Performative Causation – Noah Smith-Drelich

Article | Legal Theory
Performative Causation

by Noah Smith-Drelich*

From Vol. 93, No. 3 (March 2020)
93 S. Cal. L. Rev. 379 (2020)

Keywords: Specific Causation, General Causation

Specific causation requires plaintiffs to prove that their injury was caused by this defendant and not merely that an injury like theirs could have been caused by a party like the defendant. Science, however, cannot regularly supply such proof: scientific evidence of causation typically comes via epidemiology and statistics, which provide a bounty of detail about population-level effects but little that translates to individual questions of causation. This means that in the considerable number of cases in which medical causation is uncertain—including (but not limited to) nearly all mass torts—plaintiffs are required to prove what science cannot. Even where studies show that widespread harm is a statistical certainty, without any individual-level evidence proving specific causation, no plaintiff should be able to recover.

But yet some do. This Article’s detailed examination of the specific causation requirement reveals how, in the face of specific causation’s impossible and seemingly unjust demands, judges and juries have grown increasingly receptive to “performative causation,” proofs of causation that rely on shoddy scientific evidence and emotional appeals. This impulse, however well-meaning, routinely facilitates judgments against the wrong defendants or on behalf of the wrong plaintiffs. The result is a mass denial of justice—to countless plaintiffs deprived of any hope of recovery and to numerous defendants held liable for harms they may not have committed.

By illustrating the substantive and procedural dimensions of specific causation’s challenges, this Article provides a foundation for future discussions of reform. In its final section, this Article puts forward its own novel proposal: a private law-administrative hybrid model that uses statistical evidence to grant proportional recoveries to plaintiffs. By better aligning the questions asked by the law with the answers provided by science, this model offers a promising mechanism for resolving individual questions of causation—as well as a template for how mass torts resolutions can capture the best and guard against the worst features of both private law and public law adjudicatory systems.

*. Academic Fellow, Columbia Law School; J.D., M.S., Stanford Law School. Thanks to Professors David Bernstein, John Donohue, Nora Engstrom, Dan Farber, David Fischer, Don Gifford, Hank Greely, Clarisa Long, Bob Rabin, David Rosenberg, Allen Rostron, Alan Sykes, Wendy Wagner, and the members of the Civil Procedure Workshop for all of their advice and help with this Article.

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Doctrinal Sunsets – David Schraub

Article | Legal Theory
Doctrinal Sunsets
by David Schraub*

From Vol. 93, No. 3 (March 2020)
93 S. Cal. L. Rev. 431 (2020)

Keywords: Sunset Provision, Grutter v. Bollinger

Sunset provisions—timed expirations of an announced legal or policy rule—occupy a prominent place in the toolkit of legislative policymakers. In the judiciary, by contrast, their presence is far more obscure. This disjuncture is intriguing. The United States’ constitutional text contains several sunset provisions, and an apparent doctrinal sunset appeared in one of the most high-profile and hot-button Supreme Court decisions in recent memory—Grutter v. Bollinger. Grutter’s famous declaration that while affirmative action programs in pursuit of diversity ends were currently constitutional, “25 years from now, the use of racial preferences will no longer be necessary to further the interest approved today.” Yet despite voluminous literature debating the merits of sunset clauses as a legislative practice, scholars have not systematically explored the utility of incorporating sunset clauses into judicial doctrine.

This Article provides the first comprehensive analysis of the place of sunset provisions in judicial doctrine. It defends the conceptual legitimacy of doctrinal sunsets as valid across all theories of legal interpretation, including textualist or originalist accounts which might seem incompatible with admitting any change in legal outcomes without formally amending the underlying text. In addition, it articulates the practical utility of doctrinal sunset clauses in scenarios where predictable changes in circumstances make it unlikely that an initial rule-decision will remain optimal over a long period of time. This can occur in mundane situations where a placeholder rule is necessary to govern until a more complex and tailored rule can be operationalized. It can also occur in sharply controversial scenarios where a decision is needed immediately under conditions that do not allow for optimal deliberation. Finally, sunsets can be beneficial as a means of prompting reassessment and tailored adjustment of prior decisions which— though perhaps products of the best judgment of their eras—are unlikely to continue tracking changing social circumstances.

*. Lecturer in Law and Senior Research Fellow, University of California, Berkeley School of Law. Thanks to Amin Afrouzi, Larry Alexander, Emily Berman, Josh Blackman, Kiel Brennan-Marquez, Franciska Coleman, Anuj Desai, Craig Green, Aziz Huq, George Lambeth, Jud Mathews, Larry Solum, David Strauss, and the participants at the National Conference of Constitutional Law Scholars, the Berkeley Reading Group in Legal Philosophy, and the Loyola University Constitutional Law Colloquium for helpful comments.

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Prosecution or Forced Transport: Manhattan Beach’s Unconstitutional Banishment of the Homeless

Postscript | Constitutional Law
Prosecution or Forced Transport: Manhattan Beach’s Unconstitutional Banishment of the Homeless
by Jared Osborne*

Vol. 93, Postscript (April 2020)
93 S. Cal. L. Rev. Postscript 70 (2020)

Keywords: Constitutional Law, Ordinance No. 18-0020, Manhattan Beach 

 

It is apparent that an individual’s decision to remain in a public place of his choice is as much a part of his liberty as the freedom of movement inside frontiers that is a part of our heritage. – City of Chicago v. Morales[1]

  Introduction

On September 4, 2018, the Manhattan Beach City Council unanimously passed Ordinance No. 18-0020.[2] The ordinance states, in relevant part: “It shall be unlawful and a public nuisance for any person to camp” on public property.[3] Its stated purposes, among other things, are to keep all public areas “readily accessible and available . . . for their intended purposes”[4] and to promote the “health, safety, environment and general welfare of the community.”[5] Violating the ordinance may be punished as either a misdemeanor or an infraction at the city attorney or city prosecutor’s discretion.[6]

Coincidentally, on the same day the ordinance was passed, the Ninth Circuit held in Martin v. City of Boise that “as long as there is no option of sleeping indoors, the government cannot criminalize indigent, homeless people for sleeping outdoors, on public property, on the false premise they had a choice in the matter.”[7] The court concluded, “a municipality cannot criminalize such behavior consistently with the Eighth Amendment when no sleeping space is practically available in any shelter.”[8]

In turn, Manhattan Beach announced that it would only enforce the ordinance if an individual refused shelter.[9] However, the city failed to mention that Manhattan Beach lacks homeless shelters and that the city planned to have police transport individuals to shelters in other municipalities.[10] Further, many of its neighboring cities also lack homeless shelters,[11] and those that do are over ten miles away.[12] It is unclear what enforcement actions the city has taken pursuant to the ordinance since it has passed.[13] However, the city did join thirty-two other California counties and cities in an amicus brief petitioning the Supreme Court for review of the Ninth Circuit’s Martin decision, which was denied.[14]

Nonetheless, should Manhattan Beach choose to enforce its anti-camping ordinance as planned, this paper argues that doing so would unconstitutionally force individuals to choose between criminal prosecution or banishment. Part I of this paper will briefly provide an overview of homelessness in the United States, particularly in California, and place the Manhattan Beach ordinance within the various laws and practices localities have implemented in response to the rise of homelessness. Part II will examine the use of banishment in criminal law and explore various challenges to such conditions. Finally, Part III will demonstrate that Manhattan Beach’s ordinance and planned enforcement constitute banishment and are invalid for many of the same reasons courts have used to invalidate conditions of banishment imposed in criminal law.

I.  Background

Manhattan Beach’s potential transportation of the homeless out of its jurisdiction should not be viewed in isolation. Instead, it should be evaluated within the current state of homelessness and the laws and practices used to criminalize and control the homeless.

