The Pregnancy Discrimination Act of 1978 can be interpreted in two obvious ways: one interpretation requires employers to make reasonable accommodations for pregnant employees, and the other does not require such accommodations. In Young v. United Parcel Service, Inc., the Supreme Court held that in some cases employees may be able to prove intentional pregnancy discrimination based on an employer’s failure to make accommodations for the pregnant employee when the employer makes accommodations for other disabled employees. Rather than reaching this result by interpreting the statute to require reasonable accommodations, however, the Court held that plaintiffs with “indirect evidence” of discrimination may prove their claim using the pretext analysis developed by the Court in McDonnell Douglas Corp. v. Green. Under this analysis, the Court instructed that, after the first two stages of the analysis, a plaintiff could attempt to prove that the employer’s legitimate, nondiscriminatory reason for denying an accommodation for a pregnant employee is pretextual, and this could be proven by demonstrating the significant and unjustified burden the employer’s nonaccommodation policy imposes on pregnant employees. Although it seems that the Court resorted to McDonnell Douglas as a compromise to fashion a majority opinion, this essay contends that invocation of the McDonnell Douglas analysis was neither necessary nor prudent. There are two likely ramifications of the Court’s use of the McDonnell Douglas analysis. The first is that the Young opinion is likely to resurrect the division of intentional discrimination claims between those based on direct evidence and those based on circumstantial evidence, with the claims in those two categories being analyzed differently. That is a distinction that the Court rejected in 2003 in Desert Palace, Inc. v. Costa. Second, the Court’s resort to the McDonnell Douglas analysis refortifies a proof framework which arguably should not have survived the Desert Palace decision and which has constrained the robust development of employment discrimination law by forcing evidence in most cases into proxy questions or categories that have only a tangential relationship to the ultimate issue of discrimination. Too many claims in employment discrimination law are forced into the McDonnell Douglas analysis, which often serves to obscure the actual issues presented. Neither of the foregoing potential ramifications is a good development for employment discrimination law. Young v. UPS could—and should—have been resolved without resort to McDonnell Douglas.
Day: October 23, 2021
The Global Colony: A Comparative Analysis of National Security-Based Foreign Investment Regimes in the Western Hemisphere
In 1975, the United States took steps to prevent its national security from being undermined by foreign investment through the creation of the Committee for Foreign Investment in the United States (CFIUS). CFIUS is an interagency committee meant to review and approve mergers and acquisitions of US companies that have a relation, however tangential, to national security. CFIUS has evolved since its inception from a relatively benign review mechanism to a sophisticated shield with the power to block almost any questionable foreign transactions involving US companies.
This Note compares CFIUS to the investment regulations of Mexico, Chile, and Brazil, specifically those regulations focused on guaranteeing the national security of these countries. Each country’s regulatory regime is compared to CFIUS to determine their relative strength and potential to be undermined by a foreign power. This comparison is buttressed by background on the Latin American economy to illustrate the importance of natural resources and their effect on the definition of “national security” within the region. This Note continues by drawing a relation between the inadequacy of these investment regimes and the prevalence of nationalization by various regional governments. It suggests that nationalization might serve to compensate for these investment regimes by enabling governments to reassert control over critical industries and resources.
Finally, this Note argues that the turmoil created by the region’s ineffective investment regimes creates a security risk for the United States and the Western Hemisphere as a whole. To reduce this risk, the United States should work with its hemispheric neighbors to ensure they have robust legal regimes to protect themselves and ensure they maintain economic independence.
The Evolution of Federal Courts’ Healthcare Antitrust Analysis: Does the PPACA Spell the End to Hospital Mergers?
Traditionally, hospital mergers were seen as a benefit to consumers. That is no longer the case. After years of nonprofit hospitals engaging in price inflation and misreporting charity care, new hospital mergers will be more heavily scrutinized. Specifically, the United States government has implemented policies that are intended to shrink the relevant market, separate hospital services into individual lines, and require more than a good faith standard for evidence of proposed efficiencies. These policies were created as a response to the findings in antitrust court cases that hospital executives were increasing prices as a monopolist. These cases have worked to discredit previous studies supporting the notion that nonprofit hospitals exhibit a lower association between market share and price. The resurgence of hospital merger cases in the federal courts combined with the PPACA provisions—namely, ACO implementation and redefined charity-care standards—will subject mergers to heightened scrutiny. Some damage has already been done in the hospital merger setting, but it is certain that, going forward, nonprofit hospitals no longer enjoy the same deference as before.
