Wednesday, May 10, 2017
(Image Credit: Nick Anderson @The Daily Bail)
Yesterday, a court that very few lawyers spend much time thinking about (the US Court of Appeal for the Federal Circuit) rendered a decision in an important series of cases regarding the use of takings claims in connection with government intervention resulting from the 2008 crisis. But before I get to the case itself (Starr International v. United States), first a little background . . .
As almost everyone knows, in the wake of the 2008 financial crisis the federal government took several measures aimed at saving many of the country’s largest financial institutions from disaster. Among these institutions were Fannie Mae and Freddie Mac (the mortgage finance giants that shortly prior to the crash either guaranteed or outright owned forty percent of all U.S. residential mortgage debt) and AIG (a Wall Street financial institution that, in the run-up to the crash, entered into complex derivative contracts called credit default swaps with various parties that ended up costing the company trillions of dollars in liabilities that it could not hope to pay).
In order to deal with these failing but systemically important entities, Congress essentially took them over through a series of legal transactions. With regard to AIG, in order to save that entity from collapse and an ultimate bankruptcy, the Federal Reserve Bank of New York made a loan to it in the amount of $85 billion. In exchange for this loan, the New York Fed obtained a majority and controlling number of shares in the company. It was argued by market commentators at the time that without such measures, “ultrasafe money-market funds owned by individual investors to complex derivatives used by Wall Street banks” would crash.”
In the cases of both Fannie/Freddie and AIG, the companies were in tremendous financial distress and, moreover, the financial health of these entities had become so intertwined with the financial health of the country that a failure of any one of them would have had dire consequences. However, these entities were private companies and each had their own private shareholders. Because the federal government required that a significant amount of the control and economic rights of these shareholders be suppressed in exchange for federal aid, a number of these shareholders asserted constitutional takings claims.
In 2013 and 2014 groups of Fannie/Freddie shareholders initiated lawsuits against the government, arguing that, among other things, the FHFA’s orders regarding the sweeping of net cash, the cessation of dividends, and the removal of the entities from the publically traded marketplace constituted an unconstitutional taking of their property rights. As Nestor Davidson (Fordham) wrote in his 2016 article Resetting the Baseline of Ownership: Takings and Investor Expectations After Bailouts, to date courts have held that the actions taken by the FHFA with regard to Fannie and Freddie do not in fact amount to a taking of property.
I’ve argued recently that the reasons behind many of these court decisions hint at a larger move toward embracing the idea that, to quote Eric Freyfogle (Illinois), “that private ownership . . . is a tool that society uses to promote its interests.” For instance, the court in Perry Capital LLC v. Lew (70 F.Supp.3d 208) noted that while it is true that the FHFA foreclosed the possibility of dividend payments to shareholders (other than the treasury) in the near-term, the fact that these investors had purchased stock in private entities that were widely known to be highly regulated by the federal government makes the fact that dividend payments had ceased even more foreseeable and reasonable, and thereby less evident of a deprivation of their “reasonable investment-backed expectations.” This idea of an investor operating in an arena that is inherently public and attuned to societal policy shifts—thereby imbuing such property rights with societal concerns—underscores the assertion that “[t]here is no need to weigh public interests against private interests in a kind of apples versus oranges assessment. . . The public interest is central and private rights exist to the extent their recognition helps promote that public interests.”
Similarly (and to the point), in 2011 AIG’s largest shareholder (Starr International Co.) filed suit against the government in the U.S. Court of Federal Claims, arguing that although the New York Fed may have had the authority to make the loan under the company’s then state of financial exigency, it did not have the authority to require stock in exchange for such credit and thereby become the controlling shareholder. Due to this illegal act, so the shareholder alleged, the government had effectuated a taking of the plaintiff’s property rights in the company. The trial court in Starr International Co. v. United States (121 Fed.Cl. 428) agreed with the plaintiff that the New York Fed had acted beyond its authority when it took an equity stake in the company in exchange for the loan, but the trial judge nevertheless denied that a taking had occurred. Importantly, the court stated that there had been no damage as a result of the fed’s act, due to the fact that without the loan the shareholders (while certainly free of interference with their economic and governance rights in AIG) would have held merely worthless paper in the company.
[As side note, Starr International is a Panama corporation with its headquarters in Switzerland. It’s chairperson and controlling shareholder is Maurice Greenberg, who was the CEO of AIG until 2005. Also, although Starr is the main plaintiff, it represents 274,000 AIG shareholders in a certified class for this litigation.]
The trial court in Starr noted that “[i]n the end, the Achilles' heel of Starr's case is that, if not for the Government's intervention, AIG would have filed for bankruptcy.” If such an insolvency proceeding had been commenced, the court noted, then “AIG's shareholders would most likely have lost 100 percent of their stock value.” In other words, the shareholders of AIG, for all practical purposes, had property rights that were worthless as the company faced immediate insolvency and ruin. Therefore, having “lost” some of those rights by virtue of the New York fed’s exchange of the loan for the stock did not amount to a taking because the shareholders were actually better off after the equity distribution than they were before.
Needless to say, the AIG shareholder (Starr) appealed the decision to the U.S. Court of Appeals for Federal Claims. That court’s decision was rendered yesterday (Tuesday, May 9, 2017). The holding essentially came down to an issue of standing with regard to the takings claim. Starr argued that it met its standing burden because “the Government’s acquisition of equity harmed Starr’s personal ‘economic and voting interests in AIG,’ independent of any harm to AIG.” The acquisition of the equity stake in AIG, so argued Starr, was “’indistinguishable from a physical seizure of four out of every five shares.’”
The court explored the standing issue at great lengths (with regard to corporate law compliance and regarding the federal reserve loan program), but for the readers of this blog I will focus on what the court said about Fifth Amendment standing. Starr said that the Takings Clause created a “special relationship” between the federal government and the AIG shareholders, and that relationship created standing when the government acted so as to harm Starr's “property” interest related to that relationship. The court was not persuaded by this argument, noting that Starr cited no authority for this Fifth Amendment “relationship” concept. However, the court took note of the fact that “Starr has not demonstrated why that duty would flow directly to a corporation’s shareholders rather than the corporation in the context of an equity transaction that affects all pre-existing shareholders collaterally.” Reading into this, it would seem clear that the court was rejecting the “relationship” theory for the shareholders, but maybe leaving the door open for the corporation to assert the takings claim? The court later stated, in a more omnibus holding paragraph, that Starr’s claims “are therefore exclusively derivative in nature and belong to AIG, which has exercised its business judgment and declined to prosecute this lawsuit.” It’s hard to tell if that statement was meant to apply to the pure takings claim of Starr or merely to other collateral claims related to compliance with corporate law and federal reserve statutes.