A.  Current State of Homelessness

Before discussing homelessness in America, it is important to understand the U.S. Department of Housing and Urban Development’s (“HUD”) definitions of homelessness and its Point-In-Time Count. According to HUD, “homeless describes a person who lacks a fixed, regular, and adequate nighttime residence,” “sheltered homelessness refers to people who are staying in emergency shelters, transitional housing programs, or safe havens,” “unsheltered homelessness refers to people whose primary nighttime location is a public or private place not designated for, or ordinarily used as, a regular sleeping accommodation for people,” and “Point-in-Time Counts” (“PIT”)  “are unduplicated [one]-night estimates of both sheltered and unsheltered homeless populations” done every year by local planning bodies during the last week of January.[15]

In 2019, HUD’s PIT counted 567,715 people experiencing homelessness.[16] Approximately 62 percent (356,422) were sheltered while the other 38 percent (211,293) were unsheltered.[17] In California, the PIT counted 151,278 individuals experiencing homelessness,[18] but only 136,839 year-round beds.[19]

HUD’s numbers most likely undercount the homeless population. First, the PIT count of unsheltered individuals uses visual counting, resulting in a sizeable portion of the homeless population being excluded from the statistics on account of being unseen.[20] Second, HUD’s measures do not include either those living with others in temporary “doubled up” situations or those who are currently incarcerated or institutionalized but were homeless prior to arrest.[21] Therefore, it is unsurprising that the population has been estimated to be between 2.5 to 10.2 times greater than the PIT count.[22]

Certain localities have seen dramatic growth in not just the numbers of homeless but also the visibility and awareness of such individuals. For instance, the number of unique homeless encampments reported in the media from 2007 to 2016 has increased by 1,342 percent.[23] While some of these encampments are temporary, many others became at least semi-permanent if not fully permanent fixtures within cities.[24]

B.  Punitive Response to Rise of Homeless Population

In response to these overwhelming numbers, cities have largely favored punitive measures over less costly rehabilitative ones.[25] These measures roughly fit into four categories[26]: (1) ordinances prohibiting sitting, lying down, sleeping, or camping in public places; (2) anti-panhandling laws; (3) trespass admonishments and exclusionary orders; (4) homeless encampment sweeps.

Many cities—like Manhattan Beach—have enacted ordinances banning or limiting a citizen’s ability to sit, sleep, or camp in public places. According to the National Law Center on Homelessness & Poverty’s (“NLCHP”) 2016 survey of 187 cities across the country, 18.2 percent of cities banned sleeping in public city-wide and 26.7 percent prohibited sleeping in particular public places. Moreover, the same survey found that 32.6 percent of cities surveyed restricted camping in public city-wide and 49.7 percent did so in particular areas.

Boise, Idaho’s ordinances on sitting, lying, and sleeping in public places—challenged by plaintiffs in Martin—are illustrative of such laws. One law makes “standing, lying, or sitting down on any of the sidewalks, streets, alleys or public places” in an obstructive manner a misdemeanor upon refusal of an authority’s request to “immediately move on.”[27] Sleeping and camping are also covered:

It shall be unlawful for any person to use any of the streets, sidewalks, parks or public places as a camping place at any time . . . . The term “camp” or “camping” shall mean the use of public property as a temporary or permanent place of dwelling, lodging or residence, or as a living accommodation at any time between sunset and sunrise, or as a sojourn.[28]

As NLCHP’s survey demonstrates, Boise is not an anomaly.[29] Consequently, a 2016 survey found that 75 percent of homeless people do not know a place where it is safe and legal for them to sleep.[30] These laws collectively punish the homeless for engaging in the elementary human need for rest and sleep.

Panhandling and loitering laws further allow the state to exert control over the homeless.[31] The following example from the Los Angeles Municipal Code exemplifies this approach:

No person shall stand in or upon any street, sidewalk or other public way open for pedestrian travel or otherwise occupy any portion thereof in such a manner as to annoy or molest any pedestrian thereon or so as to obstruct or unreasonably interfere with the free passage of pedestrians.[32]

 Other localities, such as Bakersfield, California, more specifically target panhandling, by making “aggressive” panhandling a crime in any public place and placing time and manner restrictions on non-aggressive forms of soliciting.[33] Critics contend that cities have used the wide-ranging latitude such ordinances offer to “target and harass” the homeless for the simple and involuntary act of being in public.[34]

Trespass admonishments are different from previously discussed measures in that they involve private business interests using the power of the state to ban unwanted individuals from private, semi-public, and public locations, including “the public transportation system, hospitals and religious institutions, libraries and recreation centers, neighborhood stores, and social service agencies.”[35] In these arrangements, private businesses band together and deputize local police officers to banish “unauthorized” individuals from places for up to one year under threat of arrest, prosecution, and conviction for violating the trespass admonishment.[36] Likewise, exclusion orders provide localities with another method to keep out homeless individuals from certain areas. For example, in Seattle, any individual violating one of the many rules governing behavior in public parks can be subject to an exclusion order prohibiting entry into the park—and possibly all city owned parks—for up to a year.[37]

Finally, in response to the rise of homeless encampments, cities have resorted to forcibly removing and clearing out these campsites.[38] These sweeps frequently result in the destruction or confiscation of people’s only property, including important items such as tents, sleeping bags, valuables, documents, and even medications.[39] Cities argue that these sweeps are necessary to limit crime, prevent environmental degradation, and promote public health.[40] While these sweeps do allow a city to clean areas,[41] they do so at a steep budgetary and human cost.[42] Even worse, there is evidence that these sweeps are an ineffective means to clear out areas[43] or induce individuals to seek out shelters.[44]

II.  Banishment Overview

A.  Banishment in the Criminal Context

Historically, banishment was a form of punishment whereby an individual was deported and exiled from a specific area, typically a state or country.[45] As others have noted,[46] perhaps the most famous banishment known to Western culture occurred when God banished Adam and Eve from Eden.[47] The Greeks, Romans, Chinese and Russians applied such punishment throughout the world.[48] Furthermore, this tradition was prevalent during colonial times as England “transported” criminals to the colonies.[49]

While it is often viewed as an outdated and primitive mode of punishment, banishment is not unheard of in the United States.[50] Today, banishment conditions are generally encountered as a condition imposed on parole, probation, or suspended sentence.[51] It has been theorized that banishment promotes rehabilitation, deterrence, and public safety.[52] Banishment conditions vary in degree and scope, ranging from state exile[53] to banishment from smaller delineated geographic areas within cities.[54]

Despite the continued use of banishment in the United States, the majority of jurisdictions have found at least some forms of banishment to be void, especially in cases involving interstate banishment and banishment by deportation.[55] In fact, twenty-seven of the thirty-six state courts that have evaluated the legality of banishment orders have held that at least some forms of banishment are illegal.[56] Generally, the larger the area a banishment order covers, the increased likelihood a court will find that the condition is void.[57] Each of the seven state courts that have reviewed banishment conditions requiring a defendant to self-deport from the United States as a condition of probation or suspended sentence have overturned such conditions because they violated the Supremacy Clause and exceeded the trial court’s judicial authority.[58] Further, all fifteen state courts that have ruled on state banishment as a condition of probation or suspension of a sentence have found it illegal.[59] However, at least five states distinguish conditions of parole or pardon from conditions of probation or suspension of a sentence, primarily arguing that banishment is a valid condition of parole and pardon because both involve an individual voluntarily agreeing to the banishment condition.[60]

As for multi-county, county, and city banishments, the results are more mixed. No court has held they are per se illegal, though seven of the ten appellate state courts that have reviewed such conditions have refused to uphold a county or city-wide banishment order.[61]

More limited banishment restrictions—specific areas within a city—have been viewed less suspiciously by courts. In five states, such narrower restrictions have been upheld in every instance these types of banishments were challenged.[62] On the other hand, Alaska and Illinois have both invalidated and upheld intracity restrictions dependent on the attendant circumstances,[63] while California, Florida, and Minnesota have voided intracity banishment conditions each time they have been challenged.[64]

At the state constitutional level, fifteen state constitutions explicitly prohibit interstate banishment,[65] and another six state constitutions forbid banishment without some form of due process.[66]