Appraisal Arbitrage and the Future of Public Company M&A
In this Article, we demonstrate that the stockholder’s appraisal remedy—long-dismissed in corporate law scholarship as useless or worse—is in the middle of a renaissance in public company mergers. We argue that this surge in appraisal activity promises to benefit public shareholders in circumstances where they are most vulnerable.
We first show a sea change in the use of appraisal in Delaware. Relying on our hand-collected data, we document sharp recent increases in the incidence of appraisal petitions, in the size of the petitioners’ holdings, and in the sophistication of the petitioners targeting public deals. These litigants appear to invest in target company stock after the announcement of the merger and with the intention of pursuing appraisal. In short, this is appraisal arbitrage. There is every reason to believe that appraisal now stands as the most potent legal challenge to opportunistic mergers.
We also present evidence showing that these appraisal petitions bear strong markers of litigation merit—they are, in other words, targeting the right deals. Nevertheless, defense lawyers have recently suggested that appraisal arbitrage constitutes some sort of “abuse” of the remedy and ought to be stopped. This nascent argument has matters precisely backwards.
This new world of appraisal should be welcomed and indeed encouraged. Our analysis reveals that appraisal arbitrage focuses private enforcement resources on the transactions that are most likely to deserve scrutiny, and the benefits of this kind of appraisal accrue to minority shareholders even when they do not themselves seek appraisal. In this way, the threat of appraisal helps to minimize agency costs in the takeover setting, thereby decreasing the ex ante cost of raising equity capital and improving allocative efficiency in public company mergers and acquisitions. We offer some modest reforms designed to enhance the operation of the appraisal remedy in Delaware.
Asymmetry as Fairness: Reversing a Peremptory Trend
A recent Ninth Circuit decision, prohibiting peremptory challenges on the basis of sexual orientation, reveals the continuing evolution of the Batson doctrine. Meanwhile, contrary judicial voices demand the abolition of the peremptory challenge. This Article uncovers two phenomena that militate against abolition of the peremptory challenge, and in favor of allowing Batson’s evolution. First, the justifications for abolition apply asymmetrically to prosecution and defense, suggesting that an asymmetrical approach is more apt. Second, the states historically adopted an asymmetrical approach—unequal allocation of peremptory challenges to prosecution and defense—and yet many state legislatures have recently abandoned asymmetry, with some legislators declaring that there are no reasons not to. This Article supplies those reasons, demonstrating that asymmetrical allocation of peremptory challenges not only brings benefits in the context of jury selection but also may help resist tendencies elsewhere in the criminal justice system to equate asymmetry with unfairness, and thus to erode foundational protections.
Understanding the Failures of Market Discipline
“Market discipline”—the theory that short-term creditors can efficiently rein in bank risk through their self-interested actions—has been a central pillar of banking regulation since the late 1980s, both in the United States and abroad. While market discipline did not prevent the buildup of bank risk that caused the recent financial crisis, the conventional wisdom has been that this failure was due to extrinsic factors that impeded the effective operation of market discipline, rather than any underlying problems with the theory itself. As a result, policymakers have increased regulatory reliance on market discipline, making this a central part of their reform efforts. This Article challenges the prevailing wisdom and makes two contributions to the literature. First, I demonstrate that market discipline failed more severely and completely than has previously been acknowledged. A foundational premise of market discipline is that investors will signal elevated bank risk through higher prices and lower liquidity. But as I illustrate, there was no such reaction until after the financial crisis had already begun, despite historically high levels of bank risk. Second, I attempt to explain why market discipline failed so completely and fundamentally. I contend that the theory of market discipline relies too heavily on investors that are relatively insensitive to risk and thus serve as particularly poor monitors of banks, and wrongly ignores the effects of bank shareholders, who are highly risk-sensitive but may have incentives adverse to those of public policy. Both of these flaws with the doctrine of market discipline arise from its conflation of capital market investors, who generally are quite sensitive to risk, and purchasers of money instruments, who generally are not. Despite these enormous flaws with the underlying doctrine, improving the conditions for market discipline continues to be seen as a panacea for reducing systemic risk, thus increasing the likelihood that regulators may again be blindsided by another financial crisis.
