This article proposes a new theoretical framework for resolving conflicts between antitrust law and securities regulation, which is distinctive in four respects. First, it eschews the traditional approach of resolving antitrust-securities conflicts through implied antitrust immunity, which unjustifiably prioritizes securities regulation above antitrust law. Second, it argues for a narrow definition of conflict, encompassing only conduct presently authorized or required by the securities regime that also has likely and significant anticompetitive effects; practices that are illegal under both antitrust law and securities regulation are thereby excluded. Third, this article builds on the literature on the antitrust-intellectual property interface to recommend a structured, rule-of-reason framework for resolving conflicts at the antitrust-securities interface. Unlike implied antitrust immunity, which automatically allows securities regulation concerns to trump antitrust concerns, the rule of reason seeks to strike a proper balance. The analysis begins by asking whether the securities practice has likely and significant anticompetitive effects. It then inquires into the securities regulation concerns behind the conduct and whether there is a less restrictive means of addressing those concerns. Fourth, a two-stage procedure is proposed for implementing the rule of reason to resolve antitrust-securities conflicts in rulemaking and adjudication, involving the collaboration of the Securities and Exchange Commission, the Department of Justice, and the courts.
Artificial intelligence (AI) is no longer merely a tool of invention. It has become an inventor. As AI systems increasingly contribute to the design and discovery of new technologies, their involvement raises novel challenges for patent law. This essay presents the first empirical test of whether jurors systematically perceive alleged patent infringement differently when a product is designed by AI rather than human engineers. In a controlled experiment involving a hypothetical patent dispute, participants were significantly more likely to find infringement, award higher damages, and judge business practices as less ethical when a putatively infringing device was designed by AI. These findings reveal a legally irrelevant but psychologically powerful distortion in adjudicating AI-designed products, with serious implications for firms, innovation policy, and the future structure of patent incentives. We conclude by discussing strategies for business leaders, litigators, and policymakers as AI becomes a central actor in technological innovation.
In many cases alleging consumer deception, a plaintiff must prove both that the representation at issue was false or misleading and that it was material. While there is an extensive body of law addressing when a representation is false or misleading, there is a paucity of authority on how to establish that the representation was material. Neither federal regulation nor case law has clearly laid out a standard method by which materiality should be measured. In this article we empirically show how a research study's design can impact its effectiveness in identifying an attribute's materiality and propose a measurement method that can effectively measure both small and large effects of that attribute, independent of the overall desirability of a product and the importance of other characteristics of that product. Using mathematical simulations, we show that between-groups experiments are less effective than within-groups experimental choice tasks at identifying the presence of a material attribute when ceiling effects or other important traits are present in a product. We also explain why focalism bias and the need for marketplace realism are inappropriate objections to the use of a within-groups choice task to measure materiality. Finally, we demonstrate the utility of our proposed methodology with two case studies.
In the face of powerful criticism, the "reliance interest" continues to hold an impactful position in judicial and academic treatment of contract damages. And yet, the theoretical foundation of reliance damages for breach of contract remains unsettled. This Article exposes the inability of the reliance scholarship to coherently explain and justify the widespread judicial practice of awarding reliance damages in lieu of expectation damages. Considering this failure, the Article offers a hitherto overlooked promise-based conception of the reliance interest. Under reliance-as-promise, the right to be reimbursed for one's reasonably foreseeable performance costs is a secondary remedial right grounded in an implied contractual promise which the law attributes to every contracting party. When due to a total breach it becomes clear that the contract will not be performed, the background duty to reimburse comes into play. The Article presents and develops this promise-based account. It claims that reliance as promise can provide a more coherent normative and explanatory account of the phenomenon of awarding reliance damages for breach of contract. Apart from its explanatory force, and the normative support it can find in major contract theories, reliance as promise finds support in basic psychological insights and in the findings of a preliminary empirical study conducted by the authors.
