Volume 2006

Number 1

Articles

The Jeffersonian Treaty Clause

Gary Lawson & Guy Seidman | 2006 U. Ill. L. Rev. 1

At first glance, the Treaty Clause contained in Article II, Section 2 of the U.S. Constitution appears to grant power to the President and the Senate that is unlimited in scope, and that position represents settled doctrine. However, Professors Lawson and Seidman claim that this view of the Treaty Clause does not reflect the original meaning of the Constitution.

Professors Lawson and Seidman, employing a methodology that in-terprets the Constitution to mean what a reasonable eighteenth-century individual in possession of all relevant information would have under-stood it to mean, endorse an “implementational” view of the treaty pow-er, which traces its lineage back to Thomas Jefferson. On this view, the Treaty Clause may be used to carry into execution other federal powers but does not function as a free-standing grant of power. The Treaty Clause thus parallels and complements the Article I Sweeping Clause, which authorizes Congress to implement federal powers by passing laws that are “necessary and proper for carrying into Execution” such pow-ers. The authors do not claim that this interpretation is unproblematic, only that it is the least problematic of all possible interpretations.

Jurisdiction and the Internet: Returning to Traditional Principles to Analyze Network-Mediated Contacts

A. Benjamin Spencer | 2006 U. Ill. L. Rev. 71

Courts have been evaluating the issue of personal jurisdiction based on Internet or “network-mediated” contacts for some time. The U.S. Su-preme Court has remained silent on this issue, permitting the federal ap-peals courts to develop standards for determining when personal jurisdic-tion based on network-mediated contacts is appropriate. Unfortunately, the circuit approaches—which emphasize a Web site’s “interactivity” and “target audience”—are flawed because they are premised on an out-dated view of Internet activity as uncontrollably ubiquitous. This view has led courts to depart from traditional jurisdictional analysis and im-pose elevated and misguided jurisdictional standards. This article argues that courts should reinstitute traditional principles to analyze jurisdiction based on network-mediated contacts in light of current technology that enables Internet actors to restrict the geographical reach of their virtual conduct. Such a return will be fairer for plaintiffs while recognizing the legitimate due process rights of defendants.

Who Owns Work Product?

Fred C. Zacharias | 2006 U. Ill. L. Rev. 127

This article explores the issue of who has, or who should have, the power to control or waive the work-product privilege: the attorney or the client. The Restatement of the Law Governing Lawyers takes the posi-tion that work-product privilege is entirely subject to client control. Sev-eral American jurisdictions have taken the opposite position—that the privilege protects the ability of the bar to operate freely and therefore be-longs to the lawyers who have created the product.

Case law has thoroughly identified and vetted the theoretical justifica-tions for the privilege itself. However, as in many other areas of the law, insufficient attention has been paid to the theoretical justifications for waiver. The failure of scholars, courts, and rule makers to distinguish is-sues regarding control of the privilege from the substantive underpin-nings for the privilege has led to rules that are both simplistic and inade-quate.

This article identifies the possible theoretical approaches to delineating an appropriate control and waiver principle, some reconcilable only with the Restatement rule, others with the contrary position. It then highlights why the choice of theory becomes significant. The analysis illustrates that blind application of either extreme approach fails to account for im-portant considerations underlying the work-product principle. The arti-cle thus proposes a model control and waiver statute that would more di-rectly serve the reasons for which work-product privilege developed.

