ContractsProf Blog

Editor: Myanna Dellinger
University of South Dakota School of Law

Monday, November 23, 2015

Farewell Post III: Misplaced Anger

Rage of AchillesA lot of people are angry at the legal academy.  They are angry about falling bar passage rates and limited career opportunities.  They are angry that law schools do not do enough to prepare them for the bar or for practice and that tuition is too high given what traditional legal education can accomplish.  The anger, to the extent that it comes from law graduates who worked hard and still cannot find satisfying work as attorneys, is understandable.  Directing that anger at law professors is also understandable but in most cases unjustified.  

We did not create the market conditions.  We, for the most part, are not even the architects of the policies that determine admissions standards or tuition.  We are very limited in the extent to which we can innovate because we are subject to ABA educational guidelines that increasingly (and often unhelpfully) micro-manage our operations.  Almost every innovation that would improve legal education would also make legal education more expensive.  

I want to outline two arguments in this post.  First, legal academics and administrators at unranked law schools are people of good will who are trying to continue to serve people who ardently aspire to become attorneys.  Second, the legal profession is also full of people of good will, but collectively the legal profession is behaving as professions always do in times of economic contraction: they are raising barriers to entry so as to protect their incomes and their self-created monopoly in the provision of specialized services.

What is going on at unranked law schools is pretty simple.  For decades, such law schools accepted students who, for the most part, could not have gotten in to more highly-ranked law schools.  For decades, the overwhelming majority of such students went on to pass the bar and enter the legal profession.  As Michael Simkovic and Frank McIntyre have shown, those students are financially better off for having done so, and without the lower-ranked schools, they never would have had the careers they now have.  Unranked law schools started dipping deeper into the applicant pool when that pool shrunk considerably in size, believing that they had the ability to identify students who could succeed in law school and in the legal profession and that they could address the needs of the academically underprepared with beefed-up academic success programs and curricula more geared towards bar preparation.  

Evidence is mounting that law schools were overly sanguine about their ability to help students in the bottom quartile of the national LSAT pool.  But evidence is also beginning to suggest that the pool has bottomed out and begun to grow again.  That should mean that unranked law schools that are competing for students may have a larger pool of students to compete over, and so long as schools learn their lesson and keep growth and costs down, that should mean that they can begin to increase their admissions standards back towards where they were a decade ago.  In five years, the crisis may well have passed and the law schools over which the sword of Damocles currently hangs will be crowing about gaudy bar passage and employment rates.  

This result is far preferable to shutting down existing law schools.  Right now, we have overcapacity, but it law schools disappear, they are unlikely to reappear.  And if, as seems likely, the law schools that close are the unranked law schools, the losses will hit underserved communities the hardest.  I will have more to say about who those communities are and why keeping them out of the legal profession is a big problem in the next post in this series.

The ABA is the guardian of our profession.  What do professions and professional organizations do?  Following Magali Sarfatti Larson, we can conceive of the legal profession as a group of trained experts attempting to establish a monopoly over a market in services.  The key to control over a market for professionals becomes control over the production of producers. By limiting the supply of credentialed practitioners, professionals assure themselves a favorable bargaining position in the market for their knowledge and services. (Magali Sarfatti Larson, The Rise of the Professions: A Sociological Analysis 29-30 (1977)). As Larson points out, professions do not so much meet existing needs as shape or channel the needs of consumers  (id. at 58).  In order for a profession to succeed, it needs to convince the members of society as a whole that its services are necessary and that only people with a certain kind of expertise and credentialing are qualified to provide such services.   

And so, when the going gets tough, barriers to entry rise.  Recent trends of (often steeply) lower bar passage rates and the steady drumbeat calling for greater scrutiny of law schools viewed as underperforming are consistent with how Larson's model predicts professional organizations will respond to economic pressures.  But it also threatens to add a new and ugly chapter to the history of the ABA.

Many have written about the racist bias underlying the establishment of the ABA (e.g., Daria Roithmyer, Deconstructing the Distinction between Bias and Merit, 85 Cal. L. Rev. 1449, 1476 (1997)).   I do not think there is any such intentional bias at work today, but the organizations so eager to mete out death sentences to law schools that serve underrepresented minorities and the academically underprivileged need to think about what the legal profession will look like in 2025 if their wishes all come true.   

November 23, 2015 in About this Blog, Commentary, Teaching | Permalink

Wednesday, November 18, 2015

Farewell Post II: Still Crazy About Blogging after All These Years

BeforeI'm not stopping because I'm burned out.  I still love blogging, and I wouldn't be surprised if, after a hiatus, I want to come back to blogging in some form.  I'm stopping because I think I've maxed out on the benefits I can derive for myself and my law school from this enterprise, and it is time for me to find new ways to contribute.  Also, look how blogging has aged me, as evidenced in these photographs of me taken before I started blogging (left) and after (right).

ShinerMoving on feels especially urgent given what is going on in the legal academy and in unranked law schools like mine in particular.  Posts III and IV in this series will elaborate on that subject.  Given the challenges that my current students face and that I face in teaching them, I am contemplating a complete re-tooling of my approach to teaching contracts.  I have requested a year off from teaching contracts next year so that I can teach a couple of legal writing/legal reasoning courses and get better insights into where my students are at in those areas when they get to law school.  I also need to learn from my skills-training colleagues so that I can better incorporate skills training into doctrinal teaching when I go back to teaching contracts, as I very much hope to do.  

At the same time, at age 52, I am beginning to think about what remains of my career as an academic and what sort of an impact I think I can have in the 10-15 years that remain to me as an active scholar and teacher.  It is already clear to me that my most important impact is going to be in the classroom.  Although I would like to think that I have original ideas and can contribute to an academic debate that can move the law or inform policy decisions, the likelihood of that is small, as it is for most of us mortals.  Still, perhaps out of vanity, I have three book projects that I think will keep me occupied into my sixties.  One is an edited collection on Hans Kelsen, which is under contract and which I hope will come out next year.  The second is an intellectual history of originalism in constitutional adjudication, as a judicial practice, an academic approach and a popular movement.  The third will be on theories of public international law,  I have a typology of public international law theories that I use in presenting the material to my students.  I've always wished there were a book that did this the way it needs to be done. Oona Hathaway and Harold Koh edit a collection which is very useful, but for some reason they have not decided to organize the material the way I organize it.  I'm kidding.  My organization is unique, and I will only know if it makes sense once the book is well underway.  So, I have assigned myself the task of writing that book.

None of these projects relates to contracts law, and so the prospects for me returning to contracts scholarship before retirement are remote.  I expect that I will continue to follow the blog, use it as a resource, refer students to it, and feel pride that I contributed to it for nearly a decade.  But I need to allocate my dwindling intellectual energies elsewhere.  Producing a book every five years is something I think I can still handle while focusing on Job 1, which is helping my students pass the bar and prepare for their legal careers.

November 18, 2015 in About this Blog, Commentary, Teaching | Permalink | Comments (0)

Monday, November 16, 2015

Farewell Post I: Why Junior Faculty Members Should Blog

I have told my co-bloggers and the Blog Emperor that I intend to step down from the blog at the end of the semester.  I am leaving things in good hands.  Nancy Kim will continue as a contributing editor, and Myanna Dellinger has agreed to step up as editor.  I hope that this post will aid Myanna in her efforts to attract new contributors.  The more different voices we feature on the blog, the more we can attract new readers and move others from occasional to habitual readers.  

