Federalism
The States as Laboratories of Statutory Interpretation: Methodological Consensus and the New Modified Textualism
119 Yale L.J. 1750 (2010). This Article offers the first close study of statutory interpretation in several state courts of last resort. While academics have spent the past decade speculating about the “death of textualism,” the utility of legislated rules of interpretation, and the capacity of judges to agree on a single set of interpretive rules, state courts, as it turns out, have been engaging in real-world experiments in precisely these areas. Several state courts have articulated governing interpretive regimes for all statutory questions. Methodological stare decisis—the practice of giving precedential effect to judicial statements about methodology—is generally absent from federal statutory interpretation, but appears to be a common feature of some states’ statutory case law. Every state legislature in the nation has enacted certain rules of interpretation, which some state courts are, in an unexpected twist, flouting. And, far from textualism being “dead,” what emerges from these state cases is a surprisingly strong consensus methodology—what this Article terms “modified textualism”—a theory that shares textualism’s core components but has broader potential appeal. These state developments offer a powerful counter-paradigm to that of the U.S. Supreme Court, where persistent interpretive divides and a refusal to treat methodological statements as precedential have made interpretive consensus seem impossible. They also highlight that, for all the energy that the statutory interpretation wars have consumed, the legal status of methodology itself—whether it is “law” or something “less”—remains entirely unresolved.
Bankruptcy as Constitutional Property: Using Statutory Entitlement Theory To Abrogate State Sovereign Immunity
119 Yale L.J. 1568 (2010). In the decade following Seminole Tribe’s ruling that Article I is not a grant of authority to abrogate state sovereign immunity, scholars and courts overwhelmingly agreed that the Eleventh Amendment barred Congress from subjecting states to suit in bankruptcy proceedings. The Court has since backpedaled, holding in Katz that the states ceded their sovereign immunity when they ratified the Bankruptcy Clause. Katz, however, leaves much unsettled—including whether the ratifying states intended to cede their immunity defenses to suits seeking monetary damages. There is also reason to doubt Katz’s durability: beyond the serious flaws in its reasoning, Eleventh Amendment precedents perish and reanimate with the changing composition of the Court, and mere days after Katz was handed down, Justice O’Connor, who provided the fifth vote for the majority, was replaced by Justice Alito. The prospect that Katz may be overruled or cabined has caused anxiety for scholars and practioners who convincingly argue that the bankruptcy system cannot effectively function unless the states, like private creditors, are subject to the binding jurisdiction of bankruptcy tribunals. In an effort to insure against Katz’s rollback, this Note offers a new theory for how Congress could invoke its enforcement powers under Section 5 of the Fourteenth Amendment to authorize suits against the state for bankruptcy violations. Borrowing from the case law on statutory entitlements and procedural due process, the Note argues that like welfare, public education, and government employment, bankruptcy protections are property interests cognizable under the Due Process Clause. Because these property interests are conferred by the federal government and binding on the states, a state that tramples on an individual's bankruptcy rights in violation of federal law effects an unconstitutional deprivation of property without due process.
When the Interests of Municipalities and Their Officials Diverge: Municipal Dual Representation and Conflicts of Interest in § 1983 Litigation
119 Yale L.J. 86 (2009). In many cases, municipal attorneys defend both a municipality and a municipal official against § 1983 claims. Some defenses available to the two types of defendants are incompatible and may give rise to conflicts of interest. This Note analyzes the problems associated with these conflicts of interest. The Note categorizes and describes the strengths and shortcomings of existing approaches to addressing these conflicts. Finally, it proposes a hybrid approach that may better address conflicts of interest in municipal dual representation.
The Federalism Challenges of Impact Litigation by State and Local Government Actors
118 Yale L.J. 1557 (2009).
Uncooperative Federalism
118 Yale L.J. 1256 (2009). This Essay addresses a gap in the federalism literature. Scholars have offered two distinct visions of federal-state relations. The first depicts states as rivals and challengers to the federal government, roles they play by virtue of being autonomous policymakers outside the federal system. A second vision is offered by scholars of cooperative federalism, who argue that in most areas states serve not as autonomous outsiders, but supportive insiders—servants and allies carrying out federal policy. Legal scholarship has not connected these competing visions to consider how the state’s status as servant, insider, and ally might enable it to be a sometime dissenter, rival, and challenger. The literature has not developed a vocabulary for describing how states use regulatory power conferred by the government to resist federal policy, let alone a full account of the implications of this practice. It has thus neglected the possibilities associated with what we call “uncooperative federalism.” In this Essay, we provide an initial descriptive and normative account of this undertheorized aspect of our federalism. We also explore what a strong commitment to uncooperative federalism would mean for the doctrines on commandeering and preemption, offering some counterintuitive conclusions about the ways in which weakening the protections for state autonomy might push states to engage in stronger forms of dissent.
