Thursday, July 6, 2017
If you're looking for some interesting summer reading, I highly recommend that you check out a new book by Joshua A.T. Fairfield (Washington & Lee) titled Owned: Property, Privacy, and the New Digital Serfdom (coming out at the end of this month by Cambridge University Press). I've had the pleasure of reading portions of this project over the past few years, and I've constantly been impressed by Joshua's way of exploring the role that technology is playing in our conceptions of property while at the same time really engaging with the theories of property. The topics discussed in this book are incredibly timely (particular in the age of ransomware and international hacking) as much of our identity and the business of our daily lives takes place online. Here's some excerpts from the book's summary:
In this compelling examination of the intersection of smart technology and the law, Joshua A. T. Fairfield explains the crisis of digital ownership - how and why we no longer control our smartphones or software-enable devices, which are effectively owned by software and content companies. In two years we will not own our 'smart' televisions which will also be used by advertisers to listen in to our living rooms. In the coming decade, if we do not take back our ownership rights, the same will be said of our self-driving cars and software-enabled homes. We risk becoming digital peasants, owned by software and advertising companies, not to mention overreaching governments. . . Owned explains how the increasing implementation of smart technology in our world today has changed the nature of property. Fairfield explains property theory and the legal regime of online ownership as it ties to the 'Internet of Things' - the interconnected system of digital technology as controlled by corporations who own the software needed to run these devices. . . .Owned should be read by anyone wanting to know more about the loss of our property rights, the implications for our privacy rights and how we can regain control of both.
If you want to read more of Joshua's work, click here. Happy reading!
Friday, June 23, 2017
Zach Arnold (DC lawyer) has posted Preventing Industrial Disasters in a Time of Climate Change: A Call for Financial Assurance Mandates (Harvard Environmental Law Review) on SSRN. Here's the abstract:
In the current era of accelerating climate change, rising sea levels, and increasingly extreme weather, coastal industrial disasters pose a large and growing risk to society. The private sector and public officials are both failing to adequately respond to this risk, and the familiar regulatory tools in this context, such as design mandates and adaptation subsidies, have significant drawbacks. This paper proposes a novel policy framework to prevent coastal industrial disasters. I argue that financial assurance requirements (FAMs), such as insurance mandates, can induce coastal industry to adapt to the coastal impacts of climate change and can ensure that the public will be fully compensated for any disasters that nonetheless occur. FAMs can mobilize the considerable expertise of third-party financial assurance providers and provide efficient incentives for private adaptation. Moreover, they are relatively simple to implement, making them especially suitable for state, regional, and municipal policymakers facing locally concentrated climate impacts, tight resources, and federal gridlock. FAMs are a promising remedy for a significant and increasingly urgent danger.
Wednesday, June 14, 2017
Singer and Mulvaney on Homelessness, Eviction, and Democratic Values (A Tribute to Andre van der Walt)
Friends of the blog will no doubt remember the untimely passing of Andre van der Walt, the South African Research Chair in Property Law and a Distinguished Professor of Law at Stellenbosch University in South Africa. Andre was a champion of progressive theories of property, and he made major contributions to South African constitutional property rights law and educated many generations of lawyers and property scholars. In his honor, Joe Singer (Harvard) and Tim Mulvaney (Texas A&M) recently posted an article titled Move Along to Where? Property in Service of Democracy on SSRN. The piece is a tribute to Andre, and the abstract is as follows:
When the police in cities that prohibit sleeping in public spaces command that people on the streets “move along,” advocacy groups for the homeless have started a campaign that pointedly asks “move along to where?” This question seeks to highlight the reality that homeless persons are being subjected to an order with which they have no capacity to comply. In this instance, the state is defining and rigidly enforcing property rights without concern for the consequences of its doing so; it apparently is only after this exercise in definition and enforcement that the state can move to respect fundamental democratic values—such as dignity and equality—in the space that remains.