In any case, the whole “special relationship” business seems like nonsense anyway. I am certainly no expert in federal courts or civil procedure, so I will not attempt to opine on the intricacies of the standing analysis, but the idea that (even if Starr had standing) that this was a taking under the Fifth Amendment is ridiculous. Obviously an interest in stock in a corporation is a form of property right. That much is well-established. But the circumstances under which the voting power of Starr was diluted by the government’s exchange of a loan for common stock do not present a taking that would require compensation by the government. While it may be true that the “property” right in the stock was in some way diminished, the economic realities of the corporation must give context to the claim. AIG would have gone under and that, in turn, would have rendered Starr’s stock worthless. The fact that Starr ended up (for a period of time) holding stock that had less voting power than before the New York Fed’s loan must be viewed through the lens of the inevitable vanquishing of the stock’s value had no government intervention occurred. Thus, as the trail court noted, without the government action, “AIG's shareholders would most likely have lost 100 percent of their stock value.” Moreover, it was (in my view) within the reasonable public interest for the government to intervene and acquire the stock in exchange for the loan. The fall of AIG would caused significant damaged to the economy. The public interest (indeed, the quite strong public interest) in staving off that kind of wide-spread damage must inform the takings analysis when balancing against the private rights.
But, in truth, the audacity of corporations like Starr in using the Takings Clause as a way to profit from what was essentially their own poor (or malfeasant) decision-making in the lead-up to the financial crisis is really quite appalling. Starr was the controlling shareholder of AIG (thereby able to select AIG's board of directors), and the Starr CEO was the prior CEO of AIG in the run-up years to the crisis. To have allowed AIG to engage in a wide-range of poor investment choices (with serious consequences for everyday Americans) and then to turn around and assert a takings claim against the government AFTER taxpayer funds were used to bailout the company represents exactly the kind of greed that has come to be so closely identified with the 2008 crisis.
In the end, I’m glad the court threw-out Starr’s case on standing, but I would have much better liked had the court smashed the merits of these “bailout” takings claims altogether.
Tuesday, May 9, 2017
Monday, May 8, 2017
For our trust and estate law folks, check out this interesting symposium co-hosted by the Iowa Law Review and the American College of Trust and Estate Counsel (ACTEC) Foundation (announcement courtesy of Tom Gallanis @Iowa):
Wealth Transfer Law in Comparative & International Perspective
Iowa Law Review & ACTEC Foundation
Friday, September 8, 2017
University of Iowa College of Law
Iowa City, Iowa
Attendees must pre-register by Friday, September 1, 2017; day-of registration is not allowed. Attendance is free.
Continental Breakfast (8:00AM)
Thomas P. Gallanis, University of Iowa
Panel 1: Comparative & International Perspectives on Succession (9:00AM)
Chair: Sheldon F. Kurtz, University of Iowa
Naomi R. Cahn, George Washington University, Revisiting Revocation on Divorce?
David Horton, University of California, Davis, The Harmless Error Rule in the United States & Abroad.
Jeffrey A. Schoenblum, Vanderbilt University, U.S. Conflict of Laws Involving International Estates: The Lessons of Estate of Charania v. Shulman.
E. Gary Spitko, Santa Clara University, Intestate Inheritance Rights for Unmarried Committed Partners: A Comparative and International Perspective.
Mariusz Zalucki, Krakow University, Attempts to Harmonize the Inheritance Law in Europe.
Panel 2: Comparative & International Perspectives on Trusts & Other Will Substitutes (10:45AM)
Chair: John H. Langbein, Yale University
Adam S. Hofri-Winogradow, Hebrew University of Jerusalem & Richard L. Kaplan, University of Illinois, Property Transfers to Caregivers: A Comparative Analysis.
Paul B. Miller, McGill University, Trust Protectors as a Trust Reinforcement Device: Comparative Perspectives.
S.I. Strong, University of Missouri, The Role of Succession Law in the Arbitration of Internal Trust Disputes.
Jamie Glister, University of Sydney, Lifetime Wealth Transfers and the Equitable Presumptions of Resulting Trust and Gift.
Jaume Tarabal, University of Barcelona, Modes of Transferring Wealth Upon Death Outside the Laws of Wills and Intestacy in the U.S. and Spain.
Remarks by Henry Christensen III, McDermott Will & Emery, New York
Panel 3: Comparative & International Perspectives from Asia (1:45PM)
Chair: Thomas P. Gallanis, University of Iowa
Yun-chien Chang, Academia Sinica, Taiwan, A Comparative and Empircal Study of Wealth Transfer Doctrines in 150 Countries.
James C. Fisher, University of Tokyo, The Trust as Trojan Horse: A Quiet Revolution in the Japanese Law of Property and Succession.
Rebecca Lee, University of Hong Kong, Trends, Prospects, and Challenges in Financial Planning for High Net Worth Individuals in Hong Kong.
Masayuki Tamaruya, Rikkyo University, Japanese Law Within the Global Process of Trust Law Diffusion.
Hang Wu Tang, Singapore Management University, From Waqf and Ancestor Worship to Modern Wealth Management: A History of the Use of the Trust as a Vehicle for Wealth Transfer in Singapore.
College of Law endowed Tamisiea Lecture in Wealth Transfer Law (3:30PM)
Lionel D. Smith, McGill University
Attendance has been approved for 5.5 hours of Iowa CLE credit. Federal credit is pending.
Accommodations in Iowa City
Information about accommodations in the Iowa City area can be found here.