Federalization in Information Privacy Law
118 Yale L.J. 868 (2009). In Preemption and Privacy, Professor Paul Schwartz argues that it would be unwise for Congress to adopt a unitary federal information privacy statute that both eliminates the sector-specific distinctions in federal information privacy law and blocks the development of stronger state regulation. That conclusion, though narrow, rests on descriptive and normative claims with broad implications for the state-federal balance in information privacy law. Descriptively, Professor Schwartz sees the current information privacy law landscape as the product of successful experimentation at the state level. That account, in turn, fuels his normative claims, and in particular his sympathy with theories of competitive federalism. As I will argue, however, we cannot ignore the federal inputs—judicial and legislative—that shape significant segments of state information privacy law. The story of information privacy law is one of federal leadership as well as state experimentation, and we should be wary—whether on the basis of observable practice or theoretical perspective—of disabling Congress from articulating and federalizing privacy norms. Moreover, even from the perspective of competitive federalism, the arguments for federal regulation of information privacy law are stronger than Professor Schwartz suggests.
Preemption and Privacy
118 Yale L.J. 902 (2009). A broad coalition, including companies formerly opposed to the enactment of privacy statutes, has now formed behind the idea of a national information privacy law. Among the benefits that proponents attribute to such a law is that it would harmonize the U.S. regulatory approach with that of the European Union and possibly minimize international regulatory conflicts about privacy. This Essay argues, however, that it would be a mistake for the United States to enact a comprehensive or omnibus federal privacy law for the private sector that preempts sectoral privacy law. In a sectoral approach, a privacy statute regulates only a specific context of information use. An omnibus federal privacy law would be a dubious proposition because of its impact on experimentation in federal and state sectoral laws, and the consequences of ossification in the statute itself. In contrast to its skepticism about a federal omnibus statute, this Essay views federal sectoral laws as a promising regulatory instrument. The critical question is the optimal nature of a dual federal‑state system for information privacy law, and this Essay analyzes three aspects of this topic. First, there are general circumstances under which federal sectoral consolidation of state law can bring benefits. Second, the choice between federal ceilings and floors is far from the only preemptive decision that regulators face. Finally, there are second‑best solutions that become important should Congress choose to engage in broad sectoral preemption.
Medicaid and Beneficiary Enforcement: Maintaining State Compliance with Federal Availability Requirements
117 Yale L.J. 1374 (2008). When states accept federal funding to administer a joint federal-state program, what assurance is there that they will conform to the requirements of governing federal law? This question takes on a new urgency in the Medicaid context since the § 1983 lawsuits that have historically monitored state compliance with fundamental federal Medicaid requirements may now be impermissible due to recent legislative developments. Anticipating a scramble to find alternative means of enforcement, a novel solution—using administrative hearings to compel states to conform to the federal requirements—may prove to be the most appropriate remaining mechanism for bridging the impending accountability gap.
The Duty To Defend
114 Yale L.J. 1489 (2005) Through the lens of history and doctrine, combining personal narrative, memoir, and stump speech, Barbara Babcock recalls John Ely's contributions to criminal defense.
Applying Section 5: Tennessee v. Lane and Judicial Conditions on the Congressional Enforcement Power
114 Yale L.J. 1133 (2005) Section 5 of the Fourteenth Amendment grants Congress the "power to enforce, by appropriate legislation," the Equal Protection and Due Process Clauses. Yet in the past seven years the Supreme Court has invalidated five different laws--including three landmark civil rights laws--as exceeding Congress's power to enforce the Fourteenth Amendment. This Note reveals changes in the Court's review of the Section 5 power by examining its ruling last Term in Tennessee v. Lane, in which it upheld for the first time Congress's effort to enforce the Due Process Clause. The Note contends that while Lane affirms the Court's claim to exclusive interpretive authority, the Court applied its tests for valid enforcement legislation in important new ways that vindicate a more expansive Section 5 power for Congress.