Before I go, I have a few things to get off my chest, and I will do so in a final series of posts.

SnyderFirst come the thanks (and they will come again at the end).  Nearly ten years ago, I sent a Limerick to Frank Snyder (pictured) and asked him if he would be interested in posting it on this blog.  He responded by inviting me to become a regular contributor.  He showed me the ropes and roped me in to the contracts law community, and for that service, I owe him continual thanks, as the benefits continue to accrue.  While on the blog, I have had many great colleagues, who have helped keep the blog going and added new and interesting perspectives.  Two such colleagues, Nancy Kim and Meredith Miller, merit special thanks because of their long tenure on the blog and because their contributions moved the blog in new directions, both scholarly and quirky, that expanded our readership in ways we could not otherwise have done.  Both served me as sounding boards both in my contracts scholarship and in connection with issues that arose on occasion relating to the blog.  It is a bit odd to describe as friends people you have only spoken with face-to-face on a handful of occasions.  Yet, in unreflective moments, when I confess that I like to go to the International Conferences on Contracts because I get to see my friends there, I have Frank, Meredith and Nancy (and others) in mind.

Which brings me to the second subject I want to tackle in this post.  When I started blogging, I was untenured, and there were a few articles circulating (as well as many more blog posts) suggesting that it might not be a great idea for junior faculty members to blog.  The main concern was that blogging would interfere with serious scholarship.  Based on my own experience, I think this is nonsense.  Blogging can certainly spur scholarship, but I have never been much of a contracts scholar (with the exception of my forthcoming article so-authored with Nancy Kim, my publications tend not to be about contracts).   But blogging also is scholarship, and it is scholarship that is much, much, much more widely read than are law review articles.  This blog gets about 300 unique visitors A DAY.  I think I am doing well if one of my articles gets to 300 downloads TOTAL on SSRN.

And my posts on this blog have been cited in law review articles.  It doesn't happen all that often, but when it does, it is always for the unique substance of the blog post.  My law review articles are sometimes cited for that purpose, but probably more often, my law review articles are cited for some proposition that the author could have found in ten other law review articles.  

But the benefits of blogging to a junior faculty member can also lie elsewhere.  Blogging has certainly kept me on top of new developments in a field in which I teach.  But beyond that, blogging has helped me establish connections with contracts professors throughout the country and sometimes even internationally.  Through our online symposia, I have gotten to work with contracts scholars who are doing the most exciting work in the field.  I hope for better and not for worse, I am known as a contracts professor in ways that I think other contracts professors at "unranked" law schools generally are not, and I expect that my being known (for better and not for worse) also redounds to the benefit of my law school.  By way of contrast, I am not equally well known in the field of international law, although that is where I do most of my writing, and in the community of American scholars who work on Hans Kelsen . . . .  Just joking, all six of them know me.

On the more personal and less professional level, I have had innumerable, rewarding conversations with contracts professors at various conference and gatherings.  Often, these conversations begin with something like, "I saw your post about . . . ." or "Oh yes, I know you from the blog . . . "  We academics are awkward people.  The blog provides a ready ice-breaker, and so I have the blog to thank for providing the gateway to many rewarding exchanges.

For years, I have introduced myself to students as "the editor of the ContractsProf Blog, the official blog of the AALS Section on Contracts."  As I look out at their impassive faces, I tell them that they have now heard my best pick-up line.  I love the joke, especially since I don't know what it means to be the official blog of the AALS Section on Contracts.  I also love it because I think my students think it might be an impressive thing but also that my joking about suggests that I don't take myself too seriously.  

They are dead wrong about that.  When my teenage daughter gets too sassy, I remind her that I am a famous contracts professor.  I sign various school forms "D. A. Jeremy Telman, FCP," and I explain that FCP stands for famous contracts professor. "Dad," my daughter groans, "you are not a famous contracts professor."  "Oh yeah?" I counter.  "Can you name one who is more famous?"

She cannot, and now I have a plaque (Fathers' Day 2015) to prove it!


November 16, 2015 in About this Blog, Commentary, Teaching | Permalink | Comments (0)

Friday, September 11, 2015

Weekly News Roundup

Richard_III_earliest_surviving_portraitVery excited to be able to report on a UCC case from Indiana, JMB Manufacturing, Inc. v. Child Craft, LLC decided by the 7th Circuit.  The opinion is long, but Judge Hamilton's introduction captures its spirit.

This case presents a merchant’s creative effort to avoid the limited remedies that contract law provides for a seller’s delivery of non-conforming goods. After the seller delivered about $90,000 worth of nonconforming wood products, the buyer sought recovery from both the seller and its president personally for tort damages on a tort theory, that they negligently misrepresented the quality of the delivered goods.

The district court ruled in favor of the buyer and awarded damages of more than $2.7 million on the theory that the non-conforming goods caused the complete destruction of the buyer’s business. This damages theory echoed the proverb of Poor Richard’s Almanack (“A little neglect may breed mischief; for want of a nail, the shoe was lost; for want of a shoe the horse was lost; for want of a horse the rider was lost; for want a rider the battle was lost.”), and Shakespeare’s story of Richard III [pictured], where the loss of a horse led in turn to the loss of a battle, the death of a king, and the loss of a kingdom. Cf. Hadley v. Baxendale, 9 Exch. 341, 156 Eng. Rep. 145 (1854) (damages for breach of contract limited to consequences reasonably contemplated by both parties when they made contract).

We reverse the award of damages against the seller and the seller’s president, but for reasons that do not depend on the flawed “want of a nail” theory. Under Indiana law, a buyer who has received non-conforming goods cannot sue a seller for negligent misrepresentation to avoid the economic loss doctrine, which limits the buyer to contract remedies for purely economic losses. See Indianapolis-Marion County Public Library v. Charlier Clark & Linard, P.C., 929 N.E.2d 722 (Ind. 2010). Second, there is no basis for transforming the buyer’s breach of contract claim into a tort claim for negligent misrepresentation to hold the seller’s president personally liable. See Greg Allen Construction Co., Inc. v. Estelle, 798 N.E.2d 171 (Ind. 2003). In all other respects, we affirm the judgment of the district court. 

The opinion includes a lengthy discussion of Indiana's economic loss doctrine.   

The Complete Colorado provides this report about a court's grant of a preliminary injunction empowering a teachers' union to continue in its role as sole entity empowered to negotiate a new contract with the local school board.  The ruling keeps the union's existing contract in force until its breach of contract claim can be heard, but the grant of the P.I. suggests the likelihood that the union will succeed on the merits of its claim.  But the ultimate remedy remains unclear.

And in news that will make you say, "What the . . .???" we learn from this article from the Washington Times that Ashley Madison claims that its new users are flocking to its website after news of its massive security breach, about which Myanna Dellinger has written herehere and here.   Other than quoting a spokesperson for the company who blathered about happy return customers, he Times does not speculate on the relationship between the scandal and the increase in users.  Knock yourself out.


September 11, 2015 in About this Blog, In the News, Labor Contracts | Permalink | Comments (0)

Tuesday, August 18, 2015

Forthcoming Scholarship from Your Blog Editors

Nancy_kim Telman2Nancy S. Kim and I have an article, Internet Giants as Quasi-Governmental Actors and the Limits of Contractual Consent, forthcoming in the Missouri Law Review, and that journal has been kind enough to feature our abstract on their homepage.  