Sunday, May 7, 2017
Fresh from Cambridge University Press, property law scholar and friend of the blog Ilya Somin (George Mason) recently published a co-edited book titled Eminent Domain: A Comparative Perspective. The work analyzes the use and abuse of eminent domain in a number of jurisdictions, including Germany, Taiwan, the US, South Korea, and a variety of developing nations. The book came about as a result of a conference hosted by the Korea Development Institute (one of South Korea's leading research centers), as the use of eminent domain in South Korea has attracted a great deal of attention from law and policy makers across the globe.
Friday, May 5, 2017
Call for Papers -- Joint Program of the Section on Real Estate Transactions and the Section on Commercial and Related Consumer Law at the 2018 AALS Annual Meeting
The Sections on Real Estate Transactions and Commercial and Related Consumer Law are pleased to announce a Call for Papers from which at least one additional presenter will be selected for the sections’ program to be held during the AALS Annual 2018 Annual Meeting in San Diego. The program is titled “Exploring New Frontiers in Real Estate Development.”
Program Summary: Real estate development projects include assisted living facilities, hospitals, mixed-use urban sites, office buildings, shopping centers, planned residential communities, and low-income housing. The legal issues that may accompany these projects range from initial financing, refinancing, accompanying credit transactions and leases, and default and restructuring in bankruptcy. Recent years have seen specific legal developments regarding the Fair Housing Act, an uptick in municipal bankruptcy filings, and, more generally, an evolving economic and regulatory landscape. This panel brings together scholars working in the wide-ranging area of real estate development to discuss emerging issues from a variety of legal perspectives, including real estate finance, commercial law, bankruptcy and restructuring, fair housing, and related consumer protection laws.
David Reiss, Professor, Brooklyn Law School
Jennifer Taub, Professor, Vermont Law School
Form and Length of Submission: We invite submissions from scholars interested in presenting at the program. One or two speakers will be selected from this call for papers. There is no formal requirement as to the form or length of papers. Preference will be given to papers that are substantially complete and that offer novel scholarly insights. Untenured scholars in particular are encouraged to submit their work.
Per AALS rules, only full-time faculty members of AALS member law schools are eligible to submit a paper to Sections’ calls for papers. Fellows from AALS member law schools are also eligible to submit a paper but must include a CV with their proposal. All panelists, including speakers selected from this Call for Papers, are responsible for paying their own annual meeting registration fee and travel expenses.
Deadline: September 15, 2017. Please email your submission, in Word or PDF format, to Kristen Barnes at email@example.com and Pamela Foohey at firstname.lastname@example.org with “CFP Submission” in the subject line.
Inquiries or Questions: Please contact the Section on Real Estate Transactions chair, Kristen Barnes at email@example.com, or the Section on Commercial and Related Consumer Law chair, Pamela Foohey at firstname.lastname@example.org.
Tuesday, May 2, 2017
Yesterday SCOTUS released another important case involving the US Fair Housing Act: Bank of American Corp. et al v. City of Miami, Florida. I say "another" because the FHA has had a lot of action lately in light of the 2014 decision in Texas v. Inclusive Communities where the Court upheld the disparate impact theory in housing discrimination cases.
The Bank of America v. Miami case dealt with whether municipalities can bring claims under the Fair Housing Act (Title VIII of the Civil Rights Act of 1968). The question originates from a lawsuit filed by the City of Miami against Bank of America that was consolidated with another case where the city sued Wells Fargo. In both cases the city argued that these financial institutions had engaged in a long and targeted practice of making risky loans to minority borrowers (loans that were 5x more likely to result in a default than loans made to white borrowers). Further, the city alleged that in the wake of the 2008 crisis the banks refused to allow these distressed homeowners to refinance or engage in a loan modification, even through they routinely offered such deals to similarly situated white borrowers.
The scope of who can serve as a party under a Fair Housing Act claim raises interesting policy issues. The city argues that it is within the "zone of interest" for standing purposes because the discriminatory loan practices created large numbers of defaults and foreclosures, which in turn resulted in the proliferation of abandoned and blighted properties that hit hard the bottom line of cities when they needed resources the most.
The suit was initially filed against BoA in July 2013 and against Wells Fargo in July 2014, but both were dismissed by the district court for lack of standing and on the basis that the city had failed to prove that the bank's behavior was the proximate cause of the harm alleged. In September 2015, the 11th circuit remanded both of these cases for further proceedings on the proximate cause determination and held that the city did indeed have standing under the Fair Housing Act.
In deciding the case, Justice Stephen Breyer (writing for a 5-3 majority that was joined by Roberts, Ginsburg, Sotomayor, and Kagan) decided that Miami did have standing under the FHA to bring suit against these lenders. The Court stated that the FHA broadly authorizes a cause of action for anyone that has "been injured by a discriminatory housing practice" and that federal courts have and should construe this standard so as to allow the greatest possible access for potential plaintiffs (citing to Trafficante v. Metropolitan Life Ins. Co., 409 U. S. 205 (1972) and Congressional intent). Breyer also noted that in the past SCOTUS has allowed local governments to assert claims related to discrimination under the FHA, such as in Gladstone, Realtors v. Village of Bellwood, 441 U. S. 91 (1979) where the local government was allowed to bring suit for lost tax revenue that resulted from racial-steering practices.
However, although the Court opened the door for Miami to makes its FHA claim, it was not so positive when discussing the claim's viability on the merits. Specifically, one of the main reasons that the 11th circuit found for the city at the appellate level was based on the fact that, in satisfying the proximate cause element of an FHA claim, the harms caused by the actions of the lenders were "reasonably foreseeable." The foreseeability of the various municipal harms that would result from the subprime and race-based lending was enough to meet the proximate cause requirement. However, SCOTUS disagreed with the application of such a standard as held that: "In the context of the FHA, foreseeability alone does not ensure the close connection that proximate cause requires. The housing market is interconnected with economic and social life. A violation of the FHA may, therefore, 'be expected to cause ripples of harm to flow' far beyond the defendant’s misconduct."
The Court further stated that "[n]othing in the [Fair Housing Act] suggests that Congress intended to provide a remedy wherever those ripples travel. And entertaining suits to recover damages for any foreseeable result of an FHA violation would risk 'massive and complex damages litigation.'"