Notes

Using Economic Development Programs as Tools for Urban Revitalization: A Comparison of Empowerment Zones and New Markets Tax Credits

Jennifer Forbes | 2006 U. Ill. L. Rev. 177

This note examines the Empowerment Zones/Enterprise Communi-ties (EZ/EC) and the New Markets Tax Credits (NMTC) and their reli-ance on tax incentives to revitalize economically distressed, low-income areas. After examining the history, purpose, program requirements, and projects resulting from the two market-based initiatives, the author con-cludes that the current tax incentives primarily benefit private interests. While the goal of both programs is to reduce poverty in low-income areas through economic growth, the programs are built on two distinct theoretical frameworks. The EZ/EC program is built on a “place-based people” policy that focuses on building the community as a method to help the local residents. The NMTC program, in contrast, adopts a “pure place strategy.” This policy focuses on a specific geographical area rather than the economic needs of the area’s residents. Ultimately, these programs fall short of economic revitalization goals because they do not effectively promote sustainable social change. Finally, the note proposes that the tax-incentive programs should shift their focus from place-based restrictions to the development of human capital within the inner-city residents. This direct investment of resources, which would include training programs, counseling services, and more direct residential involvement on project advisory boards, would ultimately create solid social structures within economically depressed areas and support the goal of the economic initiatives in present and future years.

Resolving the Ambiguity Behind the Bright-Line Rule: The Effect of Crawford v. Washington on the Admissibility of 911 Calls in Evidence-Based Domestic Violence Prosecutions

Geetanjli Malhotra | 2006 U. Ill. L. Rev. 205

Crawford v. Washington changed the focus of Confrontation Clause jurisprudence. Before Crawford, hearsay could be admitted against a criminal defendant if the declarant was unavailable and the statement bore sufficient indicia of reliability. After Crawford, the central focus is no longer on a statement’s reliability, but on whether the statement was “testimonial” in nature. Although the Court did not define the word “testimonial,” the author teases out three possible definitions of “testimonial” from the Court’s opinion in Crawford. In light of the dual function of 911 calls, and the peculiar phenomenon of domestic violence, the author suggests that five factors are relevant to whether any statement made during the course of a 911 call reporting an incident of domestic violence is “testimonial.” The author proposes that courts use these five factors on a case-by-case basis to determine whether such statements are testimonial.

Number 2

Articles

Liberalism and Tort Law: On the Content of the Corrective-Justice-Securing Tort Law of a Liberal, Rights-Based Society

Richard S. Markovits | 2006 U. Ill. L. Rev. 243

In this article, Professor Markovits delineates what he considers to be the tort-related moral rights and obligations of members of a liberal, rights-based society as well as the tort-related moral and constitutional obligations of a government of a liberal, rights-based society. A rights-based society prioritizes the just over the good, and a liberal, rights-based society derives its moral-rights conclusions from its commitment to valuing most highly individuals’ leading lives of moral integrity.

Professor Markovits argues (inter alia) that liberalism implies that the concrete standard of wrongfulness that should be applied to choices made by someone who knew or should have known that his choice would impose “net losses” on others will depend on the nature of the loss in question: when the relevant “net loss” is a “mere utility” loss, the wrongfulness-standard that liberalism warrants resembles the Hand for-mula for negligence; when the chooser knew or should have known that his choice would or might disserve the interests of one or more of his so-ciety’s members and participants in having and seizing the opportunity to lead a life of moral integrity, his choice will be wrongful if he should have concluded ex ante that, on balance, it would disserve this interest of his society’s members and participants.

Improving Criminal Jury Decision Making After the Blakely Revolution

J.J. Prescott & Sonja Starr | 2006 U. Ill. L. Rev. 301

The shift in sentencing fact-finding responsibility triggered in many states by Blakely v. Washington may dramatically change the complexity and type of questions that juries will be required to answer. Among the most important challenges confronting legislatures now debating the fu-ture of their sentencing regimes is whether juries are prepared to handle this new responsibility effectively—and, if not, what can be done about it. Yet neither scholars addressing the impact of Blakely nor advocates of jury reform have seriously explored these questions. Nonetheless, a number of limitations on juror decision making seriously threaten the ac-curacy of verdicts in systems where juries are given a more prominent role in finding sentencing facts. In this article, we assess the capacity of juries to analyze and deliberate on sentencing-related facts. We consid-er, inter alia, problems of cognitive overload, frustration and loss of motivation due to complex structures, difficulties evaluating evidence that juries do not ordinarily consider, distortions due to the framing of nonbinary questions, and deliberation-related biases. We also propose a model for sentencing-stage jury proceedings that would minimize these problems. Its components include bifurcation of proceedings, partial ap-plication of the rules of evidence, special verdict forms that are carefully designed to minimize framing effects, structural simplification of sentenc-ing tasks, a more active jury, and guidance for jurors on bias-reducing deliberation structures.