We look forward to seeing this one in print, and as usual the work has improved throughout the editing process, but if you can't wait for the final version, a draft is still up on SSRN.

Or, if you want the elevator speech, you can watch this video.


August 18, 2015 in About this Blog, Recent Scholarship | Permalink | Comments (0)

Tuesday, April 28, 2015

Legal Education in the News and on the Blogosphere

I began this series with the question: Why Is the Legal Academy Incapable of Standing Up for Itself?  Paul Campos thinks we are doing far too much of that, going so far as to compare those of us who think legal education is worth defending with Holocaust deniers.   Fortunately for us, I suppose, this blog isn't on anybody's radar, but in any case I think it bears noting that I value the contributions of people who have shed critical light on legal education, although I don't agree that it is anything approaching a scam.  I have gained valuable insights from the work of Law School Transparency, Brian Tamanaha, Deborah Merritt, and Bill Henderson on our sister blog, The Legal Whiteboard, among others.

That said, there is another side of the story.  Legal education is constantly re-forming itself in fundamental ways.  Clinical education has only been with us since the 70s; legal writing programs took off in a major way in the 80s and 90s.  Both represent fundamental shifts in pedagogy in response to perceived deficits in the legal education model.  Those programs continue to develop and expand, now supplemented with robust ASP programs.  All of these things jack up the costs of legal education and all in the name of better preparing students for the profession.  Nobody is fiddling while our students burn.  In fact, at this point, it is clear that everybody in the debate passionately believes that they have the best interests of our students at heart, and I do not doubt their sincerity.  

Meanwhile, just when you thought it was safe to read what the New York Times has to say about legal education, we get another one-sided piece based on a few anecdotes and one piece of scholarship.  I thought I had a lot to say in response, but others have beaten me to it, so I will just provide the links:

Simkovic on Leiter

Stephen Diamond on his own blog

Brian Galle on Prawfsblawg

Deborah Merritt, on whose scholarship the piece relies, on The Law School Cafe 

Links to Related Posts:

The Current Series 

VIII: Myanna Dellinger, Caveat Emptor and Law School Transparency
VII: Myanna Dellinger, On Issue-Spotting and Hiding the Ball
VI: Issue Spotting: A Response to a Comment
V: Did Legal Education Take a Wrong Turn in Separating Skills and Doctrine?
IV: What Is the Place of Core Doctrinal Teaching and Scholarship in the New Curriculum?
III: My Advice to Law School Transparency: Declare Victory and Move On
II: SLOs and Why I Hide the Ball (and Why You Don't Have To)
I: Why Is the Legal Academy Incapable of Standing Up for Itself?

Related Posts form 2012:

Thoughts on Curricular Reform VI: Preparing the Academically Adrift for Practice
Thoughts on Curricular Reform V: A Coordinated Curriculum and Academic Freedom
Thoughts on Curricular Reform IV: The Place of Scholarship in the 21st Century Legal Academy
Thoughts On Curricular Reform III: The Costs of Change
Thoughts on Curricular Reform II: Teaching Materials
Thoughts on Curricular Reform I: The Problem

April 28, 2015 in About this Blog, Commentary, In the News, Law Schools, Teaching, Weblogs | Permalink | Comments (0) | TrackBack (0)

Tuesday, March 17, 2015

New Scholarship from Your Blog Editors

Nancy_kim TelmanOne of the great pleasures of working on the blog is the opportunity to have virtual colleagues as a subject-matter specific supplement to one's local colleagues.  I have for many years admired Nancy Kim's scholarship, and she has been for me, a sounding board and a gateway for entering into the scholarship on electronic contracting, with an especial focus on wrap contracts.  

Now, I am happy to announce that we have collaborated on an article, "Internet Giants as Quasi-Governmental Actors and the Limits of Contractual Consent."  The article is forthcoming with the Missouri Law Review and available in draft on SSRN.  Here is the abstract:

Although the government’s data-mining program relied heavily on information and technology that the government received from private companies, relatively little of the public outrage generated by Edward Snowden’s revelations was directed at those private companies. We argue that the myth of contractual consent muted criticisms that otherwise might be directed at the real data-mining masterminds. By clicking “agree,” consumers are deemed to have consented to the use of their private information in ways that they would not agree to had they known the purposes to which their information would be put and the entities (including the federal government) with whom their information would be shared. We also question the distinction between governmental actors and private actors in this realm, as the Internet giants increasingly exploit contractual mechanisms to operate with quasi-governmental powers in their relations with consumers. We propose that, in their efforts to better protect consumer data, regulators and policymakers should demand more than mere contractual consent as an indicator of consumers’ grant of permission for the use of their data.

Here is a short (2 minute) video of me discussing the article:


March 17, 2015 in About this Blog, Recent Scholarship | Permalink | Comments (0) | TrackBack (0)

Back in the Saddle

Yael_ronenI have been traveling the past two weeks, leading a group of 25 of my law students on a two-credit course on International Humanitarian Law in Israel and Palestine.   How does a U.S. contracts prof teach a course on the law of armed conflict in Israel?  I get by with a little help from my friends.  We teamed up with an Israeli law college, Sha'arei Mishpat Academic Center (SMAC), and I had the pleasure of c0-designing, co-directing and co-teaching the program with the very accomplished Professor Yaël Ronen (pictured).  My students' experience was enriched by the fact that eight Israeli students from SMAC also participated in the course.

We partnered with Mejdi Tours, which provided us with two tour guides, one Jewish Israeli, one Muslim (Palestinian) Israeli.  Together they gave us their versions of the dual narrative that continues to unwind, side-by-side, each informing the other even when the two sides do not acknowledge the other's perspective.  Nothing beats teaching a course in the place where the subject matter of the course has been written and is being supplemented on a continual basis.

My students chronicled our trip as we went, and those chronicles are in the process of being posted on a Mejdi Tours blog.  While we were teaching our students international humanitarian law, they gave me a lesson in the art of the selfie.

Selfie Lesson

Thanks to Myanna Dellinger and Nancy Kim for keeping stuff happening on the blog while I was off on my frolic and detour.  We now return to our regular programming. . . .

March 17, 2015 in About this Blog, Teaching | Permalink | Comments (0) | TrackBack (0)

Thursday, February 26, 2015


Things may be a big sleepy here on the blog for the next two weeks.  I leave today for a two-week Spring Break course with my law students.

I hope that I will be able to post a few times during the trip, at least keeping up with our regular weekly features, but things might get a big hectic once I leave the country.

February 26, 2015 in About this Blog | Permalink | Comments (0) | TrackBack (0)

Monday, February 16, 2015

Your Smart TV May Be Engaged in Intelligence Work

Back in 2013, we mused about the seeming disconnect between public outrage at NSA data mining and the lack of comparable outrage with respect to private data mining.  Nancy Kim and I have been writing in this area, and a recent report in the ABA Journal provides additional fodder for our scholarship.  

One of the things that makes television's "smart" these days is that they have the ability to respond to voice commands.  If you have this feature on, the television transmits your information to a third party, according to Samsung.  If you turn the voice recognition feature off, your television still gathers the data but it does not transmit it.  