Inspired by the work of André van der Walt, we here present the alternate thesis that property exists in service of the values that characterize our democracy. We advance this thesis through the lens of two stories of eviction—the leading cause of homelessness in the U.S.—in which our democratic values seemingly and, in our view, unacceptably are taking a backseat to property.
This is an excellent and very timely article (which I've had the pleasure of listening to the authors present recently). A truly fitting tribute to Andre. To view Andre's many excellent books, articles, chapters, and other contributions, click here. Excellent work to both Joe and Tim.
Wednesday, June 7, 2017
As promised, we have more call for papers on property-related workshops coming up!
The AALS Property Section and AALS Commercial and Related Consumer Law Section are co-sponsoring a workshop at Penn State Law (University Park) on October 6-7, 2017 titled "Property Implications of the Sharing Economy." The workshop is being co-organized by Dean Hari Osofsky, Penn State Law and School of International Affairs; Rashmi Dyal-Chand, Northeastern University School of Law; and Shelly Kreiczer-Levy, College of Law and Business, Ramat Gan, Israel.
The last several years have seen a major growth in peer-to-peer online exchanges and other collaborative consumption enterprises. Companies such as Airbnb and Uber have disrupted long-established regulated industries. A wide range of smaller companies connect strangers to “share” underutilized resources. In addition, crowdfunding through Kickstarter and other companies has provided a mechanism for individuals to launch ventures that are difficult to fund through traditional methods. These types of companies are only likely to become more important. PricewaterhouseCoopers, for instance, estimates that sharing economy global platform revenues could grow from $15 billion in 2013 to $335 billion by 2025.
The rapid growth of the sharing economy has significant property implications. It changes how people use their own property and interact with the property of others. Property law—among many other types of applicable law, including tax, insurance, zoning, licensing, consumer protection, data privacy, and labor law—both facilitates and constrains these exchanges.
Submissions of abstracts are welcome in any area that connects to the workshop themes. The organizers would also would be delighted to have individuals serve as commentators or moderators of sessions. Please let the organizers know of your interest in participating by July 1, 2017 by emailing Shelly Kreiczer-Levy. Please include an abstract if you would like to present. Presenters, commentators, and moderators will be accepted on a rolling basis and the organizers anticipate finalizing participants by July 15, 2017.
Penn State Law, based in University Park, PA, will host the event and provide meals throughout the workshop. Participants will be responsible for other expenses, including their own travel and lodging, though a hotel block has been arranged for participants at a discounted rate.
Tuesday, June 6, 2017
There are lots of call for papers in the works for AALS sections for presentations at the upcoming AALS Annual Meeting in San Diego from January 3-6, 2018. Two such CFPs are below and I know there are more forthcoming in the next few days. If you have a call for papers for a property conference or workshop, let us here at #PropertyLawProfBlog know and we will help you spread the word!
AALS Section on Property Law Presents "Structural Facilitation of Property Markets"
January 4, 2018 from 10:30am to 12:15pm
A variety of legal doctrines, systems, and institutions have emerged over time to facilitate the effective operation of markets in property by adding value to property assets, adding certainty to and streamlining the process of property transactions, adding accessibility to property, or otherwise proving greater security for property rights. At other times, informal norms may emerge to accomplish similar aims. These structural facilitators are, indeed, sometimes features of the property system itself (component parts of its governance) and at other times operate outside but ancillary to the system. Some of these arise spontaneously by market demands while other elements of the property law infrastructure may or may not be possible only by means of government intervention in the markets. Some facilitators are deliberately designed to benefit the property system, while others simply have that effect. Some are arguably designed to enlarge “freedom” while others could be described as restricting “freedom” in order to save it, i.e. intentionally placing limits on autonomy to enhance the value of the property rights that remain. Examples of such facilitators that may be discussed by the panelists include: information systems like recording regimes or registries; traceability mechanisms like blockchain technology; content limits like the numerus clausus principle; fairness, equality, and anti-discrimination principles geared toward enlarging property ownership markets; prohibitions on certain restraints on alienation; or at other time restraints on alienation like with fraudulent conveyancing doctrines. Land use and public law systems themselves create a legal infrastructure designed to facilitate property ownership or to manage property conflicts. Other examples of facilitating industries or polices could include: big data; financial markets; banks and real estate financing; brokers; title and other insurance; and tax preferences, among others. This panel will examine the necessity of these facilitators and the property system’s dependence on them, along with the ways they should or should not be regulated to guide or control their effect on property markets. The panel will also consider how these facilitators influence or are influenced by various theories of property systems, property rights, and the operation of property markets. Approaches considering interdisciplinary perspectives are encouraged.