The emerging relationship between fintechs and banks has revealed antitrust's antiquation. At one time, scholars predicted that fintechs could democratize banking while providing a critical source of competition. But then banks began to acquire their digital rivals: about 900 acquisitions of fintechs have taken place since 2021. By merging or partnering, banks have squelched competition in an already concentrated market. Antitrust's absence in bank-fintech deals is additionally curious because enforcers recognize that digital platforms such as fintechs are prone to monopolization. Despite this landscape, enforcers have asserted that the rise of fintechs should make antitrust even more deferential to bank mergers. The problem is that antitrust law adheres to an orthodox brand of economic theory about how people ostensibly behave. At its root, antitrust cannot intervene in most scenarios because rational actors are supposed to correct markets. This article shows that consumers in the digital era cannot always detect or mitigate their injuries, suggesting that antitrust is underenforced in fintech and other innovative sectors. Just as troublesome is the outdated assumption that consumers suffer harm as a collective group. With digital markets, anticompetitive conduct may injure only certain people such as low-income persons. Recognizing these issues, the Department of Justice (DOJ) and Federal Trade Commission (FTC) issued new merger guidelines that seem to jettison outdated assumptions about when markets will self-correct. The primary assertion of this article is that to preserve the promise of fintech and its ability to democratize financial services, the courts should embrace the agencies' new approach.
Large multinational companies (MNCs) are increasingly leveraging the enormous value embedded in the global digital economy. This has resulted in numerous innovations; however, it has likewise resulted in the loss of billions of dollars in tax revenue to governments due to outdated laws that generally assume a brick-and-mortar economy and residence-based taxation. Governments have responded with a multitude of efforts to capture lost revenue and update tax laws to meet the realities of the digital era, but with only partial success. Resistance from MNCs and disagreements among national governments resulted in significant delays and half-hearted responses. The result is that current laws do not sufficiently capture lost tax revenue from an increasingly valuable digital environment. This article proposes that a robust general anti-avoidance rule (GAAR) can help alleviate the problem of costly tax avoidance by MNCs. A GAAR is a mechanism that gives governments a general power to deny taxpayers the tax benefit of a transaction when the transaction's primary purpose is merely to circumvent the payment of taxes. This article defines the GAAR, presents the advantages and disadvantages of adopting GAARs, and shows how GAARs can be particularly effective in civil law systems. This article then highlights New Zealand's GAAR as a model of effective drafting and enforcement to stop tax avoidant behavior. Finally, this article presents several carrots and sticks, with particular emphasis on a regime enacted in the United Kingdom that specifically deters serial tax avoiders, that can further strengthen GAARs introduced at the national level. The article concludes that GAARs, utilized effectively and enacted in conjunction with strong tax laws, are a necessary and important tool for optimizing enforcement of legitimate tax laws in an increasingly global and digital economy.
The intermingling of sport and political speech has become increasingly poignant. Although basketball star Michael Jordan has now clarified that his famous statement that "Republicans buy sneakers, too" was made in jest when asked about why he did not make political statements, Michael Jordan was well within his rights to avoid the political spotlight and reserve his political and social contributions for more discreet settings. Things have changed since Jordan's playing days in the 1990s; many contemporary athletes promote their activism as part of their commercial identities. The rise in athlete activism has not, however, reduced athlete interest in being "like Mike" by not speaking. In fact, the opposite might be true, as athletes may have a stronger sense of the causes they desire to support, as well as how they are willing to assume the risks associated with social and political activism. Nevertheless, the teams and leagues that make up our sports industry are also developing activist, or at least social, identities and are within their rights to do so. Teams, leagues, and other sport or corporate entities are permitted to engage in corporate social activism (CSA) on causes that are important to them. This Article explores the underexamined world of compelled speech in the realm of private employers. The Article uses the context of private sports leagues to examine the ability of individuals to resist efforts by private employers to compel speech. Furthermore, we extended the scope of our investigation to include examination of compelled speech regulation in the multibillion-dollar industry of collegiate sports. In fact, the heightened degree of institutional control that athletic programs exercise over the lives and careers of college students makes them particularly vulnerable to free speech compulsion that, in some cases, could violate the First Amendment. Our research culminates in the development of suggestions that were formulated based on a thorough survey of the relevant case law and literature on the subject of compelled speech.