A Model Regime of Privacy Protection

Daniel J. Solove & Chris Jay Hoofnagle | 2006 U. Ill. L. Rev. 357

A series of major security breaches at companies with sensitive per-sonal information has sparked significant attention to the problems with privacy protection in the United States. Currently, the privacy protec-tions in the United States are riddled with gaps and weak spots. Although most industrialized nations have comprehensive data protection laws, the United States has maintained a sectoral approach where certain industries are covered and others are not. In particular, emerging companies known as “commercial data brokers” have frequently slipped through the cracks of U.S. privacy law. In this article, the authors propose a Model Privacy Regime to address the problems in the privacy protection in the United States, with a particular focus on commercial data brokers. Since the United States is unlikely to shift radically from its sectoral approach to a comprehensive data protection regime, the Model Regime aims to patch up the holes in existing privacy regulation and improve and extend it. In other words, the goal of the Model Regime is to build upon the existing foundation of U.S. privacy law, not to propose an alternative foundation. The authors believe that the sectoral approach in the United States can be improved by applying the Fair Information Practices—principles that require the entities that collect personal data to extend certain rights to data subjects. The Fair Information Practices are very general principles, and they are often spoken about in a rather abstract manner. In contrast, the Model Regime demonstrates specific ways that they can be incorporated into privacy regulation in the United States.

Antidiscrimination Law in the Administrative State

Julie Chi-hye Suk | 2006 U. Ill. L. Rev. 405

No Abstract Available

Review Essay

Review Essay: Competing Visions of Angst Among Elite Lawyers

Michael L. Rustad & Thomas H. Koenig | 2006 U. Ill. L. Rev. 475

This review essay contrasts the explanations provided in two recent books for the existential anxiety suffered by many lawyers in top national law firms. Jean Stefancic and Richard Delgado’s How Lawyers Lose Their Way: A Profession Fails Its Creative Minds, and Milton Regan’s Eat What You Kill: The Fall of a Wall Street Lawyer, provide provoca-tive case studies of different aspects of schizoid alienation at the highest rungs of the legal profession. Stefancic and Delgado explore the complex relationship between elite attorney Archibald MacLeish and Imagist poet Ezra Pound to demonstrate that top lawyers have struggled for many decades with the conflict between the demands of corporate law and the desire for self-fulfillment. Regan provides a riveting account of the downfall of John Gellene, a leading bankruptcy specialist in a top New York corporate law firm. While Stefancic and Delgado locate the core of the spiritual malaise among top corporate lawyers in the ideological cage resulting from the conceptual blinders of legal formalism, Regan takes a more economic-based perspective, portraying the hypercompetitive elite law firm as a soul destroying work environment.

How Lawyers Lose Their Way: A Profession Fails Its Creative Minds, by Jean Stefancic & Richard Delgado. Duke University Press, 2005.

Eat What You Kill: The Fall of a Wall Street Lawyer, by Milton Regan. Uni-versity of Michigan Press, 2004.

Notes

Still Beating the Dead Horse: Eliminating Redundant Analysis and Inconsistent Judgments for Means-Plus-Function Claims