Photo by LG

Over at Salon, Michael Price gives us reasons why we should be afraid of our smart tvs.  Having reviewed his television's 46-page privacy policy, Price concludes that it has the capability to collect a staggering amount of data.  One could turn off the television's "smart" features, but that can affect your television's ability to do some of the things you bought it for.  Just as we cannot choose which channels the cable providers send us, we can only choose from packages, we apparently cannot choose to have a television with some "smart" features unless we are willing to invite Big Brother into our living rooms.

February 16, 2015 in About this Blog, Commentary, Television, Web/Tech | Permalink | Comments (1) | TrackBack (0)

Thursday, November 27, 2014

Thanksgiving Feast: Meredith Miller Top Ten List

MeredithThis is a rather unconventional list.  I have just gone back into our archives and picked out one my favorite Meredith posts from each of the ten years since she started blogging here.  It's amazing how well I remember each of these posts!

Meredith Vintage 2014: John Oliver and Sarah Silverman Tackle Payday Loans

Meredith Vintage 2013: Breaking: Bieber Requires NDA of Guests in His Home

Meredith Vintage 2012: Markets on the Mekong

Meredith Vintage 2011: Don't Buy This: 'Tis the Cyber Season of Reverse Psychology

Meredith Vintage 2010: A Hairy Breach of Contract Suit against Paris Hilton 

Meredith Vintage 2009: Can Mad Men Bring Sexy Back to Contracts?

Meredeith Vintage 2008: Brown on Halloween, Promises & Signed Documents

Meredith Vintage 2007: Law Prof Takes on Cell Phone Company

Meredith Vintage 2006: British Court Must Watch Jerry Springer Show

Meredith Vintage 2005: The Commonality of Computers, French Fries and Arbitration

It was hard to make these choices.  Lots of competition in the Meredith archives!


November 27, 2014 in About this Blog, Celebrity Contracts, Television, Travel | Permalink | Comments (1) | TrackBack (0)

Friday, November 21, 2014

Farewell Meredith!

MeredithMeredith Miller started blogging here before I did.  She holds the record for the contributing editor with the longest tenrue on the blog.  

Her lively, quirky posts were one of the things that attracted me to this site and made it worthwhile to keep coming back.  She has been a steady companion, sounding board and dedicated contributor to our blog, and we will miss her contributions.

But life moves on, and we can only thank Meredith and wish her well in her new endeavors.  In her farewell e-mail to the rest of us, Meredith referenced her blogger's guilt.  Blogs are like sharks; they either move or die.  There have been many weeks when I despaired of finding the time and the content to keep this blog lively when Meredith would post a story that I knew would attract interest and buy the rest of us some time away from the blog.  After nearly ten years of providing us stories and laughts, he has certainly earned her release from blogger's guilt. 

I am hoping to compile a top ten list next week of my favorite Meredith posts.  Please feel free to nominate your favorites in the comments.

November 21, 2014 in About this Blog, Commentary | Permalink | Comments (0) | TrackBack (0)

Thursday, November 20, 2014

Good Night and Good Luck

I have been a contributing editor at ContractsProf since 2005.  The blog has provided a wonderful platform to share contracts-related news stories (as bizarre as possible), summarize important recent cases and self-promote my scholarship.  When Frank Snyder roped me into this nearly a decade ago, alot of things were different in varying degrees, especially: the Internet, law schools and the market for legal services.  Frank told me at the time that blogging might seem thankless, but it is not.  He said that every so often you meet someone at a conference and they realize you are that person who pointed out the connection between Eminem and Sister Antillico and the NDA Justin Bieber presents to house guests.  Frank was right.  I've met a lot of great people through the blog and its lead to meaningful conversations about contract law and other things.

One of the most rewarding parts of blogging is the record of posts we've created over the years.  Sometimes I will do a "quick and dirty" search on Google for the answer to a contracts question and I find the answer on this blog.  

I have come to the realization that I just do not have the time to commit to the blog right now.  In fact, earlier this week I made a list of things I was going to quit (quite liberating; highly recommended).  I am clearing the decks to focus on writing projects and other pursuits, including my new role at Touro as Director of Solo & Small Practice Initiatives.  It is where my heart is right now, and I am going to follow that.

In short, thanks Jeremy and previous blog overlords for letting me holdover this long.

With much gratitude for this opportunity, here's a reprise of turkey leftovers in time for Thanksgiving.

Goodbye Movie Clips by Ian_Buckwalter

November 20, 2014 in About this Blog, Contract Profs | Permalink | TrackBack (0)

Friday, October 24, 2014

The New York Times's "The Upshot" Column on Wrap Contracts

Yesterday's New York Times included a "The Upshot" column by Jeremy B. Merrill.  The print version was entitled Online, It's Easy To Lose Your Right to Sue [by the way, why can't the Times be consistent in its capitaliziation of "to"?], but the online version's title tells us how easy, One-Third of Top Websites Restrict Customers' Right to Sue.   The usual way they restrict the right is through arbitration provisions and class-action waivers.  They do so through various wrap mechanisms so that consumers are bound when they click "I agree" to terms they likely have not read and perhaps have not even glanced at.  

Some websites attempt to bind consumers by stating somewhere on their websites that consumers are bound to the website's and the company's terms simply by using the company's website or its products (I'm looking at you, General Mills).  The only thing surprising about this, given the Supreme Court's warm embrace of binding arbitration and class action waivers, is that two-thirds of websites still do not avail themselves of this mechanism for avoiding adverse publicity and legal accountability.

As I was reading this article, it started to sound very familiar -- a lot like reading this blog.  And just as I was beginning to wonder why the Times was not ' quoting our own Nancy Kim, the article did just that:

Wrap Contracts“Courts have been very reluctant to say that browsewrap is not enforceable,” said Nancy S. Kim, a professor at the California Western School of Law and the author of a book about online contracts.

When courts decide whether a website’s terms can be enforced, they look for two things, Ms. Kim said: First, whether the user had notice of the site’s rules; and second, whether the user signaled his or her agreement to those rules. Courts have ruled that simply continuing to use the site signals agreement. When browsewrap agreements have been thrown out, as in the Zappos case, courts have said that the site’s link to the terms wasn’t displayed prominently enough to assume visitors had noticed it.

Congratulations to Nancy on such prominent notice of her scholarship!

And congratulations to the Times for paying attention!


October 24, 2014 in About this Blog, Contract Profs, In the News | Permalink | Comments (1) | TrackBack (0)

Tuesday, October 7, 2014

Introducing our Guest Blogger, Robin Kar's Coda to Our Virtual Symposium on More That You Wanted to Know

KarProfessor Robin Kar is a professor of law and philosophy at the University of Illinois College of Law. He is a faculty affiliate of the Illinois Law and Philosophy Program, the Beckman Institute for Science and Technology (in the Cognitive Psychology Research Group), the Illinois Program in Law, Behavior and he Social Sciences, and the Illinois Network for Neurocultures.  He is Director of the Illinois Center for Interdisciplinary and Comparative Jurisprudence, and a Project Leader for the Illinois Program on Cultures of Law in Global Contexts.  He has a PhD in philosophy, with a special focus on moral psychology, moral, legal and social philosophy, meta-ethics, rational choice and game theory, and the foundations of economics and the social sciences.  Some of his work on moral psychology, the psychology of obligation, and the nature of law and legal obligation can be found in pieces like The Deep Structure of Law and Morality, The Psychological Foundations of Human Rights, Hart’s Response to Exclusive Legal Positivism, and The Two Faces of Morality

Readers of the blog are also likely already familiar with Professor Kar’s recent SSRN Top Ten hits on contract law and theory, Contract as Empowerment: A New Theory of Contract and Contract as Empowerment Part II: Harmonizing the Case Law, along with his piece The Challenge of Boilerplate.  Kar teaches contract law and wide array of jurisprudence and legal theory courses, including seminars like morals, markets and the law.