The contract-failure theory posits that the nonprofit form can be an indicator of high product quality because the nondistribution constraint reduces the nonprofit manager's financial benefits from cheating. This would give nonprofits an advantage over for-profit firms when consumers cannot determine product quality and thus explains nonprofits' existence. This article finds that nonprofits are not generally more trustworthy. It is methodologically wrong to compare the nonprofit and for-profit managers' personal benefits from cheating to one another. Instead, both nonprofit and for-profit managers will act to maximize their respective utility, seeking either higher income and/or more leisure. Since providing low-quality products leads to both less effort and a lower cost, both nonprofits and for-profit firms will cheat. Further, providers cannot overcharge because there are no informational asymmetries about product price. The market price in contract failure situations will drop, forcing both nonprofits and for-profit firms to offer only the lowest quality product. Shifting to nonprofit purposes requires nonprofits to allocate part of their resources through giving, which makes some of their transactions trustworthy. However, consumers usually cannot identify trustworthy transactions. Adopting the nonprofit form will not make an untrustworthy provider trustworthy; and trustworthy providers are also not necessarily more likely than untrustworthy ones to take that form because it costs untrustworthy-inefficient providers even less to do so. The nonprofit form thus cannot be an effective signal of high quality. Even if nonprofits were more trustworthy, this cannot explain why nonprofits exist. It is the supply side, which only partly overlaps the contract failure situations, that drives the nonprofit sector. The existence of other informational-asymmetries-relieving mechanisms also reduces consumers' demand for the nonprofit form. In debunking the contract-failure theory, this article will be useful for scholars examining nonprofits' behavior and the justification for the nonprofit sector.
This article seeks to analyze the legal, market, and institutional features needed to become an international hub for debt restructuring. To that end, it examines the strategy adopted by Singapore as well as the market and institutional factors generally found in other leading legal and financial centers such as the United States, the United Kingdom, and Hong Kong. It is argued that in jurisdictions that have traditionally had creditor-oriented insolvency systems, such as Singapore, the United Kingdom, and Hong Kong, one of the primary challenges when enhancing the restructuring framework for debtors is ensuring that the insolvency system remains protective of the interests of the creditors. Otherwise, a reform that seeks to support the real economy may end up doing more harm than good, given that creditors may respond by increasing the cost of debt or restricting the availability of credit, ultimately harming firms' access to finance and the promotion of economic growth. Drawing on a novel insolvency index that measures the attractiveness of reorganization procedures from the perspective of debtors, secured creditors, and general unsecured creditors, this article shows how the United States managed to design an insolvency system that is attractive to both debtors and creditors and how Singapore and the United Kingdom have recently enhanced their restructuring framework for debtors while continuing to be attractive jurisdictions for lenders. Therefore, the experiences of these jurisdictions provide valuable lessons for countries seeking to improve their restructuring frameworks. It will be argued, however, that enhancing a country's insolvency and debt restructuring laws represents only the first step toward becoming a restructuring hub. The sophistication of the judiciary, the development of the restructuring ecosystem, and other external factors, such as the international recognition of reorganization procedures, will also play an essential role in the success of a jurisdiction seeking to become an international hub for debt restructuring.
Traditional insolvency duties are designed to protect creditors, yet in times of financial crisis, they may lead to a wave of bankruptcies. This Article challenges the assumption that director insolvency duties always serve creditor interests, arguing that they can generate "congestion costs"-a surge in bankruptcy cases that overwhelms courts and floods markets with distressed assets at fire-sale prices. Drawing on a comparative analysis of legal responses in Germany, Australia, and the United States during the COVID-19 pandemic, this Article demonstrates how the presence or absence of rigid insolvency duties can affect bankruptcy congestion and premature filings during times of crisis. To address these concerns, this Article proposes a designated carve-out, providing temporary relief from insolvency duties during macroeconomic shocks. Where legal reform is impractical, it suggests alternative contractual solutions such as automatic debt deferrals. By integrating macroeconomic considerations into insolvency law, this Article reframes the role of director duties in corporate governance and financial stability. This Article concludes that flexible insolvency frameworks are essential to building crisis-resilient markets.