Lindsay M. Beyer | 2006 U. Ill. L. Rev. 499

The patent system fosters invention, disclosure, and innovation by temporarily protecting the fruits of a patentee’s labor. As an expansion of patent rights, the doctrine of equivalents provides a patentee with the ability to recover for patent infringement by a device that is equivalent, but not identical, to a patent claim. Means-plus-function patent claims under 35 U.S.C. § 112, ¶ 6 permit a patentee to describe, in her claim, the function of an element of her invention, without specifying the structure of the element. However, the application of the doctrine of equivalents to means-plus-function claims has resulted in inconsistent and inefficient infringement analyses that may harm either the plaintiff or the defendant. This note explains the basics of patent law and the heart of the confusion about the doctrine of equivalents and means-plus-function claims. The author evaluates four approaches to the doctrine of equivalents and means-plus-function claims, concluding that the Temporal Predetermination Approach best preserves the goals of each theory of patent infringement while promoting consistency and efficiency. Ultimately, the author proposes changes in jury instructions, the use of a specified set of special jury verdicts, and changes in § 112, ¶ 6 to clear the confusion and provide consistent, efficient infringement judgments.

Number 3

Articles

On the Economic Inefficiency of a Liberal-Corrective-Justice- Securing Law of Torts

Richard S. Markovits | 2006 U. Ill. L. Rev. 525

This article is a companion to Professor Markovits’s article, Liber-alism and Tort Law. In that article, he articulated a vision of what lib-eralism means and its implications for the content of a liberal-corrective-justice-securing law of torts. Liberalism values most highly individuals having and seizing the opportunity to lead a life of moral integrity. A tort law system in a liberal, rights-based society will therefore, above all, offer redress for violations of this right to live a life of moral integrity.

In this article, Markovits reviews his conception of liberalism and its tort-law implications and then describes twelve reasons why a liberal-corrective-justice-securing tort law will not maximize economic efficien-cy. These reasons are rooted in liberalism’s (1) overall “goal” of allow-ing all members of society to pursue a life of moral integrity above every-thing else, (2) the distinction between choices based on the desire to in-flict pain and degradation on others versus choices made for other rea-sons, and (3) the notion that harming others is different from not helping others. Thus, the choices that people make and the decisions made by courts in response to these choices will often be based on factors that do not maximize economic efficiency, but rather support the pursuit of a life of moral integrity.

Is It Fair to Give Religion Special Treatment?

Andrew Koppelman | 2006 U. Ill. L. Rev. 571

It is widely believed that the First Amendment puts courts and legis-latures of the United States in a double bind when it comes to religion: requiring them to remain neutral with respect to religious concerns, while simultaneously protecting these same concerns. Many areas of law cur-rently recognize religious exemptions from generally applicable laws, but there has been persistent uncertainty as to whether it is fair or appropri-ate for government actors to single out religious objectors for this type of special treatment.

This article offers a way to resolve the difficulty. Government may privi-lege religion, but the First Amendment requires that it do so at a very high level of abstraction. It is possible to treat all ultimate human con-cerns with equal respect. It is, however, impossible to formulate a rule that will guarantee that religion be treated precisely no better or worse than other, equally valuable human concerns. As soon as one sets aside crude utilitarianism and begins to decide which human concerns ought to receive special weight and dignity in political decision making, some amount of discretion is unavoidable. All we can do is enumerate ultimate goods, such as religion, and honor them as best we can. But we can only accommodate them one at a time. Because religion is a distinctive human good, accommodation of religion as such is not unfair.

Professor Koppelman begins with a critique of Christopher Eisgruber and Lawrence Sager’s fairness objection to the singling out of religion. Eisgruber and Sager argue that religion should not be privileged over other deep and valuable concerns, but should be protected from discrimi-nation, due to the particular vulnerability of religious minorities. Professor Koppelman observes that protection and privilege are logically continuous with one another, and that Eisgruber and Sager’s approach still calls for the special treatment of religion. If religion cannot be treated with indifference, the question remains why religion should be given special consideration over other human concerns.

After considering various approaches to determining which values should be privileged, Professor Koppelman concludes that the most defensible approach relies upon what Charles Taylor calls “strong evaluation.” Taylor argues that ordinary practical reasoning involves discriminations of better and worse that are independent of our desires and offer stand-ards by which those desires are to be judged. Professor Koppelman notes that religion is only one of many objects of strong evaluation, and that other objects of strong evaluation, such as the desire to protect the envi-ronment and the need to accommodate persons with disabilities, are cur-rently under the protection of the government. Because religion in its broadest sense—humanity’s various efforts to address what is fundamen-tally problematic in the human condition—is an object of strong evalua-tion that is not reducible to any other good, it should be accorded gov-ernment protection as well.

