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Tuesday, November 23, 2010

Anderson on the microfinance collapse

1908RandallCountyCourthouseCanyonTexas907TJnsn The situation in India's microfinance industry continues to deteriorate, appearing to replicate what went on in the U.S. with Fannie Mae and Freddie Mac and is still going on in the U.S. housing markets.

For years microfinance -- the lending of small amounts to would-be small-scale entrepreneurs in developing countries -- has been seen as a method of helping to lift people up from poverty.  But the original small-scale programs have proved very difficult to scale up.

Kenneth Anderson of the Volokh Conspiracy has been looking at microfinance issues for a long time.  He has some thoughts on the problems that come from "mixing motives" -- trying to "do well by doing good."  Here's a taste:

One can pile up important similarities and differences, in other words, between India’s microfinance bursting bubble and the subprime crisis.  But let me focus on one that is perhaps less noticed.  I notice it as a similarity because it’s something that (as someone who works out in the gym in Fannie Mae’s basement in Washington DC), I have heard a lot over the past dozen years: a tendency to play a self-deceptive bait and switch between doing good and doing well.  I.e., the many conversations with Fannie Mae senior staff who, when things were going well, thought (what they thought of as) their mixed social-profit model must be great, and as things weren’t going so well, took comfort in the idea that they were doing good and this was merely a cost of doing “good” business.  Something like that seems to have been present here — which hardly surprises me because I confess to having been tempted to it many times, working in or advising organizations with similarly mixed motives.

The invitation to self-deception is high, in other words.

FGS 

November 23, 2010 in Commentary | Permalink | Comments (0) | TrackBack (0)

Monday, November 22, 2010

No "bad faith" in Katrina coverage dispute

Aa The Mississippi Supreme Court has reversed an award of punitive damages, attorneys’ fees, and damages for emotional distress against an insurer who denied coverage for storm-surge damage caused by Hurricane Katrina. The court upheld a jury verdict for compensatory damages against insurer USAA, but held that the plaintiff had failed to show that the denial was in bad faith.

USAA argued that the damages to the first floor of the Lisanby home (top left) was caused by water, and thus was excluded from coverage. An expert for the Lisanbys testified that the damages was caused by wind.  From the report:

The home of retired Navy Admiral James Lisanby and his wife, Gladys (top left) was severely damaged by Hurricane Katrina in 2005. USAA provided the couple with homeowners insurance but concluded that most of the damage was caused by storm surge, a peril not included in a standard homeowners policy.

USAA paid the Lisanbys about $46,350 and the couple filed a complaint against the insurer. After the trial a jury awarded the Lisanbys about $909,640 in compensatory damages, which included $86,000 for emotional distress. It also gave the couple about $302,920 for attorneys’ fees and about $211,100 for litigation expenses.

The Supreme Court opinion written by Justice Jim Kitchens upheld the couples’ breach of contract claim against their insurer, but "because the [Lisanbys] failed to demonstrate that [USAA] acted in bad faith when it denied their claim, we reverse and render judgment in favor of [USAA] regarding the award of extra-contractual damages for the infliction of emotional distress, attorneys’ fees and litigation expenses."

FGS

November 22, 2010 in Recent Cases | Permalink | Comments (0) | TrackBack (0)

Today in History -- November 23

534 BC – Thespis of Icaria becomes the first actor to act out the part of a character—as opposed to being a narrator or commentator—on the Greek stage. This new style of drama will become known as "tragedy."

1499 – Perkin Warbeck—who had the very bad judgment to pretend to be the lost son and heir of King Edward III of England—is hanged by King Henry VII, who is not amused.

1644 – John Milton publishes Areopagitica, a philosophical and moral attack on censorship, except when the censored statements at issue are critical of the Transportation Security Administration.

1804 – Future lawyer, Senator, Mexican War general, U.S. President, and law-school namesake Franklin Pierce is born in a log cabin at Hillsborough, New Hampshire

1859 – Future gunman William "Billy the Kid" Bonney is born at New York City.
              "Too mean to live,
              "Too young to die.
              ".He did anyway."

1876 – William "Boss" Tweed is handed over to Federal debtors’ prison after being captured in Spain. He is held on $3 million bond.

1889 – The earliest known progenitor of the iPod music device—called a "jukebox"—is put into operation at the Palais Royale Saloon in San Francisco. Songs are a nickel apiece but you can only listen to them once.