Despite the stability of the formal Bankruptcy Code, an influential literature suggests a paradigm shift from debtor control to lender control in the actual processing of Chapter 11 cases. Yet, while existing studies highlight who now benefits more from case outcomes, how the doctrinal case content has evolved amidst this paradigm shift remains unexplored. To address this gap, I examine the doctrinal evolution of Chapter 11 cases through citation practices. In bankruptcy law, judges are required to cite sections and co-cite doctrinally related code sections to justify their decisions, similar to how precedents are co-cited. The citation practices enable a systematic examination of corporate reorganization law using information from 6439 bankruptcy opinions, revealing a shift toward a closer relationship between operational and distributional sections. These two types of sections govern critical bankruptcy decisions: operational sections oversee firm activities related to asset deployment and securing financing, while distributional sections regulate decisions concerning creditors' priority and payoffs. Both individual section co-citation analysis and the global examination based on community detection and text analysis demonstrate that these two categories of sections have transitioned from being infrequently co-cited to being frequently co-cited. This article explains the strengthened co-citation relationship between operational and distributional sections as a result of a shift in business transaction structures. In modern bankruptcy, distributional decisions are increasingly made simultaneously with operational decisions-the bundling structure, rather than the traditional unbundled structure. This bundling serves as the mechanism through which lender control is exercised as it sidesteps the priority rule in favor of certain senior lenders. As judges oversee more bundled transactions, sections of different types, implicitly or explicitly, are co-cited more frequently. This study systematically identifies the doctrinal shift from unbundling to bundling for the first time. By linking case content to outcomes, this study enhances our understanding of the bankruptcy law paradigm shift. Furthermore, this network approach to addressing the inconsistency between judicial practice and formal law holds potential in other fields.
This article investigates the burgeoning trend of proceduralization within corporate law, with a spotlight on the board of directors. It delves into the tension between nurturing skill diversity within the board and outsourcing specific functions, and the related paradoxical challenge: while external consultants and specialized directors enhance expertise and decision-making, they may inadvertently expose directors to greater legal risks. Drawing on a comprehensive review of existing literature and relevant case law, the paper examines the intricate dilemmas corporations face when choosing between specialized directors and external consultants, particularly in light of the business judgment rule. It points out the paradox where operations without consultancy costs, ostensibly perceived as financially advantageous, might expose directors to liability, while those with consultancy expenses often avoid scrutiny. It also considers risk management and accountability in today's environment, where reliance on external experts is increasing. Furthermore, the piece identifies two pivotal cross-sectoral shifts: the rising influence of diverse stakeholder cohorts and the evolving role of consultancy firms as board service providers & agrave; la Bainbridge. This paper posits that over-reliance on external expertise may turn boards into "theater boards," where the performative aspects of governance overshadow substantive decision-making, especially when conflicts of interest arise. It addresses the question of which core competencies of the board are nondelegable, examining the balance between delegation and ensuring reliable information from external advisors. While consultants can improve decision-making, the board must retain strategic oversight and accountability. To address these challenges, the paper calls for a robust framework that balances external expertise with safeguarding governance functions. This includes enhancing the board's internal capabilities, ensuring that directors are equipped to critically assess external input, establishing guidelines on consultant reliance, and fostering a culture of critical engagement and board accountability.
Drawing on an original dataset of Delaware Caremark decisions from 1996 to 2024, this article reframes the corporate purpose debate by focusing on directors' oversight duties rather than conventional business judgment cases. It reveals a paradox: Delaware judges espouse shareholder primacy rhetoric; however, they allow Caremark claims to proceed more than twice as often when misconduct causes severe physical or mental harm to stakeholders than when it results in pure financial loss to investors. This pattern, the article argues, reflects a form of "Democratic Capitalism" in which courts filter evolving social values through a shareholder framework, protecting stakeholders when their welfare is tightly linked to long-term firm value. By shifting the lens through which we assess corporate purpose, this article clarifies how Delaware law balances shareholder primacy with stakeholder welfare and provides fresh guidance for boards, litigants, and scholars. This article also challenges the claim that Caremark enforcement is partisan. Through a hand-coded analysis of judicial political affiliation, it becomes clear that Republican and Democratic judges apply the doctrine with striking uniformity. Ultimately, this analysis invites a reassessment of Delaware's doctrinal understanding, revealing a more nuanced judicial posture in how Delaware courts operationalize corporate purpose in practice.