Professor Kar’s posts serve as a sort of coda to our our virtual symposium on the new book by Omri Ben-Shahar and Carl E. SchneiderMore Than You Wanted to Know: The Failure of Mandated Disclosure 

Professor Kar will present his argument in four parts:

Part I: The Proverbial “Egg” suggests that three ungrounded premises of the classical law and economics movement have often caused many people to think that mandatory disclosure regimes have an unwarranted degree of support. 

Morethan Part II: Breaking Out of the Shell describes More Than You Wanted to Know as emerging from the classical law and economics paradigm but as able to challenge one of its central dogmas because it is willing to depart from two of the three core assumptions associated with that classical tradition.  The book seeks to answer psychological and empirical questions based on real psychological and empirical research rather than ungrounded psychological premises and abstract theoretical modeling. This explains why the book is better able to track the truth about mandatory disclosure regimes.   

Part III: What Is This Emerging New Life? outlines a better and even more broadly interdisciplinary paradigm that Professor Kar sees as potentially emerging from these developments. This research program would draw not only on psychological and empirical research to answer any psychological and empirical questions relevant to contract and consumer protection law but also on a broader range of philosophical methods of argumentation to answer any normative questions relevant to these topics. Part III argues that further development toward this interdisciplinary collaboration is needed for contract law studies to better track the truth.      

Part IV: Discarding the Last Remnants of the Old Shell suggests that we still have a way to go in freeing ourselves from the limitations of the classical law and economics paradigm.  It describes how this problem still causes many scholars to ask the wrong normative questions when asking how best to reform consumer protection law—as illustrated both by More Than You Wanted to Know and many of the responses to it in this symposium. This has led to an increase in knowledge about the psychological and empirical facts, but even more uncertainty and less consensus over how best to reform consumer protection law in light of them.  This problem can only be fully addressed by attending better to the right normative questions. 

So what are the right normative questions, you ask?  Stay tuned to find out!

October 7, 2014 in About this Blog, Books, Commentary, Recent Scholarship | Permalink | Comments (0) | TrackBack (0)

Tuesday, September 30, 2014

Ben-Shahar & Schneider Symposium: One-Stop Shopping

Monday, September 29, 2014

Ben-Shahar & Schneider Symposium, Finale: The Authors Respond

Ormi 3 SchneiderAfter reading our book and the blogs about it, you are surely in danger of hearing more than you want to know and even more surely apprehensive about a response in which we battle and bicker point by point.   Our critics have described our thesis accurately:  More Than You Wanted To Know does argue that mandated disclosure is the most common and least successful form of regulation today, that it cannot be fixed, and that it does more harm than good.  But our critics puzzle us in some basic ways we will briefly explore. 

 Our objection to mandated disclosure is not an objection to information. People need information, seek it, and commonly use it wisely, especially when they want and even enjoy it.  Advertising would not thrive were people indifferent to information, nor would libraries, newspapers, universities, or Google.  But mandated disclosure is not just about information; it is a regulatory technique that directs quite particular kinds of information at quite particular times in quite particular ways.  It aspires to give people information they did not seek and do not like to use.  Information they often find irrelevant to their decision.  Information that is often repellently complex and baffling.   Information that thus requires training to use well.  All this while people are contending with counterparties who are well informed and have interests of their own. 

Morethan Our critics in this symposium and elsewhere widely acknowledge the strength of our core arguments that mandated disclosure’s record is poor and its challenges great.  In area after area, mandated disclosure’s history is the same:  high hopes that people will be liberated from ignorance, made at last truly autonomous, and led to improved decisions.  In area after area, able and thoughtful people have labored decade after decade to realize these hopes.   After all these years, those hopes are still thwarted.  One might have expected, then, that all this thought and effort and ability would be turned to seeking better regulatory methods and persuading law-makers to use them.  Instead, two responses are common:  One is to argue that disclosure will work if only we can at last learn to do it better; the other is to shift the goals of disclosure from helping people make choices to more general benefits more indirectly achieved.

For example, immense creativity has been harnessed to solve the problem of conveying complex information to people ill-situated to interpret it.   We devote a chapter in the book to arguing that simplification—the deus ex machina of contemporary disclosurism—has not only disappointed its advocates’ eager hopes, it has barely budged the meter.   True, there are always more techniques to try, like Ryan Calo’s “visceral” disclosures, Bar-Gill’s “use pattern” disclosure, or Porat-Strahilevitz’ “personalized” disclosures.  These might succeed where others failed, but let’s make sure we understand how formidable their task is and how discouraging the history of such efforts has been.

Take Lauren Willis’ example of the CARD Act’s simplified disclosure, a payment “nudge” invented in the era of “smart” disclosure to prompt debtors to pay balances faster. Willis—one the most sophisticated critics of disclosures in consumer law—calls this regime successful even while recognizing that its benefits are not “dramatic.” How undramatic can benefits be before we stop advocating simplified disclosure? A recent study based on government data finds few cardholders responded to this nudge, that those who did saved only $24 on average, and that the total effect of this disclosure reform was $71 million annualized savings. In a $750 billion market, this benefit is so undramatic that we doubt it’s worth its design costs. (Luckily, the CARD Act did more than simplify disclosure.  It also limited fees and saved consumers—especially lower income people—many billions of dollars.)

Can disclosure serve other goals than improving people’s decisions? Can it “improve accountability”? Can firms be deterred from bad conduct even if disclosures go unread?  If disclosure helps the government improve enforcement actions, then the answer is yes.  But now we are talking about a different regulatory animal, where information is reported to the government and used as a baseline for command and control, like enforcing emission standards or collecting taxes. When, instead, disclosure is targeted at the public, does it improve accountability? Hospital report cards have almost no detectable effect on the quality of medical care, but hospitals worried for their reputation seem to be sending high-risk patients (especially minorities) away.  How is that for accountability?  What evidence is there that campaign-finance disclosure reduces money’s corruption of politics?  Or that Miranda stops police coercion?   Instead of sanitizing public life, disclosure is often a fig leaf to make disreputable behavior acceptable.  The rich buy influence—and file their disclosures.  Police, as Stuntz shows, use abusive tactics—and recite Miranda warnings.  Lenders lure gullible borrowers into disastrous debt—and making everything kosher with their neat stack of disclosures. 

While our critics are rich in new refinements on disclosure and in new purposes for disclosure to serve, they are not rich in responses to one of our central concerns:  that mandated disclosure is incompatible with basic features of human nature, with the way that people live their lives and make their decisions.  Unless human nature changes or people live differently, refinements in mandated disclosure can do little and new purposes for mandated disclosure will be increasingly peripheral.