Overlooking a Sixth Amendment Framework
114 Yale L.J. 905 (2005) As the Supreme Court further plunges the world of criminal sentencing into turmoil, state courts in particular are scrutinizing their own statutory sentencing schemes and judicial practices. Ever since the Court's holding in Apprendi v. New Jersey (recently reformulated and expanded in Blakely v. Washington ), states have been called upon to ensure that trial judges do not usurp the jury's exclusive fact-finding power and thereby violate criminal defendants' Sixth Amendment guaranty of a trial by jury. While the legal framework that protected this Sixth Amendment right has been developing for decades, Apprendi formulated a bright-line rule that prohibits a judge from finding by herself during sentencing, instead of submitting to a jury for determination at trial, any fact that increases a defendant's sentence beyond the prescribed statutory maximum absent that fact. Under Apprendi, scores of factual determinations were taken from judges and placed back in the hands of juries. But while courts have continued to occupy themselves with defining the scope of Apprendi and its progeny, they have remained blind to a more fundamental, and increasingly prevalent, problem. By mechanically examining the effect a factor has on the length of a defendant's sentence in determining whether it must be submitted to a jury, courts have permitted the Apprendi bright-line rule to eviscerate the preexisting substantive method for making that determination. Long before Apprendi, the Court applied a less mechanical, more substantive analysis to determine whether a fact must be submitted to a jury. In Mullaney v. Wilbur, the Court analyzed how the presence or absence of a particular fact related to the underlying crime in order to determine whether or not that fact was indeed an essential element of that crime. Apprendi did not replace or eliminate the need for this Mullaney inquiry; it merely short-circuited the inquiry in cases where the finding at issue increased the sentence beyond the otherwise available maximum sentence. The current widespread misapplication of the Apprendi doctrine threatens the very Sixth Amendment and due process protections Apprendi was designed to safeguard. A recent Connecticut Appellate Court case, State v. Kirk R., illustrates this problem. The Kirk R. court, relying primarily on the Apprendi doctrine, failed to conduct a Mullaney analysis and thereby permitted the finding of a particular element of a crime to be removed from the jury's purview, allowing the trial judge to make his own unilateral determination at sentencing. Part I presents the relevant doctrinal background, describing the continuum between "element of a crime" and "sentencing factor" and demonstrating how Apprendi and its progeny do not--and were never intended to--displace the preexisting and entirely discrete element-of-a-crime analysis. Part II discusses the facts and holding of Kirk R. Part III argues that the Connecticut court improperly relied on the Apprendi doctrine as relevant to, and even dispositive of, this issue; in truth, all Apprendi could have done was remove a special protection from the Kirk R. court's arsenal, forcing the court to then apply Mullaney's more basic element-of-a-crime test. Part IV closes by addressing the impact of Blakely on this Comment's thesis.
The Federalist Dimension of Regulatory Takings Jurisprudence
114 Yale L.J. 203 (2004) Federalism concerns, underappreciated in the takings literature, play an important role in shaping the Supreme Court's takings jurisprudence. The Takings Clause does not guarantee any particular property rights; instead, the Clause protects primarily against change in background state law. As a result, the nature and scope of constitutional protection depends heavily on background principles of state law in effect at the time of a challenged enactment. Federalism concerns, therefore, prevent the Supreme Court from articulating and enforcing a comprehensive national takings standard. Instead, the Court's role in the constitutional scheme is to articulate categorical rules that address difficulties that cut across state lines, while leaving primary responsibility for monitoring local land use regulation to state law and state courts. State courts, in turn, should view the Court's Penn Central balancing test not as a finely calibrated analysis of constitutional limits, but as a broad delegation of authority.