When three banks failed in the Spring of 2023, regulators were roundly criticized for failing to adequately supervise the now-insolvent institutions. Bank supervision-roughly defined as activities to address firm-specific risks that traditional regulations cannot-is of such importance to banking that, in addition to condemning these banks' executives, Congress demanded to know how regulators allowed such mismanagement to occur. Simultaneously, the banking industry is challenging fundamental assumptions about the power of regulators to even engage in supervision. Against this backdrop, examiners, regulators, and legislators must understand the legal framework within which supervision occurs and how that framework allows for contemporary supervision. This article argues that "bank supervision" is simply an umbrella term for the activities undertaken by agency officials across the government, just applied to banks by agency examiners. Rather than being a unique agency action, supervisors license applications, perform routine examinations of banks, offer guidance following those examinations, initiate enforcement actions, and conduct adjudications. Supervision only appears unique because regulators may engage in frequent and deep examinations and interpret and apply capacious regulatory authorities, the combination of which enables them to prevail in most enforcement actions. This article coins the term "supervisory dance" to describe the dynamic that leads banks to acquiesce to supervisors' recommendations made absent the force of law rather than fight future enforcement actions in court.
Regulators, legislatures, and advocacy groups assert that diversity improves decision-making in groups when pushing firms to change the way they select managers, officers, and directors. Likewise, consulting firms trumpet diversity as a path to better organizational outcomes, citing impressive-sounding performance differentials between diverse and non-diverse entities. A review of the empirical literature provides a much more uncertain assessment of the evidence for the "business case" for diversity. This literature is dominated by research designs that do little to isolate causal relationships. This review examines many of the most highly cited articles used to support the proposition that diversity improves decision-making and performance within groups or firms, focusing on the credibility of the research designs employed.
Notwithstanding its many agreeable benefits, the sharing economy has presented numerous negative externalities and policy challenges. Foremost among these is the abuse of users' privacy, which is enabled by the capture of vast troves of data by sharing economy platforms. As humankind confronts the frontier of generative artificial intelligence, examining how privacy harms have been articulated and addressed in the context of ridesharing is a beneficial exercise and one that can be enhanced by looking beyond U.S. borders. This Article, therefore, uses a functionalist comparative law methodology to examine the regulation of ridesharing platforms concerning user data in the United States and China, and to reveal actionable insights for policymakers. Following a primer on comparative law methodology, the Article integrates Chinese- and English-language primary and secondary sources to compare the ridesharing data regulations of China and the United States along their institutional and substantive dimensions. We argue that China has effectively utilized the benefits of its federalist structure by promulgating a floor of data privacy regulations at the national level that enables local regulators to address local realities while also preserving the incentives to innovate that are so important for technology firms. We suggest that a national regulatory floor would also promote consistency and innovation in the United States and would similarly enable regulators to speedily and efficiently respond to market failures in fast-paced technology sectors. We also argue that the utilization of technology to enhance the regulatory oversight of technology firms would behoove the United States, though perhaps with the addition of certain guardrails that do not exist in the Chinese legal environment.
