Volume 68, Issue 3

Volume 68, Spring 2016, Issue 3

Articles

Brian Gallini

This Article reviews the “public safety” exception to Miranda created by the Supreme Court in the 1984 case, New York v. Quarles, and how it has developed in two high profile cases. In both Colorado v. Holmes (the Aurora Movie Theatre shooting) and U.S. v. Tsarnaev (the Boston Marathon Bombing), the exception’s application leads the Author to note that the Court should re-examine Quarles. The author intends to contribute to the discussion regarding, particularly, the scope and limits of Quarles‘ exception. Ultimately, the author notes that the Court never considered anything beyond applying the public safety exception to concern about a missing weapon at the time of Benjamin Quarles’s arrest. Thus, the straightforward approach in Quarles has gone unaltered since the case was decided in 1984. Since then, despite numerous opportunities, the Court has never seen fit to update, interpret, or otherwise reexamine the public safety doctrine—unlike almost every other facet of Miranda. The Article concludes that the modern Court should reexamine Quarles.

Seth C. Oranburg

President Obama signed the Jumpstart Our Business Startups (“JOBS Act”) of 2012 into law to “help entrepreneurs raise the capital they need to put Americans back to work and create an economy that’s built to last.” The goal is to “democratize startups” by making capital available to diverse entrepreneurs in new geographies. Yet the net effect of securities regulations and market conditions is the opposite. Startup companies are encouraged to stay private so capital is consolidating in large, mature firms instead of recycling into new startups. Evidence of consolidation is that once-rare “Unicorns” (billion-dollar startups) now number at least 170. More money is going into huge private companies, yet total venture capital investment is flat, so less is going to new startups. This could stall out the innovation economy.

Democratizing startups requires safe-harbor exemptions from securities regulations for both original issuance and resale of stock, but securities regulations do not permit resale on exchanges. This Article proposes “Rule 144B,” a regulatory provision that could be enacted without an act of Congress, to permit transparent web-based venture exchanges with fraud-prevention intermediaries termed “independent analysts.” This Article answers the SEC’s call for rulemaking comments and informs Congress’s new work on JOBS Act 2.0.

Kevin M. Clermont

From historical, jurisprudential, and comparative perspectives, this Article tries to synthesize res judicata while integrating it with the rest of law. From near their beginnings, all systems of justice have delivered a core of res judicata comprising the substance of bar and defense preclusion. This core is universal not because it represents a universal value, but rather because it responds to a universal institutional need. Any justice system must have adjudicators; to be effective, their judgments must mean something with bindingness; and the minimal bindingness is that, except in specified circumstances, the disgruntled cannot undo a judgment in an effort to change the outcome.

By some formulation of rules and exceptions, each justice system must and does deliver this core of res judicata. Fundamental fairness imposes some distant outer limit on res judicata, too. In between those minimal and maximal limits, context-specific policy will decide how far res judicata will go in any particular country, with huge implications for its legal system. At one extreme the United States loves preclusion, and so it goes well beyond the bare minimum. Thus far, China sticks close to the core. Perhaps for both of these prime examples, the optimum lies closer to the middle.

Ilya Beylin

A core part of the international response to the financial crisis has been the adoption of a requirement to clear standardized swaps. Clearing extinguishes the original transaction, creating two identical transactions between the counterparties to the original trade and a regulated central counterparty, usually referred to as a clearinghouse. The clearing mandate represents a significant intervention into derivatives markets. The net present value of cash flows due under outstanding instruments of the types subject to the clearing mandate rivals the U.S. gross domestic product. Policymakers have justified the clearing mandate as a mitigant of systemic risk. Scholarship, however, has challenged this justification, arguing that the rerouting of payment flows through clearinghouses exacerbates systemic risk. This article reviews, critiques and then adds a new dimension to the scholarly debate by identifying how the clearing mandate changes trading behavior and how those changes affect systemic risk. These overlooked effects have transformative potential for swaps markets as they reduce trading volume, affect swap customization, prevent bank runs, enable risk management during a crisis and create a channel for risk transfer that does not flow through large banks.

Lawrence Ponoroff

The ability of bankruptcy courts to recharacterize a putative debt claim as an equity interest in order to ensure that form does not prevail over substance is beyond cavil. There is considerable uncertainty, however, over whether this power derives from the inherent equitable authority of the bankruptcy courts to subordinate a purported claim to ensure attainment of system-wide objectives or from the courts’ statutory authority to allow and disallow claims. The answer to that question has significant ramifications far beyond the question of debt recharacterization, implicating both the division of authority between state and federal law in bankruptcy cases and the policies and purposes of the bankruptcy regime. This Article takes the position that “subordination,” not “disallowance,” is the most accurate metaphorical concept for understanding recharacterization and that by locating the source of the courts’ authority under the statutory power to equitably subordinate claims, the issue will properly be resolved under a federal framework and with specific attention to the unique aims of the bankruptcy system.

Ciara Torres-Spelliscy

Citizens United v. FEC gives corporate managers a power they may not actually want to wield: the ability to spend corporate resources on politics. Because politics is risky business, and politicizing business is risky, managers that spend corporate resources on elections may impact their company’s own brands.

