tag:blogger.com,1999:blog-70984969428623002252024-02-07T18:54:45.550-08:00Notes from Law School by Kristopher NelsonClass notes and materials by a law student for law students.Kristopher Nelsonhttp://www.blogger.com/profile/17278778516172837095noreply@blogger.comBlogger130125tag:blogger.com,1999:blog-7098496942862300225.post-82220272849162130472009-04-26T20:07:00.001-07:002011-02-12T19:20:20.799-08:00Fault-Based Liability for Harm Based on Wrongdoer’s Gains<div style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em; text-align: right;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiyzmFrHfg-LRvhQjMTV6Xnl5YTcZlnmYVpO1s_JEhNPJC9xNFh5EArpQ0bpOpb0F02OnYkhHDcepFsFjCTq_nfHO3tOv4pgqS78iwHfV-r6RFoRagKiT-TjpWGbJ15zbAvdmhcCFTyFdw/s1600/foundations-of-economic.jpg" /></div><br />
Very often legal sanctions are focused on disgorgement of ill-gotten gains. In other words, a wrongdoer “bears a sanction equal to his gains.” It does discourage undesirable behavior, but only to a limited extent as compared to a rule that sets the penalty to the level of harm caused. It can, for example, still leave an incentive to act harmfully.<br />
<br />
Shavell says, “Suppose, for example, that an act creates a gain of $1,000 and harm of $1,000,000. If the gain is estimated to be $950, a party would have an incentive to engage in it, because the sanction would be $950 so that he would profit by $50.”<br />
I must admit that this is not 100% clear to me. Does Shavell mean to bring in the idea that the court may underestimate the gain, thus making it potentially profitable to engage in the activity?<br />
<br />
Steven Shavell, <a class="zem_slink" href="http://www.amazon.com/Foundations-Economic-Analysis-Steven-Shavell/dp/0674011554%3FSubscriptionId%3D0G81C5DAZ03ZR9WH9X82%26tag%3Dcommentinprop-20%26linkCode%3Dxm2%26camp%3D2025%26creative%3D165953%26creativeASIN%3D0674011554" rel="amazon" title="Foundations of Economic Analysis of Law">Foundations of Economic Analysis of Law</a>, pp. 476-78 (2004).Kristopher Nelsonhttp://www.blogger.com/profile/17278778516172837095noreply@blogger.comtag:blogger.com,1999:blog-7098496942862300225.post-30937660175508321302009-04-19T20:13:00.001-07:002011-02-12T19:21:36.437-08:00Damage measures and incentives to perform<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiyzmFrHfg-LRvhQjMTV6Xnl5YTcZlnmYVpO1s_JEhNPJC9xNFh5EArpQ0bpOpb0F02OnYkhHDcepFsFjCTq_nfHO3tOv4pgqS78iwHfV-r6RFoRagKiT-TjpWGbJ15zbAvdmhcCFTyFdw/s1600/foundations-of-economic.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiyzmFrHfg-LRvhQjMTV6Xnl5YTcZlnmYVpO1s_JEhNPJC9xNFh5EArpQ0bpOpb0F02OnYkhHDcepFsFjCTq_nfHO3tOv4pgqS78iwHfV-r6RFoRagKiT-TjpWGbJ15zbAvdmhcCFTyFdw/s1600/foundations-of-economic.jpg" /></a></div><em>When contracts are completely specified</em>, a high damage measure would be best, in order to give a strong motivation to obey the contract—but only if it is truly completely specified. Then it would be in both parties interest because they could rely on the exact contract they wrote being obeyed.<br />
<br />
After all, if the contract is truly complete, then there is no chance of onerous performance because that eventuality would have been deal with by contract. So performance is always guaranteed and there is no reason to breach.<br />
<br />
<em>When contracts are incomplete</em>, too-high <a class="zem_slink" href="http://en.wikipedia.org/wiki/Damages" rel="wikipedia" title="Damages">damages</a> may lead to undesirable performance. Moderate damages are better, since that will lead to breach when performance becomes too difficult or excessive. Thus, in certain circumstances, parties will simply receive <em>expectation damages </em>when it makes sense.<br />
<br />
Thus, moderate damages allow for breach when performance would be expensive, and induce performance when it would not be expensive. This leads to performance closest to those under <em>mutually beneficial completely specified contracts. </em>In other words, moderate damage measures serve as substitutes for more complete contracts.<br />
<em><br />
</em><br />
<em>There is a qualification that comes in when <a class="zem_slink" href="http://en.wikipedia.org/wiki/Contract" rel="wikipedia" title="Contract">contractual</a> duties are purely financial, as damage measures cannot completely substitute for more completely specified contracts.</em><br />
<br />
Steven Shavell, <a class="zem_slink" href="http://www.amazon.com/Foundations-Economic-Analysis-Steven-Shavell/dp/0674011554%3FSubscriptionId%3D0G81C5DAZ03ZR9WH9X82%26tag%3Dcommentinprop-20%26linkCode%3Dxm2%26camp%3D2025%26creative%3D165953%26creativeASIN%3D0674011554" rel="amazon" title="Foundations of Economic Analysis of Law">Foundations of Economic Analysis of Law</a>, pp. 305-309 (2004).<br />
<div class="zemanta-pixie" style="height: 15px; margin-top: 10px;"><a class="zemanta-pixie-a" href="http://reblog.zemanta.com/zemified/ccf8256a-fd22-4204-b184-9c851bb526b9/" title="Zemified by Zemanta"><img alt="Reblog this post [with Zemanta]" class="zemanta-pixie-img" src="http://img.zemanta.com/reblog_c.png?x-id=ccf8256a-fd22-4204-b184-9c851bb526b9" style="border-bottom: medium none; border-left: medium none; border-right: medium none; border-top: medium none; float: right;" /></a></div>Kristopher Nelsonhttp://www.blogger.com/profile/17278778516172837095noreply@blogger.comtag:blogger.com,1999:blog-7098496942862300225.post-24639631759484556722009-04-19T19:56:00.001-07:002009-04-19T19:58:07.152-07:00Why are contracts enforced<div class="zemanta-img" style="display: block; float: right; margin: 1em; width: 212px" jquery1240195388899="2875"><a href="http://commons.wikipedia.org/wiki/Image:Payday_loan_shop_window.jpg"><img style="border-right: medium none; border-top: medium none; display: block; border-left: medium none; border-bottom: medium none" height="446" alt="A shop window advertising payday loans." src="http://upload.wikimedia.org/wikipedia/commons/thumb/c/c3/Payday_loan_shop_window.jpg/202px-Payday_loan_shop_window.jpg" width="202" /></a> <p class="zemanta-img-attribution" style="font-size: 0.8em">Image via <a href="http://commons.wikipedia.org/wiki/Image:Payday_loan_shop_window.jpg">Wikipedia</a></p> </div> <p>Why do parties want their contracts to be enforced by courts? Without such enforcement, why would parties break their contracts and why would that be bad for the parties?