Submissions are invited for presentation at the program. There is no formal requirement as to the form or length of papers. Although abstracts will be accepted, preference will be given to papers that are substantially complete and that offer novel scholarly insights. Submissions must be received no later than September 1, 2017. Individuals interested in presenting are encouraged to send letters of interest and an abstract as soon as possible (with expectation of a paper to follow), even if you will not submit a final paper for consideration until closer to the deadline. Please email your submission, in Word or PDF format, to the Property Section chair, Donald Kochan with “Submission: AALS Property CFP” in the subject line. All submissions will be reviewed and selected by the Property Section’s Executive Committee. The individuals selected to present papers will be notified no later than Thursday, September 28, 2017.
AALS Section on Property Law Presents "New Voices in Property Law: Junior Scholars Works-in-Progress Panel"
January 6, 2018 from 3:30pm to 5:15pm
The purpose of this works-in-progress program is to bring together junior (pre-tenure) and senior property law scholars to give the junior scholars an opportunity to present and get useful feedback on papers that will not yet have been submitted for publication as of January 2017. In addition to having the opportunity to share work through the panel, at least one senior scholar will be designated as a reviewer who will have read the paper ahead of time and will be prepared to discuss the paper and offer constructive comments at the session and/or in writing.
An eligible junior scholar is anyone who is an untenured, full-time faculty member of an AALS member law school. To be considered for participation in the program, please send an email to Donald Kochan, no later than September 8, 2017. In your email, please use the subject line “AALS Property Junior WIP Submission” and attach at least an abstract or draft-in-progress (including a working title of the paper). Also, please include in your email (a) your school, (b) your tenure status, (c) your years in the position and any prior legal academic positions, and (d) whether you have participated in the New Voices program last year (or Property Law Breakfast Mentoring program in previous years); preference will be given to those who have not previously participated. The Section’s Executive Committee will consider and select papers from the pool of submissions.
If selected for participation in the program, by accepting a presenter agrees to submit a draft to Donald Kochan no later than December 1, 2017, so that the draft can be sent to the designated reviewers to read before the conference. The draft submitted at that time should be substantial, but it does not need to be fully polished or ready for law review submission. Reviewers welcome early stage papers when the author can most benefit from discussing the paper.
For senior scholars, if you are interested in serving as a commentator on a paper submitted by a junior scholar, please email Donald Kochan as soon as possible.
Nadia Ahmad (Barry University) has two new pieces that both touch on environmental justice and land use, albeit in slightly different ways. In her article Trust or Bust: Complications with Tribal Trust Obligations and Environmental Sovereignty, 41 Vermont L. Rev. 799 (2017), Ahmad looks at environmental justice and land use from a Native American perspective. Ahmad examines infrastructure projects on tribal lands and argues that current federal right-of-way law chisels away at tribal land rights. In The Baseline Bar, 65 Kansas L. Rev. 579 (2017), Ahmad explores the National Environmental Policy Act's "no action" alternative provision used to assess whether a project moves forward. Ahmad asserts that the "no action" alternative is used more as a tool of assessment to move a project forward than as a tool of prohibition to halt a project and its deleterious environmental impacts. To strengthen the “no action” alternative, this article recommends a more detailed analysis to conserve delicate environmental spaces and alleviate the phenomenon of environmental racism. While both these articles explore land use through different lenses, both articles address the issue of infrastructure projects and property rights issues related to natural resources, indigenous land rights, extraction activities on federal lands, and environmental justice concerns for land use.