Rather, in order for the city to prevail the Court said the plaintiff had to show "some direct relation between the injury asserted and the injurious conduct alleged" which the court analogized to "a number of tort actions recognized at common law." Importantly, the Court declined to go any further in setting forth the details of such a needed "direct connection." Instead, the Court handed the question back to the circuit court, concluding that "[t]he lower courts should define, in the first instance, the contours of proximate cause under the FHA and decide how that standard applies to the City’s claims for lost property-tax revenue and increased municipal expenses."
Justice Thomas wrote separately, offering a partial dissent and a partial concurrence. This was joined by Kennedy and Alito (Gorsuch stayed out of it due to the fact that the case was heard prior to his confirmation). Thomas stated that the injury to the city (i.e., foreclosures, decreased property values, and blight) was not the kind of injury that Congress meant to be covered by the FHA (pointing rather to victims of discrimination themselves or their neighbors). He did agree, however, with the majority's articulation of the need to prove a strong direct connection between the harm and the violation, finding that the foreseeability analysis of the 11th circuit was not appropriate.
As others have recently observed, this opinion is in some ways one step forward and then two steps back. Like in Inclusive Communities, a threshold question of access was answered in the affirmative, only to be followed by limiting principles as to the chances of success. As one of my bright young law students wrote in his student comment last year (S. Lamar Gardner, #BlackLivesMatter, Disparate Impact, and the Property Agenda, 43 S.U. L. Rev. 321 (2016)), the robust causal requirement articulated in Inclusive Communities does much to limit the practical ability of FHA disparate impact plaintiffs to clear the summary judgment hurdle. The decision in Bank of American v. Miami seems to have a similar theme in that it opens the door for cities to bring suit, but potentially makes the bar to success so high that few local governments will be able to produce sufficient evidence to prevail. More than ever, strong empirical work will become an ever-important part of making out a viable claim under the FHA.
Monday, May 1, 2017
Joe Singer (Harvard) has posted Indian Title: Unraveling the Racial Context of Property Rights, or How to Stop Engaging in Conquest (Albany Government Law Review). Here's the abstract:
This article discusses the racial injustice faced by Native Americans, with whom land titles in the United States originated with. The author argues it is vital to interpret the Supreme Court cases of the 19th century that correctly defined Indian title, and to honor the property rights of Indian title just as we do the "fee simple of the whites."
Friday, April 28, 2017
Last week, my good friend, brilliant colleague, and property law scholar extraordinaire, Jim Gordley (Tulane), told me that he had been on a road trip and listened to a good deal of country music. In the course of listening to a series of country songs, Jim decided that country music was about two things: love and breaking the law. Being from the south and having listened to my fair share of country music, I have to admit that Jim is right. Just listen to Friends in Low Places, Achy-Breaky Heart, Before He Cheats, Folsom Prison Blues, and Ol' Red and you can see for yourself. Sure, there are some other songs about dogs and beer, but those are really in the minority. Most country music is about love and the law.
Given this discovery about country music, Jim decided to write his own country love song about the law. Property law, that is. With Jim's permission, I share his song with you. It may not make the Billboard's Top Ten list, but it had my property law class rolling on the floor with laughter, all the while reinforcing some exciting possessory and future estate rules.
Saturday, April 22, 2017
While at the Texas A&M University Property Schmooze in February, one book title was mentioned at least 10 times: Matthew Desmond's (Harvard) Evicted: Poverty and Profit in the American City (2016). I knew of the book but, admittedly, had not read it in February of this year. Given that everyone was talking about it, I decided to order a copy while flying back to the Big Easy. To me, the book can be described in one word: powerful. Through his words, Demond gives personality to the housing struggles that are all too real for so many. From the recovering addict tenant to the landlord who views low-income rentals as good for her business to the incarcerated renter to the victim of domestic abuse who is thrown out, Desmond breathes life into the lives of those that far too many have turned their back on.
The Yale Law Journal Forum recently published a set of essays responding to Desmond's book. The collection of essays includes writings by Lisa T. Alexander (Texas A&M), Laurie Ball Cooper (Cohen Milstein), and Ezra Rosser (American).
Alexander uses her essay to pitch the thesis that the right to housing is a human right. Alexander uses her "right to housing framework" to "help cities evaluate the efficacy of their local laws, policies, plans, programs, and housing markets." She highlights how the law on the books does not apply as perhaps it was intended for low-income renters. Alexander then proposes how municipalities can codify superior laws and landlord-tenant regulations that address the issues facing low-income tenants while retaining the tenants' dignity. Finally, Alexander highlights how other programs, such as the Tiny Homes for the Homeless, have offered some solutions to the problems Desmond describes.
Cooper uses her position in practice to focus on what lawyers can do to help individuals in the position of the characters in Desmond's book. Cooper offers a number of suggestions such as special rent protections for victims, more real protections for retaliatory evictions, and better access to counsel for low-income tenants. While Cooper offers a number of legal solutions, she acknowledges that her solutions are only a small part of the puzzle. As Cooper says:
The legal solutions outlined in Parts II and III of this Essay can only be part of the picture. As Desmond’s sociological study makes clear, any solution to the housing crisis that those living in poverty face requires an interdisciplinary approach. Laws to protect tenants threatened with eviction and tenants seeking safe, affordable housing—and lawyers to ensure that tenants can realize those legal protections—are a critical part of the solution. But they are only part of the solution. Other important areas for further inquiry include the way “affordable” housing is defined for people with extremely low incomes, the dearth of subsidized and/or genuinely affordable housing for individuals in poverty, the way rent is calculated in the voucher program, and the effects of that formula on both voucher tenants’ mobility and on market rents for other tenants in high poverty neighborhoods.
Finally, Rosser focuses on the aspect of low-income tenants that no one likes to talk about: exploitation. A central claim of Desmond's book is that poor renters are exploited and Rosser applauds Desmond for bringing that issue to the forefront as opposed to dancing around it as many are want to do. Rosser categorizes the types of exploitation that low-income tenants face into deliberate exploitation and market-driven exploitation. The former, while morally reprehensible, is in many respects less concerning than the latter. As Rosser writes, "The market, combined with a legal structure that largely supports the interests of landlords in collecting rent over the interests of tenants in adequate conditions, exploits the inability of the poor to make meaningful demands on landlords."