</p> <ol> <li>Without enforcement, a party could appropriate funds that had been paid before contract performance (i.e., borrowers would be able to refuse to repay <a class="zem_slink" title="Loan" href="http://en.wikipedia.org/wiki/Loan" rel="wikipedia">loans</a>, insurers could keep premiums, etc.), rending the entire system unworkable. </li> <li>A party might not deliver a promised good or perform a promised service.If there is failure to perform even though performance would be best because its value exceeds its true cost, then the value of the <a class="zem_slink" title="Contract" href="http://en.wikipedia.org/wiki/Contract" rel="wikipedia">contractual</a> arrangement is diminished for the parties. This is avoided if contracts are enforced. </li> <li>Price cannot be fixed in advance, and parties can bargain opportunistically, changing prices later. This is <em>price <a class="zem_slink" title="Holdup (bridge)" href="http://en.wikipedia.org/wiki/Holdup_%28bridge%29" rel="wikipedia">holdup</a></em> and will result in underinvestment in the contractual enterprise. </li> </ol> <p>Steven Shavell, <a class="zem_slink" title="Foundations of Economic Analysis of Law" href="http://www.amazon.com/Foundations-Economic-Analysis-Steven-Shavell/dp/0674011554%3FSubscriptionId%3D0G81C5DAZ03ZR9WH9X82%26tag%3Dcommentinprop-20%26linkCode%3Dxm2%26camp%3D2025%26creative%3D165953%26creativeASIN%3D0674011554" rel="amazon">Foundations of Economic Analysis of Law</a>, pp. 297-299 (2004).</p> <p></p> <p></p> <p></p> <p></p> <div class="zemanta-pixie" style="margin-top: 10px; height: 15px"><a class="zemanta-pixie-a" title="Zemified by Zemanta" href="http://reblog.zemanta.com/zemified/ccf8256a-fd22-4204-b184-9c851bb526b9/"><img class="zemanta-pixie-img" style="border-right: medium none; border-top: medium none; float: right; border-left: medium none; border-bottom: medium none" alt="Reblog this post [with Zemanta]" src="http://img.zemanta.com/reblog_c.png?x-id=ccf8256a-fd22-4204-b184-9c851bb526b9" /></a></div> Kristopher Nelsonhttp://www.blogger.com/profile/17278778516172837095noreply@blogger.comtag:blogger.com,1999:blog-7098496942862300225.post-72268567655850021782009-04-19T19:49:00.001-07:002009-04-19T19:49:34.376-07:00Why contracts are made<div class="zemanta-img" style="display: block; float: right; margin: 1em; width: 212px" jquery1240195388899="1269"><a href="http://commons.wikipedia.org/wiki/Image:Profit_max_marginal_small.png"><img style="border-right: medium none; border-top: medium none; display: block; border-left: medium none; border-bottom: medium none" height="170" alt="Profit Maximization - The Marginal Approach" src="http://upload.wikimedia.org/wikipedia/commons/thumb/e/e6/Profit_max_marginal_small.png/202px-Profit_max_marginal_small.png" width="202" /></a> <p class="zemanta-img-attribution" style="font-size: 0.8em">Image via <a href="http://commons.wikipedia.org/wiki/Image:Profit_max_marginal_small.png">Wikipedia</a></p> </div> <ol> <li>Future provision of goods, especially for custom or specialized goods or services where a well-organized and routine market does not exist. </li> <li>Mutually beneficial reallocation or sharing of risks, including <a class="zem_slink" title="Insurance" href="http://en.wikipedia.org/wiki/Insurance" rel="wikipedia">insurance</a> contracts or <a class="zem_slink" title="Partnership" href="http://en.wikipedia.org/wiki/Partnership" rel="wikipedia">partnerships</a> for sharing of profits. </li> <li>Differences of opinion regarding future events. Thus each side “bets” on their outcome. Found especially in deals around securities and durable <a class="zem_slink" title="Asset" href="http://en.wikipedia.org/wiki/Asset" rel="wikipedia">assets</a>. </li> <li>Timing of <a class="zem_slink" title="Consumption (economics)" href="http://en.wikipedia.org/wiki/Consumption_%28economics%29" rel="wikipedia">consumption</a>, i.e., borrowing or lending, which allows shifting the time a purchase is made.</li> </ol> <p>Steven Shavell, <a class="zem_slink" title="Foundations of Economic Analysis of Law" href="http://www.amazon.com/Foundations-Economic-Analysis-Steven-Shavell/dp/0674011554%3FSubscriptionId%3D0G81C5DAZ03ZR9WH9X82%26tag%3Dcommentinprop-20%26linkCode%3Dxm2%26camp%3D2025%26creative%3D165953%26creativeASIN%3D0674011554" rel="amazon">Foundations of Economic Analysis of Law</a>, pp. 296-97 (2004).