So what do we propose instead? We propose a moratorium on mandated disclosure because we want real problems to be addressed with real solutions. Are credit card fees obnoxious?  Regulate them.  Are medical charges unconscionable? Face up to the perplexities of medical costs.  Do firms cheat customers?  Punish them.  Do conflicts of interest distort incentives?  Decide whether the distortion is great enough to justify prohibiting the conflict.  All these solutions are politically hard, and some of them may be politically unattainable.  But is that a good reason to encourage law-makers to persist in solutions that, while politically feasible, don’t work?

September 29, 2014 in About this Blog, Books, Recent Scholarship | Permalink | Comments (0) | TrackBack (0)

Thursday, September 25, 2014

Ben-Shahar & Schneider Symposium Part XI B: David Vladeck, Living in a Post-Disclosure World, Part B

This is the eleventh in a series of posts that are part of a virtual symposium on the new book by Omri Ben-Shahar and Carl E. SchneiderMore Than You Wanted to Know: The Failure of Mandated Disclosure Biographies for the second week's contributors can be found here.  The authors' introduction to the symposium can be found here.  

VladeckDavid C. Vladeck is a Professor of Law at Georgetown University Law Center, where he teaches federal courts, civil procedure, administrative law, and a seminar on First Amendment litigation. Professor Vladeck recently returned to the law school after serving for nearly four years as the Director of the Federal Trade Commission’s Bureau of Consumer Protection.

This is the second of a two-part post.  The first can be found here.

My commentary on More Than You Needed to Know picks up where Ben-Shahar and Schneider’s critique of mandatory disclosure leaves off; that is, how to reform the process to move to less bad disclosure regimes. 

I have three modest points:  In yesterday’s post, I argued that there are disclosure regimes that work.  We should explore them to see why.   In today’s post, I will argue that there are tools that can be used to address some of the flaws that Omri and Carl rightly identify and criticize.  They must be employed.  Finally, my tenure at the FTC taught me that mandatory disclosures are often an effective way to ensure accountability.  That virtue is worth exploiting. 

2.  Fix disclosures.  As Omri and Carl point out, disclosures often fail because they are designed to fail.  True, but that state of affairs is not inevitable.   Legislatures and regulatory agencies can mandate that disclosures do just that:  Convey important information to consumers concisely, in plain English, and at the right moment, and nothing more. 

Let’s do a thought experiment with privacy policies, which are rightly the poster child for disclosures that go unread.  Let’s assume that companies were forced to abide by the following simple rules:

(1) Get rid of Orwellian names for mandatory disclosures.   The name “privacy Morepolicy” is itself an oxymoron.   It deceives consumers by assuring them that the company takes privacy seriously because it has a privacy policy.  But these policies abrogate privacy.   Imagine instead if the disclosure were entitled “All the things we will do with your personal information, regardless of whether those uses are harmful to you.”   There is a chance that it would be read.  That might be true even if the title of the disclosure was “What we do with your personal data.” 

(2) Tell consumers what they need to know and nothing else.  Next, imagine that the policies stated clearly and concisely the uses to which one’s personal data would be put.  No other statement would be permitted, especially the long prefatory comments about how much the company really “cares” about your privacy.  And no prevarication would be permitted.  If the data will be given or sold to a third party, that fact – along with the identity of the third parties (and affiliates) and the uses the third party would put the data – would have to be disclosed.   If the company wants to reserve the right to sell the data as it sees fit, the company would have to disclose in bold letters:  “We reserve the right to sell your personal data to whomever we want!”    

(3) Make the legal disclaimers and boilerplate a separate “disclosure”.    Most privacy policies are incomprehensible because they are written by lawyers expert in what Senator Elizabeth Warren calls the art of “wordbarf” (her term, not mine) and focus mainly on disclaiming legal liability, not on “disclosing” the key information. 

(4) Require that the disclosure be made prominently each time a consumer is asked to provide personal information.   At the moment, finding a privacy policy is often like playing “hide and seek” against a determined and smart twelve year old.   If disclosures are going to work, they must be both conspicuous and delivered at the right time. 

(5) Make sure that there is a robust default.    Disclosure regimes are too often stand-alone efforts to regulate, employed as a sop to beat back efforts to impose more stringent regulation.   Default rules are often needed so that if the disclosure fails, the presumption should be that the default rule remains in place.             

I could go on.  But you see my point.  Today most disclosures are carefully engineered by lawyers and experts on human behavior not to be read, or to be discounted because of other claims more prominently displayed.  If you want to see how sophisticated these obfuscation efforts can be, take a look at FTC v. Commerce Planet, Inc., 878 F. Supp. 2d 1048, 1068-72 (C.D. Cal. 2012), a fraud case involving the adequacy of buried disclosures that were contradicted by other far more prominent claims. 

If we are going to reclaim disclosures, those techniques will have to be reined in by more than enforcement cases by the FTC and state agencies.  More important, we must focus on making disclosures comprehensible and addressing the “indifference” problem that Omni and Carl describe.   Professor Oren Bar-Gill’s book, Seduction by Contract, argues that more effective disclosures could be designed to enhance consumer welfare.  And the FTC’s work on disclosures holds some promise.  Look at, for example, the FTC’s work on Dot.Com disclosures available here

3.  Disclosures to ensure accountability.  There is a long history of mandatory disclosures in the United States.   For instance, even before there was an FDA, Congress mandated that food labels identify the name of the food, the food’s ingredients, the net weight of the food, and the name and address of the manufacturer.  The requirement was intended to aid consumers in making purchasing decisions.  But more than that, the requirement was intended to give law enforcement agencies a hook to bring enforcement cases in the event that the food was misbranded.  When Congress passed the Food, Drug and Cosmetic Act in 1938, it carried forward these requirements, and they remain in force today. 

The same of course is true with the Federal Trade Commission Act’s longstanding prohibition on deceptive acts and practices.  Without disclosure regimes, many mandated by law, the FTC’s enforcement authority would be a shell of what it is today, as would be the case for State Unfair and Deceptive Acts and Practices statutes.    

My point here isn’t to claim that disclosure regimes should ordinarily be imposed to serve only as accountability mechanisms.  How to inject greater accountability into the marketplace is an issue that extends far beyond the scope of Omri and Carl’s wonderful book.  Instead, it is to make the more modest claim that even if, as Omri and Carl demonstrate, disclosure regimes generally fail to inform, they often serve the collateral purpose of enabling law enforcement agencies, and at times private parties, to hold sellers accountable for their claims.

                                    *                                  *                                  *

Let me end where I began.   The Failure of Mandated Disclosure is a must-read book for anyone who cares about consumer protection, contract law, and an informed marketplace.  To me, the book throws down the gauntlet to anyone who is willing to defend the status quo.    I doubt that anyone will pick that gauntlet up.  But if we agree that the status quo is indefensible, we need to figure how either to live in a post-disclosure world or how to improve disclosures to the point that some of Omri and Carl’s criticisms no longer stick.  That is our challenge.  I for one am not ready to surrender to a post-disclosure marketplace, especially when we have not yet really focused on designing and enforcing effective disclosure mandates.   

September 25, 2014 in About this Blog, Books, Recent Scholarship | Permalink | Comments (0) | TrackBack (0)

Wednesday, September 24, 2014

Ben-Shahar & Schneider Symposium Part XI A: David Vladeck, Living in a Post-Disclosure World, Part A

This is the eleventh in a series of posts that are part of a virtual symposium on the new book by Omri Ben-Shahar and Carl E. SchneiderMore Than You Wanted to Know: The Failure of Mandated Disclosure Biographies for the second week's contributors can be found here.  The authors' introduction to the symposium can be found here.  

