Seattle University Law Review

Public Duties, Private Rights: Privacy and Unsubstantiated Allegations in Washington’s Public Records Act

Robert E. Miller — Wed, 15 May 2013 12:21:35 PDT

Open government laws allow private citizens to monitor public servants. But this vital function of access presents a clash of competing interests: the privacy of public employees versus the public’s right to know. Washington’s Public Records Act (PRA) seeks to balance these interests, and the Washington Supreme Court has fought to adhere to the PRA’s spirit of open government while creating bright-line rules for the ease of government agencies. The Bainbridge Island Police Guild court held that investigative reports of unsubstantiated allegations of sexual misconduct against public officials are highly offensive to a reasonable person and that the public has an interest in knowing about the fact of an allegation, but not the identity of the accused. Part II of this Note lays out the events that led to Kim Koenig’s allegations of misconduct against Bainbridge Island Police Officer Steven Cain and the subsequent public records requests. Part III presents the policies of the PRA and the reasoning employed in the opinions in Bainbridge Island Police Guild and prior cases. Part IV critiques the court’s reasoning in its right to privacy jurisprudence. Part V offers a brief conclusion.

A Barrier to Child Welfare Reform: The Supreme Court’s Flexible Approach to Federal Rule of Civil Procedure 60(b)(5) and Granting Relief to States in Institutional Reform Litigation

Rachel Dunnington — Wed, 15 May 2013 12:21:33 PDT

In a recent decision, Horne v. Flores, the Court demanded a broader and more flexible application of Federal Rule of Civil Procedure (Rule) 60(b)(5). In doing so, the Court opened the door for states to seek relief from court-enforced agreements like consent decrees. This decision undermines the use of institutional reform litigation as a means of fixing the child welfare system and thus deals a further blow to the nation’s most vulnerable citizens. This Note will discuss Horne’s impact on consent decrees stemming from institutional reform litigation in child welfare. Part II will explore the history of Rule 60 as it applies to final judgments, and specifically consent decrees. Additionally, Part II discusses the Supreme Court’s application of Rule 60(b)(5) in Horne. Part III will critique the Court’s decision for providing a more flexible standard that weighs federalism concerns above the merits of the case. Part IV discusses the importance of consent decrees in child welfare and proposes suggestions for their ongoing use to be effective. Finally, Part V provides a brief conclusion.

When the Classroom Is Not in the Schoolhouse: Applying Tinker to Student Speech at Online Schools

Brett T. MacIntyre — Wed, 15 May 2013 12:21:31 PDT

Despite the overwhelming increase in students’ Internet use and the growing popularity of online public schools, the United States Supreme Court has never addressed how, or if, schools can discipline students for disruptive online speech without violating the students’ First Amendment rights. What the Supreme Court has addressed is how school administrators can constitutionally discipline students within traditional schools. In a landmark decision, Tinker v. Des Moines Independent Community School District, the Supreme Court announced the now famous principle that students do not “shed their constitutional rights to freedom of speech or expression at the schoolhouse gate.” Still, the Court continued, school administrators can discipline students when their speech “materially disrupts classwork or involves substantial disorder.” In a later case, the Court stated that free speech rights for students on campus are “not automatically coextensive with the rights of adults in other settings.” In this Comment, I suggest that in order to provide a workable standard that balances online students’ free speech rights with online schools’ obligations to maintain an appropriate learning environment for all students, the Supreme Court should apply Tinker, without its exceptions, to speech made by students at online schools.

The Admissibility of Cell Site Location Information in Washington Courts

Ryan W. Dumm — Wed, 15 May 2013 12:21:24 PDT

This Comment principally explores when and how a party can successfully admit cell cite location information into evidence. Beginning with the threshold inquiry of relevance, Part III examines when cell site location information is relevant and in what circumstances the information, though relevant, could be unfairly prejudicial, cumulative, or confusing. Part IV provides the bulk of the analysis, which centers on the substantive foundation necessary to establish the information’s credibility and authenticity. Part V looks at three ancillary issues: hearsay, a criminal defendant’s Sixth Amendment confrontation rights, and the introduction of a summary of voluminous records. Finally, Part VI offers a summary of and conclusion to this Comment’s analysis.