Just like Desmond's book is a powerful piece, so too are the essays in the Yale Law Journal Forum. If you have not had a chance to read the book or the essays and have any interest in housing, landlord/tenant issues, or just human dignity, they are well worth the read.
Monday, April 17, 2017
Fellowship Opportunity with the Princeton-Mellon Initiative in Architecture, Urbanism, and the Humanities
This just in from Sarah Schindler (Maine):
Princeton-Mellon Initiative in Architecture, Urbanism, and the Humanities
Call for Fellows, 2017-18
The Princeton-Mellon Initiative in Architecture, Urbanism, and the Humanities is pleased to announce a call for fellows for the 2017-18 academic year. Two fellows will be appointed; one fellow will focus on Architecture and Humanities and the other on Urban Adaptation to Climate Change.
For questions, please email email@example.com.
Architecture and Humanities Fellow
The Princeton-Mellon Initiative in Architecture, Urbanism and the Humanities and the Council of the Humanities at Princeton University seek to attract a fellow whose work is grounded in the humanities to collaborate with both programs. Applicants with outstanding intellectual, literary, and visual talents who demonstrate an abiding interest in multi-disciplinary work focused on the intersection of architecture, urbanism, and the humanities are strongly encouraged to apply. The fellow may be expected to team-teach a new interdisciplinary design studio for undergraduates that will be required for Urban Studies certificate students, or a seminar on urbanism and the environment, with a member of the design faculty in the School of Architecture at Princeton (contingent upon sufficient enrollments and approval from the Dean of the Faculty).
Please submit a cover letter (including your teaching interests), CV, 1,000 word description of a proposed research project, and a brief (chapter or article-length) writing sample, and contact information for three references by May 12, 2017 for full consideration.
For applicants taking a sabbatical year., please apply here.
For applicants seeking a postdoctoral position, please apply here.
Urban Adaption to Climate Change
The Princeton-Mellon Initiative in Architecture, Urbanism, and the Humanities, together with the Climate Futures Initiative at Princeton University, are seeking fellowship applications in urban adaptation to climate change for the 2017-18 academic year.
We seek to attract a Fellow engaged in bridging the environmental sciences, social sciences, planning and architecture and/or the humanities. Fields of specialization might include planning and architecture, cultural studies, geography, history, philosophy, politics, or public policy. We welcome research projects contemplating any given dimension of the relationships between built and natural environments. These could include scholarship on the impact of different urbanization models (e.g.: density vs. sprawl); ethical questions (who wins and who loses in various adaptation scenarios); models of deliberative governance; the arts in the 'anthropocene'; or design solutions to cope with the consequences of climate change. The individual will be required to team-teach an undergraduate course on urban adaptation to changing environmental conditions (contingent upon sufficient enrollments and approval from the Dean of the Faculty), and expected to participate regularly in the events and activities of both the Princeton-Mellon Initiative and the Climate Futures Initiative.
This position is funded through the support of the Princeton Environmental Institute's Urban Grand Challenge, which fosters productive exchanges between students and scholars working in a variety of fields to create an innovative program that combines the study of the natural and built urban environments with a goal of identifying solutions that are sensitive to environmental issues including global change, water resource management, energy efficiency, technology innovation, human and environmental health, as well as equity and fairness, poverty and jobs creation, race, ethnicity, and more intangible notions of belonging.
Please submit a cover letter, vita, 500-word description of a proposed course, brief (chapter or article-length) writing sample, 1,000 word description of a research project that he/she would undertake as a fellow, and contact information for three references by May 12, 2017.
For applicants taking a sabbatical year., please apply here.
For applicants seeking a postdoctoral position, please apply here.
Thursday, April 13, 2017
Dying Easter eggs with your kids always starts out as a wholesome, family fun event, yet somehow seems to always end with children in time out and parents scrubbing pastel-colored dye off of white surfaces because we never seem to learn that egg dying should not take place on white tables. Or maybe that’s just my family’s annual experience.
Or, during the start of spring, perhaps you are thinking about an entirely different type of eggs, namely human eggs. Frozen human eggs, to be specific. Property law's relation to frozen human eggs is the topic of Browne Lewis’ (Cleveland-Marshall) article “You Belong to Me”: Unscrambling the Legal Ramifications of Recognizing a Property Right in Frozen Human Eggs, 83 Tenn. L. Rev. 645 (2016). Lewis’ article was just reviewed by Tanya Marsh (Wake Forest) on JOTWELL. Both the article and the review are worthy reads during this egg-cellent spring season.
Lewis’ article notes the importance of determining whether and how property law applies to frozen human eggs. While Marsh (and most courts) are a bit taken aback at the idea of “owning” any part of the human body, be it eggs or cells, what Lewis provides is a framework for contemplating the property and bioethics issues involving frozen human eggs.
So here's to scholarship on eggs of all types!
Monday, April 10, 2017
This Article offers a new theory of secured debt that aims to answer fundamental questions that have long puzzled bankruptcy scholars. Are security interests property rights, contract rights, or something else? Why do secured debt holders enjoy a priority right that, in bankruptcy, requires them to be paid in full before other debt holders recover anything? Should we care that secured credit creates distributional unfairness when companies cannot pay their debts? Because scholars have yet to provide a satisfactory account of security interests, these questions remain unanswered.
The Article argues that security interests are best understood as a form of “limited liability property.” Limited liability — the privilege of being legally shielded from liability that would normally apply — has long been considered the quintessential feature of equity interests. But limited liability is in fact a critical feature of security interests as well. When examined closely, security interests enable their holders to assert several privileges of ownership without bearing any of ownership’s concomitant burdens.
In seeking to explain security interests, the Article offers a comprehensive account of capital investment more generally, systematically examining the various interests held in corporate capital structures. Though critics have bemoaned the inequity associated with the priority right in bankruptcy — a secured debtholder can get all its assets back in the event of a bankruptcy while unsecured creditors like unpaid employees get nothing — this priority right is an inevitable consequence of recognizing security interests as a form of direct ownership. The real problem lies in the scope of secured debt holders’ limited liability protections. While equity holders enjoy limited liability, in return they are paid only after other claims in the event of insolvency. Secured lenders make no such tradeoff, and are thus arguably over-protected. Understanding security interests as limited liability property, then, offers a more elegant way to understand capital investment at the theoretical level while also helping us recognize when and where our system of secured debt needs reform.