Federal courts have largely followed the same pattern as state courts—exhibiting a decreasing reluctance to void banishment orders the more limited their scope. The two federal district courts to have ruled on the legality of state banishments as conditions of probation each determined that banishment from an entire state is unconstitutional.[67] On the other hand, in 1983, the Ninth Circuit upheld a parole condition requiring a defendant—a resident of Washington prior to incarceration—to complete parole in Iowa, and not enter Washington without the parole commissioner’s permission.[68] There, the court reasoned that the constitutional right to travel is not “revived by the change in status from prisoner to parolee.”[69] In 1982, an Ohio district court held, under the “very peculiar circumstances” of the case, that a convict’s commutation granted by the governor—conditioned upon state banishment—was valid because the defendant waived his constitutional rights when accepting the commutation, and moreover, the government may impose certain conditions of liberty on individuals released early.[70]

Like state courts, federal courts are much more likely to uphold conditions of banishment from a county or specific area within a state than those banishing an offender from an entire state. The First,[71] Third,[72] Sixth,[73] Ninth,[74] and Eleventh Circuits[75] as well as the Southern District of Mississippi[76] have all upheld conditions banishing an individual from a particular county on grounds that such conditions were authorized by Federal statute, reasonably related to rehabilitation, not contrary to public policy, or some combination of these factors.[77]

Federal and state courts, in addition to various legal authorities, disagree on what constitutes banishment.[78] For example, an Oregon court held:

Banishment, however, has traditionally been “synonymous with exilement or deportation, importing a compulsory loss of one’s country.” The 90-day exclusion at issue here differs from traditional banishment in two important respects. First, it is of limited duration. Second, it does not involve loss of one’s country or even one’s place of residence or one’s ability to carry out lawful business within the drug free zones. As noted, variances are available for those who live within the drug free zones or have legitimate business there.[79]

On the other hand, the Supreme Court of Arkansas defined banishment “as an order which compels a person ‘to quit a city, place, or county for a specific period of time, or for life.’ ”[80] Generally, courts, like the Oregon court cited above, that apply a more extreme definition of banishment—an absolute, unqualified, and long-term ban from a large geographical area—are more likely to uphold banishment orders on a limited scale, whereas courts, like the Arkansas court cited above, that apply a less extreme definition of banishment, are less likely to uphold banishment orders.[81]

Johnson v. City of Cincinnati presents a unique example of generalized banishment. In Johnson, the Sixth Circuit held that an ordinance mandating banishment from all “public streets, sidewalks, and other public ways” within a city’s drug-exclusion zones for anyone arrested or taken into custody on certain drug-related offenses in these zones was unconstitutional.[82] Specifically, the court took issue with the ordinance’s lack of individualized consideration prior to exclusion,[83] and its infringement on the right to intrastate travel.[84]

Ketchum v. West Memphis also involved an individual being banished without a conviction or judicial order. In Ketchum, a man sufficiently stated a claim supporting a violation of his federal constitutional right to travel when he alleged police officers arrested him for loitering in West Memphis, Arkansas, drove him across the Mississippi River, and then “dumped” him in Memphis, Tennessee.[85]

B.  Challenges to Banishment Conditions

Banishments have been invalidated for: (1) infringing the constitutional right to travel,[86] (2) lacking a reasonable relation to rehabilitation,[87] (3) violating public policy,[88] and (4) exceeding the statutorily authorized range of punishment.[89]

Banishment conditions have been found to unconstitutionally infringe on an individual’s right to travel.[90] The Supreme Court has recognized a right to “be free to travel throughout the length and breadth of our land uninhibited by statutes, rules, or regulations which unreasonably burden or restrict this movement.”[91] While the right to interstate travel is a fundamental freedom, not all courts apply a strict scrutiny analysis to banishment as a condition of parole, probation, suspended sentence, or pardon.[92] Some apply rational review[93] and others strict scrutiny.[94] Further, parolees may be subject to harsher travel restrictions than what could be imposed on a citizen not on parole.[95]

One potential reason why courts are more likely to uphold county or city banishment orders over state banishment orders could be a reluctance to explicitly recognize a constitutional intrastate right to travel.[96] The Supreme Court has not ruled on whether there is an implicit right to intrastate travel inherent from the right to interstate travel.[97] However, multiple state and federal courts have expressly found such a right, including California,[98] Washington, Wyoming, Wisconsin, Hawaii, Minnesota, and New York at the state level and the Sixth Circuit[99] at the federal level.[100] “[T]he right to intrastate travel (which includes intramunicipal travel) is a basic human right protected by the United States and California Constitutions as a whole. Such a right is implicit in the concept of a democratic society and is one of the attributes of personal liberty under common law.”[101] Moreover, “[i]t would be meaningless to describe the right to travel between states as a fundamental precept of personal liberty and not to acknowledge a correlative constitutional right to travel within a state.”[102]

Given that many courts do not recognize a fundamental right to travel, or have held that probationers and parolees are subject to stricter restrictions on their constitutional rights, banishment orders have also been challenged as not being reasonably related to states’ dual goals to rehabilitate convicts and protect the public at large.[103] Generally, such challenges are roughly analyzed via an application of the attendant facts and circumstances of the underlying criminal offense, banishment, and the connection between the two. However, some courts, such as Washington[104] and Mississippi,[105] apply a specific set of factors to aid in this analysis. A Texas court held that “banishing appellant from the county . . . when he is broke and unemployed is not reasonably related to his rehabilitation,” especially considering the appellant was a resident of the area prior to his conviction for the unauthorized use of a vehicle.[106] On the other hand, a Wisconsin court upheld a banishment condition prohibiting a convicted stalker from entering a city where his victim resided because it was reasonably related to rehabilitation and the defendant had no reason to enter the city, making the banishment a mere “inconvenience.”[107]

In addition to challenging the penological purposes of a banishment order, courts have held that such orders violate public policy.[108] In 1930, the Michigan Supreme Court, in People v. Baum, articulated how interstate banishment violates public policy:

To permit one State to dump its convict criminals into another would entitle the State believing itself injured thereby to exercise its police and military power in the interest of its own peace, safety, and welfare, to repel such an invasion. It would tend to incite dissension, provoke retaliation, and disturb that fundamental equality of political rights among the several States which is the basis of the Union itself. Such a method of punishment . . . is impliedly prohibited by public policy.[109]

Baum is often cited when courts invalidate a banishment order on public policy grounds.[110] In 1946, a California court applied the same reasoning to invalidate county or city banishments on public policy grounds.[111] Conversely, state courts in Mississippi and Georgia have held that intrastate banishments do not violate public policy.[112]

Finally, banishments have been challenged for exceeding the range of punishment authorized by statute. “A common tenet of criminal law . . . is that the judge can only sentence the defendant to that which the legislature has deemed within the permissible range of punishment . . . .”[113] Thus, absent statutory authorization, a judge may not impose a condition of banishment on probation or suspension of a sentence.[114]

III.  Manhattan Beach’s Ordinance and Practices as an Illegal Form of Banishment

The Manhattan Beach Ordinance and its planned enforcement protocol is unconstitutional because it is a form of banishment, burdens the right to travel, is not reasonably related to rehabilitation or public safety, and violates public policy. This is true regardless of whether the city only enforces it when an individual in violation of the ordinance refuses transportation to a shelter arranged for by the city.

A.  The Manhattan Beach Ordinance and Enforcement Protocol Constitute Banishment

Banishment should be understood as “an order which compels a person ‘to quit a city, place, or county for a specific period of time, or for life.’ ”[115] By forcing a homeless individual to leave Manhattan Beach, the ordinance and its enforcement plan undoubtedly “compels” an individual to quit the city. Further, by arranging mandatory shelter services for the individual, the city has specified a period of time—at minimum overnight—the person may not return given that Manhattan Beach lacks homeless shelters. Despite the seemingly fleeting nature of the banishment involved—one might argue a homeless individual can return to Manhattan Beach after spending the night in a shelter—the realities of being homeless make the banishment substantial. By virtue of being impoverished and homeless, an individual forced to acquiesce to a police officer’s offer of relocation under threat of fine or imprisonment most likely lacks the resources to return in a timely manner. Furthermore, the homeless often have jobs they must return to,[116] nearby families or loved ones that require care or visitation, and vital social services close to where they live, albeit without shelter.[117] As researchers Katherine Beckett and Steve Herbert have documented in their interviews with homeless individuals in Seattle banished from certain city zones, ostensibly temporary and limited forms of banishment have a profound impact on the homeless akin to more traditional forms of banishment[118]

Furthermore, it should make no difference whether or not a person “chooses” to accept Manhattan Beach’s offer to accept shelter under threat of prosecution. Just as courts have ruled that a defendant’s “agreement” to a banishment condition on probation does not make it valid,[119] consent given by a homeless person—who unlike a probationer has not just been convicted of a crime—to accept shelter elsewhere does not make the forced transportation out of Manhattan Beach legal. Therefore, the relocation under threat of prosecution should be categorized as a form of banishment.