</p> <p></p> <p></p> <p></p> <p></p> <p></p> <p></p> <p></p> <div class="zemanta-pixie" style="margin-top: 10px; height: 15px"><a class="zemanta-pixie-a" title="Zemified by Zemanta" href="http://reblog.zemanta.com/zemified/ccf8256a-fd22-4204-b184-9c851bb526b9/"><img class="zemanta-pixie-img" style="border-right: medium none; border-top: medium none; float: right; border-left: medium none; border-bottom: medium none" alt="Reblog this post [with Zemanta]" src="http://img.zemanta.com/reblog_c.png?x-id=ccf8256a-fd22-4204-b184-9c851bb526b9" /></a></div> Kristopher Nelsonhttp://www.blogger.com/profile/17278778516172837095noreply@blogger.comtag:blogger.com,1999:blog-7098496942862300225.post-48769245752672137822009-04-19T19:35:00.001-07:002009-04-19T19:35:15.827-07:00Mutually beneficial contracts are Pareto efficient<div class="zemanta-img" style="display: block; float: right; margin: 1em; width: 212px" jquery1240194512098="3856"><a href="http://commons.wikipedia.org/wiki/Image:Handshake.jpg"><img style="border-right: medium none; border-top: medium none; display: block; border-left: medium none; border-bottom: medium none" height="128" alt="Shaking with the right hand while delivering a..." src="http://upload.wikimedia.org/wikipedia/commons/thumb/3/38/Handshake.jpg/202px-Handshake.jpg" width="202" /></a> <p class="zemanta-img-attribution" style="font-size: 0.8em">Image via <a href="http://commons.wikipedia.org/wiki/Image:Handshake.jpg">Wikipedia</a></p> </div> <p>A contract is mutually beneficial or <a class="zem_slink" title="Pareto efficiency" href="http://en.wikipedia.org/wiki/Pareto_efficiency" rel="wikipedia">Pareto efficient</a>:</p> <ul> <li>If it cannot be modified so as to raise the well-being (or “<a class="zem_slink" title="Expected utility hypothesis" href="http://en.wikipedia.org/wiki/Expected_utility_hypothesis" rel="wikipedia">expected utility</a>”) of <em>each of the parties to it.</em></li> </ul> <p>We expect <a class="zem_slink" title="Contract" href="http://en.wikipedia.org/wiki/Contract" rel="wikipedia">contracts</a> to tend toward this state, since we think that if a contract can be altered that would raise the expected utility of both parties, then that would be done.</p> <p>From Steven Shavell, <a class="zem_slink" title="Foundations of Economic Analysis of Law" href="http://www.amazon.com/Foundations-Economic-Analysis-Steven-Shavell/dp/0674011554%3FSubscriptionId%3D0G81C5DAZ03ZR9WH9X82%26tag%3Dcommentinprop-20%26linkCode%3Dxm2%26camp%3D2025%26creative%3D165953%26creativeASIN%3D0674011554" rel="amazon">Foundations of Economic Analysis of Law</a>, p. 293 (2004).</p> <p></p> <p></p> <p></p> <p></p> <p></p> <p></p> <p></p> <p></p> <p></p> <div class="zemanta-pixie" style="margin-top: 10px; height: 15px"><a class="zemanta-pixie-a" title="Zemified by Zemanta" href="http://reblog.zemanta.com/zemified/a242a180-6165-4e5b-88c8-5d4fb81cbcbc/"><img class="zemanta-pixie-img" style="border-right: medium none; border-top: medium none; float: right; border-left: medium none; border-bottom: medium none" alt="Reblog this post [with Zemanta]" src="http://img.zemanta.com/reblog_c.png?x-id=a242a180-6165-4e5b-88c8-5d4fb81cbcbc" /></a></div> Kristopher Nelsonhttp://www.blogger.com/profile/17278778516172837095noreply@blogger.comtag:blogger.com,1999:blog-7098496942862300225.post-31687873617510246682009-04-16T17:34:00.001-07:002011-02-12T19:23:15.489-08:00Use vs. Creation Without Property Rights<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiyzmFrHfg-LRvhQjMTV6Xnl5YTcZlnmYVpO1s_JEhNPJC9xNFh5EArpQ0bpOpb0F02OnYkhHDcepFsFjCTq_nfHO3tOv4pgqS78iwHfV-r6RFoRagKiT-TjpWGbJ15zbAvdmhcCFTyFdw/s1600/foundations-of-economic.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiyzmFrHfg-LRvhQjMTV6Xnl5YTcZlnmYVpO1s_JEhNPJC9xNFh5EArpQ0bpOpb0F02OnYkhHDcepFsFjCTq_nfHO3tOv4pgqS78iwHfV-r6RFoRagKiT-TjpWGbJ15zbAvdmhcCFTyFdw/s1600/foundations-of-economic.jpg" /></a></div>1. In the absence of <a class="zem_slink" href="http://en.wikipedia.org/wiki/Property" rel="wikipedia" title="Property">property rights</a> in information, that information will tend to become available at the <a class="zem_slink" href="http://en.wikipedia.org/wiki/Cost-of-production_theory_of_value" rel="wikipedia" title="Cost-of-production theory of value">cost of production</a>. Since anyone who valued the book (for example) more than the cost to print it would then buy it, this would result in an "optimal" number of books being printed.<br />
<div><br />
</div><div>2. Again, without property rights, creation of new information tends to be inadequate. Creators will be rewarded with less than the full <a class="zem_slink" href="http://en.wikipedia.org/wiki/Value_system" rel="wikipedia" title="Value system">social value</a> of their work. In some cases, virtually no profit could be realized by creators. This would result in a low amount of <a class="zem_slink" href="http://en.wikipedia.org/wiki/Incentive" rel="wikipedia" title="Incentive">incentive</a> for new creation.</div><div><br />
</div><div>Qualifications: it takes time for competitors to copy, thus original creators may enjoy a <a class="zem_slink" href="http://en.wikipedia.org/wiki/Monopoly" rel="wikipedia" title="Monopoly">monopoly</a> position for a certain period of time. Also, creators will have an incentive to make copying difficult (as with Digital Rights Management, for example).</div><div><br />
</div><div>Steven Shavell, <a class="zem_slink" href="http://www.amazon.com/Foundations-Economic-Analysis-Steven-Shavell/dp/0674011554%3FSubscriptionId%3D0G81C5DAZ03ZR9WH9X82%26tag%3Dcommentinprop-20%26linkCode%3Dxm2%26camp%3D2025%26creative%3D165953%26creativeASIN%3D0674011554" rel="amazon" title="Foundations of Economic Analysis of Law">Foundations of Economic Analysis of Law</a>, pp. 140-141 (2004).</div><div><br />
</div><div>I would add, too, that it is possible that rewards exist for creators outside of "property," such as reputation or the joy of creation. However, if <b>no</b> property rights exist, attribution (which builds reputation) might well be lost too. Joy might still exist anyway, however!</div><div><br />
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<div><br />
</div><div>If it can be copied at low cost by others, the first developer will have few buyers as these initial buyers can resell or disseminate the information themselves, usually at a lower cost. All other things being equal, this will tend to undesirably hamper the development of new information.<br />
<br />