1992 – Roy Acuff, the pioneer fiddler, singer, and music publisher who invented the Nashville music industry, dies at age 89. Here’s him doing his 1936 hit, The Great Speckled Bird:

On that same day, future Disney pop star Destiny Hope "Miley" Cyrus is born at Nashville, Tennessee. This is proof positive that the idea of progress in human affairs is illusory.

FGS

November 22, 2010 in Today in History | Permalink | Comments (0) | TrackBack (0)

Dick Whittington and the "Theater of Capitalism"

1908RandallCountyCourthouseCanyonTexas907TJnsn Over at the Volokh Conspiracy, Kenneth Anderson has a thread about plays that "express or comment in some important way on the economic conditions of capitalism."  Here's my own thought:

From a historic perspective . . . one of the most influential plays is the 1605 production of Dick Whittington and His Cat.  I believe it to be the first pro-free-enterprise play in English history, with a poor-but-honest-and-hardworking hero (rather than a lost prince or orphaned nobleman) who makes a fortune AND makes everyone else better off by engaging in voluntary international trade.

The change in viewpoint between, say, The Merchant of Venice – where the only way for a poor man like Bassanio to get rich is to marry wealth — and Dick Whittington is striking.  The world of King James and his courtiers (the first audience for Merchant) was the static one of inherited wealth and noble honors. But the world of the merchants and artisans in the cities was changing dramatically.

The poor-but-honest man who succeeds by his own merits became so clichéd in the Horatio Alger era that it’s hard to understand just how radical it was at the time.

FGS

November 22, 2010 in Commentary | Permalink | Comments (0) | TrackBack (0)

Now in Print

Following a much longer than planned hiatus, it's time to clear the pile of journals blocking the transom. Thanks to Frank and Meredith for highlighting a few of the following during my absence.  Stay tuned for future updates.

PileofbooksT. Leigh Amenson, Beyond Chafee: A Process-Based Theory of Unclean Hands, 47 Am. Bus. L.J. 509 (2010).

Oren Bar-Gill & Kevin Davis, Empty Promises, 83 S. Cal. L. Rev. 985 (2010).

Shmuel I. Becher & Esther Unger-Aviram, The Law of Standard Form Contracts: Misguided Intuitions and Suggestions for Reconsideration, 8 DePaul Bus. & Com. L.J. 199 (2010).

Hazel Beh & Jeffrey W. Stempel, Misclassifying the Insurance Policy: The Unforced Errors of Unilateral Contract Characterization, 32 Cardozo L. Rev. 85 (2010).

Eric Behrens, A Trend Toward Enforceability: Convenants Not to Compete in At-Will Employment Relationships Following Sheshunoff and Mann Frankfort, 73 Tex. B.J. 732 (2010).*

Doug Bouton, Note, The Music Industry in Flux: Are 360 Record Deals the Saving Grace or the Cup de Grace?, 9 Va. Sports & Ent. L.J. 312 (2010).

John J. Chung, From Feudal Land Contracts to Financial Derivatives: The Treatment of Status Through Specific Relief, 29 Rev. Banking & Fin. L. 107 (2009).

Chapin F. Cimino, Virtue and Contract Law, 88 Or. L. Rev. 703 (2009).

Peter Devonshire, Pecuniary Remedies for Breach of Confidence, 21 King's L.J. 355 (2010).

Ronald J. Gilson, Charles F. Sabel & Robert E. Scott, Braiding: The Interaction of Formal and Informal Contracting in Theory, Practice, and Doctrine, 110 Colum. L. Rev. 1377 (2010).

David Hahn, The Roles of Acceleration, 8 DePaul Bus. & Com. L.J. 229 (2010).

Martin Hogg & Hector MacQueen, Melville Monument Liability: Some Doubtful Dicta, 14 Edinburgh L. Rev. 451 (2010).

Andrew Hutchison, The Doctrine of Frustration: A Solution to the Problem of Changed Circumstances in South African Contract Law?, 127 S. Afr. L.J. 84 (2010).

Tal Kastner, Book Review Essay, The Persistent Ideal of Agreement in an Age of Boilerplate, 35 L. & Soc. Inq. 793 (2010) (reviewing Boilerplate: The Foundation of Market Contracts (Omri Ben-Shahar ed. 2007)).

Dori Kimel, The Morality of Contract and Moral Culpability in Breach, 21 King's L.J. 212 (2010).

Tamara L. Kuennen, Private Relationships and Public Problems: Applying Principles of Relational Contract Theory to Domestic Violence, 2010 BYU L. Rev. 515.

