Wednesday, August 16, 2023
I'm am always happy to have an opportunity to look at a familiar case with fresh eyes, and Duncan Kennedy's eyes are especially good when it comes to scanning a horizon and bringing objects near and far into focus. In The Bitter Ironies of Williams v. Walker-Thomas Furniture Co. in the First Year Law School Curriculum, newly published in the Buffalo Law Review, he sets out his aims clearly and directly.
The article is, Professor Kennedy tells us, part of a larger project which. . .
defends the range of legal initiatives that legal services lawyers and clinicians, with progressive lawyers and academic allies, have undertaken on behalf of poor Black neighborhoods against the perennial neoliberal accusation that they "hurt the people they are supposed to help.”
It does so while contributing to critical race theory, the Black capitalism critical approach, and the critical legal studies literature on law’s distributive role in economic and social life. This essay focuses on the teaching of Williams v. Walker-Thomas in first-year courses. First-year students who read Williams (and most do) get a large dose of the argument that progressives who challenged the cross-collateralization clause at issue in Williams actually make it harder for poor people to buy furniture. Professor Kennedy shows that litigating cases like Williams actually helps the residents of poor Black neighborhoods.
The article laments that progressives have not responded more robustly to the neo-classical law and economics critique of Williams. The argument is familiar to those of us who have been teaching Williams, and many casebooks incorporate it, at least in the notes. Walker-Thomas's cross-collateralization clause made it economically feasible for the store to provide goods to low-income populations lacking credit. If we allow activist judges like Skelly-Wright to deem such clauses unconscionable, the result will be that people without credit could only buy furniture at very high rates of interest or with other extremely onerous terms.
Professor Kennedy then provides the missing robust response to the neo-classical approach and argues that the litigation strategy and liberal judicial interventions from 1965-1980 were effective in improving living conditions in poor Black neighborhoods. He takes on the economics and law approach in its own terms, explaining that Walker-Thomas operated in an oligopolist market with a captive consumer group unable to shop for alternatives. Once one understands the economics of that particular market, one can argue based on economic principles was that the main effect of litigation like Williams is that businesses like Walker-Thomas will become a bit less profitable than they otherwise would be. The difference would not be significant enough to alter their basic business model.
The piece is filled with nuggets from the case that help flesh out the socio-economic setting in which Ms. Williams bought furnishings from Walker Thomas. Much of this information is gleaned from prior scholarship on the case, but Professor Kennedy reorganizes the material and repurposes it for deployment in his argument that poor neighborhoods benefit from litigation like Williams v. Walker Thomas. The effect of eliminating the cross-collateralization clause would be that poor consumers would have to pay a slightly higher price for their goods. However, Professor Kennedy concludes, "[T]he consequences of reducing the rate of blanket repossession, with its obvious material and psychological cost to the family affected, is I would say obviously worth the tiny price increase and the lost monopoly profits on the seller’s side of the bargain."
While eliminating the cross-collateralization clause might have hurt some small businesses, Walker-Thomas was not one of them. It had annual sales of $4 million, and it was exploiting its position in the oligopoly to make such high profits that it could easily absorb the cost of profits lost through the elimination of the clause.
But the cross-collaterization clause was just one component of a multi-pronged strategy that various businesses devised to extract surplus capital on exploitative terms from poor neighborhoods. The advocacy that resulted in the Williams decision led to legislative reforms that prohibited many of these predatory practices. But such practices arise in new forms all the time, and the argument that progressive advocacy "hurts the people it is trying to help" stifles attempts to address those new forms. Professor Kennedy capably deploys the methods of conventional neo-classical economics to show that progressive advocacy helps the people it is trying to help and only hurts the businesses that serve those people by reducing their profits but allowing them to continue to operate.
Careful readers might have noted that Professor Kennedy cites to Deborah Zelesne's guest post on the blog!