B.  The Ordinance and Mandated Shelter Beyond Manhattan Beach’s Jurisdiction is Invalid

California has recognized not only an intrastate but also an intra-municipal right to travel under the United States and California constitutions.[120] Therefore, one is precluded from arguing that the forced relocation to a nearby shelter is too geographically narrow to run afoul of the constitutionally provided right to travel. Moreover, while probationers, parolees and prisoners may be subject to “limitations on liberty from which ordinary persons are free,”[121] homeless individuals—like housed individuals—not convicted of a crime may not be. Given the Martin decision, Manhattan Beach cannot prosecute an individual for sleeping outside if the city lacks shelter beds. Therefore, homeless individuals in Manhattan Beach have not relinquished their full constitutional right to travel and the city would violate this right by mandating an individual leave a municipality where a person wants to remain.

While judges are often legally bound by sentencing guidelines requiring punishment to be reasonably related to rehabilitation and public safety at large, the Manhattan Beach City Council is generally not under such constraints when enacting ordinances and city practices. Nonetheless, the city should apply this type of analysis to its anti-camping ordinance. In this case, the homeless individual is not an incarcerated or supervised criminal, so the city should not be concerned with a criminal rehabilitation, but rather a more holistic rehabilitation aiming to help an individual obtain safe and stable housing. Unfortunately, Manhattan Beach’s plan as currently constructed will most likely fail to achieve this aim. As previously discussed, homeless people live in areas where they have social, familial, and employment ties. Thus, forcing someone to immediately accept shelter at a city determined location—potentially with no input from the homeless individual—seems to bear little relation to the goal of getting a person off the streets. At best it might be a temporary and shortsighted fix for the city at the expense of the individual. At worst, a person will refuse the offer and be arrested by the police, requiring the city to use its resources to house the individual in jail, waste administrative capacity on processing, and most likely end up with the individual back living unsheltered in its jurisdiction.[122] Instead of forcing an individual to choose between prosecution and forced relocation, the city should proactively apply city services, including its newly hired homeless liaison, to homeless prevention, not criminalization or banishment.

Additionally, Manhattan Beach’s planned policies are void for public policy for the same reasons criminal banishment orders violate public policy. It invokes the same problems identified by the Baum court in its critique of banishing criminals: sending one’s homeless to neighboring jurisdictions would most definitely “tend to incite dissension, provoke retaliation, and disturb that fundamental equality of political rights among the several States [or municipalities] which is the basis of the Union itself. Such a method of punishment . . . is impliedly prohibited by public policy.”[123]

Finally, Manhattan Beach’s planned enforcement exceeds the range of punishment provided by statutory authority. A violation of the ordinance is punishable “as a misdemeanor or an infraction at the discretion of the City Attorney or City Prosecutor.”[124] The ordinance does not authorize the forced relocation of an individual upon pain of punishment. Similar to how judicial banishment orders were found to exceed the court’s authority,[125] the city’s planned enforcement exceeds the city’s statutory authority. Further, a potential unlawful seizure could result should a person “accept” transportation to an area shelter.[126]

In conclusion, Manhattan Beach’s plan constitutes banishment because it impermissibly compels an individual to quit Manhattan Beach for a period of time. Furthermore, the planned practices are illegal because they unduly burden the constitutional rights of interstate and intrastate travel, are void for public policy, and exceed the statutorily authorized range of punishment. Finally, the city council should alter its practices given how its plan is not reasonably related to achieving a long-term decrease in the homeless population or increasing public safety.

 


[*] *.. Executive Senior Editor, Southern California Law Review, Volume 93; J.D. Candidate 2020, University of Southern California Gould School of Law; B.A. Art History 2009, New York University. Thank you to my wife, Allison, and my family and friends for all of their support. In addition, thank you to Professor Clare Pastore for her guidance not just during the drafting of this Note but throughout my time in law school. Finally, thank you to the talented Southern California Law Review editors for their excellent work.

 [1]. City of Chicago v. Morales, 527 U.S. 41, 54 (1999) (plurality opinion) (quoting Kent v. Dulles, 357 U.S. 116, 126 (1958)) (holding that an ordinance prohibiting a gang member from loitering in any public place with one or more people to be unconstitutionally vague).

 [2]. Manhattan Beach, Cal., Municipal Code ch. 4.140 (2019).

 [3]. Id. § 4.140.030.

 [4]. Id. § 4.140.010.

 [5]. Id.

 [6]. Id. § 4.140.130.

 [7]. Martin v. City of Boise, 920 F.3d 584, 617 (9th Cir. 2019).

 [8]. Id. at 618.

 [9]. Homelessness, Manhattan Beach, https://www.citymb.info/government/city-manager/
homelessness [https://perma.cc/78KC-XQ6U] (“If the City has arranged for adequate and available shelter, and an individual chooses not to use it, the City will enforce the new Ordinance.”). The city steadfastly maintained its ability to enforce the ordinance. Emily Holland, Manhattan Beach Makes it Illegal to Live On the Street, Patch (Sept. 13, 2018, 10:10 AM), https://patch.com/california/manhattan
beach/anti-camping-ordinance-adopted-manhattan-beach [https://perma.cc/4F8J-3FAZ] (“The City still retains the authority to arrest any individual who has committed a crime, regardless of his or her status, and will continue to exercise that authority . . . .”).

 [10]. Mark McDermott, Anti-Camping Ordinances Aimed at Homeless under Scrutiny, Easy Reader News (Sept. 21, 2018), https://easyreadernews.com/anti-camping-ordinances-aimed-at-home
less-under-scrutiny [https://perma.cc/ZV8W-33UK] (“[T]here are no homeless shelters in Manhattan Beach. MBPD offers homeless transport to regional homeless shelters.”).

 [11]. This author’s search could not locate any homeless shelters in the nearby cities of El Segundo, Redondo Beach, Hermosa Beach, or Gardena.

 [12]. For example, the Doors of Hope Women’s Shelter in Wilmington, California, is a 15.9 mile drive from Manhattan Beach’s city center; the Beacon Light Mission, also in Wilmington, is a 16.5 mile drive; and Jordan’s Disciples Community Service is 16.9 miles from Manhattan Beach.

 [13]. The author’s email to the city’s homeless liaison went unanswered.

 [14]. For this brief, see generally Brief for Cal. State Ass’n of Counties & 33 Cal. Counties & Cities as Amici Curiae Supporting Petitioner, 140 S. Ct. 674 (2019) (No. 19-247) (mem.).

 [15]. U.S. Dep’t of Hous. & Urban Dev., Annual Homeless Assessment Report (AHAR) to Congress pt. 1, at 2–3 (2017), https://files.hudexchange.info/resources/documents/2017-AHAR-Part-1.pdf [https://perma.cc/EG3Q-DYRM].

 [16]. U.S. Dep’t of Hous. & Urban Dev., HUD 2019 Continuum of Care Homeless Assistance Programs Homeless Populations and Subpopulations: All States, Territories, Puerto Rico and District of Columbia 1 (2019), https://files.hudexchange.info/reports/published/
CoC_PopSub_NatlTerrDC_2019.pdf [https://perma.cc/HB2V-EJEM].

 [17]. Id.

 [18]. U.S. Dep’t of Hous. and Urban Dev., HUD 2019 Continuum of Care Homeless Assistance Programs Homeless Populations and Subpopulations: California 1 (2019), https://files.hudexchange.info/reports/published/CoC_PopSub_State_CA_2019.pdf [https://perma.cc/M
9N8-FHF6].