To deal with this, we can (1) grant <a class="zem_slink" href="http://en.wikipedia.org/wiki/Property" rel="wikipedia" title="Property">property rights</a> (<a class="zem_slink" href="http://en.wikipedia.org/wiki/Patent" rel="wikipedia" title="Patent">patents</a>, <a class="zem_slink" href="http://en.wikipedia.org/wiki/Trade_secret" rel="wikipedia" title="Trade secret">trade secrets</a>, <a class="zem_slink" href="http://en.wikipedia.org/wiki/Copyright" rel="wikipedia" title="Copyright">copyright</a>) or (2) create a system of state rewards for creators. <br />
<div><br />
Steven Shavell, <a class="zem_slink" href="http://www.amazon.com/Foundations-Economic-Analysis-Steven-Shavell/dp/0674011554%3FSubscriptionId%3D0G81C5DAZ03ZR9WH9X82%26tag%3Dcommentinprop-20%26linkCode%3Dxm2%26camp%3D2025%26creative%3D165953%26creativeASIN%3D0674011554" rel="amazon" style="color: #bb3300;" title="Foundations of Economic Analysis of Law">Foundations of Economic Analysis of Law</a>, p. 138 (2004).</div><div><br />
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</script></span></div></div>Kristopher Nelsonhttp://www.blogger.com/profile/17278778516172837095noreply@blogger.comtag:blogger.com,1999:blog-7098496942862300225.post-13738023819307488162009-04-09T18:56:00.001-07:002009-04-09T19:01:35.508-07:00Mutually beneficial contracts and Pareto efficiency<p class="zemanta-img" style="margin-top: 1em; margin-right: 1em; margin-bottom: 1em; margin-left: 1em; float: right; display: block; width: 167px; "><a href="http://www.amazon.com/Foundations-Economic-Analysis-Steven-Shavell/dp/0674011554%3FSubscriptionId%3D0G81C5DAZ03ZR9WH9X82%26tag%3Dcommentinprop-20%26linkCode%3Dxm2%26camp%3D2025%26creative%3D165953%26creativeASIN%3D0674011554"><img src="http://ecx.images-amazon.com/images/I/41Q6P0RWFDL._SL200_.jpg" alt="Cover of "Foundations of Economic Analysi..." style="border:none;display:block" width="157" height="200"></a><span class="zemanta-img-attribution">Cover of <a href="http://www.amazon.com/Foundations-Economic-Analysis-Steven-Shavell/dp/0674011554%3FSubscriptionId%3D0G81C5DAZ03ZR9WH9X82%26tag%3Dcommentinprop-20%26linkCode%3Dxm2%26camp%3D2025%26creative%3D165953%26creativeASIN%3D0674011554">Foundations of Economic Analysis of Law</a></span></p>In the language of <a class="zem_slink" href="http://en.wikipedia.org/wiki/Economics" title="Economics" rel="wikipedia">economics</a>, a <a class="zem_slink" href="http://en.wikipedia.org/wiki/Contract" title="Contract" rel="wikipedia">contract</a> is <span style="font-style:italic;"><a class="zem_slink" href="http://en.wikipedia.org/wiki/Pareto_efficiency" title="Pareto efficiency" rel="wikipedia">Pareto efficient</a></span>, and <span style="font-style:italic;">mutually beneficial</span>, if it cannot be modified so as to raise the well being (or the <a class="zem_slink" href="http://en.wikipedia.org/wiki/Expected_utility_hypothesis" title="Expected utility hypothesis" rel="wikipedia">expected utility</a>) of each of the parties to it. If such a modification could be done to improve the contract for both parties, we would rationally expect this to be done.<br /><br />Steven Shavell, <a class="zem_slink" href="http://www.amazon.com/Foundations-Economic-Analysis-Steven-Shavell/dp/0674011554%3FSubscriptionId%3D0G81C5DAZ03ZR9WH9X82%26tag%3Dcommentinprop-20%26linkCode%3Dxm2%26camp%3D2025%26creative%3D165953%26creativeASIN%3D0674011554" title="Foundations of Economic Analysis of Law" rel="amazon">Foundations of Economic Analysis of Law</a>, pp. 293 (2004).<br /><br /><br /><fieldset class="zemanta-related"><legend class="zemanta-related-title">Related articles by Zemanta</legend><ul class="zemanta-article-ul"><li class="zemanta-article-ul-li"><a href="http://crookedtimber.org/2009/03/30/rawls-cohen-and-the-laffer-hypothesis/">Rawls, Cohen and the Laffer hypothesis</a> (crookedtimber.org)</li></ul></fieldset><br /><br /><div class="zemanta-pixie" style="margin-top:10px;height:15px"><a class="zemanta-pixie-a" href="http://reblog.zemanta.com/zemified/b2664c0c-1920-4501-bb8e-c514d581459b/" title="Reblog this post [with Zemanta]"><img class="zemanta-pixie-img" src="http://img.zemanta.com/reblog_c.png?x-id=b2664c0c-1920-4501-bb8e-c514d581459b" alt="Reblog this post [with Zemanta]" style="border:none;float:right"></a><span class="zem-script more-related"><script type="text/javascript" src="http://static.zemanta.com/readside/loader.js" defer="defer"></script></span></div>Kristopher Nelsonhttp://www.blogger.com/profile/17278778516172837095noreply@blogger.comtag:blogger.com,1999:blog-7098496942862300225.post-58272687298362555242009-04-09T18:02:00.000-07:002009-04-09T18:20:01.890-07:00Strict Liability and Liability Insurance<p class="zemanta-img" style="margin-top: 1em; margin-right: 1em; margin-bottom: 1em; margin-left: 1em; float: right; display: block; width: 167px; "><a href="http://www.amazon.com/Foundations-Economic-Analysis-Steven-Shavell/dp/0674011554%3FSubscriptionId%3D0G81C5DAZ03ZR9WH9X82%26tag%3Dcommentinprop-20%26linkCode%3Dxm2%26camp%3D2025%26creative%3D165953%26creativeASIN%3D0674011554"><img src="http://ecx.images-amazon.com/images/I/41Q6P0RWFDL._SL200_.jpg" alt="Cover of "Foundations of Economic Analysi..." style="border:none;display:block" width="157" height="200" /></a><span class="zemanta-img-attribution">Cover of <a href="http://www.amazon.com/Foundations-Economic-Analysis-Steven-Shavell/dp/0674011554%3FSubscriptionId%3D0G81C5DAZ03ZR9WH9X82%26tag%3Dcommentinprop-20%26linkCode%3Dxm2%26camp%3D2025%26creative%3D165953%26creativeASIN%3D0674011554">Foundations of Economic Analysis of Law</a></span></p>When <a class="zem_slink" href="http://en.wikipedia.org/wiki/Liability" title="Liability" rel="wikipedia">liability</a> is strict, victims are insured by the legal system, but <a class="zem_slink" href="http://en.wikipedia.org/wiki/Risk" title="Risk" rel="wikipedia">risk</a>-averse potential injurers may wish to insure against liability. There are two situations that may occur that will have an impact on the situation: (1) where insurers can observe the level of care and (2) where they cannot observe the level of care.