Politically active corporations in the United States are facing a perfect storm that makes political expenditures perilous. Ingredients of this perfect storm include the increasingly politically polarized American public and technological advances that place data about the political affiliations of brands in the palm of consumers’/shareholders’ hands, which facilitates boycotts and divestment. The author’s purpose here is not to make the normative claim that any customer or shareholder should pull their dollars from politically active firms. Rather, the author is describing the volatile environment that corporate political spending must navigate post-Citizens United, where customers and shareholders are already reacting.

The Article explores why brands are valuable to the firms that own them, as well as why the meaning of a brand is easily co-opted in our wired, social media environment. It discusses the new legal terrain that companies and their brands must navigate post-Citizens United v. FEC. It chronicles the increasing partisan divide among Americans. The author notes that historically, as well as contemporaneously, customers have used boycotts to express their displeasure with the behavior of sellers of goods. The author further examines how shareholders are also impacted by corporate political activity and how shareholders have been reacting to this spending. If customers’ ultimate power is to boycott, investors ultimate power is to divest. The Article then examines three new smartphone applications (“Apps”) that enable customers to instantly access information about firm’s political affiliations and positions. These technologies enable boycotts on a small and large scale. And finally, the author explores how customers and shareholders have caused what is known as the “ALEC Exodus”—an effort to get corporations to abandon membership in the American Legislative Exchange Council (“ALEC”).

This Article takes the position that the two latest decisions of the Supreme Court (Walden v. Fiore and Daimler AG v. Bauman), refining the jurisdictional limits of both specific and general personal jurisdiction, will adversely impact tribal courts by further limiting their personal jurisdiction. The Article provides the reader with a glimpse of the unique nature of tribes, tribal sovereignty, tribal courts, and the Constitution. It further applies this understanding to Walden and the Supreme Court’s latest interpretation of specific personal jurisdiction. Walden is particularly relevant because, while it does not include an Indian casino, it governs the actions of professional gamblers and their winnings—a situation far from unique in Indian Country. The Article then applies the unique status of tribal court jurisdiction to Bauman and the Supreme Court’s latest interpretation of general jurisdiction. Bauman further limits the general jurisdiction of courts and makes it virtually impossible for a tribal court to claim general jurisdiction over a party not domiciled on the reservation, however strong its connection to the reservation. Finally, the Article provides a reflection on the future of tribal court personal jurisdiction and a conclusion urging the limited application of these new cases to tribal courts.

Notes

TRAVERSING THE TRESPASS-PRIVACY DIVIDE: THE EVOLUTION OF
THE FOURTH AMENDMENT IN LIGHT OF CELL PHONES, SPIKE MIKES, AND A VERY TINY CONSTABLE

David C. Botticello

Previously unimagined technological innovation has outstripped the current theoretical framework on which search and seizure law is based. Theories of search and seizure based in trespass or the reasonable expectation of privacy each, alone, lack the capacity to adequately analyze devices involving densely packed aggregate information that is broad in scope and non-physical, which do not significantly increase risk to police officers. This Note argues, as is suggested in Riley v. California and United States v. Jones ̧ a hybrid rule of trespass and privacy, approaching a per se rule, is appropriate in cases involving technologies with such invasive potential.

WHEN A KICKSTARTER STOPS: EXPLORING FAILURES AND REGULATORY FRAMEWORKS FOR THE REWARDS-BASED CROWDFUNDING INDUSTRY

Jay H. Ganatra

As the online marketplace continues to grow and connect the world, crowdfunding has claimed its position as the newest player in the financial industry. Social media has allowed crowdfunding platforms to become places where innovators and small businesses can share their ideas, receive feedback from browsers, and gauge the potential success of their projects before formally launching them. However, as many individuals on both sides of a crowdfunding campaign have learned, an overwhelming validation of an idea does not necessarily lead to realized success, and crushing defeat for creators has often left backers looking for recourse. The problems that users of crowdfunding platforms face are symptomatic of its success; sparse regulation, easy access to capital, and the ever-expanding Internet community have created significant opportunity for millions of users, yet when things go wrong, it has led creators and entrepreneurs to feel that the more money they come across, the more problems they encounter.

This Note explores the failures in the reward and pre-purchase crowdfunding model, particularly in the industry-leading Kickstarter. Specifically, what happens when project creators receive all of their requested funding but fail to deliver with the completion of their project and the promises they made to project backers? In doing so, various existing regulatory schemes and possible legal remedies are analyzed for their compatibility with the rewards-based crowdfunding model. The Note provides an introduction to the crowdfunding industry; the various models of crowdfunding that individuals and businesses have access to; and the business model used by Kickstarter, including what existing protections are available in its Terms of Use. It will analyze the contract formed between a Kickstarter backer and creator upon the completion of their transaction and viable contractual remedies that backers may explore. The Note will further examine what steps Kickstarter can take to protect creators and backers and avoid disputes arising from the backer-creator relationship. It continues by examining existing regulatory schemes that oversee industries similar in type to the rewards-based crowdfunding model, including state and federal consumer protection laws; the newly enacted Title III of the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”); and existing state non-profit registration requirements. Finally, the Note will outline the framework of a regulatory scheme that may be applicable to rewards-based crowdfunding models, which could be used to oversee sites like Kickstarter and Indiegogo that currently do not have any meaningful regulation.

 

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