The Inbetweeners: Standardizing Juvenileness and Recognizing Emerging Adulthood for Sentencing Purposes After Miller
In June 2012, the United States Supreme Court decided Miller v. Alabama, marking significant progress in the Court’s Eighth Amendment jurisprudence regarding juvenile offenders. In Miller, the Court held mandatory life without parole for juvenile offenders to be unconstitutional. Following its reasoning set forth in previous cases, the Court found that “children are different” in a fundamental way: offenders under the age of eighteen are incapable of being criminally liable to the same extent as their adult counterparts. Miller was an enormous win for the juvenile justice system, because it meant that the Court concluded that, as a constitutional rule, juveniles’ cognitive development has not progressed enough to warrant adult sentencing (save for extreme circumstances, which the Court did not outline). Although that conclusion has major implications for juvenile justice, some questions remain.
After Miller, there are two related, unsettled issues that contribute to the daunting uncertainty facing juvenile offenders. First, there is no uniform definition or cutoff of the “juvenile” class of defendants in the United States, which means due process may differ from state to state, depriving some children of the full constitutional protection intended by the Court. The Court’s decision in Miller may necessitate a constitutional definition of “juvenile” as a person under eighteen years old. Second, if the neurological research and social science on which Miller was based conclude that cognitive abilities are not fully developed until around age twenty-five, it may be arbitrary and inconsistent to choose age eighteen as the age after which a defendant may be subject to mandatory life without parole, or even the death penalty. The distinction of adulthood beginning at age eighteen is arguably based on no more than traditional and outdated norms. The Court’s Eighth Amendment jurisprudence and cognitive science articulated in Miller and its forebears may necessitate legal recognition of a stage of life between adolescence and adulthood often called “emerging adulthood,” during which defendants should be entitled to further special consideration under the Eighth Amendment.
This Note examines the Supreme Court’s Eighth Amendment jurisprudence in relation to juvenile sentencing, and the social science, psychology, and neuroscience research underpinning the Court’s decisions in these cases. In short, this Note offers two proposals. First, there should be a uniform definition of “juvenile” that ends at eighteen years of age, and this should be the cutoff age for juvenile court jurisdiction nationwide. Second, courts should recognize an age group between the ages of eighteen and twenty-five, called “emerging adulthood,” during which judges would potentially consider a defendant’s youthful characteristics, capacity for change, and culpability in deciding whether to give the defendant a sentence as harsh as his or her fully formed adult counterparts.
The Seven Dirty Words You Should Be Allowed to Say on Television
For any American who has ever watched television on one of the traditional broadcast networks, seven particular dirty words have always been conspicuously absent. Confusingly, on cable, these seven words may all occur in quick succession on one show. When one of them does make it to air on a broadcast network, it often becomes the source of a fine from the Federal Communications Commission and years of litigation. A recent case resulted in a huge victory for broadcasters. In the 2012 holding of FCC v. Fox Television Stations, Inc., the Supreme Court required the FCC to eliminate its existing policy on how it regulated indecent content on the broadcast networks. The Court found the policy unconstitutionally vague because it did not put broadcasters on notice about what types of content were prohibited on television. The FCC has yet to issue a new regulation; this holding leaves the FCC with a gaping hole, but also an enormous opportunity.
An important reason the FCC has yet to act may be that the existing regulatory framework for indecent content on television has grown obsolete. The federal government’s ability to regulate the broadcast airwaves is based on the idea that the airwaves are a scarce resource. However, after the advent of cable and the digital transition, many see opportunities to access the airwaves as plentiful, not scarce. Part of the Court’s holding in Fox was that the government does still have the power to regulate the broadcast networks. However, it would be wise for the FCC to think about television in a more modern context when making its new regulations.
The American government need only look across the pond for guidance on how to structure a modern regulatory scheme for indecent content on television. In the 2003 Communications Act, the United Kingdom empowered its Office of Communications, the U.K. equivalent of the FCC, to create a strong and coherent Broadcasting Code to take U.K. television regulation into the modern era. The code it promulgated is a happy medium that can satisfy all interested parties, which would be an excellent model to emulate in the United States. The U.K. Broadcasting Code regulates all networks equally and has flexible content regulations, but sets important limits about content during the hours when children are most likely to be watching.