“Lonesome Road”: Driving Without the Fourth Amendment

Lewis R. Katz — Wed, 15 May 2013 12:21:22 PDT

The protections of the Fourth Amendment on the streets and highways of America have been drastically curtailed. This Article traces the debasement of Fourth Amendment protections on the road and how the Fourth Amendment’s core value of preventing arbitrary police behavior has been marginalized. This Article contends that the existence of a traffic offense should not be the end of the inquiry but the first step, and that defendants should be able to challenge the reasonableness even when there is proof of a traffic offense.

Section 501(c)(4) Advocacy Organizations: Political Candidate-Related and Other Partisan Activities in Furtherance of the Social Welfare

Terence Dougherty — Wed, 15 May 2013 12:21:21 PDT

In the wake of the 2012 presidential election, tax and political law lawyers are left with a number of unanswered questions concerning the political activities of tax-exempt organizations. Despite the importance of these questions, there are striking gaps in the authority of federal tax law governing the conduct of political candidate and other partisan-related activities by tax-exempt organizations. Assuming activities in furtherance of partisan interests are activities that support private interests, I consider what this authority may tell us about the permissibility of Section 501(c)(4) organizations engaging in partisan political activities and having as a constitutive purpose a partisan political goal, and I consider whether the authority supports quantitative limits and qualitative limits. I suggest that this authority may support the existence of some limits to these activities.

Toward an Empirical and Theoretical Assessment of Private Antitrust Enforcement

Joshua P. Davis et al. — Wed, 15 May 2013 12:21:17 PDT

The predominant view in the antitrust field has been that private enforcement, and especially class action cases, yields little or no positive results. This Article analyzes these twenty cases, compares and contrasts their analysis with that of our earlier group of forty cases, and draws new insights from the results of all sixty combined. This Article demonstrate that private antitrust litigation has provided a substantial amount of compensation for victims of anticompetitive behavior: at least $33.8 to $35.8 billion. The studies also demonstrate that private antitrust enforcement has had an extremely strong deterrent effect. In fact, this research demonstrates that private enforcement probably deters more anticompetitive behavior than even the appropriately acclaimed anti-cartel program of the DOJ Antitrust Division.

In Memory of Professor Derrick Bell

Bell Symposium — Wed, 15 May 2013 12:21:15 PDT

Derrick Bell—law teacher, mentor, scholar, activist, author, loving husband and father—larger than the sum of his many parts. The articles in this symposium are fitting tributes to his legacy and valuable contributions to Derrick’s memory.

Seattle University Law Review — Wed, 15 May 2013 12:21:12 PDT

Proposition 8 Is Unconstitutional, But Not Because the Ninth Circuit Said So: The Equal Protection Clause Does Not Support a Legal Distinction Between Denying the Right to Same-Sex Marriage and Not Providing It in the First Place

Nathan Rouse — Sun, 10 Mar 2013 13:45:38 PDT

In Perry v. Brown, the Ninth Circuit held that Proposition 8 is unconstitutional. But in doing so, the court stepped back from the breadth of the district court’s decision. The Ninth Circuit did not address whether same-sex marriage is a fundamental constitutional right. Nor did the Ninth Circuit address whether the Equal Protection Clause categorically prevents states from limiting marriage to opposite-sex couples. Instead, the Ninth Circuit reached the narrow conclusion that Proposition 8 violates the Equal Protection Clause because it withdrew a preexisting legal right from a marginalized group without any legitimate purpose. The Ninth Circuit should have held that the Equal Protection Clause prohibits any denial of the right to same-sex marriage, regardless of whether it is withdrawn or withheld. Accordingly, the Supreme Court should affirm the Ninth Circuit, but disregard its reasoning. The Court should instead adopt the district court’s reasoning. Part II provides background information on the facts and district court bench trial that led to the Ninth Circuit’s decision in Perry. Part III then summarizes and explains the decision. Part IV argues that the U.S. Supreme Court’s equal protection jurisprudence does not support the narrowness of the Perry court’s holding. Part V concludes.

Who Wants to Watch? A Comment on the New International Paradigm of Financial Consumer Market Regulation

Toni Williams — Sun, 10 Mar 2013 13:45:37 PDT

This Article explores the capacity of the G20’s model of financial consumer protection to reconfigure relationships between financial firms and consumers, focusing in particular on the market conduct of financial firms. Although this Article does not focus directly on Adolf A. Berle’s work, it does engage with some of his enduring concerns about economic relations between corporations, regulators, and individuals; the socialcontext of those economic relations; and the role of law and legal regulation in shaping market relations. More specifically, this Article considers new international regulatory principles related to corporate social responsibility— a recurring theme of Berle’s work11—in the somewhat novel context of consumer-finance markets. Part II describes the dominant paradigm of consumer-finance regulation before the crash and then outlines two important aspects of contemporary consumer-finance marketsthat bear on the relationships between firms and consumers— the increasing importance of household financing in the revenue streams of many global banks and the inequalities in the distribution of consumer debt. Part III outlines the elements of the G20 model and critically analyzes its understanding of consumer protection in retail-finance marketsand its potential to realize that protection. Part IV concludes.