David C. Baum Memorial Lecture

The European Legacy of Brown v. Board of Education

Bob Hepple | 2006 U. Ill. L. Rev. 605

The U.S. Supreme Court’s decision in Brown v. Board of Education has influenced civil rights and antidiscrimination laws beyond the bor-ders of the United States. The concept of equal protection from Brown and other American precedents has been a crucial stimulus for legal de-velopment in Europe. However, these precedents have operated in very different ways in the United States and in Europe. They have been reconstructed and in some cases transformed to fit the different social and political milieu of the European countries. This lecture examines such reconstruction using three illustrations: (1) the recognition of unintentional indirect discrimination; (2) the proof of direct discrimina-tion; and (3) the development of positive duties on public authorities to promote equality of opportunity. There are a number of reasons for the divergences between the two continents. First, there are profoundly dif-ferent contexts of racial disadvantage in the United States and in Europe. Second, racial classifications tend to be less entrenched in European countries than in the United States. Finally, European countries have recognized positive social, economic, and cultural obligations on the state. Thus, the globalization of law and the transplant of legal ideas into various countries actually creates differences between legal institutions, and these differences will continue to grow in the future.

Notes

Food Safety vs. Promotion of Industry: Can the USDA Protect Americans from Bovine Spongiform Encephalopathy?

Gregory L. Berlowitz | 2006 U. Ill. L. Rev. 625

When bovine spongiform encephalopathy (BSE), or mad cow disease, first struck the United States in December 2003, a debate raged over whether the tragedy that decimated Great Britain’s beef industry had finally reached U.S. shores, or whether the infected cow was an anomaly which had somehow broken through a BSE “firewall.” After major importers halted importation of U.S. beef, the United States Department of Agriculture (USDA) announced long-awaited new regula-tions, including increased testing for BSE. Shortly thereafter, two private producers petitioned the USDA for permission to test their own cattle for BSE, and were turned down on the authority of the 1913 Virus, Serum, and Toxin Act (VSTA).

The second case of BSE in the United States arrived among a mixture of criticism and praise. While some claimed the USDA’s regulations were inadequate and unenforced, others pointed at the agency’s BSE controls as minimizing BSE’s impact on the American cattle herd. Either way, the second BSE case revealed inconsistencies in USDA policy and pointed to the need for a more comprehensive BSE prevention policy.

This note examines and questions the efficacy of the USDA’s BSE testing policies. The author notes that the USDA inconsistently enforces BSE prevention regulations and argues that increased testing is necessary. The author also contends that the VSTA does not authorize the USDA to prevent cattle producers from testing their cattle for BSE.

To resolve the problem, the author recommends that the USDA create a comprehensive BSE testing and tracking policy. The author suggests that, among other things, the USDA widen the scope of testing to include younger cows and more random tests. Moreover, the USDA should license and regulate voluntary BSE testing. Finally, the author proposes that tracking, labeling, and mandatory recall policies and procedures be implemented by the USDA to more closely follow and contain the disease.

Willful Patent Infringement: Theoretically Sound? A Proposal to Restore Willful Infringement to Its Proper Place Within Patent Law

Stephanie Pall | 2006 U. Ill. L. Rev. 659

The patent system encourages public disclosure of information and investment in invention by protecting the subject of the patent from infringement by outside parties. Patent infringement contains elements of strict liability, negligence, and intentional torts. The basic claim of patent infringement carries no required mental state and compensates the patentee with a reasonable royalty or recovery of lost profits. In exceptional cases, the patentee may recover attorney’s fees. Upon a showing of willful patent infringement, the court may award up to treble the award granted by the jury. Willful infringement initially resembles an intentional tort because “willful” ordinarily involves intentional or deliberate conduct and treble damages are essentially punitive in nature. However, the Federal Circuit sometimes defines willful infringement subjectively, and other times in terms of a “duty of care” and “reasonableness,” concepts mainly associated with negligence law. This hodgepodge of negligence law and intentional tort law has resulted in confusion and unpredictability for potential litigants.