 [19]. U.S. Dep’t of Hous. and Urban Dev., HUD 2019 Continuum of Care Homeless Assistance Programs Homeless Housing Inventory Count Report: California 1 (2019), https://files.hudexchange.info/reports/published/CoC_HIC_State_CA_2019.pdf [https://perma.cc/727M
-ERDB].

 [20]. Nat’l Law Ctr. on Homelessness & Poverty, Don’t Count on It: How the HUD Point-in-Time Count Underestimates the Homeless Crisis 6 (2017), https://nlchp.org/wp-content/
uploads/2018/10/HUD-PIT-report2017.pdf [https://perma.cc/RE4P-ACTM] [hereinafter Don’t Count on It]. One New York study found that 31 percent of the homeless slept in areas “not visible” at the time of the count. Kim Hopper et al., Estimating Numbers of Unsheltered Homeless People Through Plant-Capture and Postcount Survey Methods, 98 Am. J. Pub. Health 1438, 1440 (2008).

 [21]. Don’t Count on It, supra note 20, at 6. Such exclusions are not trivial as Houston’s 2017 PIT count increased 57 percent when including individuals in county jails who reported being homeless at the time of arrest. Id.

 [22]. Id.

 [23]. Natl Law Ctr. on Homelessness & Poverty, Tent City, USA: The Growth of Americas Homeless Encampments and How Communities are Responding 7 (2017), https://nlchp.org/wp-content/uploads/2018/10/Tent_City_USA_2017.pdf [https://perma.cc/K9N5-Y2D8] [hereinafter Tent City]; see also Phil Willon & Taryn Luna, Californias Homelessness Crisis Is ‘A Disgrace,Newsom Says in State of the State Address, L.A. Times (Feb. 19, 2020), https://www.latimes.com/homeless-housing/story/2020-02-19/governor-gavin-newsom-state-of-state-california-speech-homelessness [https://perma.cc/T84S-XNWX].

 [24]. See Tent City, supra note 23, at 7 (“Close to two-thirds of reports which recorded the time in existence of the encampments showed they had been there for more than one year, and more than one-quarter had been there for more than five years.”).

 [25]. See Natl Law Ctr. on Homelessness & Poverty, Housing Not Handcuffs 2019: Ending the Criminalization of Homelessness in U.S. Cities 71–73 (2019), https://nlchp.org/wp-content/uploads/2019/12/HOUSING-NOT-HANDCUFFS-2019-FINAL.pdf [https://perma.cc/U6EH-L5AS] (estimating that the annual cost per homeless person of arrests, jail stays, ER visits, and hospital stays costs Central Florida $31,000 in comparison to $10,000 per year to provide permanent housing and a case manager).

 [26]. Cf. Farida Ali, Note, Limiting the Poors Right to Public Space: Criminalizing Homelessness in California, 21 Geo. J. on Poverty L. & Poly 197, 212–16 (2014) (categorizing criminalization of homelessness into the following: (1) sleeping ordinances, (2) loitering ordinances, (3) panhandling ordinances, (4) sanitation ordinances).

 [27]. Boise, Idaho, City Code § 7-3A-1 (2019).

 [28]. Id. § 7-3A-2.

 [29]. See, e.g., Durango, Colo., Code of Ordinances § 17-60(c) (2019) (outlawing—with only limited exceptions—sitting, kneeling, reclining, or lying down “in the downtown business area upon any surface of any public right-of-way, or upon any bedding, chair, stool, or any other object placed upon the surface of any public right-of-way between the hours of 7:00 a.m. and 2:30 a.m. of the next day”); see also Santa Monica, Cal., Municipal Code § 4.08.095 (2020); Beverly Hills, Cal., City Code § 5-6-1501–5-6-1502 (2019); Seattle, Wash., Municipal Code § 18.12.250 (2020).

 [30]. W. Reg’l Advocacy Project, National Civil Rights Outreach Fact Sheet 2 (2016), https://wraphome.org/wp-content/uploads/2017/10/NationalCivilRightsFactSheetOctober2016.pdf [https://perma.cc/KLC8-2GJ4].

 [31]. Terry Skolnik, Homelessness and the Impossibility to Obey the Law, 43 Fordham Urb. L.J. 741, 759–61 (2016) (noting that while not all persons who panhandle are homeless, studies have shown that many panhandlers are).

 [32]. L.A., Cal., Municipal Code  § 41.18(a) (2019).

 [33]. Bakersfield, Cal., Municipal Code § 9.32.020 (2019).

 [34]. Ali, supra note 26, at 212–213.

 [35]. ABA Comm’n on Homelessness & Poverty, No Such Place as “Away:” Why Banishment is a Wrong Turn on the Path to Better and Safer Cities 1–2 (2010), https://www.americanbar.org/content/dam/aba/migrated/homeless/PublicDocuments/ABA_CHP_Banishment_White_Paper_February_2010.pdf [https://perma.cc/4TYY-GWGU].

 [36]. Id. at 1.

 [37]. Id. at 2.

 [38]. Natl Coal. for the Homeless, Swept Away: Reporting on the Encampment Closure Crisis 2 (2016), http://nationalhomeless.org/publication/view/swept-away-2016 [https://perm
a.cc/7FEQ-HGTX
].

 [39]. Id.; see also Jennifer Wadsworth, San Jose Dramatically Increases Sweeps of Homeless Camps, San Jose Inside, (Nov. 2, 2018), http://www.sanjoseinside.com/2018/11/02/san-jose-dramatically-increases-sweeps-of-homeless-camps [https://perma.cc/PV6N-W75X].

 [40]. Natl Coal. for the Homeless, supra note 38, at 5.

 [41]. Dakota Smith, L.A. Wants More Money for Homeless Encampment Sweeps, L.A. Times (Feb. 21, 2018, 4:00 AM), http://www.latimes.com/local/lanow/la-me-ln-homeless-clean-backlog-20180221-story.html [https://perma.cc/7QC3-5WQ6].

 [42]. Office of the City Auditor, Report to the City Council City of San Jose, Audit of the City’s Homeless Assistance Programs 41 (2018), https://www.sanjoseca.gov/Home/Show
Document?id=33914 [https://perma.cc/TT3P-QZQK]. The City of San Jose spent over two million dollars during the 2017–2018 fiscal year. Id. at 37.

 [43]. Laura Waxmann, Homeless Advocates Claim April Sweeps Led to More Encampment Complaints, S.F. Examr (May 25, 2018, 12:00 AM), http://www.sfexaminer.com/homeless-advocates-claim-april-sweeps-led-encampment-complaints [https://perma.cc/59KD-BHNC] (noting that an analysis of homeless encampment complaints in an area affected by a major sweep actually increased 8 percent the month after tents were removed).

 [44]. See Natl Coal. for the Homeless, supra note 38, at 7 (“Seattle’s Human Services Department admitted that the majority of campers displaced in sweeps did not end up in city shelters, and a Honolulu survey revealed that more encampment residents stated that sweeps made them less likely or able to seek shelter than the reverse.” (footnote omitted)).

 [45]. 1 Shirelle Phelps & Jeffrey Lehman, Wests Encyclopedia of American Law 462 (2d ed. 2005).

 [46]. Jason S. Alloy, Note, “158-County Banishment in Georgia: Constitutional Implications Under the State Constitution and the Federal Right to Travel, 36 Ga. L. Rev. 1083, 1085 (2002).

 [47]. Genesis 3:22–23 (New International Version).

 [48]. Phelps & Lehman, supra note 45, at 462.

 [49]. Id.

 [50]. See Brian McGinnis, This Is Why Some U.S. Judges Banish Convicts From Their Home Communities, Wash. Post (Mar. 16, 2017, 4:00 AM), https://www.washingtonpost.com/news/monkey-cage/wp/2017/03/16/this-is-why-some-u-s-judges-banish-convicts-from-their-home-communities/?no
redirect=on&utm_term=.1b630b8931b2 [https://perma.cc/6TET-JPVD] (“Houston County, for instance, has banished more than 500 people since 1998.”).

 [51]. Robert E. Haffke, Note, Intrastate Banishment: An Examination and Argument for Strict Scrutiny of Judicially and Executively Imposed Banishment Orders, 57 Case W. Res. L. Rev. 896, 903 (2007).

 [52]. Id. at 903–08.