Wednesday, May 31, 2017
The Central States Law Schools Association 2017 Scholarship Conference will be held on Friday, October 6 and Saturday, October 7 at the Southern Illinois University School of Law in Carbondale, Illinois.
CSLSA is an organization of law schools dedicated to providing a forum for conversation and collaboration among law school academics. The annual conference is an opportunity for legal scholars to present working papers or finished articles on any law-related topic in a relaxed and supportive setting. Scholars from member and nonmember schools are invited to attend.
Registration will formally open in July. Hotel rooms are already available, and more information about the CSLSA conference can be found on our website at www.cslsa.us.
Wednesday, May 24, 2017
Property Law and Consumer Protection: Some Thoughts on Today's Oral Arguments in PHH Corporation v. CFPB
In October 2016, a panel of the U.S. Court of Appeals for the D.C. Circuit in PHH Corp. v. CFPB, 839 F.3d 1 (D.C. Cir. 2016) struck down a key provision of the Dodd-Frank Act that provided that the director of the CFPB would be appointed by the President and confirmed by the Senate for a set term of five years, and could only be removed by the President for cause. Traditionally, federal agencies are either headed by an executive branch official who serves at the pleasure of the President or by a group of independent commissioners serving for terms (e.g., the Securities and Exchange Commission) and sometimes with additional political or geographic limitations on eligibility. By giving the director of the CFPB—a single individual appointed for a set term and without even budgetary oversight by Congress—such broad authority, the court held that Congress created an unconstitutional agency position. The three-judge panel of the D.C. Circuit resolved the constitutional issue by striking out the appointment clause in Dodd-Frank, thereby allowing the President to remove the director at will (as he would a cabinet secretary or similar position). On February 16, 2017, the D.C. Circuit decided to grant a rehearing of the case en banc and today (May 24, 2017 at 9:00 AM ET) the judges of the D.C. Circuit heard oral arguments.
So why should property law profs care about this? Well, the CFPB has had tremendous importance in the realm of mortgage finance—everything from imposing underwriting guidelines for home loans, to bringing enforcement actions against banks and mortgage lenders for predatory and abusive practices, to going after financial institutional related to discriminatory mortgage activities. At the core of the 2008 financial crisis was property (housing to be specific), and the CFPB was created to address the dangerous activities of lenders and various other agents with regard to how people acquired property or used property to acquire credit. This case, in short, has a lot to do with property.
There has been much speculation that President Trump desires to remove the current director of the CFPB, Richard Cordray (an Obama appointee whose term does not end until 2018). This theory is buttressed by the many comments and critiques of the CFPB lodged by various officials within the Trump transition team, including the Secretary of the Treasury, Steven Mnuchin. Obviously, based on the comments of the president and its surrogates, there is reason to believe a Trump-appointed CFPB director would roll-back many of the Cordray-lead mortgage rules and potentially allow for the same kind of easy flow of mortgage credit that characterized the pre-2008 housing market.
The oral arguments in today’s case became available today at 2:00 PM ET here on the D.C. Circuit’s website. I wanted to spend some time here and share my impressions. To start, Theodore Olson (arguing for the unconstitutionality of the CFPB’s single director structure) had a hard time convincing Judge Griffith and some others that the CFPB’s current structure materially diminishes the power of the President of the U.S. any more than did the Federal Trade Commission in Humprey’s Executor. Olson tried to convince the court that having a single director was not the only constitutional flaw in the CFPB’s system (something that has been focused on by most commentators), but rather the “accumulation of power” in the agency head under the provisions of the Dodd-Frank Act (which would be true whether with a single director or with a multi-person commission) was also a material defect. Judge Millett stated that the constraint of picking commissioners from different political parties isn’t present here (like with the FTC or the FCC), so the president has even less restrictions on his ability to select the agency head when it comes to the CFPB. In other words, the president has more appointment leeway in selecting the CFPB director than in many other multi-member commissions (FCC, FTC, Federal Reserve) where statute requires the president to appoint someone from a particular political party or from a geographic area.