The author of this note attempts to provide clarity by identifying the ele-ments of negligence present in willful infringement and creating a new cause of action for negligent patent infringement. The author begins with a thorough discussion of the principles of patent law, willful infringement, and the awards available. Next, the author sets out the fundamental elements of negligence. The author then analyzes willful infringement in light of those core concepts, showing that the availability of treble damages conflicts with the essentials of negligence law. The author concludes, however, that neither negligence nor intent should be rejected, but that they should be separated into distinct causes of action, with distinct damages available. Under the author’s scheme, all levels of culpability are accounted for, and the available damages more closely correspond to the infringer’s level of culpability than under the current system.

Number 4

Articles

Challenges and Implications of a Systemic Social Effect Theory

Aaron Xavier Fellmeth | 2006 U. Ill. L. Rev. 691

This is a companion piece to an article appearing in the Georgetown Law Journal in November 2005, which sets forth a new theory for distinguishing civil measures from criminal measures for constitutional purposes. This article discusses the most controversial implications of the Systemic Social Effect Theory and defends it against alternative theories for distinguishing the two sanctions. By preserving the strengths of the alternative theories while avoiding their weaknesses, the Systemic Social Effect Theory integrates constitutional policy and self-consistent jurisprudence with a viable legal theory.

The Supreme Court’s Casual Use of the Assignment of Income Doctrine

Brant J. Hellwig | 2006 U. Ill. L. Rev. 751

In early 2005, the U.S. Supreme Court answered a question that had been plaguing courts for years: whether plaintiffs should be taxed on the portion of contingent fee awards paid to their attorneys. The Court determined that they should. In this article, Professor Brant J. Hellwig focuses on the analysis employed by the Court to reach its conclusion in Commissioner v. Banks and the implications of that analysis for future cases. Although Professor Hellwig believes that the Court correctly as-certained the plaintiff’s tax burden, he suggests that the Court’s use of the assignment of income doctrine was both unnecessary to the final determination of the question before the Court and costly in its potential to confuse the issues of income realization and assignment of income. By applying the assignment of income doctrine to a commercial transaction and employing the doctrine as a means of determining income realiza-tion, the Court broke with the foundational principles of equity that originally supported the assignment of income doctrine and instead created a potential conflict with statutory authority on the question of income realization. Professor Hellwig calls for courts to restrict expansion of this unfortunate trend, noting the potential of the Court’s decision to create more problems than it solves.

Lecture

Objections in Conscience to Medical Procedures: Does Religion Make a Difference?

Kent Greenawalt | 2006 U. Ill. L. Rev. 799

How should the government respond if people refuse standard med-ical treatment? What should the government do if people refuse medical treatment for their children, and what autonomy should teenagers be giv-en in making such choices? Is religion a proper basis for refusing such medical treatment? Furthermore, should medical practitioners have a privilege not to render services that they object to in conscience? This article analyzes such questions and proposes that the most sensible an-swers depend on context. Legislatures should sometimes create no ex-emptions, should sometimes create exemptions based on nonreligious cri-teria, and should sometimes use criteria framed in terms of religion. As a matter of constitutional law, statutes may often use religion as a criterion for a privilege, but even then, legislatures may choose broader criteria.