 [53]. Reeves v. State, 5 S.W.3d 41, 42 (Ark. 1999) (reviewing an appeal of a seven-year exile from the state of Arkansas as a probation condition imposed on a defendant convicted of stalking).

 [54]. State v. Morgan, 389 So. 2d 364, 366 (La. 1980) (affirming a special probation condition that banned a defendant convicted of prostitution from the French Quarter neighborhood for the length of the defendant’s probation).

 [55]. Wm. Garth Snider, Banishment: The History of Its Use and a Proposal for Its Abolition Under the First Amendment, 24 New Eng. J. on Crim. & Civ. Confinement 455, 466 (1998) (“The majority of courts, both federal and state, which have addressed the legality of banishment, have held that banishment is illegal.”).

 [56]. See Brown v. State, 660 So. 2d 235, 236 (Ala. Crim. App. 1995); Jones v. State, 727 P.2d 6, 7–9 (Alaska Ct. App. 1986); Reeves, 5 S.W.3d at 44–45; Alhusainy v. Super. Ct., 48 Cal. Rptr. 3d 914, 919 (Ct. App. 2006); State ex rel. Baldwin v. Alsbury, 223 So. 2d 546, 547 (Fla. 1969); People v. Harris, 606 N.E.2d 392, 397 (Ill. App. Ct. 1992); Burnstein ex rel. Burnstein v Jennings, 4 N.W.2d 428, 429 (Iowa 1942); Weigand v. Commonwealth, 397 S.W.2d 780, 781 (Ky. Ct. App. 1965); State v. Sanchez, 462 So. 2d 1304,1309–10 (La. Ct. App. 1985); Howard v. State, No. 1909, 2016 Md. App. LEXIS 1370, at *37–38 (Md. Ct. Spec. App. Oct. 12, 2016) (unpublished); Commonwealth v. Pike, 701 N.E.2d 951, 960–61 (Mass. 1998); People v. Baum, 231 N.W. 95, 96 (Mich. 1930); State ex rel. Halverson v. Young, 154 N.W.2d 699, 701–02 (Minn. 1967); Mackey v. State, 37 So. 3d 1161, 1166–67 (Miss. 2010); State v. Muhammad, 43 P.3d 318, 324 (Mont. 2002); Ex parte Thornberry, 254 S.W. 1087, 1089–1090 (Mo. 1923); State v. J. F., 621 A.2d 520, 522 (N.J. Super. Ct. App. Div. 1993); State v. Charlton, 846 P.2d 341, 344 (N.M. Ct. App. 1992); People v. Marcial, 577 N.Y.S.2d 316, 317 (App. Div. 1991); State v. Doughtie, 74 S.E.2d 922, 924 (N.C. 1953); State v. Mose, No. 11CA0083-M, 2013 Ohio App. LEXIS 562, at *7 (Ohio Ct. App. Feb. 25, 2013); State v. Jacobs, 692 P.2d 1387, 1389 (Or. Ct. App. 1984); State v. Karan, 525 A.2d 933, 934 (R.I. 1987); State v. Baker, 36 S.E. 501, 502 (S.C. 1900); Johnson v. State, 672 S.W.2d 621, 623 (Tex. Ct. App. 1984); State v. Schimelpfenig, 115 P.3d 338, 339 (Wash. Ct. App. 2005): Crabtree v. State, 112 P.3d 618, 622 (Wyo. 2005).

 [57]. See, e.g., Schimelpfenig, 115 P.3d at 339 (“An order banishing an individual from a large geographical area is bound to raise both societal and legal concerns.”).

 [58]. See In re Babak S., 22 Cal. Rptr. 2d 893, 898 (Ct. App. 1993); Weigand, 397 S.W.2d at 781; Sanchez, 462 So. 2d at 1309–1310; State v. Pando, 921 P.2d 1285, 1286–87 (N.M. Ct. App. 1996); Commonwealth v. Nava, 966 A.2d 630, 635–36 (Pa. Super. Ct. 2009); State v. Karan, 525 A.2d 933, 934 (R.I. 1987); Gutierrez v. State, 354 S.W.3d 1, 7 (Tex. Ct. App. 2011).

 [59]. Warren v. State, 706 So. 2d 1316, 1318 (Ala. Crim. App. 1997); Reeves,  5 S.W.3d at 44–45; Alhusainy, 48 Cal. Rptr. at 919; Burnstein, 4 N.W. 2d at 429; Harris, 606 N.E.2d at 397; Q.M. v. Commonwealth, 459 S.W.3d 360, 370 (Ky. 2015); Pike, 701 N.E.2d at 960–61; Baum, 231 N.W. at 96; Halverson, 154 N.W.2d at 701; J. F., 621 A.2d at 522; Charlton, 846 P.2d at 344; Marcial, 577 N.Y.S.2d at 317; Doughtie, 74 S.E.2d at 924; Mose, 2013 Ohio App. LEXIS 562l at *7; Baker, 36 S.E. at 502; Snider, supra note 55, at 466 (“Almost without exception, courts reviewing a plan of probation requiring a person to leave the state or a large geographical subdivision of the state, have found the plan to be illegal.”).

 [60]. Beavers v. State, 666 So. 2d 868, 871–72 (Ala. Crim. App. 1995) (holding county banishment was valid because there was no statutory or constitutional authority proscribing banishment as a condition of parole, the parole board had statutory authority to set parole rules, and had defendant turned down parole he would have faced banishment anyways, so there was no loss of liberty); Dougan v. Ford, No. 04-623, 2005 Ark. LEXIS 519, at *3–4 (Ark. Sept. 29, 2005) (holding a parole condition requiring defendant not return to a specific county valid because there was no constitutional right or entitlement to parole, the parole board was provided statutorily authorized discretion to set parole conditions, and defendant was free to decline and serve out his sentence instead); In re Petition for Cammarata, 67 N.W.2d 677, 682–83 (Mich. 1954); Ex parte Snyder, 159 P.2d 752, 754 (Okla. Crim. App. 1945); Mansell v. Turner, 384 P.2d 394, 395 (Utah 1963) (“If the conditional termination were void, petitioner has no complaint as to recommitment to prison, since the compact was nudum pactum.”); see also Snider, supra note 55, 466 (1998) (“[A] number of states have drawn a distinction between banishment as a condition of probation or suspension of sentence, and banishment as a condition of a pardon or parole.”).

 [61]. Alabama, California, Maryland, Missouri, Montana, Ohio, Washington and Wyoming have all rejected each county and city banishment reviewed. See Brown, 660 So. 2d at 236 (“Our statutes do not permit courts to impose sentences of banishment. Such an agreement is beyond the jurisdiction of the court and is void.”); Ex parte Scarborough, 173 P.2d 825, 827 (Cal. Ct. App. 1946); Howard, 2016 Md. App. LEXIS 1370, at *37–38; Thornberry, 254 S.W. at 1089–90; Muhammad, 43 P.3d at 324; State v. Jerido, No. 1997CA00265, 1998 Ohio App. LEXIS 2482, at *2–3 (Ohio Ct. App. May 26, 1998); State v. Schimelpfenig, 115 P.3d 338, 341 (Wash. Ct. App. 2005); Crabtree, 112 P.3d at 622. On the other hand, Mississippi has both upheld and invalidated such banishments dependent on the circumstances of the case. See Mackey v. State, 37 So. 3d 1161, 1166­–67 (Miss. 2010) (holding that a condition prohibiting defendant from coming within 100 miles of a city for 30 years was invalid because the trial court’s order lacked factual findings in support of banishment); Cobb v. State, 437 So. 2d 1218, 1221 (Miss. 1983) (upholding banishment condition requiring defendant to stay at least 125 miles away from a county). Georgia and Wisconsin have upheld city or county banishments each time they have been reviewed.   De Terry v. Hamrick, 663 S.E.2d 256, 258–59 (Ga. 2008); State v. Nienhardt, 537 N.W.2d 123, 125–26 (Wis. Ct. App. 1995); State v. Johnson, No. 02-2793-CR, 2003 Wis. LEXIS App 188 (Wis. Ct. App. July 15, 2003) (unpublished), aff’d 681 N.W.2d 901 (Wis. 2004).