<div><br /></div><div><b>(1) Insurers can observe the level of care:</b></div><div><ul><li>Thus, they can reduce premiums to reflect risk reduction that care engenders.</li><li>Insureds will thus purchase full coverage to cover risk and</li><li>Insureds will take care to avoid risk in order to keep premiums as low as possible.</li></ul><div>The outcome will be socially optimal: risk-averse injurers will be fully protected against risk and victims will be protected against risk by <a class="zem_slink" href="http://en.wikipedia.org/wiki/Strict_liability" title="Strict liability" rel="wikipedia">strict liability</a> rules. Because of this, liability is socially desirable in this situation. In other words, without insurance, victims would be just as well off, but injurers would be worse off because they would bear too much risk (and would modify their actions in socially undesirable ways that do not benefit society as a whole).</div><div><br /></div><div>(2) Insurers cannot observe the level of care:</div><div><ul><li>Insureds will purchase incomplete care because full coverage would be too expensive (since there is no way to account for different levels of risk, everyone has to pay to cover risky behavior).</li><li>This results in lessened risk that induces less than optimal precautions.</li></ul><div>This is thus not socially ideal because (a) injurers are only partly protected against risk, and their level of care is less than optimal; but (b) victims are still protected by strict liability.</div><div><br /></div><div>Steven Shavell, <a class="zem_slink" href="http://www.amazon.com/Foundations-Economic-Analysis-Steven-Shavell/dp/0674011554%3FSubscriptionId%3D0G81C5DAZ03ZR9WH9X82%26tag%3Dcommentinprop-20%26linkCode%3Dxm2%26camp%3D2025%26creative%3D165953%26creativeASIN%3D0674011554" title="Foundations of Economic Analysis of Law" rel="amazon">Foundations of Economic Analysis of Law</a>, pp. 262-263 (2004).</div><div><br /></div></div></div><br /><div class="zemanta-pixie" style="margin-top:10px;height:15px"><a class="zemanta-pixie-a" href="http://reblog.zemanta.com/zemified/541bf4ff-8dbb-4ed9-8d47-308e5a116a11/" title="Reblog this post [with Zemanta]"><img class="zemanta-pixie-img" src="http://img.zemanta.com/reblog_c.png?x-id=541bf4ff-8dbb-4ed9-8d47-308e5a116a11" alt="Reblog this post [with Zemanta]" style="border:none;float:right" /></a><span class="zem-script more-related"><script type="text/javascript" src="http://static.zemanta.com/readside/loader.js" defer="defer"></script></span></div>Kristopher Nelsonhttp://www.blogger.com/profile/17278778516172837095noreply@blogger.comtag:blogger.com,1999:blog-7098496942862300225.post-50370520427704420772009-03-15T12:33:00.000-07:002009-03-15T12:38:30.673-07:00What is a "tangible employment action"?Unfavorable Action<br /><ul><li>Firing</li><li>Demotion</li><li>Possibly transfer</li><li>Often has economic impact</li><li><i>Everyone agrees that this is a Tangible Employment Action</i></li></ul><div>Unfavorable Inaction</div><div><ul><li>Denial of raise</li><li>Must show connection between the inaction and the conduct</li><li><i>Likely sufficient, but still unclear that this is a Tangible Employment Action</i></li></ul><div>Favorable Action</div><div><ul><li>"Give me a kiss and I'll promote you," then employee gives kiss and boss promotes</li><li>Clearly involves use of power</li><li><i>Courts are unclear if this is a Tangible Employment Action</i></li></ul><div>Favorable Inaction</div><div><ul><li>"I'm going to fire you unless you give me a kiss," then employee gives a kiss and is not fired</li><li><i>Least successful of the four, as courts often don't think this is a Tangible Employment Action</i></li></ul><div><br /></div></div></div></div>Kristopher Nelsonhttp://www.blogger.com/profile/17278778516172837095noreply@blogger.comtag:blogger.com,1999:blog-7098496942862300225.post-31079040981249532342009-03-15T12:24:00.000-07:002009-03-15T12:30:06.649-07:00Six Categories of Sexual HarassmentSix Categories of Sexual Harassment:<br /><ol><li>Targeted and <i>presumptively</i> unwelcome remarks or acts (grabbing someone's bottom)--courts get this</li><li>Not targeted, but sexual in nature (picture of naked woman on boss's desk)</li><li>Quid pro quo demands<ul><li>Courts mostly get this</li><li>Some unsuccessful attempts are not suits per se (no harm), but may be a building block for a kind of collateral claim for hostile work environment</li></ul></li><li>Remarks or statements or acts that are targeted but are not unlawful unless person indicates they are unwelcome (asking someone out after being told not to do it)<ul><li>Not a building block unless the victim declares it unwelcome</li><li>But sometimes asking again and again might qualify and one may not have to declare it unwelcome</li></ul></li><li>Statements that are mysoginistic (anti-woman, not sexual in nature specifically--perhaps dumb blonde jokes)</li><li>Conduct or statements that are general neutral on their face, but are targeted at plaintiff</li></ol>Kristopher Nelsonhttp://www.blogger.com/profile/17278778516172837095noreply@blogger.comtag:blogger.com,1999:blog-7098496942862300225.post-18010068825312709032009-03-15T12:04:00.000-07:002009-03-15T12:10:15.063-07:00Categories in Examining Employment Testing<div>When examining an employment test, courts use the following categories (ranked in order of lessening confidence by the courts):</div><div><br /></div><div>1. Content validity: does the exam test the kind of work actually done?</div><div><br /></div><div>2. Construct validity: does the exam test the skills needed by a worker?