Shelley McGill, Consumer Arbitration Clause Enforcement: A Balanced Legislative Response, 47 Am. Bus. L.J. 361 (2010).

John MacLeod, Before Bell: The Roots of Error in the Scots Law of Contract, 14 Edinburgh L. Rev. 385 (2010).

Solène Rowan, Reflections on the Introduction of Punitive Damages for Breach of Contract, 30 Oxford J. Legal Studs. 495 (2010).

Struan Scott, Duress and the Variation of Contracts -- Looking Beyond General Statements of Principle to the Results in Particular Cases, 12 Otago L. Rev. 391 (2010).

Justin W.A.S. Sobion, The Law Governing the CARICOM Contract and the Implementation of the UN Convention on Contracts for the International Sales of Goods, 35 W. Indian L.J. 145 (2010).

Charles Tiefer, No More Nisour Squares: Legal Control of Private Security Contractors in Iraq and After, 88 Or. L. Rev. 745 (2009).

Nishita Vasan & Sowjhanya Shankaran, Recovery of Money Paid Under Mistake of Law, 42 Bracton L.J. 48 (2010).

Eric A. Zacks, Unstacking the Deck? Contract Manipulation and Credit Card Accountability, 78 U. Cin. L. Rev. 1471 (2010).


* - While I rarely include articles from state and local bar journals (not to be confused with the law review-like journals that several sections of the ABA publish), this is a particularly meaty article about a very important topic from the selective and well-edited organ of the third largest state bar.  If you run across anything comparable that you think merits the blog's attention, please forward me a copy, citation, or both.


[Keith A. Rowley]

November 22, 2010 in Recent Scholarship | Permalink | Comments (0) | TrackBack (0)

News in Brief

MONDAY, NOVEMBER 22, 2010

HOLLYWOOD (Calif.): "Live Nation reportedly is suing former Chairman Michael Cohl for $5.35 million, the amount he allegedly owes the company as part of his exit agreement from more than two years ago."

IRVINE (Calif.):  "Spectrum Pharmaceuticals is suing Cangene Biopharma in the U.S. District Court in Baltimore for allegedly breaching a 2008 contract to make Fusilev, an injectable cancer drug."

A ABUJA (Nigeria): "The Nigeria Football Federation have swung to crack down on bribery and corruption in the Super Eagles by putting in black and white that new Nigeria coach, Samson Siasia (right) will not only be fired, but will be liable to pay out a whooping three million US dollars (over 450 million naira) should it be established he has taken a bribe in the discharge of his duty."

LOS ANGELES (Calif.): "The Hollywood Foreign Press Association, creator and owner of the Golden Globe Awards, has filed a lawsuit against Dick Clark Productions, accusing the company of breach of contract."

NEW YORK (N.Y.): "Wells Fargo (WFC) agreed to pay Citigroup (C) $100 million to settle a lawsuit stemming from Wells Fargo's acquisition of Wachovia in 2008, the companies said Friday."

HUDDERSFIELD (U.K.): "The concert was billed as ‘explosive,’ promising Beethoven's Battle Symphony and Handel's Royal Fireworks. But the real explosions happened offstage when the principal conductor of the Huddersfield Philharmonic orchestra stormed out of rehearsals just three hours before the concert was due to start—and never came back.

LAS VEGAS (Nev.): "Owners of the Hard Rock Hotel & Casino in Las Vegas say a federal lawsuit filed by the Hard Rock Cafe chain over their shared name is hurting their bottom line in Nevada and other states."

FGS

November 22, 2010 in In the News | Permalink | Comments (0) | TrackBack (0)

More claims by "contract employees" against Feds

A Steve Schooner (right) and Collin Swan (both Geo. Washington) have a new paper out, Suing the Government as a 'Joint Employer'–Evolving Pathologies of the Blended Workforce. Here’s the abstract:

As the 'blended workforce'–a realm in which contractors work alongside, and often are indistinguishable from, their Government counterparts–becomes more commonplace, the distinction between civil servants, members of the military and contractor employees increasingly blurs. One intriguing (and, apparently, accelerating), yet little-known trend is that contractor employees are more frequently suing the Government, alleging employment discrimination on the part of Government managers, supervisors or even coworkers. This short piece discusses the evolving 'joint employer' liability doctrine. It suggests that The federal courts' and the EEOC's willingness to define federal agencies as de facto employers of contractor employees is further evidence that the prohibition on personal service contracts is–or should now be deemed–a dead letter. Ultimately, it concludes that both the Government and its contractors need to understand that, as federal agencies continue to rely on contractors for their staffing needs, the ability to distinguish between civil servants and contractors–in the eyes of the law–will become increasingly more difficult.