Notes

Why “It Pays” to “Leave Home Without It”: Examining the Legal Culpability of Credit Card Issuers Under Tort Principles of Products Liability

Adam Goldstein | 2006 U. Ill. L. Rev. 827

This note examines the liability of credit card issuers and their role in creating high levels of consumer debt under the tort principles of products liability. This note is based on the underlying argument that credit cards are products knowingly designed and distributed to the pub-lic in order to take advantage of consumers’ cognitive and behavioral vulnerabilities and to encourage high levels of consumer debt. To make this argument, the author first examines state and federal legislation that has shaped the regulation of credit cards. The author also examines ju-dicial reactions to the legislation as well as the actions taken by credit card companies in response to these legal developments. After establish-ing this background, the author analyzes the liability of credit card issu-ers under a “defective design” theory of products liability. This analysis takes the reader step-by-step through an examination of how credit cards could be considered “products” as opposed to “services,” how the de-sign of credit cards as products are “defective,” and whether reasonable alternative credit card designs can make credit cards safer for consumers. The author highlights how the product defects at issue stem not from the physical card itself, but rather, from the terms and conditions of the cardholder agreements accompanying the cards. Additionally, the author defends his argument against two potential affirmative defenses that credit card issuers could raise to counter a design defect theory of liability. Finally, the author concludes that judicial adoption of a prod-ucts liability framework based on the notion that credit cards are defective products could effectively protect consumers and address the growing problem of credit card debt.

Prescription Drugs in America: The Pain of Pricing Has an Unpromising Cure

Vaishali V. Shah | 2006 U. Ill. L. Rev. 859

The escalating cost of prescription drugs in the United States great-ly burdens consumers and mystifies state and federal legislators. As an increasing elderly population struggles to pay for prescription drugs, law makers try to find a solution that balances the public interest with the profit-seeking interests of private drug manufacturers. Short-term solu-tions, such as illegal importation of drugs and replacement of name brands with generic drugs, temporarily alleviate some, but not all, of the rising costs to consumers. Moreover, some short-term solutions are put-ting the health and safety of consumers at risk.

This note examines federal and state attempts to resolve the prescription drug crisis in the United States. The author discusses reasons for high prices in the United States, the problems associated with short-term solu-tions, and alternative systems successfully used by other countries to con-trol drug costs. The author recommends two long-term solutions that balance free-market principles with the health and welfare of American citizens. The author proposes that: (1) decreasing patent protection terms to make cheaper alternatives available more quickly; and (2) creat-ing a federal committee to oversee drug manufacturers’ pricing mecha-nisms in order to reduce and regulate arbitrarily high prices will de-crease costs but still maintain market competition. Although these solutions are not perfect, they are the most realistic solutions currently available.

Number 5

Articles

Private Monitoring of Gatekeepers: The Case of Immigration Enforcement

Jeffrey Manns | 2006 U. Ill. L. Rev. 887

This article addresses the “monitoring paradox” that public enforc-ers may face in attempting to oversee private gatekeepers. Governments frequently enlist private parties to serve as gatekeepers because they pos-sess special skills or advantages that allow them to detect and prevent wrongdoing by their clients or suppliers in a cost-effective way. Howev-er, the same skills or advantages that enable gatekeepers to monitor wrongdoing often provide them with the means and the incentives to sub-vert their duties and to evade public oversight. This article provides an innovative solution to this challenge by showing how governments may overcome their inability to oversee gatekeepers by providing other private actors, such as victims, qui tam litigants, informants, or even the targeted wrongdoers themselves, with incentives to serve as monitors of gatekeeper compliance. This article will apply this framework for private monitoring of gatekeepers to the chronic failure of efforts to enlist em-ployers as gatekeepers for immigration enforcement. This private moni-toring approach coupled with a set of complementary reforms and safe-guards offers a cost-effective way to provide employers with incentives to comply with their duties to confirm the immigration status of employees and thus to reduce economic incentives for illegal immigration.

On the Decision to Regulate Hedge Funds: The SEC’s Regulatory Philosophy, Style, and Mission

Troy A. Paredes | 2006 U. Ill. L. Rev. 975

In a controversial move in late 2004, the Securities and Exchange Commission (SEC) decided to require hedge fund managers to register with the agency as investment advisers. Until then, the SEC had largely refrained from ramping up hedge fund regulation, even after the collapse of Long-Term Capital Management in 1998.