What Kind of Immunity? Federal Officers, State Criminal Law, and the Supremacy Clause
112 Yale L.J. 1943 (2003) When, if ever, may a State prosecute a federal officer for violating state criminal law while discharging his federal duties? Over the past decade, developments in the doctrines associated with "federalism" have redefined the constitutional status of federal attempts to regulate the States. The question posed here implicates the opposite, rarely examined, side of federalism's coin: the extent to which the Constitution constrains state attempts to regulate the federal government and its agents. It has been clear for over a century that federal officers enjoy some degree of immunity in this area, but the precise scope of, and basis for, that immunity--known as "Supremacy Clause immunity"--remain unclear. This Article seeks clarity. Drawing on recent litigation arising out of the 1992 standoff between federal law enforcement officers and armed separatists at Ruby Ridge, Idaho, it argues that federal officers acting within the scope of their employment should be immune from state prosecution for any action taken that they reasonably believe is necessary and proper to the performance of their federal functions. State criminal law, in other words, must not be applied so as to chill federal officers in the discharge of their federal duties as they reasonably understand them. In articulating this standard, the Article draws on related doctrines like qualified immunity in the civil context and on principles of preemption as derived from foundational cases like McCulloch v. Maryland. In addition to supporting the Article's view of the proper scope of Supremacy Clause immunity as a default matter, these analogies confirm that the degree of immunity in this area is largely subject to congressional control. Congress, the Article suggests, could completely immunize federal officers from state prosecution for conduct taken in the discharge of their duties, or it could expose federal officers to the full force of state law. Either congressional choice would change what a reasonable federal officer would think about the scope of his federal authority vis- -vis contrary state law, thus recalibrating the scope of his immunity. At bottom, Supremacy Clause immunity is concerned with resolving conflicts between state and federal law. Where the application of state law threatens the effectuation of federal law or policy, the Supremacy Clause provides a federal trump. This attention to actual state-federal conflict, the Article suggests, should inform courts' approaches to a whole range of issues of overlapping federal and state power. Rather than making categorical judgments about the division of sovereign power, courts should instead be attentive to the extent of actual conflict between state law and federal functions.
The Tenth Amendment and Local Government
This Comment posits that the Constitution may well carve out a limited space for the people to express themselves and exercise certain powers through local self-government—without interference by the state. More specifically, the Tenth Amendment endows the people with the right to choose and define their local government.
Vigorous Race or Leisurely Walk: Reconsidering the Competition over Corporate Charters
112 Yale L.J. 553 (2002) Does American corporate law work effectively to enhance shareholder value? The recent corporate governance crisis makes this time as good as any for reexamining the basic structure of this body of law. This Essay provides such a reconsideration of a defining feature of U.S. corporate law--the existence of regulatory competition among states. In the United States, most corporate law issues are left for state law, and corporations are free to choose where to incorporate and thus which state's corporate law system will govern their affairs. The dominant state in attracting the incorporations of publicly traded companies is, and for a long time has been, the small state of Delaware. Although Delaware is home to less than one-third of a percent of the U.S. population, it is the incorporation jurisdiction of half of the publicly traded companies in the United States and of an even greater fraction of the larger publicly traded companies. Delaware thus plays a central role in setting corporate governance rules for the nation's publicly traded companies. Why should this small state play such a critical role in the governance of the nation's corporate sector? At first glance, Delaware's existing dominant role might be viewed as inefficient or even illegitimate. The widely accepted justification for the existing state of affairs, however, is that Delaware's dominant role is a product of its winning a competition among states for providing desirable corporate law rules. Indeed, the dominant view in corporate law scholarship is that allowing Delaware to dominate national corporate law is not a problematic feature, but rather an important virtue, indeed the "genius," of American corporate law. According to the prevailing view among corporate scholars, competition provides powerful incentives for adoption and development of value-enhancing corporate rules. Delaware has won its leading place by offering the best rules, and the competitive pressure it faces can be relied on to ensure that Delaware will continue to provide companies with whatever rules turn out to be best in our dynamic and changing business world. The view that state competition works well rests on two propositions: (i) that states actively and vigorously compete for incorporations, and (ii) that the ensuing competitive threat provides the dominant state of Delaware, as well as other states, with powerful incentives to provide value-enhancing rules. Those skeptical of state competition have mainly focused on questioning the second proposition. Accepting that states actively compete for incorporations, such critics have argued that the competitive threat might push states in undesirable directions with respect to some important corporate issues. In contrast, this Essay challenges the standard case for state competition by questioning the claim of the first proposition that states vigorously compete for incorporations. The alleged vigorous race among states vying for incorporations, we argue, simply does not exist. We present evidence that Delaware's dominant position is far stronger, and thus that the competitive threat that it faces is far weaker, than has been previously recognized. We also explain the