Better than law school: Frank Easterbrook, John Harrison, Akhil Amar, and Victoria Nourse on rules versus standards in jurisprudence, with particular attention to the work of Justice Antonin Scalia, who made the subject a particular theme of his. The video is from the Federalist Society National Lawyer’s Convention last weekend, which had a Scalia theme.
Ted Frank, who directs the Center for Class Action Fairness and was long a co-blogger here at Overlawyered, is the subject of this Bloomberg/BNA profile from Steven Sellers of Class Action Litigation Report. A master key to Ted’s analysis of class action settlement incentives? “The Posner and Easterbrook decisions on class actions… pervade everything I do,” he says, referring to economically informed Seventh Circuit judges Richard Posner and Frank Easterbrook, both also associated with the University of Chicago law school, where Ted studied. Chicken offsets get a mention, too.
“Auer deference,” announced by the U.S. Supreme Court in Auer v. Robbins (1997), requires courts to accord deference to a federal agency’s interpretation of its own statute. The U.S. Department of Education, contradicting some earlier statements, has lately taken the view that “collection costs may not be assessed against [student loan] borrowers who sign rehabilitation agreements,” thus turning unlawful in retrospect thousands of instances in which lenders have done that. The Seventh Circuit has now denied en banc rehearing in the case of Bryana Bible v. United Student Aid Funds, which — invoking Auer deference — let a suit go forward on that theory. Judge Frank Easterbrook, concurring in that denial of rehearing en banc (h/t Ted Frank), noted that Supreme Court justices including Auer’s original author have lately expressed doubts about the doctrine’s ongoing viability. Easterbrook:
…deference has set the stage for a conclusion that conduct, in compliance with agency advice when undertaken (and consistent with the district judge’s view of the regulations’ text), is now a federal felony and the basis of severe penalties in light of the Department’s revised interpretation announced while the case was on appeal.
- “American Express Settlement Collapses Amid Charges Of Collusion” [Daniel Fisher]
- Some on Capitol Hill would like U.S. Treasury to return money seized from South Mountain Creamery in now-notorious structuring case [Washington Post, our earlier coverage]
- CEO pay shaming theory has been tried and failed twice, but why not one more try? [Marc Hodak, earlier]
- Another big courtroom reverse for SEC in use of in-house administrative law judges [Reuters]
- Judge Easterbrook on competitive federalism, Delaware, and incorporation [Robert Goddard, Corporate Law and Governance quoting Corre Opportunities Fund, LP v. Emmis Communications Corp.]
- How far will California go to tax one wealthy ex-resident? Consider saga of Gilbert Hyatt vs. Franchise Tax Board [Lloyd Billingsley, Daily Caller]
- Apparently so: “Is Securities Litigation’s Future Secure?” [Nick Goseland, Above the Law]
- Colorado solon’s lawsuit claims direct voter initiatives are unconstitutional. Nice try but no go [Ilya Shapiro]
- Gail Heriot and Alison Somin on creative interpretations of the Thirteenth Amendment [Fed Soc]
- Ted Olson’s work on punitive damages provides clue to his approach on originalism [Mike Rappaport]
- Yes, Prof. Seidman, there is an Origination Clause [Shapiro, my related take]
- Justice Roberts and legislative deference [PoL]
- Easterbrook, Barnett and others: video of panel on federalism and federal power [Fed Soc] Constitutional law treatise available free online through Library of Congress [Volokh] New Podcast: Who violates the constitution–statutes or individuals? [Nick Rosenkranz, PoL]
- National Endowment for the Arts uses creative misreading to conjure up a constitutional charter for its existence [Roger Pilon/Cato]
Judges move slower than markets but faster than the economics profession, a deadly combination.
— Judge Frank Easterbrook, “Comparative Advantage and Antitrust Law” (California Law Review, 1987).
A federal appeals court on Wednesday put the kibosh on a shareholder antitrust suit against the board members of Sears Holding Corp, finding that the suit only served to enrich the plaintiffs’ lawyers.
The ruling from the Chicago-based U.S. Court of Appeals for the 7th Circuit marks the latest victory for Ted Frank, of the Center for Class Action Fairness, who argued that the suit was an abuse of the legal system and conferred no benefit on Sears shareholders at large. The 7th Circuit agreed.
“The only goal of this suit appears to be fees for the plaintiffs’ lawyers,” Judge Frank Easterbrook wrote for a unanimous three-judge panel.