Citing to Morrison v. Olsen, 487 U.S. 654 (1988), Judge Tatel said that the authority of the independent counsel was actually much more powerful than that of the CFPB, and in that case SCOTUS said it was a constitutional structure. The judge also said that without being able to overturn Morrison and Humphrey’s Executor, there was little way for the DC circuit court to strike down the constitutional structure of the CFPB. I think that Olson indicated, in some way, that he knew the circuit court might not be able to get to the result he wanted, but that he might prevail before the Supreme Court since they could overturn the other two cases.
One of the judges summarized the case as trying to set forth the contours of Humprey’s Executor. He noted that SCOTUS in Arizona Free Enterprise Club's Freedom Club PAC v. Bennett, 564 U.S. 721 (2011) said that when faced with such a task, a court should look to history, the effect of those being regulated, and the effect on presidential power. Olson pointed out how the staggered terms of other multi-member commissions prevented the diminishment of presidential power—something that is not present with the CFPB. One of the judges pushed back and said that whereas the president can remove the CFPB director for cause or he can appoint a new person when the term is over, he will never have the chance to reappoint the entirety of any commission, and likely won’t even get a chance to reappoint a majority. Under that notion, he questioned whether this creates “a wash.” Olson placed an emphasis on the ability of the president to appoint the chairperson of most commission as being a way to reinforce the president’s executive power, even if he can’t change the ultimate majority make-up.
Another judge on the panel also argued that the president’s power is to faithfully execute the laws, which suggests that since the president can remove an officer for cause the structure is consistent with that constitutional notion. She stated that removing someone for a policy disagreement is not what “faithfully execute the laws” means. Olson disagreed, stating that our system sets up an elected unitary president, and that a policy disagreement is intimately tied to the president’s constitutional power.
A number of the judges, prominently Judge Tatel, said that Olson needs to bring his argument to SCOTUS, because the circuit court cannot turn away from Morrison or Humphrey’s Executor.
When the CFPB’s lawyer went to the podium, some of the judges did question how far Congress could go in limiting the appointment power of the president over those that exercise executive power—asking specifically whether Congress could place a “for cause” removal restriction on cabinet secretaries. The CFPB lawyer was a bit shaky here – saying that maybe some cabinet secretaries may exercise more inherent constitutional powers of the president (state and defense) than others (like labor) that only carry out powers granted by statute.
Some of the judges did raise some interesting hypos. For instance, one asked whether Congress could require that the President only appoint individuals to a multi-member commission who are from a political party that is different than the president’s. In other words, would that impermissibly limit the president’s power in a way that making him split appointments between political parties does not? They also asked counsel for the CFPB whether Congress giving the CFPB director a 30-year term would cause constitutional problems. The CFPB attorney said he didn’t want to speculate.
My take is that, in the end, despite the various hypos (some outlandish and some quite vexing), the general tenor of the en banc hearing was that the judges appeared to feel bound by Morrison and Humphrey’s Executor to uphold the CFPB’s single director structure as being constitutional. We’ll have to see if my reading of the tea leaves turns out to be true. On the whole, the lawyering was really excellent. Definitely worth a listen!
Friday, May 19, 2017
Wednesday, May 17, 2017
Property law produces great characters. Today I have been introduced to yet another great character of property law: Mrs. Abigail Sparklepants.