There is a clear tension in the law between exercises of state police power in land-use regulation, including zoning laws, on the one hand, and takings under the Fifth Amendment on the other. Courts have struggled to find a dividing line between the two, but for their efforts we are left only with is a disjointed array of legal tests, each one as flawed as the next. Legal theorists, for their part, must shoulder some of the blame—no single theory can identify the point at which community need outweighs private property rights. Even well-developed theories thus fail to translate into practical application. But this Article is resolved to bridge that gap.
This Article presents a novel theory that provides a unified normative framework for evaluating government interference with private property. It seeks to identify the tipping point at which private property rights must give way to the needs of the community at large. This approach, which I refer to as Property’s Tipping Point, is a burden-shifting framework that accommodates competing theories of property. It builds on landmark Supreme Court cases to provide a unified standard for courts to apply in resolving cases of regulatory takings and exactions.
The approach presented in this Article has both a substantive and a procedural component. It develops two tests that work dynamically to identify the point where community need trumps owner autonomy: the indispensability of needs and the generality of action. The former requires that any government interference with private property is designed to promote community prosperity. The latter test—the generality of action—confines the government to the boundaries of the rule of law. It is only by passing these two tests that a government authority may reach Property’s Tipping Point.
Thursday, March 30, 2017
Paula A. Franzese (Seton Hall), Abott Gorin (Essex-Newark Legal Services), and David J. Guzik (Seton Hall-law student) have posted The Implied Warranty of Habitability Lives: Making Real the Promise of Landlord Tenant Reform (Rutgers Law Review) on SSRN. Here's the abstract:
The implied warranty of habitability is an implicit promise that every residential landlord makes to provide tenant with premises suitable for basic human dwelling. Tenants can assert breach of the warranty affirmatively, in a suit against landlord for providing substandard housing, but most often assert the breach defensively in the context of landlord’s eviction proceeding against tenant for non-payment of rent. Still, national data suggests that notwithstanding its placement in the firmament of modern landlord-tenant law, few tenants actually assert breach of the implied warranty of habitability, whether affirmatively or defensively. Even in housing markets fraught with substandard rental dwellings, the warranty is underutilized. This Article endeavors to examine that lapse in the context of nonpayment of rent proceedings initiated by landlords in Essex County, New Jersey. Significantly, of the more than 40,000 eviction proceedings brought there in 2014, only 80 tenants asserted breach of the implied warranty of habitability as a defense.
The authors used that field to learn more about the efficacy of the defense and, when raised successfully, its capacity to prompt the remediation of on-site defects. They found that notwithstanding its relative paucity of use, when invoked the implied warranty of habitability can and does work to bring needed repair and improvement to otherwise substandard dwellings. Indeed, in more than half of the cases surveyed the implied warranty of habitability was used successfully to cure housing code violations on leased premises. Moreover, irrespective of whether the defense succeeded or failed the majority of tenants who did assert it stated unequivocally that they would resort to it again if faced with significant on-site infirmities. The warranty deserves an important place in the stock of affirmative actions and defenses available to aggrieved tenants. The considerable challenge is to remove obstacles to its assertion, whether in the form of onerous rent deposit requirements, the absence of centralized databases for courts and rent subsidizing agencies to use when making decisions regarding rent subsidies for substandard premises, the subversive practice of “tenant blacklisting,” the scarcity of effective assistance of counsel or tenants’ lack of awareness of their basic rights.
What makes the work of these scholars particularly interesting is that it has resulted in actual legislation! As a result of this research, in 2017 the New Jersey legislature introduced Act 4610 (which codifies and enhances the use of breach of the implied warranty of habitability as a defense to certain eviction actions) and Act 4612 (which establishes the confidentiality of landlord-tenant court records and addresses adverse actions on rental applications). The authors and their research have been featured on All Things Considered on NPR/BBC/WNYC Radio and in The Star Ledger. Nice work!
Wednesday, March 15, 2017
In 2014, the Association of Law, Property, and Society (ALPS) conference was at the Peter A. Allard School of Law at the University of British Columbia and there was a plenary panel on teaching property law. [NOTE: Shameless plug for the 2017 ALPS Conference at the University of Michigan goes right here! You can still register!] Joe Singer (Harvard) was one of the participants on the plenary panel, and I distinctly recall Joe saying that every property class should include something on Indian law. Joe's property textbook (like many property textbooks) is true to his comment with a section on the forced seizures of property from American Indian nations.
Someone who understands better than anyone else the connection between Indian law and property law is Jessica Shoemaker (Nebraska). Jess and I have been friends for a number of years and she has taught me a good bit about American Indian law and the checkerboard, "emulsified," fractioned property rights held by American Indian tribes. Jess' latest article, Complexity's Shadow: American Indian Property, Sovereignty, and the Future, 115 Mich. L. Rev. 487 (2017) continues the scholarly tradition Jess has become known for.
[The article] does a great job detailing and explaining the web of rules and overlapping governance structures that contribute to the underdevelopment of Indian land. Although Complexity’s Shadow draws upon property theory and the work of scholars interested in legal complexity, the real strength of the piece is just how grounded it is in reservation land restrictions....
Complexity’s Shadow should become, along with Judith Royster’s earlier article, The Legacy of Allotment, one of the go-to sources for scholars interested in the problems of fractionated reservation land. But besides being an article destined to be cited in many footnotes, Complexity’s Shadow should also interest property scholars who ordinarily consider Indian property rights only in passing.…
Shoemaker’s observations of Indian poverty and land tenure complexity is much more nuanced than the kneejerk—make them like us—position of many non-Indians. At the very end of the article, Shoemaker switches from focusing on detailing the nature of top-down land use controls to calling for gradual change based on local experimentation.…
Though Shoemaker largely leaves to future scholars and local communities the work of showing what approaches can succeed in freeing reservation land from its current unworkable complexity, Complexity’s Shadow provides a great foundation for such work, which is crucial if Indian nations are to thrive.
