Regulating Ex Post: How Law Can Address the Inevitability of Financial Failure

Iman Anabtawi & Steven L. Schwarcz

92 Texas L. Rev. 75

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Unlike many other areas of regulation, financial regulation operates in the context of a complex interdependent system.  The interconnections among firms, markets, and legal rules have implications for financial regulatory policy, especially the choice between ex ante regulation aimed at preventing financial failure and ex post regulation aimed at responding to that failure.  Regulatory theory has paid relatively little attention to this distinction.  Were regulation to consist solely of duty-imposing norms, such neglect might be defensible.  In the context of a system, however, regulation can also take the form of interventions aimed at mitigating the potentially systemic consequences of a financial failure.  Professors Anabtawi and Schwarcz show that this dual role of financial regulation implies that ex ante regulation and ex post regulation should be balanced in setting financial regulatory policy, and they offer guidelines for achieving that balance.

Self-Government and the Judicial Function

David Rudenstine

92 Texas L. Rev. 161

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Rudenstine reviews J. Harvie Wilkinson III’s Cosmic Constitutional Theory: Why Americans Are Losing Their Inalienable Right to Self-Governance.

The Arbitral Judgment Rule: Using the Business Judgment Rule to Redefine Arbitral Immunity

Matthew Bricker

92 Texas L. Rev. 197

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In the United States, arbitrators enjoy an absolute immunity from civil liability provided that they perform the arbitral acts within their jurisdiction.  Accordingly, arbitrators can only be held liable when they fail to render a decision at all or when they no longer assume responsibilities that are functionally comparable to those of a judge.  In this respect, arbitrators are unique in the world of professionals.  Other professionals (e.g., doctors, lawyers, and accountants) incur civil liability for breach of contract, and tort liability for professional misconduct, i.e., failing to follow the proper standard of care.  This prompts an obvious question: why are arbitrators immune from suit while other professionals are not?

In this Note, Mr. Bricker argues that the distinction is mainly the result of the superficial comparison between judges and arbitrators, and as such, there is no persuasive justification for absolute arbitral immunity.  Hence, Mr. Bricker proposes a new rule of arbitral liability that better holds arbitrators accountable for the professional services they provide.

Mr. Bricker begins by examining the origins and development of judicial immunity and traces its extension to arbitrators.  Mr. Bricker then analyzes the justifications for arbitral immunity and argues that the functional comparison between judges and arbitrators is unpersuasive.  He also argues that, while it is important to protect the independent judgment of the arbitrator, doing so does not require absolute immunity.  Mr. Bricker next crafts a new rule of arbitral liability that better holds arbitrators accountable by first acknowledging the difficulties of the problem and then applying a familiar solution––the business judgment rule.  Finally, Mr. Bricker defends the new rule of arbitral liability against contractual-based criticisms by exploring what would occur if the liability of the arbitrator were to be increased or decreased.

Off-Label Drug Promotion and the Use of Disclaimers

Dina McKenney

92 Texas L. Rev. 231

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Under the current enforcement system, promoting a drug for unapproved, “off-label” uses is a violation of the Federal Food, Drug, and Cosmetic Act (FDCA).  Ms. McKenney’s Note begins by examining the current regulatory scheme in place for off-label promotion and the possible benefits and consequences of allowing the promotion of off-label uses.  Ms. McKenney then discusses how current case law regarding commercial speech threatens the government’s off-label promotion prosecution scheme.  Finally, Ms. McKenney proposes a two-tiered disclaimer system that reconciles the potential harm with the noted benefits and addresses widespread concerns about the constitutionality of the current system.  Under this system, basic disclosure requirements would apply to all off-label promotions of drugs.  A heightened, second level of disclosure requirements would apply if a pharmaceutical company is not currently seeking FDA approval for the off-label use.  The effect of such a system would be to increase data transparency about the claims of off-label efficacy while simultaneously encouraging drug companies to seek FDA approval for off-label uses.

Introduction: Footholds of Constitutional Interpretation

Alexander Tsesis

91 Texas L. Rev. 1593

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As the oldest functioning constitution in the world, the United States Constitution contains many ambiguities that do not lend themselves to easy, much less irrefutable answers.  Constitutional theory is the method of unpacking the text of the Constitution, understanding its relation to society, determining the role of the three branches of government, and developing a consistent and predictable interpretation.  As with many areas of the law, there is much disagreement on the proper theory of interpretation.  Yet, as irresolvable as the different points of view seem to be, we as a people are left with the need to better understand this ancient Constitution in the context of contemporary disputes of tremendous significance, from gay marriage to welfare benefits and from executive power to judicial authority.  Debate on these matters seems not only inevitable but necessary in a pluralistic, representative democracy.

This introduction to the University of Texas School of Law Symposium on Constitutional Foundations highlights many of the difficult and debated questions in constitutional law today and summarizes the essays submitted.

Maxim Constitutionalism: Liberal Equality for the Common Good

Alexander Tsesis

91 Texas L. Rev. 1609

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In this Article, Professor Tsesis argues that the central purpose of U.S. constitutional governance is the protection of individual rights for the common good.  Members of all three branches of government must fulfill that public trust through just policies and actions.  The maxim of constitutional governance establishes a stable foundation for the rule of law, requiring government to function in a nonarbitrary manner.  It provides the people with consistency and predictability about the scope of governmental powers and responsibilities.

The foundational dictate of governance is incorporated into the U.S. constitutional tradition through the Declaration of Independence and the Preamble to the Constitution.  Those two documents reflect the national commitment to promulgating laws that are conducive to both the public good and the personal pursuit of happiness.  The federal legal system must integrate protections of rights for the common good into statutes, regulations, and judicial opinions that address a plethora of social demands and problems.