Vladeck-david_1David C. Vladeck is a Professor of Law at Georgetown University Law Center, where he teaches federal courts, civil procedure, administrative law, and a seminar on First Amendment litigation. Professor Vladeck recently returned to the law school after serving for nearly four years as the Director of the Federal Trade Commission’s Bureau of Consumer Protection.

This is the first of a two-part post.

Living in a Post-Disclosure World?:  The Challenge of The Failure of Mandated Disclosure

 The title of Omri Ben-Shahar and Carl Schneider’s new book, More Than You Wanted to Know:  The Failure of Mandated Disclosure, is perfectly apt; the book did tell me far more about the failings in mandated disclosures than I wanted to know.   But to be fair, I was warned.  The “disclosure” in the title put me on notice that I would learn “more than I wanted to know,” and the authors kept their promise, proving, perhaps in tension with their title, that disclosures sometimes work.

This is a book worth reading.  The authors ably stake out and defend their thesis.  They carefully, cogently, and at times, ardently make the argument that mandated disclosure regimes are destined to fail.   Too many disclosures lead to overload.  Too many disclosures are incomprehensible - written in leaden language, laden with disclaimers, and comprehensible only by people with multiple doctorate degrees.  But what really dooms disclosures is indifference – a curse for which there is no cure.   While improvements around the margins may be possible, the authors contend that engaging in the quixotic effort to fix unfixable mandated disclosure regimes is a fool’s errand.   Instead, we should move to better and more effective regulatory regimes in those instances where they are really needed.   

Make no mistake; Omri and Carl are not corporatists who want to leverage corporate power over consumers.  Their intentions are pure and good.  They care deeply about promoting consumer welfare.  But, in their view, our current disclosure regime does the opposite:  It is a ruse that promises consumer protection but delivers nothing more than an illusion.       There is, of course, a great deal of truth in the authors’ critique of mandatory disclosure regimes.  Few, if anyone, will defend the status quo.   I certainly will not.  I share most, if not all, of the criticisms that the authors rightly train on mandatory disclosure regimes.   And I wholeheartedly endorse their view that disclosure and more disclosure, as a politically expedient compromise, often prevents needed regulation.  

But I do not accept the pessimism that runs through the book.   Reading it, I was reminded of the quip about democracy –  which “ is the worst form of government, except for all those other forms that have been tried from time to time.”   In some respects, disclosure mandates are the worst form of consumer protection tools.  But for some things, disclosures serve important interests.   Disclosures cannot simply be abandoned; we need to preserve them where appropriate, we certainly need to figure out how to do them better, and we need to stop using disclosure regimes as a substitute for needed regulation.  For this reason, I’ll pick up where the book leaves off; that is, how to reform the process to move to less bad disclosure regimes. 

I have three modest points:  In today’s post I will argue that there are disclosure regimes that work.  We should explore them to see why.   In my second post, I will argue that there are tools that can be used to address some of the flaws that Omri and Carl rightly identify and criticize.  They must be employed.  Finally, my tenure at the FTC taught me that mandatory disclosures are often an effective way to ensure accountability.  That virtue is worth exploiting.  

Morethan 1.  Success stories:   There is no question some mandatory disclosure schemes work.  A number of health warnings have succeeded.   For instance, no one would seriously challenge the success of the Food Allergen Labeling and Consumer Protection Act of 2004 in substantially reducing life-threatening allergic reactions to foods.   Nor would one take issue with the success of poison-prevention programs that rely on Skull and Crossbones warnings.   Perhaps the most dramatic success story is the virtual elimination of Reye’s syndrome in children in the United States as a result of mandatory labeling of aspirin-containing products.   Reye’s syndrome is a rare and potentially fatal condition affecting children and adolescents.  The syndrome attacks the brain and liver, and about half of those afflicted die, with many more suffering severe and irreversible brain damage.  By the late 1970s, strong evidence emerged that there was an association between Reye’s syndrome, and children and teenagers taking aspirin-containing products to treat flu like symptoms and chicken pox.   I was a lawyer at Public Citizen Litigation Group when we brought suit to compel the FDA in 1986 to amend the labeling of all aspirin-containing products to warn parents of the association.  The litigation took a few years, but ultimately succeeded in forcing the FDA to put this warning on aspirin-containing products:  “Children and teenagers who have or are recovering from chicken pox or flu-like symptoms should not use this product.  When using this product, if changes in behavior with nausea and vomiting occur, consult a doctor because these symptoms could be an early sign of Reye’s syndrome, a rare but serious illness.”    The statistics are striking.   “In 1977, 454 cases of Reye’s syndrome were reported in the United States.  Of the 373 cases with follow-up, 42% of these patients died, and 11% survived with residual neurologic damage. Incidence was increased with viral epidemics, especially influenza B and varicella. Reye’s syndrome cases in the U.S. numbered 555 in 1980, but they have fallen drastically.  From 1994 until 1997, identified cases in the U.S. were fewer than two per year.” Lisa Degnan,  Reye’s Syndrome: A Rare But Serious Pediatric Condition, U.S. Pharmacist.

To be sure, there are a number of factors that one could argue make these examples aberrational:  they involve matters of life and death; they generally involve young children or other vulnerable populations; and with the food allergen legislation and the Reye’s syndrome warning, the risks were conveyed not just by warnings, but by broader publicity and public education.  And the industry has become more sensitive to these risks.  For instance, most children’s pain relievers no longer contain aspirin (although some do), and some manufacturers have reformulated their products to reduce the use of food dyes, nuts, and other known allergens.   All fair points.  But the publicity surrounding Reye’s syndrome has disappeared over the past thirty years, as has the buzz surrounding children’s allergies.  Yet Reye’s syndrome has been virtually eliminated, and the risk of allergic reactions triggered by food allergens has been driven down.    

Why did these disclosure schemes work?  I think that there are a number of reasons.   First, people are not indifferent to immediate life-threatening health issues, especially for their children.  Second, these disclosures were just that - disclosures written in short, highly directive language, geared to people with no more than an elementary school education.  Third, the disclosures were not drowned in a sea of disclaimers, which is often the fatal flaw.  Fourth, the disclosures were properly labeled – the disclosure did in fact convey important health information.   Fifth, the disclosures were provided just in time – just when the consumer is making a purchase, and not in a pile of paper in the box to be viewed at some point after the purchasing decision.  And sixth, the disclosures were part of a broader education campaign and were backed up by a strong regulatory scheme.      

Tune in tomorrow for Part B. 

September 24, 2014 in About this Blog, Books, Recent Scholarship | Permalink | Comments (0) | TrackBack (0)

Ben-Shahar & Schneider Symposium Part X: Jeff Sovern

This is the tenth in a series of posts that are part of a virtual symposium on the new book by Omri Ben-Shahar and Carl E. SchneiderMore Than You Wanted to Know: The Failure of Mandated Disclosure Biographies for the second week's contributors can be found here.  The authors' introduction to the symposium can be found here.

SovernJeff Sovern is a Professor of Law at St. John’s University in New York City where he teaches Consumer Protection, among other subjects.