Dinner Parties During “Lost Decades”: On the Difficulties of Rethinking Financial Markets, Fostering Elite Consensus, and Renewing Political Economy

David A. Westbrook — Sun, 10 Mar 2013 13:45:35 PDT

This Article addresses two groups of problems that ought to be understood in relation to one another. This Article has three movements. In Part II, I discuss conceptual obstacles to forming the new elite consensus that rethinking the role of financial markets requires. To produce policy reform, it is not enough to have new ideas; the ideas must be understood, adopted, and acted upon by people. Policy reform is thus always a function of conversations. In Part III, I discuss some possible ways the elite consensus might be formed. In Part V, the conclusion, I offer a preliminary assessment of the strengths and weaknesses of the approach taken by “Rethinking Financial Markets,” which goes “live” as this journal goes to press.

On the Rise of Shareholder Primacy, Signs of Its Fall, and the Return of Managerialism (in the Closet)

Lynn A. Stout — Sun, 10 Mar 2013 13:45:34 PDT

In their 1932 opus "The Modern Corporation and Public Property," Adolf Berle and Gardiner Means famously documented the evolution of a new economic entity—the public corporation. What made the public corporation “public,” of course, was that it had thousands or even hundreds of thousands of shareholders, none of whom owned more than a small fraction of outstanding shares. As a result, the public firm’s shareholders had little individual incentive to pay close attention to what was going on inside the firm, or even to vote. Dispersed shareholders were rationally apathetic. If they voted at all, they usually voted to approve whatever course of action was recommended by the company’s incumbent directors, including the re-election of the directors themselves.

Rebalancing Private Placement Regulation

William K. Sjostrom, Jr. — Sun, 10 Mar 2013 13:45:33 PDT

Regulating securities offerings entails balancing investor protection and capital formation. Inevitably, this balance gets upset. As financial markets evolve, Congress passes new legislation, the Securities and Exchange Commission (SEC) adopts new rules, and the courts issue unanticipated opinions. These events upset the balance because they happen in an uncoordinated and haphazard manner and oftentimes produce unintended consequences.The Article proceeds as follows. To set the stage, Part II provides background on the Securities Act and describes the differences between public offerings and private placements. Part III explains why rebalancing private placement regulation may be warranted. Part IV offers proposed statutory language for a new civil liability provision in the Securities Act specifically for private placements. Part V concludes.

Equity Derivatives and the Challenge for Berle’s Conception of Corporate Accountability

Janis Sarra — Sun, 10 Mar 2013 13:45:32 PDT

With the proliferation of equity derivatives and related structured financial products, the North American conception of corporate governance faces a new and distinct challenge to its underlying premises.This Article analyzes these developments with a focus on the implications for director and officer accountability and corporate sustainability, using the occasion of the third symposium of the Adolf A. Berle, Jr. Center on Corporations, Law & Society to consider whether Berle’s analysis of corporate accountability offers any insights into how to address the uncoupling of economic interest and legal rights in corporate governance. Part II of this Article sets the context for the discussion, distinguishing the model of corporate governance prevalent in the United States from models applied elsewhere. It also briefly discusses why Berle’s shareholder-accountability model resonated with governance challenges at the time Berle wrote. Part III examines how the introduction of equity swaps and similarly structured financial products has, in a number of instances, uncoupled legal rights and economic interests, fundamentally challenging some of the underlying rationales for the shareholder- primacy model. Part IV discusses director and officer accountability in jurisdictions where equity swaps have become prevalent, and Part V considers directors hedging their own risk through derivatives activities. Part VI briefly examines why some of the current regulatory initiatives do not address the accountability concerns raised by derivativesactivities, and Part VII provides some initial thoughts as to how Berle’s original reasoning might be adapted to a more nuanced model of corporate governance and accountability. Part VIII concludes by noting that Berle’s analysis that the exercise of corporate power is subject to the equitable limitation that it cannot harm the interests of equity holders can potentially be applied to a broader set of stakeholders, and that the good faith conduct of directors and officers may play a role in determining what economic interest is actually at risk.