</div><div><br /></div><div>3. Criterion validity: does the exam tend to correlate with better, more successful workers, regardless of what skills are tested?</div><div><ul><li>Courts tend to get nervous if you can't explain why, even if they technically have to accept the result</li><li>Plus remember the potential rebuttal by employees in a suit: if the employee can show a method is as efficacious as the one you've chosen, but that is less discriminatory, the defendant loses!</li></ul></div><div><i>Note: any time you use rank-order testing (such as focusing on how much someone can bench press) and then say it helps pick the best worker (such as a firefighter) you are ignoring all the other important skills that go into that job, opening yourself up as an employer to attack on that basis.</i></div><div><br /></div><div><br /></div>Kristopher Nelsonhttp://www.blogger.com/profile/17278778516172837095noreply@blogger.comtag:blogger.com,1999:blog-7098496942862300225.post-26087950593156230102009-03-14T13:22:00.000-07:002009-03-14T13:43:30.725-07:00Proving Intent under McDonnell Douglas<ol class="c6"><li class="c2"><span class="c1">Proving Intent under <i>McDonnell Douglas:</i> prima facie case,<br />rebuttal and pretext</span><br /><ol class="c4"><li class="c2"><span class="c1">The basic back-and-forth:</span><br /><ol class="c3"><li class="c2"><span class="c1">Employee-plaintiff first must make prima facie case</span><br /><ol class="c5"><li class="c2"><span class="c1">Example: belongs to racial minority, applied and was<br />qualified, employer seeking to fill job, rejected despite qualifications, position still<br />open afterward</span></li><li class="c2"><span class="c1">Many courts have adopted a very strict standard,<br />resulting in many cases not making it to trial</span></li><li class="c2"><span class="c1">What's the standard for a prima facie case in a dismissal case?</span><br /><ol class="c4"><li class="c2"><span class="c1">(Most discrimination cases are dismissal cases, because<br />you typically get reasons when dismissed, etc.)</span></li><li class="c2"><span class="c1">Some circuits have minimal standards,</span></li><li class="c2"><span class="c1">But some circuits require that you have a "comparator":</span><br /><ol class="c3"><li class="c2"><span class="c1">Must have someone else in your "group" (some say "nearly<br />identical," which is a VERY high standard--and it's not a jury issue) who didn't get<br />fired.</span></li><li class="c2"><span class="c1">In the 7th Circuit, must be identical, NOT worse! (So you<br />stole something, someone else shot the CEO and didn't get fired--not identical enough as<br />a comparator!)</span></li></ol></li></ol></li></ol></li><li class="c2"><span class="c1">Employer must then give reasoning with legitimate, admissible evidence<br />of alternative reason</span><br /><ol class="c5"><li class="c2"><span class="c1">Prevented lawyers from simply making up<br />reasons</span></li><li class="c2"><span class="c1">Or the courts giving reasons themselves</span></li><li class="c2"><span class="c1">Why do we make the employer give a reason? What's the function?</span><br /><ol class="c4"><li class="c2"><span class="c1">Gives the plaintiff a specific answer to attack</span><br /><ol class="c3"><li class="c2"><span class="c1">So "less qualified" not a<br />useful response in court and is not good enough!</span></li></ol></li></ol></li><li class="c2"><span class="c1">Jury Instructions: if you find the reason given by the employer isn't<br />true (didn't believe at the time), you should... what?</span><br /><ol class="c4"><li class="c2"><span class="c1">You may infer that there was a discriminatory reason</span><br /><ol class="c3"><li class="c2"><span class="c1">Yeah, but I as jury knows something else is going on<br />(bribery?) OR</span></li><li class="c2"><span class="c1">Jury just thinks something else (other than discrimination) might be<br />going on</span><br /><ol class="c5"><li class="c2"><span class="c1">but doesn't know what!</span></li><li class="c2"><span class="c1">Remember that plaintiff has burden to show more likely<br />than not that it was a discriminatory reason</span></li></ol></li></ol></li><li class="c2"><span class="c1">Do you <i>have</i> to infer discrimination (<i>Hicks</i>)?</span><br /><ol class="c3"><li class="c2"><span class="c1">5-4 SCOTUS (Scalia) says didn't have to find<br />it</span></li><li class="c2"><span class="c1">but the real dispute is "can you"?</span><br /><ol class="c5"><li class="c2"><span class="c1">In the end court says "yes, you<br />can"</span></li></ol></li><li class="c2"><span class="c1">not originally intending during <i>Hicks</i> to say<br />this.</span></li><li class="c2"><span class="c1">Line is "suspicion of mendacity" in <i>Hicks</i></span></li></ol></li></ol></li></ol></li><li class="c2"><span class="c1">Then burden back to employee-plaintiff to<br />rebut</span></li></ol></li></ol></li></ol>Kristopher Nelsonhttp://www.blogger.com/profile/17278778516172837095noreply@blogger.comtag:blogger.com,1999:blog-7098496942862300225.post-77514678831800639082009-03-14T13:08:00.000-07:002009-03-14T13:12:59.902-07:00Basic Differences Among Employment Discrimination Statutes1. Which type of employer is covered?<br /><br />2. Size of employer<br /><br />3. Available of BFOQ defense: “bona fide occupational qualification”<br /><ul><li>Such as only women can be wet nurses</li><li>Fight over prison guards on this point</li></ul>4. Prerequisites to a lawsuit<br /><ul><li>For Title VII, must first file with EEOC</li></ul><br /><div>5. “Reasonable accommodation” provisions </div><div><ul><li>As in the ADA</li></ul></div><div>6. Does statute ban discriminator effect? (All ban intentional discrimination.)