Ben-Shahar’s and Schneider’s book convincingly demonstrates that disclosures are rarely effective consumer protections.  But there is one type of consumer disclosure where, in my view, at least, the jury is still out, though I think Ben-Shahar and Schneider feel differently. I refer to the single-letter restaurant grade disclosures that some states and municipalities require be posted on restaurant doors.  I want to discuss those disclosures in this post, in the hope that they can also be extended to other situations.

Localities have long inspected restaurants for health code violations.  In the pre-internet era, the resulting reports were often available for public inspection in government offices, but no doubt few consumers troubled to travel to those offices to read them.  When the internet became available, some municipalities posted the reports on the web, and some consumers surely consulted them, but it seems likely that few bothered. As a result, there is no reason to think the inspections had much impact on consumer decisions about which restaurants to patronize.  At some point, Los Angeles, later joined by New York City, San Diego, South Carolina, and various other governments, began distilling the grades down to a single letter grade—often an A,B, or a C--and requiring restaurants to display them at their entrances.   Theoretically, enabling consumers to see a readily-understandable disclosure at the time they made a decision to enter the restaurant would make it possible for consumers to use the disclosure.

As Ben-Shahr and Schneider note at page 155, initial reports about restaurant grades were quite positive.  Hospitalizations for food-borne illnesses in Los Angeles fell by 20%   while the later adoption in New York was said to cut salmonella cases by 14%.Apparently, restaurateurs, not wanting to have a bad grade on their front door, improved hygiene.  The resulting improvements benefited not only those who heeded the grades—by telling them which restaurants were less clean—but seemingly even those who ignored the grades, because restaurants became cleaner.  It seemed like the perfect disclosure, in that it appeared all restaurant patrons were helped by it. 

But a later study was less promising.  Daniel Ho’s article, Fudging the Nudge: Information Disclosure and Restaurant Grading, 122 Yale L. J. 574 (2012), found, in Ben-Shahar’s and Schneider’s words that “grades have no discernable health benefits, distort the allocation of inspection resources, and mislead diners.” While Ben-Shahar and Schneider don’t say explicitly that single letter grading is a failure, the book left me, at least, with the impression that that was the authors’ view, which of course is in keeping with the rest of the disclosures the book describes.  While Ben-Shahar & Schneider quite rightly point out genuine problems with single-letter grading, I believe that it is premature to conclude that it can’t work in some contexts. It would be unfortunate if governments abandoned a form of disclosure that might work merely because many other forms do not.

Ho’s claim that restaurant grades do not affect health is based on his findings that the grades did not have an impact on calls to 311 and Google searches.  The assumption is that people suffering stomach issues  from eating at unclean restaurants would use Google for relevant searches and that therefore if the grades resulted in fewer stomach ailments, we would see fewer such searches; because the searches didn’t decline, neither did the incidence of illnesses caused by eating at restaurants.  Similarly, if people suffered gastrointestinal problems they attributed to eating at unclean restaurants, they could be expected to call 311 and report the restaurant; the absence of a drop in calls about restaurant therefore implies that there was not a drop in stomach problems.

That makes sense, up to a point. But all it gets us to, when the earlier studies are taken into account, is that the evidence for the effectiveness of single-letter disclosure grades is inconsistent. The bigger problem, however, is that while the studies may provide the best evidence we have available at present to evaluate single-letter disclosures, they are flawed as measures of such disclosures. Changes in public health during the relevant periods may be attributable to many things, of which the restaurant grades are only one. Obviously, people who become ill through eating foods prepared at home would not be affected by restaurant grades.  But even if we ignore that, another problem is that consumers may find the disclosures useful even if the disclosures do not improve public health.

Morethan I teach in New York City, one of the localities using health department grades.  For some years, when I take up the topic of disclosure in my consumer law course, I have asked students whether they take the health grade disclosures into account in choosing among restaurants.  Usually a minority of students report that they do not. It is fair, I think, to say that those students do not benefit from the grades, unless the grades positively alter restaurateur conduct, which, as noted above, they may.  But most students have claimed that they do take the grades into account.  And their concern did not seem motivated solely by health concerns, though that was a factor. Another factor was disgust. Some students seem interested in avoiding unclean restaurants wholly apart from health concerns because they are repulsed by eating insect parts, etc.

The students I have polled are too small a sample to shed much light on consumer behavior generally, and as law students who have chosen to take a consumer law class, are hardly a random sample of the population.  In addition, perhaps my students exaggerated the extent to which they paid attention to the grades. But I don’t think so.  During one of the semesters, the cafeteria in our school received a poor grade, and students reported that they stopped eating there.  I doubt they would have invented that claim.  And because our building is some distance from the other eateries, the decision to avoid the cafeteria imposed some inconvenience, suggesting that the students in question valued cleanliness and the grades which signaled the lack thereof more than the convenience of eating in the cafeteria.

In short, even if the grades did not affect public health, about which there is some doubt, consumers could still find them valuable by enabling avoidance of  behavior—such as eating food shared by rodents—that they see as repulsive. This does not answer the question of whether the grades are worth incurring the costs they impose, but it does indicate that the grades have utility.

To be sure, some existing restaurant grade systems have been flawed in implementation.  Professor Ho observed, and Professors Ben-Shahar and Schneider echoed, that in San Diego, grade inflation has resulted in 99.9% of the restaurants receiving an A.  In New York, they report, restaurant inspectors grading practices seem not to be consistent.  But that does not mean that similar grading systems cannot be implemented well.  Perhaps they can’t be, but we don’t have enough data to determine that.

It is easy to imagine other single-letter grading systems that might benefit consumers.  For example, now that the Consumer Financial Protection Bureau has a public database for the receipt of complaints about credit card issuers, a system could assign a grade to credit card companies based on the percentage of their customers who had filed a complaint that was not satisfactorily resolved.  The grade could be made available to consumers before they applied for a credit card.  Would you like to know the grade a company had received before you applied for its credit card?  And would such a system increase company incentives to respond to consumer complaints, or even try to forestall them, just as consumers feel pressure to pay even disputed debts to avoid soiling their credit reports? 

More than most, law professors should be aware of the possibility that grades boiled down to a single symbol might be effective. Law schools have long bemoaned the impact of the US News rankings on applicants’ decisions where to go.  The US News rankings are flawed, but they have an impact.  To the extent that it is possible to create grades that are not flawed, they remain a tool in the consumer protection arsenal.  Of course, the fact that grades work in one context doesn’t mean they will work in all contexts.  Consumers might heed restaurant grades—if they do--because they wish to avoid illness or being disgusted and applicants to law schools might pay attention to the rankings because they perceive decisions as to where to study to be of great importance.  Perhaps grades in contexts with less at stake would elicit less attention.  And some matters surely cannot be reduced to a single grade, such as determinations about which mortgage offers the best terms.  In that scenario, disclosure, whether in a single grade or at greater length, seems unlikely to be successful.

The fact is, we don’t know whether single letter grades work or not.  A better test of their effectiveness would be to watch how consumers behave when selecting between two choices which received different grades.  The data that we have is an imperfect proxy for that study, and it is far too soon to know whether they work.  Ben-Shahar and Schneider are correct in much of what they say about disclosure’s limits. But it would be unfortunate to give up on single-letter grades given the evidence which suggests that they may help consumers.

September 24, 2014 in About this Blog, Books, Recent Scholarship | Permalink | TrackBack (0)