Mrs. Abigail Sparklepants, Abby for short (though I prefer to call her Mrs. Sparklepants because if you have that name, why not use it?), is a Mississippi Boston Terrier Rescue dog. Lest you think I am joking, just look up Moore v. Knower, 2016-CA-0776 (La. App. 4th Cir. 2017).
Mrs. Sparklepants was the pet of two individuals who at one time were in a romantic relationship. As frequently happens, the romance flamed out, but Mrs. Sparklepants remained. Both parties to the relationship had apparently grown fond of Mrs. Sparklepants, and thus they decided that a joint custody arrangement was in order. Over the course of multiple years, the former lovers exchanged Mrs. Sparklepants at a neutral location once a week. Eventually the couple resumed their romance, only to eventually break up again. And with the second break up came a second joint custody arrangement, again with the couple trading the dog back and forth once a week at a neutral location.
This was the life of the former lovers and Mrs. Sparklepants until one day, the defendant decided enough was enough; she was keeping Mrs. Sparklepants. She failed to show up at the neutral location. Words and emails were exchanged. And, as is the American way, a lawsuit was filed.
To me, this is a quite simple analysis, particularly under Louisiana law where there are Civil Code articles that spell out how to handle co-ownership situations. But even in another jurisdiction, the questions the court should look at are pretty straightforward.
- Were the lovers tenants in common (or co-owners as we say in Louisiana) of Mrs. Sparklepants?
- If the lovers were co-tenants, did they have an agreement about how to manage Mrs. Sparklepants?
If the lovers had an agreement, the court’s job is very simple: enforce the agreement. If the lovers did not have an agreement or cannot agree on how to handle the situation, and they are tenants in common, again, the answer is simple: let them partition (by sale, obviously . . . I am not suggesting the Court act like King Solomon).
The Fourth Circuit in Louisiana agreed with my above stated inquiries and found that yes, the lovers were co-owners and yes, they had a tacit agreement to exchange Mrs. Sparklepants every week. Great. The end result should be simple. Interesting because it involves Mrs. Sparklepants, but simple. Right?
Instead of following the questions and answers to what I believe is their natural end, the court took a different approach. The court said “the plaintiff . . . is the best person to determine the use and management of [Mrs. Sparklepants].”
I understand the defendant was wrong to keep Mrs. Sparklepants, but is the answer really to let the plaintiff call all the shots from here on out? That seems extreme to me, and I’m not even a dog owner.
I’ve been thinking a lot about co-ownership these days for a piece I am working on (and that I am presenting at ALPS later this week!), and this is the inherent problem: what do you do when the parties disagree on how to use and manage the property? The Louisiana Civil Code, like many civil law systems, has pretty express and explicit rules on how to handle the situation. The court in Moore v. Knower simply chose not to follow those rules. My guess as to why the court chose to ignore the rules is because the property in the case was difficult. It’s a dog that, by all accounts, both parties care deeply about. The court seemed to let heart strings get in the way and lose sight of the law.
Now one might say, sure, but c’mon. It’s a pet. Pets are complicated and therefore it’s okay the law was not followed to a T. But all property is tricky. People co-own land that they deeply care about. Does that mean we disregard our rules of co-ownership when dividing up Blackacre? And if we are going to simply disregard our rules whenever parties feel particularly strongly about property or the property is too difficult to divide, does that mean we need new co-ownership rules?
These are the questions I am mulling over as I pack for Ann Arbor, Michigan and the eighth annual Association of Law, Property, and Society Conference. Be on the lookout this weekend for some live blogging from ALPS. In the meantime, my best wishes for a long and happy life to my favorite new property law character, Mrs. Sparklepants.
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 firstname.lastname@example.org and Pamela Foohey at email@example.com with “CFP Submission” in the subject line.
Inquiries or Questions: Please contact the Section on Real Estate Transactions chair, Kristen Barnes at firstname.lastname@example.org, or the Section on Commercial and Related Consumer Law chair, Pamela Foohey at email@example.com.
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 firstname.lastname@example.org.
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.