Creating a regulatory model like this for the United States would be a vast improvement over its current model with its different rules for different types of broadcasting. A new U.S. model that mimics the U.K. Broadcasting Code would be much clearer than the old FCC policy and would much more likely survive a potential vagueness analysis by the Court in the future. The suggestions outlined in this Note advocate a cohesive scheme that will end the bifurcated regulatory system that has persisted despite a changing industry and culture.
The Black Box Solution to Autonomous Liability
Autonomous vehicles, or self-driving cars, have the potential to revolutionize modern transportation through increased productivity and safety. Today, industry leaders in both automotive manufacturing and technology development are engaged in the design and production of these vehicles. Representatives from these companies have already successfully lobbied a number of state legislatures to permit the testing and use of autonomous vehicles.
While the prospect of a mass market in autonomous vehicles is exciting for both consumers and manufacturers, the use of autonomous vehicles implicates novel legal issues. For example, when a car drives itself, who is responsible when it crashes? Should the manufacturer who designed the car be held liable? Or the driver who directs the vehicle? To solve this problem, I argue that all autonomous vehicles should be required to carry an Event Data Recorder (“EDR”) to monitor and record data about vehicle functioning. This technology is analogous to the Flight Data Recorder (“FDR”), colloquially known as a “black box,” found on airplanes. An FDR records and transmits information about an airplane’s functionality, and this information helps investigators determine whether the cause of a crash was human error or mechanical failure. The same would apply to autonomous vehicles. Given the possibility of manufacturers being held liable for vehicle crashes, the use of EDR data would limit financial liability in tort claims and increase manufacturer willingness to develop autonomous technology.
However, as with the collection of any personal data, there are privacy issues that must also be examined. EDRs contain personal data, such as the geographic location of the vehicle and the owner’s driving patterns. The collection and use of this data may be harmful to an individual’s privacy rights. As a result, I argue that vehicle owners should be considered the sole owner of EDR data and no data may be shared for any commercial purpose without affirmative consent of the owner.
Slouching Towards Monell: The Disappearance of Vicarious Liability Under Section 10(B)
Liability under section 10(b) of the Securities Exchange Act is one of the primary mechanisms for enforcing the federal securities laws. Section 10(b), however, prohibits only intentional or reckless deception, and there has never been consensus as to how to determine whether an organization, rather than a natural person, harbors the relevant mens rea. Traditionally, organizational liability under federal law is determined according to agency principles, and most courts pay lip service to the notion that agency principles govern under section 10(b). As this Article demonstrates, they do not.
Many section 10(b) actions involve “open-market” frauds, whereby the allegedly fraudulent statements are issued publicly under the corporate imprimatur. These statements depend on agents operating at all levels of the company, who may intentionally or recklessly pass along inaccurate information through corporate reporting channels. In such circumstances, the actus reus that forms the basis of the section 10(b) violation—the false public statement—has been disaggregated from the actor who harbors mens rea. As this Article shows, courts have used this disaggregation to eschew the agency principles applied in other areas of law. Courts instead seek to impose a form of “direct” organizational liability tied to the actions and omissions of the organization’s highest-level authorities. This regime is, in practical effect, strikingly similar to the regime used to determine the liability of local governments under § 1983, where vicarious liability has been formally rejected by the Supreme Court.
Though these two statutes would seem to have little in common, this Article argues that vicarious liability has been rejected under both regimes for similar policy reasons. Among other things, as federal corporate disclosure requirements—backed by the threat of section 10(b) liability—expand into a mechanism for substantively regulating the quality of corporate governance (a matter traditionally left to state law), courts have pushed back by limiting vicarious liability in order to distinguish “true” fraud claims from garden-variety mismanagement. Similarly, in the § 1983 context, the elimination of vicarious municipal liability functions, as a practical matter, to distinguish matters of federal constitutional concern from ordinary state law torts.
This Article ultimately concludes that, despite the criticisms that have been leveled at the current approaches to organizational liability under § 1983, § 1983 doctrine may in fact improve jurisprudence under section 10(b). Courts considering section 10(b) claims may borrow from jurisprudence developed under § 1983 to formulate objective standards of fault, in order to prevent high-level corporate authorities from insulating themselves from knowledge of wrongdoing at lower levels of the corporate hierarchy.
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