<br /><ul><li>Title VII: yes</li><li>Title VI: no, but gov’t has regs to ban such practices</li><li>ADA: yes</li><li>ADEA: yes, but different than Title VII</li><li>FMLA: yes</li><li>Constitution: no, requires intent</li></ul>7. Limitations periods are quite different<br /><ul><li>All are independent</li><li>So you can be waiting for EEOC to process and still need to file other complaints in a timely manner</li></ul>8. Jury trials?<br /><ul><li>Now most trials go to a jury, but prior to 1991 there were no juries under Section 1981</li><li>Law vs. Equity</li><ul><li>No jury in equity</li><li>Back pay viewed as equity</li><li>Also, need to frame as equity (no jury) to get a class action</li></ul><li>Punitive damage issues</li></ul>9. Type of defendant<br /><ul><li>Section 1983, lawsuits to enforce Constitution vs. state/local governments: special rules apply</li><li>Sometimes different rules for individual vs. state/local defendant</li><li>11th Amendment limites suits against states</li><li>“Quirky” interactions</li></ul></div>Kristopher Nelsonhttp://www.blogger.com/profile/17278778516172837095noreply@blogger.comtag:blogger.com,1999:blog-7098496942862300225.post-86963138149953529802009-03-14T12:56:00.000-07:002009-03-15T15:28:20.359-07:00Basic Employment Anti-Discimination Statutes<span style="font-style: italic;">Note: Employment generally “at will”: can fire for any reason, etc.</span><br /><ul><li>Cases must allege specific violations of prohibited factors (race, etc.)</li></ul><b>Statutes</b><br /><br /><div>Title VII: The Biggie</div><div><br /><div>Equal Pay Act<br /><ul><li>Gender, salary/wage discrimination</li><li>Better relief available than under other statutes</li></ul>Title IX<br /><ul><li>Sex discrimination in education</li><li>Includes employment discrimination</li></ul>Title VI<br /><ul><li>Federal funds recipients</li><li>Can’t discriminate on the basis of race or national origin</li></ul>Section 1981<br /><ul><li>Originally the 1866 Civil Rights Act</li><li>Everyone has same rights as white citizens to form contracts</li><li>Covers discrimination based on ethnicity</li><li>Different than national origin</li><li>Thus not vs. Canadians, but yes vs. Jews (but not Catholics! not an ethnicity)</li></ul>ADEA<br /><ul><li>Age Discrimination in Employment Act</li></ul>ADA & the Rehabilitation Act of 1974<br /><ul><li>Twins, but ADA more important</li></ul>FMLA<br /><ul><li>Family Medical Leave Act</li></ul>Executive Order banning discrimination<br /><ul><li>Can threaten to cut off federal funds</li><li>Produced “voluntary” compliance</li></ul>State and Local Laws<br /><ul><li>Statutes against discrimination</li><li>Constitutions</li><li>Municipal ordinances</li></ul>Tort in many states</div><div><ul><li>Intentional Infliction of Emotional Distress</li></ul><br /></div></div>Kristopher Nelsonhttp://www.blogger.com/profile/17278778516172837095noreply@blogger.comtag:blogger.com,1999:blog-7098496942862300225.post-19318586858684623042009-02-08T15:54:00.000-08:002009-02-08T16:01:18.969-08:00Employment Discrimination: Statistics Generally<span class="Apple-style-span" style="font-weight: bold;">Statistics Use in Employment Discrimination Generally</span><div><ul><li>Both Plaintiffs and Defendants use statistics<br /></li><li>Need a large enough sample size<br /></li><li>Essential for some kinds of cases</li><ul><li>Class actions</li><li>"Pattern and Practice" cases (brought by the gov't)--like class actions (used to be more important than they are today)</li></ul><li>Really important for HR purposes--otherwise how does HR find out if discrimination is happening in their company?<br /></li><ul><li>But numbers can be manipulated by managers, etc.--IMPORTANT FOR HR to structure reports to avoid having dept hide details from them<br /></li></ul><li>In litigation</li><ul><li>Basis of discovery disputes<br /></li><li>Fights about whether statistics are good enough to be admissible--court as a gatekeeper<br /></li><li>Experts also important--must have them on the one hand to explain the stats, on the other hand experts know nothing about Title VII or your widgets--can create completely useless stats b/c they do not understand what question to ask!<br /></li></ul><li>General Advice: in assessing statistics, you must understand them yourself, cannot simply rely on "experts," especially when deciding what statistical analysis to conduct<br /></li></ul></div>Kristopher Nelsonhttp://www.blogger.com/profile/17278778516172837095noreply@blogger.comtag:blogger.com,1999:blog-7098496942862300225.post-66204432898042414652009-02-02T16:45:00.000-08:002009-02-02T16:48:07.984-08:00Evidence: Rule 403 balancing<span style="font-weight: bold;">Rule 403: cost/benefit analysis</span><br /><ul><li> unfair prejudice</li><li> confusion of issues</li><li> misleading</li><li> undue delay, waste, cumulative</li></ul><span style="font-weight: bold;">Rule 403 interacts with Rules 401 and 402:</span><br /><ul><li>All relevant evidence is inherently prejudicial</li><li>The 403 balancing process presents an accuracy dilemma</li><li>Evidence is not an island onto itself</li><li>Unfair prejudice occurs when an item of evidence provokes the jury to decide a case on an improper basis</li><li>The mere fact that an item of evidence causes jurors to have an emotional response does not make it unfairly prejudicial</li><li>Jurors are not logic machines</li><li>Rule 403 offsets the lax standard set forth in Rules 401 & 402</li><li>Unfair prejudice is not the only basis for exclusion under Rule 403</li><li>Rule 403 (almost) always applicable and should (usually) be the last stop in determining admissibility</li></ul>Kristopher Nelsonhttp://www.blogger.com/profile/17278778516172837095noreply@blogger.comtag:blogger.com,1999:blog-7098496942862300225.post-34472346846614152832009-02-02T16:22:00.000-08:002009-02-02T16:32:05.074-08:00Evidence: Rules 401 and 402<span style="font-weight: bold;">Two fundamental rules of Evidence</span><br /><br /><span style="font-weight: bold;">Rule 402</span><br />Relevant evidence admissible, except if prohibited by a rule. Non-relevant evidence is not admissible.