 [62]. People v. Brockelman, 933 P.2d 1315, 1320–21 (Colo. 1997); Tyson v. State, 687 S.E.2d 284, 287 (Ga. Ct. App. 2009); State v. Morgan, 389 So. 2d 364, 366 (La. 1980); State v. James, 978 P.2d 415, 419 (Or. Ct. App 1999); State v. McBride, 873 P.2d 589, 592–94 (Wash. Ct. App. 1994).

 [63]. For Alaska, compare Oyoghok v. Anchorage, 641 P.2d 1267, 1270–71(Alaska Ct. App. 1982) (holding that a two-block radius restriction as condition of probation for prostitution conviction was not overbroad as applied, was reasonably related to rehabilitation, and did not unduly impinge upon probationer’s liberty), with Jones v. State, 727 P.2d 6, 7–9 (Alaska Ct. App. 1986) (holding that a forty-five block restriction was invalid as there was no nexus between location and defendant’s crime and the banishment was unnecessarily severe and restrictive). For Illinois, compare People v. Pickens, 542 N.E.2d 1253, 1257 (Ill. App. Ct. 1989) (holding that banishment from a fifty-block area of downtown absent written permission from a probation officer was not invalid and was reasonable), with In re J.G., 692 N.E.2d 1226, 1229 (Ill. App. Ct. 1998) (holding that banishment was invalid because it was not reasonably related to rehabilitation).

 [64]. In re White, 158 Cal. Rptr. 562, 555–57 (Cal. Ct. App. 1979) (holding that a probation restricting a convicted prostitute from known areas of prostitution too broad and unrelated to rehabilitation, and thus unreasonable and unconstitutional); State ex rel. Baldwin v. Alsbury, 223 So. 2d 546, 547 (“[O]ut-of-town or informal banishment . . . from the city is cruel and unusual punishment and is prohibited by the Federal and Florida Constitutions.”); State v. Holiday, 585 N.W.2d 68, 71 (Minn. Ct. App. 1998) (holding that an order banning defendant from reentering all public housing within the city after a charge of minor trespass was an unconstitutional violation of defendant’s right of association).

 [65]. Snider, supra note 55, at 465; see also Ala. Const. art I, § 30 (“[N]o citizen shall be exiled.”); Ark. Const. art. II, § 21 (“[N]or shall any person, under any circumstances, be exiled from the State.”); Ga. Const. art. I, § 1, para. XXI (“Neither banishment beyond the limits of the state nor whipping shall be allowed as a punishment for crime.”); Ill. Const. art I, § 11 (“No person shall be transported out of the State for an offense committed within the State.”); Neb. Const. art. I, § 15 (“[N]or shall any person be transported out of the state for any offense committed within the state.”); Ohio Const. art. I, § 12 (“No person shall be transported out of the state, for any offense committed within the same.”); Tex. Const. art. I, § 20 (“No person shall be transported out of the State for any offense committed within the same.”); Vt. Const. ch. I, art. XXI (“[N]o person shall be liable to be transported out of this state for trial for any offence committed within the same.”); W. Va. Const. art. III, § 5 (“No person shall be transported out of, or forced to leave the State for any offence committed within the same.”).

 [66]. Snider, supra note 55, at 465. Md. Const. art. XXIV (“[N]o man ought to be . . . exiled . . . but by the judgment of his peers, or by the Law of the land.”); Mass. Const. pt. 1, art. XII (“No subject shall be . . . exiled . . . but by the judgment of his peers, or the law of the land.”); N.H. Const. pt. 1, art. XV (“No subject shall be . . . exiled . . . but by the judgment of his peers, or the law of the land.”); N.C. Const. art. I, § 19 (“No person shall be . . . exiled . . . but by the law of the land.”); Okla. Const. art. II, § 29 (“No person shall be transported out of the State for any offense committed within the State, nor shall any person be transported out of the state for any purpose, without his consent, except by due process of law.”); Tenn. Const. art I, § 8 (“[N]o man shall be . . . exiled . . . but by the judgment of his peers, or the law of the land.”).

 [67]. Rutherford v. Blankenship, 468 F. Supp. 1357, 1360 (W.D. Va. 1979) (holding that a ten-year banishment from Virginia was void on both public policy and cruel and unusual punishment grounds); Naked City, Inc. v. Aregood, 667 F. Supp. 1246, 1261 (S.D. Ind. 1987) (holding—without any reasoning provided—that a ten-year banishment from the state was in violation of the Constitution).

 [68]. Bagley v. Harvey, 718 F.2d 921, 924–25 (9th Cir. 1983).

 [69]. Id. The court also relied on the fact that the parolee suggested he complete parole in Iowa, and he was free to return to Washington after parole concluded.

 [70]. Carchedi v. Rhodes, 560 F. Supp. 1010, 1017–19 (S.D. Ohio 1982).

 [71]. United States v. Garrasteguy, 559 F.3d 34, 43–44 (1st. Cir. 2009) (upholding a condition of supervised release requiring defendants to not enter the county—without any exceptions­—where they distributed cocaine for eight and twelve years, respectively, despite the breadth of the banishment giving the court “pause”).

 [72]. United States v. Sicher, 239 F.3d 289, 292 (3d Cir. 2000) (upholding prohibition from two counties, with limited ability to enter with a probation officer’s permission, because it was reasonably related to the rehabilitative goal of keeping defendant away from influences that would engage her in further criminal activity).

 [73]. United States v. Alexander, 509 F.3d 253, 256–58 (6th Cir. 2007) (approving a requirement that defendant live hundreds of miles away from the city where his child and other family members reside after defendant had committed five supervised-release violations); United States v. Rantanen, 684 Fed. Appx. 517, 520–22 (6th Cir. 2017) (mem.) (upholding a special banishment condition from a county because geographic restrictions are expressly authorized by federal sentencing guidelines set out in 18 U.S.C. § 3563(b)(13) and the county restriction was not plain error despite the court’s discomfort with the nine-year length of banishment and lack of exceptions, such as obtaining permission to enter the county).

 [74]. United States v. Watson, 582 F.3d 974, 985 (9th Cir. 2009) (holding that a condition of supervised release to not return to San Francisco or a county for the entirety of defendant’s supervised release without permission of the probation officer was reasonably related to goals of rehabilitation and deterrence and was no broader than reasonably necessary to serve those purposes).

 [75]. United States v. Cothran, 855 F.2d 749, 753 (11th Cir. 1988) (upholding a banishment from a county because it was expressly authorized by statute and “simply not contrary to public policy”).

 [76]. Watts v. Brewer, No. 2:09cv122-KS-MTP, 2012 U.S. Dist. LEXIS 52775, at *26 (S.D. Miss. Mar. 16, 2012) (upholding a sentence suspended on condition defendant remain outside a hundred-mile radius from the courthouse because such a condition did not violate any constitutional rights).

 [77]. See infra notes 7176.

 [78]. See Peter Edgerton, Comment, Banishment and the Right to Live Where You Want, 74 U. Chi. L. Rev. 1023, 1039–40 (2007) (listing various definitions of banishment found in multiple legal dictionaries); Matthew D. Borrelli, Note, Banishment: The Constitutional and Public Policy Arguments Against This Revived Ancient Punishment, 36 Suffolk U. L. Rev. 469, 480–81 (2002–2003) (“The broadened definition of probation allows states to avoid calling punishment ‘banishment’ and escape the regulations that the courts set as precedent. This creates potential confusion over what banishment entails . . . .” (footnote omitted)).

 [79]. State v. James, 978 P.2d 415, 419 (Or. Ct. App 1999) (quoting Black’s Law Dictionary 131 (5th ed. 1979)).

 [80]. Reeves v. State, 5 S.W.3d 41, 45 (Ark. 1999) (quoting State v. Culp, 226 S.E.2d 841, 842 (N.C. Ct. App. 1976)).

 [81]. Key v. State, No. 01-01-01051-CR, 2002 Tex. App. LEXIS 7980, at *7 (Tex. Ct. App. Nov. 7, 2002) (unpublished) (holding that conditions requiring defendant to serve community supervision in a particular county and obtain permission to enter a separate county do not constitute banishment and are therefore valid).