More: Dan Fisher.
- Maricopa-cabana: Sheriff Arpaio uses tank (with Steven Seagal along) to raid cockfight suspect [KPHO, Coyote, Greenfield, Balko]
- Malpractice reform in New York is about more than money (though it’s about that too) [Paul Rubin, TotM; NYDN]
- EEOC initiative combats alleged employer bias against unemployed job applicants [Bales/Workplace Prof, Hyman]
- After court rejection of Google Books settlement, where next? [Timothy Lee/ArsTechnica, David Post]
- When your lawyerly conduct has been eviscerated by Judge Easterbrook, you know it [Above the Law]
- Ninth Circuit rules on legality of keyword advertising using other firms’ trademarks [Coleman]
- Election showdown over future of Wisconsin Supreme Court [PoL, more, Esenberg, Althouse]
- Legal battle follows NYC’s attempted application of sidewalk bicycle ban to unicyclist [AP]
The losers of a union election sued the winners in federal district court in Chicago, but it wasn’t a very impressive lawsuit. One plaintiff claimed that the threat of being fired caused an asthma attack, but since she in fact got a raise, and she had been having asthma attacks for 25 years, and there wasn’t any threat, her claim of intentional infliction of emotional distress didn’t get very far. The district court issued $80,000 in sanctions under Rule 11, just a fraction of the $200,000 that the defendants claimed to have paid in legal expenses, but James Gordon Banks objected to even this amount on the grounds that he was poor (though this was in some doubt, because of the assets in his wife’s name) and because he was only recently out of law school. Unfortunately for him, he drew Judge Easterbrook on the appeal, and we know that the judge does not suffer fools lightly:
If Banks really is a bad lawyer (as he depicts himself), and is poor because people are not willing to pay much, or at all, for his services, then he should turn from the practice of law to some other endeavor where he will do less harm. No court would say, in a medical-malpractice action, that a doctor whose low standards and poor skills caused a severe injury should be excused because he does not have very many patients. No more is a bad lawyer excused because he has few clients.
Relevant to a recent comment discussion, words of wisdom from Judge Easterbrook in IFC Credit Corp. v. United Business & Indus. Federal Credit Union:
Ever since Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585 (1991), enforced a forum-selection clause printed in tiny type on the back of a cruise-ship ticket, it has been hard to find decisions holding terms invalid on the ground that something is wrong with non-negotiable terms in form contracts. See also, e.g., Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 32 (1991) (unequal bargaining power does not justify refusal to enforce an arbitration clause in a form contract); Seawright v. American General Financial Services, Inc., 507 F.3d 967 (6th Cir.2007). As long as the market is competitive, sellers must adopt terms that buyers find acceptable; onerous terms just lead to lower prices. See, e.g., Hill v. Gateway 2000, Inc., 105 F.3d 1147 (7th Cir.1997); ProCD, Inc. v. Zeidenberg, 86 F.3d 1447 (7th Cir.1996); George L. Priest, A Theory of the Consumer Product Warranty, 90 Yale L.J. 1297 (1981). If buyers prefer juries, then an agreement waiving a jury comes with a lower price to compensate buyers for the loss-though if bench trials reduce the cost of litigation, then sellers may be better off even at the lower price, for they may save more in legal expenses than they forego in receipts from customers.
There is no difference in principle between the content of a seller’s form contract and the content of that seller’s products. The judiciary does not monitor the content of the products, demanding that a telecom switch provide 50 circuits even though the seller promised (and delivered) 40 circuits. It does not matter that the seller’s offer was non-negotiable (if, say, it offered 40-circuit boxes and 100-circuit boxes, but nothing in between); just so with procedural clauses, such as jury waivers. As long as the price is negotiable and the customer may shop elsewhere, consumer protection comes from competition rather than judicial intervention. Making the institution of contract unreliable by trying to adjust matters ex post in favor of the weaker party will just make weaker parties worse off in the long run. Original Great American Chocolate Chip Cookie Co. v. River Valley Cookies, Ltd., 970 F.2d 273, 282 (7th Cir.1992) (“The idea that favoring one side or the other in a class of contract disputes can redistribute wealth is one of the most persistent illusions of judicial power. It comes from failing to consider the full consequences of legal decisions. Courts deciding contract cases cannot durably shift the balance of advantages to the weaker side of the market; they can only make contracts more costly to that side in the future, because [the other side] will demand compensation for bearing onerous terms.”).