<br /><br /><span style="font-weight: bold;">Rule 401</span><br />Relevant evidence: having a tendancy to make a fact of consequence (<em>materiality prong</em>: look to substantive law, elements, etc.) more probably or less probable than w/o evidence.Kristopher Nelsonhttp://www.blogger.com/profile/17278778516172837095noreply@blogger.comtag:blogger.com,1999:blog-7098496942862300225.post-41487174962430321392009-02-02T16:04:00.000-08:002009-02-02T16:06:40.916-08:00Evidence: Why have rules of evidence?<span style="font-weight: bold;">Why have rules of evidence?</span><br /><br /><ol><li>Mistrust of juries</li><li>Substantitive policies related to matter being litigated (tilt balance in one direction or other)</li><li>Substantive policies unrelated to matter being litigated (impact behavior outside of courtroom--spousal privilege for example)</li><li>Ensure accurate fact-finding (want a base level of reliability)</li><li>Pragmatic concerns</li></ol>Kristopher Nelsonhttp://www.blogger.com/profile/17278778516172837095noreply@blogger.comtag:blogger.com,1999:blog-7098496942862300225.post-10534469177687729672008-05-08T18:34:00.000-07:002008-05-08T18:37:42.332-07:00Copyright: the useful article testUseful articles are generally not copyrightable (go get a patent!). So how can we tell if something is too useful to be copyrightable? One has to find a separability between the useful part and the artistic part to protect the artistic part.<br /><ul><li>Physical separation<br /></li><li>Conceptual separability<br /></li><li>Goldstein test:<br /><ol><li>separable if <span style="font-style: italic;">artistic</span> part can stand on its own as a work of art as traditionally conceived AND<br /></li><li>if <span style="font-style: italic;">useful</span> part would be still be <span style="font-style: italic;">useful</span> without the artistic element<br /></li></ol></li></ul>Kristopher Nelsonhttp://www.blogger.com/profile/17278778516172837095noreply@blogger.comtag:blogger.com,1999:blog-7098496942862300225.post-82681742468824382392008-05-08T18:31:00.000-07:002008-05-08T18:34:15.231-07:00Copyright: fair-use factorsElements that can be looked at to find "fair use" in copyright:<br /><ul><li>Purpose and character of the use</li><li>Nature of the workk</li><li>Amount used--substantial amount or not?</li><li>Effect on the market or value of the original work</li></ul>Next, is it <span style="font-style: italic;">parody</span>? (Parody <span style="font-style: italic;">requires</span> reference/incorporation of the original work.)<br />Or, is it <span style="font-style: italic;">satire</span>? (Satire makes fun of society as a whole, and shouldn't need to reference a single, specific work.)Kristopher Nelsonhttp://www.blogger.com/profile/17278778516172837095noreply@blogger.comtag:blogger.com,1999:blog-7098496942862300225.post-12111736801162480112008-05-08T18:30:00.001-07:002008-05-08T18:31:34.505-07:00Copyright: work for hireElements that can be used to determine of an item is a "work for hire," meaning the copyright belongs to the employer instead of the creator:<br /><ul><li>Right to control</li><li>Who exercised <span style="font-style: italic;">actual</span> control</li><li>Back to a common-law definition of employee</li><li>Salaried (a formalistic definition of employee)</li></ul>Kristopher Nelsonhttp://www.blogger.com/profile/17278778516172837095noreply@blogger.comtag:blogger.com,1999:blog-7098496942862300225.post-33025142988631809762008-05-08T18:28:00.000-07:002008-05-08T18:29:47.976-07:00Copyright: idea/expression dichotomy and testsOnly expression is copyrightable, not ideas (or facts, or history... the more historical/factual, the "thinner" the copyright until is disappears entirely).<br /><br />Three possible tests courts have used to separate these:<br /><ol><li>Levels of abstraction</li><li>Pattern</li><li>Total look & feel</li></ol>Kristopher Nelsonhttp://www.blogger.com/profile/17278778516172837095noreply@blogger.comtag:blogger.com,1999:blog-7098496942862300225.post-32749513971597074442008-05-08T18:24:00.000-07:002008-05-08T18:28:12.302-07:00Copyright: infringement elementsDemonstrating copyright infringement requires that one show all three of the following:<br /><ol><li>Ownership of a <span style="font-style: italic;">valid copyright</span></li><li>Copying</li><li>Of constituent elements that are protected</li></ol><br />A <span style="font-style: italic;">valid copyright</span> is (all three required):<br /><ol><li>An <span style="font-style: italic;">original</span> work </li><li>Fixed</li><li>In a tangible means of expression</li></ol>An <span style="font-style: italic;">original</span> work requires both:<br /><ol><li>A modicum of creativity</li><li>Independent creation</li></ol>Kristopher Nelsonhttp://www.blogger.com/profile/17278778516172837095noreply@blogger.comtag:blogger.com,1999:blog-7098496942862300225.post-19200399296261304692008-05-08T18:22:00.000-07:002008-05-08T18:24:38.701-07:00Trademark: fair-use factorsThree factors may lead to a finding of "fair use" when one uses a trademark without permission (all are required to find fair use):<br /><ol><li>There is no way to readily identify a kind of product without using the trademarked name AND</li><li>Only as much of the mark is used as is reasonably necessary AND</li><li>There is no suggestion of sponsorship or endorsement by the trademark owner.</li></ol>Kristopher Nelsonhttp://www.blogger.com/profile/17278778516172837095noreply@blogger.com