Thanks, Jess, for your contributions!
Tuesday, March 14, 2017
As everyone knows, Murr v. St. Croix County will be heard by SCOTUS on March 20 at 10:00am. Georgetown Law is offering a special treat that afternoon: the oral advocates for the case--John Groen (counsel for Murrs), Richard Lazarus (Harvard, counsel for St. Croix County), and Misha Tseytlin (counsel for the state of Wisconsin)--will all be at Georgetown Law participating in a forum regarding the case. Peter Byrne (Georgetown) will be moderating the panel, which starts at 3:30pm in the Hart Auditorium. Anyone interested in attending may RSVP at https://goo.gl/forms/PWPx8rliE9mkRsFj2.
Monday, March 13, 2017
The 14th Australasian Property Law Teachers Conference will be held from 26-29 September 2017 at the Curtin Law School in Perth, Western Australia. The theme for this year's conference is "Beyond Sole Ownership."
In addition to the main conference there will also be a multi-disciplinary workshop on “sharing property" that will be held on 29th September.
(HT: Robin Paul Malloy @Syracuse)
Thursday, March 9, 2017
Incomplete takings are vital and extremely common. Yet, they present unique challenges that cannot be resolved by standard rules of eminent domain. In particular, incomplete, or partial, takings may result in the creation of suboptimal parcels, and even unusable and unmarketable ones. Additionally, partial takings create nettlesome assessment problems that do not arise when parcels are taken as a whole. Finally, incomplete takings engender opportunities for inefficient strategic behavior on the part of the government after the partial taking has been carried out. Current partial takings jurisprudence fails to resolve these problems, and, in some instances even exacerbates them.
In this Article, we offer an innovative mechanism that remediates the shortcomings of extant partial takings doctrines. Specifically, we propose that whenever the government engages in a partial taking, the affected property owner should be given the power to force the government to purchase the remainder (or, untaken part) of the lot at fair market value. Exercise of this power by the private owner would lead to the reunification of the land in its pre-taking form, while transferring title to the entire parcel to a new single owner, namely the government.
Implementation of our proposal would yield several important benefits: First, it would allow for the preservation of the current configuration of parcels, enabling them to remain highly usable and marketable. Second, it would lower the cost of determining compensation for private property owners and thereby of the adjudication process as a whole, in those cases in which private owners choose to exercise their entitlement to sell the remainder to the government. Third, it would significantly reduce the ability of the government to behave strategically and externalize costs on private property owners. Fourth, it would create opportunities for more efficient planning and land use by the government as the government would be free to re-parcel, develop and re-sell the parcels sold to it.
Wednesday, March 1, 2017
Just when you think you've seen everything property transactions have to offer . . . a company in Nevada called Wags Lending is offering credit products to help you rent-to-own your pet! Unforuntately, it appears that a number of the people engaging in these transactions are doing so completely in the dark - often believing they are purchasing Fluffy outright while they are in fact entering into a complicated lease-to-own contract. Check out this article in Bloomberg that explores the issue:
The Sabins had bought their new dog, Tucker, with financing offered at the pet store through a company called Wags Lending, which assigned the contract to an Oceanside, California-based firm that collects on consumer debt. But when Dawn tracked down a customer service rep at that firm, Monterey Financial Services Inc., she learned she didn’t own the dog after all.
“I asked them: ‘How in the heck can I owe $5,800 when I bought the dog for $2,400?’ They told me, ‘You’re not financing the dog, you’re leasing.’ ‘You mean to tell me I’m renting a dog?’ And they were like, ‘Yeah.’ ”
Without quite realizing it, the Sabins had agreed to make 34 monthly lease payments of $165.06, after which they had the right to buy the dog for about two months’ rent. Miss a payment, and the lender could take back the dog. If Tucker ran away or chased the proverbial fire truck all the way to doggy heaven, the Sabins would be on the hook for an early repayment charge. If they saw the lease through to the end, they would have paid the equivalent of more than 70 percent in annualized interest—nearly twice what most credit card lenders charge.
* * *
“There is just no way I should pay over $5000 for a $2000 puppy,” wrote one customer in an April 2014 complaint collected by the Federal Trade Commission after financing a Yorkshire terrier from a Kennesaw, Georgia, pet store with a lease from Wags Lending. (That complaint and the others that follow were directed at Monterey Financial by customers who had financed high-end pets through Wags Lending.) “The rep … told me the payments I had been making are rental [fees],” wrote another surprised lessee. “For a dog?? They are renting animals?? No way! Yes it's true!”
One cat lover described buying a Bengal kitten from a breeder in Jacksonville, Florida, at a sticker price of $1,700—then learning they were on the hook for 32 monthly payments of $129, or about $4,100. “They explained to me that not only was this not a loan but a lease in which I would either have to continue making these payments or return the animal,” the customer wrote in a November 2015 complaint. “Also this cat is ruining my credit score.”
The complaints raise a valid question: Why would anyone walk into a pet store to buy an animal and decide, instead, to lease?
Check out the full story here. There's been a lot written about the abuses surrounding installment land contracts (check out these articles in the NYT here and here). Also, the Uniform Law Commission is currently working on an installment land contract project and the CFPB has taken an interest in these types of predatory transactions as well. These pet financing contracts, although involving personal/movable property, raise similar consumer protection concerns. In any event, many of the contracts described in the article above lack many of the basic characteristics of a lease, as pointed out by Margot Saunders with the National Consumer Law Center. I think one of the most egregious parts of the article comes in the way of a quote from the CEO of the parent company of Wags Lending: "Wunderlich . . . hastens to argue that while he profits off high-cost lending, he’s also improving the lives of subprime borrowers." Another gem: 'We like niches where we’re dealing with emotional borrowers,' Wunderlich said."
There are all kinds of legal issues here to deal with. If this is a lease then what sort of legal duties does the lessor owe to the lessee? This looks more like just a loan disguised as a lease with some form of security attached - but with a huge interest rate included and some hidden fees and charges. What warranties does the lessor owe to the lessee as to the condition of the pet? If it's just a lease then obviously the lessor continues to own the pet throughout the duration of the term. Then, of course, there are a ton of issues with disclosure (as evidenced by some of the people interviewed in the story). The focus on subprime borrowers is particularly troubling . . .