This Article critically examines the recent movement to extend collective bargaining rights and antitrust immunity to non‐employee labor groups, spurred by the First Circuit's 2022 decision in Confederación Hípica de Puerto Rico v. Confederación de Jinetes. Historically, labor under the Clayton Act and the National Labor Relations Act (NLRA) have been limited to employees, safeguarding unions from antitrust scrutiny while requiring employer neutrality in union organization. Yet, the First Circuit extended the Clayton Act's labor exemption to a group of independent contractor jockeys, challenging the traditional employee‐focused framework. As Congress and state and local governments consider further expansions of bargaining rights to non‐employees, new tensions emerge. This Article argues that granting collective bargaining rights to non‐employee groups—without the corresponding employee protections of the NLRA and Fair Labor Standards Act—would significantly harm labor markets and weaken labor's power in collective bargaining. By examining college sports and the gig economy as case studies, we demonstrate how non‐employee bargaining heightens the risk of “sham” labor groups that allow employers to structure labor groups favorably and unionization's inherent checks and balances, starting labor off at an extreme disadvantage in collective bargaining negotiations. This Article calls for a reevaluation of non‐employee bargaining exemptions to ensure robust protections for all workers, avoiding the pitfalls of employer‐dominated bargaining frameworks that offer the antitrust immunity “carrot” without the accompanying labor law “stick.”
Business firms constantly hear that artificial intelligence has changed the world and that they must either utilize artificial intelligence or fall behind. By extension, this would be true of regulatory compliance as well as operations. This article challenges the mantra of artificial intelligence as a ubiquitous agent of change. It does so through the lens of the global anticorruption regime, a transnational web of laws, regulations, and norms that work together to rein in corruption. As this article demonstrates, the global anticorruption regime imposes on business firms a requirement to implement effective and up-to-date antibribery programs. Given the prevailing conception of artificial intelligence as the newly critical tool for business, it would be easy to interpret "effective" and "up-to-date" as requiring the use of artificial intelligence. To determine whether in fact the global anticorruption regime does, this article undertakes two analyses. First, it carefully determines the systems requirements of the type of artificial intelligence most applicable to antibribery programs-systems that can distinguish between honest and corrupt actors and transactions-and determines the regulatory constraints on the use of artificial intelligence in that way. This article then asks specifically what tasks artificial intelligence would be asked to do as part of an antibribery program, and evaluates the capacity of artificial intelligence to perform those tasks given the already determined system requirements and constraints. These analyses yield a surprising conclusion: in some instances, the use of artificial intelligence would be helpful, but for most business firms, particularly for smaller firms or firms that have not experienced bribery, the use of artificial intelligence would not be helpful and could be harmful. Regulators and legal scholars must not think of artificial intelligence as a panacea; its potential use must be analyzed in the context of objectives and the capacities, needs, and limits of artificial intelligence.
In the last decade, we learned of massive scandals at some of the world's largest companies. In each of those cases, compliance officers were charged with ensuring that the company adhered to legal and regulatory requirements and their own internal codes of conduct, and yet, these companies were not protected from their own bad actors. Compliance functions have grown in importance, while, at the same time, it has become increasingly difficult to hire and retain qualified personnel for compliance roles. We posit that a key issue facing compliance personnel-one that could be improved with legislative attention-is the failure of the law to protect compliance officers from retaliation when they blow the whistle by reporting unlawful or unacceptable conduct to superiors inside the organization. In essence, when compliance officers do their jobs and alert the company to possible violations of law or take issue with the company's handling of a potential legal violation, these officers are vulnerable to retaliation and can be terminated, demoted, and the like without legal consequence. The very employees that organizations hire to protect them are themselves unprotected. In this article, we consider compliance officers in three areas: Equal Employment Opportunity (EEO), securities fraud and financial regulation, and anti-money laundering. In two out of the three areas, we find compliance officers uniquely exposed to lawful retaliation, while the third area provides a far more protective environment and offers a path forward for the other two. In both the EEO sector and the securities fraud sector, we highlight the common law doctrines and statutory interpretations that have created this situation for compliance officers. In contrast, the Anti-Money Laundering Act of 2020 (AMLA) provides exceptional protection for whistleblower compliance officers in this sector, and as a result, we propose using the AMLA as model legislation for proposed changes in the other two domains. The plight of compliance officer whistleblowers is complicated by courts that have intentionally and unintentionally narrowed protections without contemplating the broader implications of their actions. We propose that Congress respond to these narrowing doctrines so that compliance officers can effectively do their jobs and protect their organizations from legal liability and scandals, with the assurance of protection against retaliation as they perform this essential function.