underlying reasons for the weakness of competition in the market for incorporations. Furthermore, we show that the weakness of competition has major implications for both assessing the performance of state competition and determining the desirable role of federal law in this area. Part II of this paper discusses the conventional premise that states compete actively for incorporations. We highlight the key role that this premise plays in the views of supporters of state competition. We also discuss how, at least for the purpose of the debate, critics of state competition have often accepted this premise. Part III then discusses evidence indicating the absence of active competition among states for corporate charters. We pay close attention in this Part to the patterns of incorporations among states that have been documented in a recent empirical study by Alma Cohen and one of us. Although half of the publicly traded companies are incorporated outside Delaware, Delaware does not face any significant competitors in the business of attracting and serving out-of-state incorporations. The vast majority of non-Delaware corporations do not incorporate in a state that competes with Delaware over the hearts (or pockets) of firms incorporating out-of-state; rather, these firms simply remain incorporated in the state where they are headquartered. In assessing the competitive threat facing Delaware, it is important to consider Delaware's position in the market for out-of-state incorporations. Among firms that do "shop" for out-of-state incorporations, Delaware captures approximately 85% of all incorporations. Delaware is thus a virtual monopoly in the out-of-state incorporations market, and no other state holds a significant position in this market. For example, whereas Delaware captures 216 out-of-state incorporations of Fortune 500 companies, no other state captures even 10 such incorporations, and the five states that follow Delaware's lead capture a total of 27 such out-of-state incorporations. Similarly, whereas Delaware captures about 3744 out-of-state incorporations of publicly traded companies, each other state attracts fewer than 180 such incorporations. Furthermore, Delaware's longstanding dominance of the out-of-state incorporation market, and the larger incorporation market, has been growing. Indeed, examination of recent trends indicates that Delaware's dominance can be expected to keep growing even further in the near future. Its dominant position enables Delaware to make substantial supracompetitive profits. While Delaware's expenses on providing corporate law rules to the nation's firms are exceedingly small, it captures large franchise tax revenues--which on a per capita basis amount to $3000 for each household of four--that constitute a large fraction of the state's budget. Still, notwithstanding these supracompetitive returns, other states have not been making any visible efforts to mount a serious challenge to Delaware's dominance. No state, as it were, has been giving Delaware a run for its money. What explains Delaware's powerful and unchallenged dominance? Some states, especially large states for which such profits would not be significant, might well be simply indifferent to the prospect of making profits from the incorporation business. There are, however, enough small states in the United States for which profits such as those Delaware has been making would be quite attractive; such states would have had strong motivation to mount a challenge to Delaware's dominance if such a challenge could have been expected to succeed in enabling them to capture a significant fraction of these profits. That this has not been happening, notwithstanding Delaware's persistent supracompetitive returns, indicates in our view that mounting a challenge to Delaware has not been viewed as likely to be profitable. Part IV analyzes the reasons for the absence of active competition. Drawing on the theory of industrial organization, we identify a number of structural features of the incorporation market that can explain why a challenge to Delaware's dominance by some other small state is unlikely to be profitable. The "product" currently offered by Delaware should be viewed as including not only its rules but also its institutional infrastructure, including Delaware's specialized chancery court, and the network benefits currently enjoyed by Delaware corporations. As a result, a state that would offer the same rules, but charge lower incorporation taxes and fees, would not be able to attract many out-of-state incorporations. Although its current incorporation taxes are in the aggregate meaningful for Delaware, such taxes never exceed $150,000 for any given firm, and reductions in such expenditures are unlikely to lead firms incorporating out-of-state to forgo the benefits from the institutional infrastructure and network externalities provided by Delaware. Similarly, a state that merely offers the same rules as Delaware with some marginal improvements cannot hope that such marginal improvements would by themselves attract many out-of-state incorporations. The existing rules governing reincorporations further constrain the ability of a challenger to attract quickly a significant number of out-of-state incorporations. Reincorporations must be initiated by the board before being brought to a shareholder vote. Therefore, even if a rival state could identify a set of rules that could make shareholders substantially better off, this state would be unable to attract quickly many out-of-state incorporations unless the rules are also preferable for managers. This significantly narrows, of course, the scope of improvements in substantive rules on which a potential challenge could be based. Finally, even if a rival were to identify some substantial set of changes that could significantly benefit both shareholders and management, and even if the rival were willing to invest up-front in institutional infrastructure, the profitability of a challenge could be undermined by the inability of the rival to launch a swift hit-and-run challenge. The substantial amount of time that would be required for the challenger to adopt changes and for firms to respond to them would provide Delaware with ample opportunity to react. Delaware could "match" by adopting the challenger's improved rules; Delaware's out-of-state incorporators might then stick with Delaware due to its initial network benefits, and the challenger would merely serve as a stalking horse pulling Delaware to