it differs from the writer’s [Rachel Cohen, Washington Monthly]
- More from before crisis: New Virginia employment legislation lays out unusually broad definition of harassment, bad for employers and bad for speech [Hans Bader] Labor history overwhelmingly written by historians partial to the labor movement and its goals, and it shows [Mark Pulliam, Law and Liberty and Independent Review] “Details in new BLS report suggest that most of the gender earnings gap is explained by age, marital status, children, hours worked” [Mark Perry, AEI] “Do Right-to-Work Laws Work? Evidence on Individuals’ Well-Being and Economic Sentiment” [Christos Andreas Makridis, Journal of Law and Economics]
We’ve written before about the political genesis of California’s Proposition 103, a remarkably onerous and unreasonable set of controls on the insurance business:
After insurance companies were so rash as to support efforts to obtain liability reform through the initiative process, trial lawyers struck back in 1988 with the rate-slashing Proposition 103, which inflicted huge losses on the industry.
Now, in the wake of drastic declines in miles driven as a result of the COVID-19 emergency, many of the biggest national auto insurers have announced voluntary programs to refund a portion of premiums to motorists, as a goodwill gesture reflecting in part the expectation that claims payouts will be much lower than anticipated. Those checks will come in handy for consumers in most states, but there’s a problem in California: any refunds, even those voluntarily embraced by insurers, appear to violate the terms of Prop 103. Ray Lehmann explains at Insurance Journal. He concludes:
The result is absurd. It’s a bug in the text. But because it was passed by the people of California as a ballot proposition, these sorts of bugs can’t simply be fixed by the Legislature. Any changes to the law require two-thirds majorities in both chambers, and even then, they must be found to “substantially further” the goal of the proposition.
It is yet another example of ways that the structures of Prop 103, well-intended though they may be, have come to be a straitjacket on both insurers and their customers.
In other insurance news, a few days ago I wrote about business-interruption insurance, blasting interest groups that want insurers to have to pay out despite policy exclusions. Now President Donald Trump has weighed in about how businesses supposedly should be able to recover losses for pandemic interruption, policy language or no.
He’s wrong. As I wrote Monday. “This category of risk has been widely grasped for many years… pandemic-related business interruption coverage [was] neither promised nor paid for at the time.” Seven Republican Senators, including Tim Scott (R-S.C.) and Ben Sasse (R-Neb.) have signed a well-informed letter opposing the idea.
Yes, the situation is tough on a dozen business sectors, starting with restaurants and travel. But there’s no way they should be allowed to raid insurance coffers of reserves needed to pay countless other claims whose coverage *was* promised and paid for in premiums. And if we let them get away with that kind of raid, no insurer will ever be able to count on the language of a contract again. Guess what’ll happen to rates when they realize they need to cover that kind of unpredictable future risk?
You can watch yesterday’s Cato online panel on COVID-19 and the Constitution with Ilya Shapiro, Trevor Burrus, and me.
Also at Cato, my latest Pandemics and Power notebook is on NYC Mayor Bill de Blasio’s scheme to draft health care professionals nationwide, feds’ seizures of medical equipment, any excuse to ban vaping, and a scene from the life of a great vaccinologist. And while we’re at it, here’s Deirdre McCloskey with some relevant thoughts: “Coronavirus must not rob us of our liberties forever.”
- “Comparing the 2008 financial crisis to the COVID-19 market upheaval” [Stephen Bainbridge, with chart]
- Fed has tried getting involved directly in smaller business lending before, and it hasn’t worked out well [George Selgin] “Evaluating Federal Reserve Moves amid Coronavirus Outbreak” [Cato Daily Podcast with George Selgin and Caleb Brown]
- Liquidity for you, liquidity for me, but Washington crisis response might have overlooked liquidity for mortgage servicers [Diego Zuluaga, Cato]
- “Coronavirus: An Update on Securities Suits and on Updating Company Disclosures” [Priya Cherian Huskins via Kevin LaCroix] “There are likely many more securities lawsuits to come.” [Jim Sams, Insurance Journal]
- The flimsy critique of stock buybacks: “Would United be worse off if it had spent $3 billion on dividends instead of buybacks? In each case, United has $3 billion less, and shareholders have $3 billion more that they can invest in something else” [Ted Frank, Washington Examiner]
- From before the crisis: George Selgin on Warren Mosler and the great American banking myth; Kevin LaCroix on mootness fees in securities class actions; James Pethokoukis on CEO pay; Diego Zuluaga on bank concentration; Jeffrey Miron on bank bailouts (“It is hard to think of [a solution] so long as people believe government can magically make bank lending safe.”)