FGS

 

November 22, 2010 in Government Contracting, Recent Scholarship | Permalink | Comments (0) | TrackBack (0)

Sunday, November 21, 2010

Today in History -- November 22

1307 – French King Philip IV, who has borrowed more money than he can repay and has decided to blame the lenders, has puppet Pope Clement V order the arrest of all Knights Templar in Europe and seizure of their assets.  It serves the greedy lenders right. 

1718 – In Ocracoke Inlet, North Carolina, legendary pirate Edward "Blackbeard" Teach is killed in battle by British seamen from the sloop HMS Ranger.

1858 – Land speculator William Larimer lays out a proposed mile-square city on a hill near the confluence of Cherry Creek and the South Platte River at the foot of the Rocky Mountains in what is then Arapahoe County, Kansas Territory. He names it after the territorial governor, James William Denver.

1869 – The 975-ton Cutty Sark—the last clipper ship ever to be built—is launched. She will be the world’s fastest ship, but at a construction price of £17 a ton, she will bankrupt her builders, Scott & Linton of Dumbarton, Scotland.

1935 – Pan American Airways’ China Clipper takes off from Alameda, California on its first trans-Pacific flight. It will get to Manila a week later.

1963 – President John F. Kennedy is shot to death while riding in an open car in Dallas, 36th President. If you ever go and stand on the "grassy knoll," you’ll see that it’s impossible to believe anyone could have been shooting from that location without being seen.

1995 – Pixar Studios releases the first full-length film created completely using computer-generated imagery. Toy Story will become a surprisingly big hit.

2005 – Angela Merkel becomes the first female Chancellor of Germany.

FGS

November 21, 2010 in Today in History | Permalink | Comments (0) | TrackBack (0)

Ireland to seek bailout from EU, may need $120 billioin

The New York Times seems to consider this good news

FGS

November 21, 2010 in In the News | Permalink | Comments (0) | TrackBack (0)

Mortenson on McNabb-Redskins contract

Quarterback Donovan McNabb today had one of his best outsings in hia worst NFL season, leading the Washington Redskins (5-5) to a 19-16 overtime win against the Tennessee Titans.  His new contract extension with the 'Skins has generated some controversy, but it turns out that from Washington's perspective the deal is less about McNabb himself than about what will happen when the NFL salary cap ends at the end of this year.  Here's ESPN's Chris Mortenson explaining the team's thinking.

FGS 

November 21, 2010 | Permalink | Comments (1) | TrackBack (0)

Weekly Top Ten

SSRN Three new papers make our Top 10 list this week.  They show the range of contract law:  from suing government employers to venture capital to surrogate motherhood.  Following are the Top 10 most-downloaded new papers from the SSRN Journal of Contract and Commercial Law for the 60 days ending November 14, 2010. (Last week's ranking in parentheses.)

1 (1) Two Faces: Demystifying the Mortgage Electronic Registration System's Land Title Theory, Christopher Lewis Peterson (Utah).

2 (2) Good Faith and Contract Interpretation: A Law and Economics Perspective, Simone M. Sepe (Arizona).

3 (3) The Need for Insurance Policy Transparency, Daniel Schwarcz (Minnesota).

4 (4) Choice of Forum Provisions in Intra-Corporate Litigation: Mandatory and Elective Approaches, Joseph Grundfest (Stanford).

5 (–) Suing the Government as a 'Joint Employer'–Evolving Pathologies of the Blended Workforce, Steven L. Schooner & Collin D. Swan (Geo. Washington).

6 (5) Misbehavioral Economics: The Case Against Behavioral Antitrust, Joshua D. Wright (Geo. Mason) & Judd E. Stone (Int'l Center for Law & Economics).

7 (6) Taking Punitive Damages Seriously: Why a French Court Did Not Recognize An American Decision Awarding Punitive Damages and Why it Should Have, François-Xavier Licari (Metz).

8 (–) The New Exit in Venture Capital, Darian M. Ibrahim (Wisconsin).

9 (8) Should Consumers Be Permitted to Waive Products Liability? Product Safety, Private Contracts, and Adverse Selection, Albert H. Choi (Virginia) & Kathryn E. Spier (Harvard).

10 (–) The Regulation of Surrogate Motherhood in Greece, Aristides N. Hatzis (Athens–Philosophy).

FGS

November 21, 2010 in Recent Scholarship | Permalink | Comments (0) | TrackBack (0)