improve its rules. Furthermore, even if the challenger were somehow able to capture a significant fraction of the out-of-state incorporation market, price competition between the challenger and Delaware would likely bring down prices; in this case, the challenger would bring down Delaware's current profits without being able to capture a substantial fraction of them. Part V turns to exploring the implications of the weak-competition account we develop for assessing the performance of state competition in corporate law. Our analysis indicates that the incentives of Delaware and of other states are likely to be quite different. Delaware is in the business of attracting and profiting from out-of-state incorporation. Its interests would be best served by policies that maintain its monopoly and undermine possible threats to it, and that increase the profits it makes from its position. In contrast, other states cannot, and do not expect to, obtain such a position in the out-of-state incorporation market, and maximizing revenues from such incorporations is thus irrelevant for such states. Accordingly, we examine separately the implications of our analysis for both Delaware law and the corporate law of other states. Among other things, we show that our account of state competition undermines the view that rules produced by state competition should be regarded as presumptively efficient. Neither Delaware nor other states face the type of competitive situation in which a limited slack could gravely hurt a player's interests. We also explain how our account leads to the conclusion that states would tend to provide rules that, with respect to some issues, such as takeover protections, are more favorable to managers than would be optimal for shareholders. Our weak-competition account suggests that the greatest threat confronting Delaware is not competition from other states but the possibility that the federal government will intervene in a way that would undermine Delaware's position. We discuss in Part V how, in light of this threat, Delaware's interests might be best served by providing a body of law that is largely judge-made and relies on open-ended and flexible standards. Furthermore, to the extent that Delaware is moved to act in shareholders' interests by the fear of triggering a federal intervention, this fear can provide a check only against rather large deviations from shareholder interests, and whatever benefits come from it should be attributed to the disciplinary role not of state competition but of federal fiat. Finally, Part VI discusses the implications of the weak-competition account we put forward for the desirable role of federal law in this realm. The absence of strong competition undermines the basis for the view that Delaware's dominance is the product of its winning a vigorous competition. Thus, the analysis implies that the case for preferring state competition to mandatory federal rules is much weaker than supporters of state competition have assumed. Furthermore, we argue that, given the weakness of existing competition, state competition, as currently structured, could in all likelihood be improved by using "choice-enhancing" federal intervention. This type of intervention, which has been put forward by Allen Ferrell and one of us in earlier work, could invigorate state competition. In particular, it would be desirable for federal law to provide a federal incorporation option, as Canada's federal law does, as well as to enable shareholders to initiate and approve via a vote reincorporation to another state. Such federal intervention could introduce substantial and healthy competition in this market to the benefit of investors. Although much of the work on state competition has taken as given the presence of active competition, there has been some prior work, upon which we build, discussing why Delaware has a dominant position. Among other things, earlier work has highlighted the significance of network externalities and legal infrastructure, which are important elements of our analysis. In a contemporaneous work, Marcel Kahan and Ehud Kamar also challenge the vigorous competition account of state competition, offering an analysis that complements ours. Kahan and Kamar persuasively document that states other than Delaware have not made a determined effort to attract and profit from out-of-state incorporations; this evidence complements the evidence on which we focus concerning the patterns of incorporation among states. In explaining the absence of vigorous competition, Kahan and Kamar take a different approach from ours, arguing that states other than Delaware do not compete because state decisionmakers pursue political goals rather than profits. In contrast, we suggest that such a "political" story cannot adequately explain why other small states would not eagerly seek to capture Delaware's profits if they could do so; instead, we focus on "economic" explanations as to why they cannot do so, i.e., why attempts to capture these profits can be expected to fail. Our work differs from earlier and contemporaneous work by others in several important respects. First, we show that the patterns of incorporations indicate that Delaware's dominant position in the incorporations market is far stronger and more secure than has been previously recognized. Second, we provide a comprehensive analysis of the structural features of the market for corporate law--the "industrial organization" of this market--that make it unprofitable for other small states to challenge Delaware's position. Third, other works that have discussed imperfect competition in the incorporation market, including the contemporaneous work by Kahan and Kamar, have largely remained agnostic or even doubtful about the merits of federal intervention. In contrast, we show that the lack of meaningful competition in the incorporation market undermines the case for the existing system and provides an important basis for supporting a federal role. Some of the points discussed in this Essay are more fully or rigorously developed in two companion pieces. An empirical study by Alma Cohen and one of us provides a comprehensive study of the patterns of incorporations, and we draw on it in Part III. A theoretical work by Oren Bar-Gill, Michal Barzuza, and one of us develops the first formal model of state competition over incorporations; this model pays close attention to the industrial organization features of the incorporation market, and we build on its insights in Part IV.