Although this article takes some issue with the SEC’s decision to regulate hedge funds, its primary focus is not on the particular costs and benefits of regulating hedge funds. The inquiry is broader: what can we learn generally about SEC decision making and securities regulation from the SEC’s decision to regulate hedge funds now by subjecting fund managers to the registration requirements of the Investment Advisers Act? Since the SEC consciously shifted direction in deciding to regulate hedge funds—and in doing so overstepped the traditional boundary of securities regulation by looking past the ability of sophisticated and wealthy hedge fund investors to protect themselves—the hedge fund rule prompts reconsideration of SEC decision making, particularly in the aftermath of Enron and the other recent corporate scandals that marked the early 2000s.

Although nobody knows for sure what motivates a regulator, the SEC’s decision to adopt its new hedge fund rule is consistent with two views—one political; the other, psychological. First, the SEC did not want to get caught flat-footed and embarrassed again, as it had been by Enron, WorldCom, the mutual fund abuses, and securities analyst conflicts of interest. Second, after the earlier scandals, the risk of fraud and other hedge fund abuses weighed disproportionately on the agency, prompting it to act when it had not in the past. The particular concern is that such political and psychological influences result in overregulation.

This article concludes with a suggestion. To mitigate the risk of overregulation, the SEC should increasingly consider using default rules instead of mandatory rules. Defaults at least give parties a chance to opt out if the SEC goes too far. Indeed, in some cases, perhaps the SEC can exercise an even lighter touch and simply articulate best practices.

Book Review Essay

Cost-Benefit Analysis Versus the Precautionary Principle: Beyond Cass Sunstein’s Laws of Fear

Gregory N. Mandel & James Thuo Gathii | 2006 U. Ill. L. Rev. 1037

Perhaps the quintessential role of government is to protect its citi-zens from threats of all types: war, global warming, terrorism, disease, toxic substances. This essay provides a review and critique of Sunstein’s innovative contribution to the lively debate over how government should perform this role, a debate that often pits cost-benefit analysis against the precautionary principle. The authors contend that Sunstein’s critique of the precautionary principle has merit, but that his much-discussed Laws of Fear proposals are deficient in several significant respects. Sunstein’s proposals fail to solve problems related to cost-benefit analysis, implementation of deliberative democracy, and incorporation of social values into responses to threats. The essay concludes with a recommendation for reconceptualizing the precautionary principle in a manner that saves it from Sunstein’s critiques.

Laws of Fear: Beyond the Precautionary Principle, by Cass Sunstein. Cambridge University Press, 2005.

Note

Enforcing the Goals of the Bipartisan Campaign Reform Act: Silencing Nonprofit Groups and Stealth PACs in Federal Elections

Frank J. Favia, Jr. | 2006 U. Ill. L. Rev. 1081

This note examines the ever-increasing role that nonprofit groups are playing in federal elections as independent fundraisers of “soft mon-ey” for political candidates. After examining the history and rationales surrounding enactment of the Bipartisan Campaign Reform Act, the au-thor concludes that the emergence of 527 and 501(c) groups as major players in federal elections threatens the integrity of the electoral system. As conduits for soft money, the groups greatly increase the potential for, and the appearance of, corruption in federal elections by continuing to allow large donations from corporations, unions, special interest groups, and wealthy individuals. In addition, the groups limit the field of poten-tial candidates in federal elections because otherwise qualified individu-als, with little or no ties to large soft-money contributors, are highly dis-couraged from running for office. Lastly, the groups effectively restrict the dissemination of information among potential voters because they en-courage political parties to limit their fundraising activities to potentially large donors of soft money, rather than including individual voters. Therefore, the author concludes that Congress should pass legislation to take 527 and 501(c) groups out of the soft-money game in federal elec-tions. Such legislation would almost certainly be constitutionally permis-sible and would finally accomplish the Bipartisan Campaign Reform Act’s goal of increasing the public’s confidence in this country’s electoral system and in its elected officials.