Hedge Funds and Risk Decoupling: The Empty Voting Problem in the European Union

Wolf-Georg Ringe — Sun, 10 Mar 2013 13:45:31 PDT

The law must remain adaptive and responsive to the constantly changing challenges of our society and our business life. One of the most pressing challenges of the past years is the emergence of alternative investment funds, in particular hedge funds, which masterfully exploit the traditional categories of corporate law, financial derivatives, and risk management. This Article is only concerned with the first of these two forms— negative decoupling.9 It looks at the various forms of negative riskdecoupling strategies and tries to shed light on their overall desirability. Three distinct theoretical perspectives are used as an analytical framework to examine the vast challenges of risk-decoupling: (1) a classical agency costs approach; (2) an information costs perspective; and (3) a view from corporate finance. This Article argues that shareholders with hedged risk exposure do not correspond to the traditional market expectations of shareholders. Based on the insight developed from these policy perspectives, this article develops regulatory reform proposals, particularly with regard to the EU context.

Revisiting “Truth in Securities” Revisited: Abolishing IPOs and Harnessing Private Markets in the Public Good

A. C. Pritchard — Sun, 10 Mar 2013 13:45:30 PDT

This article's focus is the idea that the transition between private- and public company status could be less bumpy if we unify the public–private dividing line under the Securities Act and Exchange Act. Part II of this article outlines the current public–private dividing lines under the Securities Act and the Exchange Act. This part also explores Facebook’s recent transition from private to public status under that framework, as well as Congress’s recent intervention in the field with the JOBS Act. Part III explores the problems of making the transition from private to public, focusing on IPOs and their role in capital allocation. This part uses Facebook’s IPO as both an illustration and as a cautionary tale. Part IV sketches an alternative to the current regulatory framework based on the two-tier-market proposal summarized above. Part V concludes.

Corporate Governance as a School of Social Reform

Ciarán O’Kelly — Sun, 10 Mar 2013 13:45:29 PDT

In this paper, I present a vision of the corporation as a moral person. I point to “the separation of ownership and control” as a moment when the corporation broke away from the moral lives of ownermanagers. I then draw out the manner in which we can speak of the company as a moral person. Finally, through a discussion of social reporting in two British banks, I point to a shift in how this moral personhood is articulated, with the rise of corporate governance—or doing business well—as its own foundation of corporate responsibility. I propose a view of corporate responsibility as a “transmission mechanism” for the company’s role in moral life, situated in the broader social conception of “moral economy.” This viewpoint sets out landscapes of legitimation and justification through which the ties that underpin economic life are founded.

The Common Link in Failures and Scandals at the World’s Leading Banks

Justin O’Brien et al. — Sun, 10 Mar 2013 13:45:28 PDT

This Article argues that both the root cause of the crisis and the route to restoring trust and confidence is to be found in ascertaining how to regulate culture across mandates, processes, and use of discretion. Part II identifies the internal and external failings of four of the most recent global banking scandals within the CEDAR matrix. Part III discusses the regulatory challenges faced when compliance serves no practical function and the consequent material risk to market integrity. This Article concludes by suggesting that it is unsustainable for regulation to be decided, implemented, and monitored at a national level. Global oversight has become an imperative to reduce the conflicts of interest that may create profitable industries, but not socially beneficial ones.

Shareholder Social Responsibility

David Millon — Sun, 10 Mar 2013 13:45:27 PDT

Amidst concerns about the negative effects on long-run value and competitiveness, one overlooked consequence of short-termism is its impediment to corporate social responsibility (CSR).In this Article, Part II examines the short-termism phenomenon, first from the point of view of investors and then from that of corporate managers, and summarizes widely held views about the social costs of short-termism. Part III then shifts the focus to the impact of shorttermism on CSR, a problem that has been largely overlooked, and develops two theories or models of CSR: the “ethical” and the “strategic.” Part III also explains how short-termism presents a significant obstacle to both models of CSR, which compounds concerns about the impact of short-termism on long-run corporate success. Accordingly, it is all the more urgent to understand the causes of institutional investor shorttermism, a subject that has not received the attention that it deserves. In Part IV, the Article first examines the pressures that institutions— particularly public and private pension funds—face to meet their current obligations. It then turns to competition among institutions for investor funds, a problem for mutual funds in particular. Finally, the Article touches briefly on competition among independent investment advisors and fiduciary duty law as potential contributors to the short-termism phenomenon.