Section 1983, Statutes, and Sovereign Immunity
112 Yale L.J. 353 (2002) This Comment argues that a significant, but unnoticed, way around state sovereign immunity has become available under current law. Although sovereign immunity now generally prohibits actions against states for violations of the Americans with Disabilities Act (ADA), a plaintiff should be able to use 42 U.S.C. § 1983 to seek damages from state officials for ADA violations. Using the leading case on the topic, Alsbrook v. City of Maumelle, the Comment will show that when the current Supreme Court closed one door through its federalism cases, it opened another through § 1983. It might appear that the Supreme Court's recent sovereign immunity jurisprudence has all but eliminated Congress's power to subject states to private damage actions for violations of federal statutes. In the line of cases beginning with Seminole Tribe v. Florida, and including Alden v. Maine, the Court has consistently (if controversially) found that Congress has no power under Article I of the Constitution to subject states to private damage actions, in either federal or state courts, for violating federal statutes. Although Congress retains power to subject states to damage suits by individuals through its power to enforce the Fourteenth Amendment, that power has been reined in substantially in recent years by the line of cases beginning with City of Boerne v. Flores and including Board of Trustees of the University of Alabama v. Garrett. The result is a number of important federal statutes, including the ADA (the subject of Garrett), in which congressional schemes for private damage suits have been held invalid on Eleventh Amendment grounds. These statutes are theoretically still legitimate legislation under the Commerce Clause, and states are still obliged to obey them--and yet an injured party is unable to seek monetary relief if they are violated. Countless commentators have noticed, and lamented, this breach of the rule-of-law principle. Nonetheless, damage suits for violations of federal law that are in essence suits against states happen all the time. They are suits under 42 U.S.C. § 1983. Section 1983 has been recognized since 1961 as providing a way to sue state officials for damages stemming from violations of federal law. The § 1983 damages suit proceeds under the legal fiction that one is suing a state official in his individual capacity for a violation of § 1983. Section 1983, in turn, creates no substantive rights; rather, it provides a remedy against officials who act under color of state law to violate a right guaranteed by federal law. The paradigm case for a § 1983 violation has been a violation of the federal Constitution, and many commentators refer to § 1983 cases as "constitutional torts." Ever since Maine v. Thiboutot, however, § 1983 has been read also to permit suits against state officials acting in their individual capacities for violations of federal statutes. One can sue a state official for violating a federal statute, just as one can sue the official for violating a duty under the Constitution. The key point, for Eleventh Amendment purposes, is the legal fiction that § 1983 suits against individual officers are not suits against a state. They thus do not, in theory, raise Eleventh Amendment issues at all. The state, although it serves as the "deep pocket," is liable only indirectly, usually through an indemnification contract or policy in which the state implicitly or explicitly agrees to reimburse monetary judgments against its officers. In this way, the courts have permitted what amounts to a modified regime of tort liability for state governments that violate federal law. If all of this is true--if the ADA still applies to the states, and if one can plead statutory violations against state officials in their individual capacities for violations of federal statutes--then why don't plaintiffs' lawyers simply sue individual state officials under § 1983 for violating their obligations under federal law? Instead of bringing a suit under the ADA directly against a state, why not sue a state official under § 1983 for his violation of the ADA? Such a method would limit the power of Seminole Tribe and render cases like Garrett almost irrelevant in practice.