Yet another reason to make sure you read the fine print before you sign on the dotted line . . .
Monday, February 27, 2017
It’s that time of year: time to beg, steal, or borrow for a few more boxes of Girl Scout cookies! This is a particularly special year of the Girl Scout Cookie as it's the 100th birthday of young girls selling cookies to raise money for their troops. Happy Birthday, Girl Scout Scout Cookies!
As you may recall, I am the troop leader for my daughter’s Brownie Troop. I am also the Cookie Mom for the troop, mainly because no one else was dumb enough wanted to do the job. For anyone out there with young daughters, who is thinking, “I love Girl Scout cookies, maybe I should be the cookie parent one day!” call me before you make that commitment. I won’t talk you out of doing it, but I will share some secrets I have found that make the experience easier. Here’s one of them.
Since February 18 when the cookies arrived at an airport hanger outside of New Orleans and I led a caravan of SUVs to pick them up, I have had stacks around my house like this:
And a few more over here:
And another one over here:
The cookies are taking over my house.
The reason we have so many Girl Scout cookies is because the cookies are great! Everyone loves these things. I walk into Tulane with a few boxes to deliver to my daughter’s customers (aka my colleagues) and I am mobbed by law students who want to know where they can buy cookies. I went to my daughter’s school last week and some middle school kids attacked me. People go nuts for these cookies.
That people love the cookies is great because that makes them easy to sell. And let’s be honest, that’s really what the cookies are about—making lots and lots of cold, hard cash. Sure, you think about the little girl in her Brownie vest, walking around with a wagon of cookies, and that’s an adorable image, but really, cookies are about one thing and one thing only: M-O-N-E-Y. The Girl Scouts aren’t terribly shy about this. The Girl Scout organization talks about how cookies teach girls “entrepreneurial skills” (aka how to make money). Some girls are super sellers, sometimes by a little creativity. There are cash rewards for troops based on how much you sell; the more boxes you sell, the more you get per box. You can now buy cookies by the case online. For $20, your troop can get a credit card swiper and make cookie selling a business of the twentieth century. With a little ingenuity and more computer skills than I have, your troop can create cookie-selling apps and move the troop into the twenty-first century. This is a full on commercial enterprise that rakes in a lot of moola.
Don’t believe me? Let me put this in real terms: Our troop has 27 third grade girls, i.e. eight and nine year old kids. Our troop sold more than $10,000 worth of cookies. Cookies are a serious business, emphasis on the word business.
Why am I writing about Girl Scout cookies on #PropertyLawProfBlog? Some of the cookie business is based on, you guessed it, property law! IP law to be specific. If you are out looking for your favorite Girl Scout cookie, you may notice that the names are slightly different than what you remember from childhood. Ask a Daisy in certain regions of the country for a box of Savannah Smiles and she won’t know what you are talking about. Why? One word: Trademark.
How trademark law gets wrapped up in Girl Scout cookies requires a little background on how Girl Scout cookies get made. Since 1936, Girl Scouts USA has been licensing bakers to make Girl Scout cookies in order to retain quality. (Prior to 1936, the girls made the cookies themselves. Here’s the original recipe.) The number of licensed bakers has fluctuated throughout the years, reaching as high as 29 licensed bakers in 1948 to as low as 2 licensed bakers, which is what we have today.
The two currently licensed bakers—ABC Bakers and Little Brownie Bakers—have divided up the country by region. Each region buys their cookies from only one baker. For example, being in New Orleans, we are part of the Louisiana East region and Louisiana East uses ABC Bakers exclusively, a change the region made just two years ago. That means our troop gets cookies only made by ABC Bakers. And that’s where trademark law pops up.
As bakers began cornering certain markets with their cookies, they also began trademarking the cookie names. Take Samoas (my personal favorite). Samoas are the coconut-caramel-chocolate cookie with the hole in the center. Samoas were introduced to consumers in 1974 by Little Brownie Bakers. In 1986, Little Brownie Bakers decided to register the cookie name with the United States Patent and Trademark Office. That was a wise move for Little Brownie Bakers because ABC Bakers rolled out its version of the same cookie in 1982 (though ABC Bakers didn’t register the trademark for it’s version of the cookie, the Caramel deLite until 2000).
Or take the Tagalong. The yummy peanut buttery goodness that is coated in chocolate. That was introduced to America in 1976 by Little Brownie Bakers, but not registered as a trademark until 1993. The ABC Bakers equivalent—Peanut Butter Patties—came out earlier but was registered later. Peanut Butter Patties were first sold in 1972 and the trademark was registered in 2000.
That Peanut Butter Patties and Caramel deLites were both registered in 2000 makes sense; ABC Bakers obviously got a lawyer who said the trademarks should be registered and ABC Bakers went on a registration spree. Why Little Brownie Bakers decided to register Samoas in 1986 but hold off on registering Tagalongs until 1993 is quite befuddling.
What’s most surprising about this story to me is why didn’t Girl Scouts USA claim ownership of these names at the outset and then have licensing agreements with the different bakers so that all of the bakers could use the same names (and the same recipes) and cut down on confusion? Girl Scouts USA has trademarked some of the cookies names, so it’s not like the thought hasn’t crossed their mind. Take Thin Mints, the best selling cookie nationwide. (And in our troop; 33% of our cookie sales were Thin Mints.) The trademark for Thin Mints was registered on August 9, 2011 to Girl Scouts USA. Both bakers have cookies named Thin Mints, and presumably both bakers are allowed to use the name because they have a licensing agreement with Girl Scouts USA. Trefoils became a registered trademark at the same time as Thin Mints, though interestingly only Little Brownie Bakers uses the name Trefoils. ABC Bakers calls the cookie Shortbread, which is certainly descriptive, though not particularly creative.
So there you have it. Property law really is everywhere, even in those boxes of Girl Scout cookies you now want to go buy. And if you can’t find any cookies from a Brownie near you, just let me know; we’ve got a few extra boxes laying around here.