The project of maxim constitutionalism runs counter to positivist skepticism about the validity of fundamental constitutional principles.  This Article seeks to demonstrate that maxim constitutionalism reflects the normative underpinning of legal order that is compatible with pluralistic self-governance.  The protection of rights for the common good facilitates the workings of a polity that tolerates debate and deliberation.  The administration of laws for the public benefit enjoins tyrannical majoritarianism and abuse of state authority.

Like originalism, maxim constitutionalism utilizes historical analysis.  But it departs from originalism by denying that the original meaning of the Constitution’s text should be determinative.  Maxim constitutionalism is a binding norm that is independent of any individual mind frame, whether past or present.  In addition, though the forward progress of constitutionalism is informed by judicial opinions, it is not defined by them alone.  Congress must also play a central role in identifying rights and promulgating statutes for their protection.  Recognizing this bedrock purpose of governance distinguishes maxim constitutionalism from prominent strands of living constitutionalism by furnishing an objective and enduring standard for evaluating the legitimacy of governmental actions.  The assessment of public conduct is not procedurally neutral but substantively rich in its account of how governmental actors should further the public good through a legal system designed to secure life, liberty, and the pursuit of happiness for an equal citizenry.

Verdi’s High C

Jack M. Balkin

91 Texas L. Rev. 1687

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In 2000, an outcry erupted at La Scala Opera House when conductor Riccardo Muti led a performance of Il Trovatore that omitted the tenor’s famous high C.  In this Article, Professor Balkin argues that Muti’s explanation—that the C did not appear in Verdi’s original score—is, like many originalist arguments, more radical than it initially appears.  Comparing Muti’s interpretation of Verdi to decisions such as Bolling v. Sharpe, Professor Balkin claims that musical performance provides a more useful analogy to legal interpretation than other art forms because of the role of the audience in shaping a work over time.  Law, like music, involves a triangle of interpretive influences: the Framers (composers), the Judiciary (performers), and the public (the audience). 

Professor Balkin argues that law and the performing arts use similar modalities of interpretation, and that both are constrained by convention and genre.  In Verdi’s time, performer interpolation was expected, and Verdi approved the high C that later became an expectation.  In this context, Muti’s interpretation was radical.  Proponents of the C can use Verdi’s approval as an argument from intent, or use the subsequent predominance of the C as an argument from precedent.  A powerful argument from ethos also exists: the spirit of Italian opera is to embrace the dramatic finale.  In the same way, defenders of the result in Bolling v. Sharpe might argue that the arc of the Constitution bends toward justice, and that a judge who refuses to integrate the District of Columbia schools because of a too-narrow construction of the Constitution’s words does not really understand the great narrative of American progress.  Professor Balkin emphasizes the importance of the audience in both law and musical performance in determining whether radical interpretations such as Muti’s become mainstream.

In closing, Professor Balkin addresses the most evident difference between musical interpretation and legal interpretation: in United States law, the goal is uniform interpretation, whereas in music, multiple interpretations are welcomed.  Professor Balkin notes that this goal of uniformity is not intrinsic to law, however, but a product of the hierarchical American legal system.  As illustrated by different expectations in opera than in other musical genres, the most important shapers of judicial interpretation are institutional.

Precedent and Jurisprudential Disagreement

Amy Coney Barrett

91 Texas L. Rev. 1711

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Over the years, some have lamented the Supreme Court’s willingness to overrule itself and have urged the Court to abandon its weak presumption of stare decisis in constitutional cases in favor of a more stringent rule.  Professor Barrett argues that one overlooked virtue of this weak presumption is that it promotes doctrinal stability while still accommodating pluralism on the Court, i.e., it functions to mediate jurisprudential disagreement.  The doctrine of stare decisis avoids entrenching particular resolutions to methodological controversies while simultaneously limiting precedential reversal by placing the burden of justification on those justices who favor it.  Yet, insofar as it keeps open the prospect of overruling, the weak presumption undeniably comes at a cost to continuity.

Professor Barrett notes, however, that continuity on the Court does not rely as heavily on the strength of stare decisis as is commonly supposed and gives supporting examples such as the prohibition upon advisory opinions, the obligation of lower courts to follow Supreme Court precedent, the Court’s certiorari standards, its rule confining the question at issue to the one presented by the litigant, and the fact that the Court is a multimember institution whose members have life tenure.

 

Pluralistic Nonoriginalism and the Combinability Problem

Mitchell N. Berman & Kevin Toh

91 Texas L. Rev. 1739

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Current proponents of the view articulated by originalists maintain that, subject to a few standard qualifications, judges deciding constitutional cases must enforce the constitutional law.  On the other hand, most proponents of the view articulated by nonoriginalists presumably reject the idea that the constitutional law consists solely of the meanings of the inscriptions in the constitutional text.  Yet, despite such disagreements between originalists and nonoriginalists, their respective views are not, strictly speaking, inconsistent.

In this Article, Professors Berman and Toh seek, first, to discredit the combinability problem and thereby facilitate development and eventual acceptance of pluralistic nonoriginalism. The Article does not solve the combinability problem. Rather, it dissolves it by exposing and making explicit a number of assumptions and predilections among constitutional theorists that are very much dispensable in favor of more credible alternatives. The bottom line, it argues, is that whether an originalist or nonoriginalist view of what our Constitution or constitutional law consists of is better than others depends on the fundamental constitutional facts of our legal system, and that there are no a priori grounds for thinking that a pluralistic nonoriginalist conception of those fundamental constitutional facts is a nonstarter.  Second, the Article seeks to devise a pluralistic nonoriginalist conception of constitutional law that is clear and plausible enough to provide a focal point for debates about constitutional interpretation.