The Law of Nations and the Offenses Clause of the Constitution: A Defense of Federalism
112 Yale L.J. 109 (2002) One of the most important features of the United States government as originally conceived by the Framers is that, even before the addition of the Bill of Rights, its powers were strictly regulated by the Constitution. Instead of being a supreme parliament, able to do whatever it believed necessary to promote the nation's health, safety, welfare, or morals, Congress was crafted as a legislature of strictly enumerated powers. Every law passed by Congress must fall within one of these discrete powers, or be "necessary and proper" to the execution of such a power. In the decades after the New Deal, however, it seemed as if almost nothing was beyond the purview of the federal government. Nearly any federal law could be upheld as an exercise of the commerce power; whatever civil rights measures fell outside its scope were justified by Section 5 of the Fourteenth Amendment. Indeed, in over fifty years, the Supreme Court struck down only one federal law as exceeding Congress's ostensibly limited constitutional authority. This changed, of course, with three cases starting in the mid-1990s: United States v. Lopez, City of Boerne v. Flores, and United States v. Morrison. For the first time in twenty-five years, the Supreme Court actually struck down laws as exceeding Congress's commerce and Reconstruction powers. The Court even set forth guidelines for determining whether statutes are authorized by the Commerce Clause. As a result of this constitutional upheaval, many academics began to scour the Constitution, looking for alternate fonts of congressional authority to replace the now truncated commerce and Reconstruction powers. Perhaps the most ingenious suggestion is that proposed by Professor Beth Stephens. Building upon an amicus brief filed in Morrison by certain "International Law Scholars and Human Rights Experts," she argues that a little-known constitutional provision, the Offenses Clause, could serve to authorize not only the laws struck down in Lopez, Boerne, and Morrison, but also legislation affecting almost all spheres of domestic activity. The Clause empowers Congress to "define and punish . . . Offences against the Law of Nations." Professor Stephens claims that this provision empowers Congress to enact civil and criminal legislation in any area upon which international law touches. Given the broad sweep of contemporary international law, this approach would turn the Offenses Clause into a Commerce Clause for the twenty-first century. It would bring virtually every aspect of society, including those traditionally left to state regulation, under congressional authority. This Note takes the opposite point of view, arguing that the Offenses Clause is a modest grant of authority, insufficient to support laws such as the Gun-Free School Zones Act and the Violence Against Women Act (VAWA), or to undermine American federalism. The Clause affirms, rather than undermines, the balance of state-federal relations that the Framers intended. I argue that it allows for the enactment of legislation touching upon only that fixed, discrete set of areas involving intercourse with foreign nations and their citizens--including navigation, trade, war, and diplomacy--that comprise what the Framers believed to be the immutable law of nations. Part I of this Note explores the claims made by Professor Stephens and the International Law Scholars, setting forth their case for viewing the Offenses Clause as an important source of substantive authority for Congress. It also examines the consequences of this approach, outlining the wide range of areas traditionally reserved to the states that it would enable Congress to regulate. Part II refutes the primary assumption upon which this interpretation is based. First, I argue that the phrase "law of nations" as used in the Offenses Clause is a term of art that is not synonymous with international law. I demonstrate that it refers to principles in certain well-defined areas that govern interactions among foreign countries and foreign nationals. The term excludes wholly domestic conduct that does not have a direct effect on foreign nations or nationals. Because the law of nations is rooted in natural law, its substantive content was understood by the Framers as being immutable. While modern-day treaties and evolving international norms are important parts of international law, they cannot expand the scope of the law of nations. Part III argues that even if courts abandon the true meaning of the phrase "law of nations" and insist on interpreting it in a modern light, the most faithful modern analogue of this concept is neither international law as a whole, nor customary international law, but jus cogens norms. Allowing for the enforcement of jus cogens norms under the Offenses Clause is less faithful to the provision's true meaning than the approach advocated in Part II. The concept of jus cogens, however, has many important similarities to the law of nations, and the range of recognized jus cogens norms is fairly narrow. Consequently, this interpretation of the Offenses Clause would be a legitimate compromise, retaining much of the Clause's original meaning while preventing it from being used to eliminate the boundary between state and federal authority. Part IV concludes. The Offenses Clause has been virtually ignored throughout most of this nation's history and has yet to be thoroughly explored by the legal literature. In light of suggestions that Congress use the Clause as a replacement for its once-omnipotent commerce and Reconstruction powers, a thorough examination of the history and meaning of its central phrase--"the law of nations"--is necessary.