 [82]. Johnson v. City of Cincinnati, 310 F.3d 484, 506 (6th Cir. 2002).

 [83]. Id. at 503.

 [84]. Id. at 498.

 [85]. Ketchum v. West Memphis, 974 F.2d 81, 83 (8th Cir. 1992).

 [86]. See, e.g., State v. Schimelpfenig, 115 P.3d 338, 339 (Wash. Ct. App. 2005) (“At the most, banishment orders encroach on an individual’s constitutional right to travel, which includes the right to travel within a state.”).

 [87]. Reeves v. State, 5 S.W.3d 41, 45 (Ark. 1999) (holding a seven-year exile from the state as a condition of probation is, among other things, “repugnant to the underlying policy of the probation law, which is to rehabilitate offenders without compromising public safety” (quoting State v. Young, 154 N.W.2d 699, 702 (1967)).

 [88]. See, e.g., People v. Baum, 231 N.W. 95, 96 (Mich. 1930) (“[Banishment] is impliedly prohibited by public policy.”).

 [89]. See e.g., People v. Blakeman, 339 P.2d 202, 202–03 (Cal. Ct. App. 1959) (“It was beyond the power of the court to impose banishment as a condition of probation. The provision therefor was a void and separable part of the order granting probation.”).

 [90]. In re Babak S., 22 Cal. Rptr. 2d 893, 898 (Ct. App. 1993); State v. Schimelpfenig, 115 P.3d 338, 339 (Wash. Ct. App. 2005).

 [91]. Shapiro v. Thompson, 394 U.S. 618, 629 (1969).

 [92]. Borrelli, supra note 78, 473; see also United States v. Soltero, 510 F.3d 858, 866 (9th Cir. 2007) (“A restriction on a defendant’s [constitutional right] is nonetheless valid if it: (1) ‘is reasonably related’ to the goals of deterrence, protection of the public, and/or defendant rehabilitation; (2) ‘involves no greater deprivation of liberty than is reasonably necessary’ to achieve these goals; and (3) ‘is consistent with any pertinent policy statements issued by the Sentencing Commission . . . .’ ” (citations omitted)).

 [93]. See, e.g., State v. Morgan, 389 So. 2d 364, 366 (La. 1980) (“[T]he condition of probation [of banishment from French Quarter neighborhood] is reasonably related to Ms. Morgan’s rehabilitation.”).

 [94]. See, e.g., Schimelpfenig, 115 P.3d at 339 (Wash. Ct. App. 2005) (“Because of its constitutional implications, we apply strict scrutiny in reviewing a banishment order.”).

 [95]. Morrissey v. Brewer, 408 U.S. 471, 478 (1972).

 [96]. Haffke, supra note 51, at 919.

 [97]. Id. at 921; see also Johnson v. City of Cincinnati, 310 F.3d 484, 496 (6th Cir. 2002) (“The Supreme Court has not yet addressed whether the Constitution also protects a right to intrastate travel.”).

 [98]. In re White, 158 Cal. Rptr. 562, 567 (Ct. App. 1979) (holding that the intrastate right to travel, including an intramunicipal right to travel, are protected by the United States and California Constitutions).

 [99]. Johnson, 310 F.3d at 498 (“In view of the historical endorsement of a right to intrastate travel and the practical necessity of such a right, we hold that the Constitution protects a right to travel locally through public spaces and roadways.”).

 [100]. Haffke, supra note 51, at 922.

 [101]. In re White, 158 Cal. Rptr. at 567 (emphasis added).

 [102]. King v. New Rochelle Mun. Hous. Auth., 442 F.2d 646, 648 (2d Cir. 1971).

 [103]. See, e.g., State v. Nienhardt, 537 N.W.2d 123, 125–26 (Wis. Ct. App. 1995).

 [104]. State v. Schimelpfenig, 115 P.3d 338, 340–41 (Wash. Ct. App. 2005) (citing the following factors: “(1) whether the restriction is related to protecting the safety of the victim or witness of the underlying offense; (2) whether the restriction is punitive and unrelated to rehabilitation; (3) whether the restriction is unduly severe and restrictive because the defendant resides or is employed in the area from which he is banished; (4) whether the defendant may petition the court to temporarily lift the restriction if necessary; and (5) whether less restrictive means are available to satisfy the State’s compelling interest”).

 [105]. Mackey v. State, 37 So. 3d 1161, 1165 (Miss. 2010) (“[T]he banishment provision herein bears a reasonable relationship to the purposes of the suspended sentence or probation, that the ends of justice and the best interest of the public and the Defendant will be served by such banishment during the period of the suspended sentence, that the banishment provision of the suspended sentence does not violate the public policy of the State of Mississippi, that the banishment provision of the suspended sentence herein does not defeat the rehabilitative purpose of the probation and/or suspended sentence, and such provision does not violate the Defendant’s rights under the First, Fifth, and Fourteenth Amendments of the United States Constitution.” (citation omitted)).

 [106]. Johnson v. State, 672 S.W.2d 621, 623 (Tex. Ct. App. 1984).

 [107]. State v. Nienhardt, 537 N.W.2d 123, 125–26 (Wis. Ct. App. 1995).

 [108]. Borrelli, supra note 78, at 478–79; Haffke, supra note 51, at 910.

 [109]. People v. Baum, 231 N.W. 95, 96 (Mich. 1930); see also State v. Sanchez, 462 So. 2d 1304, 1310 (La. Ct. App. 1985) (“[T]he portion of trial judge’s sentence in the instant case which imposes banishment as a special condition of probation is unconstitutional.”); State v. Doughtie, 74 S.E.2d 922, 924 (N.C. 1922) (holding that a suspended sentence conditioned upon a two-year exile from the state for was void because it was effectively a banishment and such punishment is “not sound public policy to make other states a dumping ground for our criminals”).

 [110]. Snider, supra note 55, at 467–68; see also Rutherford v. Blankenship, 468 F. Supp. 1357, 1360 (W.D. Va. 1979) (“[Banishment] is impliedly prohibited by public policy.” (citing People v. Baum, 231 N.W. 95 (Mich. 1930))); Doughtie, 74 S.E.2d at 924 (N.C. 1953); State v. Charlton, 846 P.2d 341, 344 (N.M. Ct. App. 1992) (quoting Baum to support holding that state banishment violates public policy); State v. Gilliam, 262 S.E.2d 923, 924 (S.C. 1980) (holding a suspension of sentence conditioned on indefinite banishment from the state was invalid because it was beyond the power of a circuit judge and “such a sentence is impliedly prohibited by public policy”).

 [111]. Ex parte Scarborough, 173 P.2d 825, 827 (Cal. Dist. Ct. App. 1946) (“The same principle which prohibits the banishment of a criminal from a state or from the United States applies with equal force to a county or city.”).

 [112]. State v. Collett, 208 S.E.2d 472, 474 (Ga. 1974); Cobb v. State, 437 So. 2d 1218, 1221 (Miss. 1983).

 [113]. Snider, supra note 55, at 466.

 [114]. Brown v. State, 660 So. 2d 235, 236 (Ala. Crim. App. 1998) (“No. Our statutes do not permit courts to impose sentences of banishment. Such an agreement is beyond the jurisdiction of the court and is void.”); Ex parte Scarborough, 173 P.2d at 826; see also State ex rel. Baldwin v. Alsbury, 223 So. 2d 546, 547 (Fla. 1969) (“The court was without power to indefinitely suspend a sentence in return for petitioner’s promise to stay out of town.”); Weigand v Kentucky, 397 S.W.2d 780, 781 (Ky. 1965) (“The Commonwealth concedes it is beyond the power of a court to inflict banishment as an alternative to imprisonment.”); Bird v. State, 190 A.2d 804, 438 (Md. Ct. App. 1963) (“We hold therefore that the suspension of sentence conditioned on banishment was beyond the power of the trial court and void . . . .”).

 [115]. Reeves v. State, 5 S.W.3d 41, 45 (Ark. 1999) (quoting State v. Culp, 226 S.E.2d 841, 842 (N.C. Ct. App. 1976)).

 [116]. See, e.g., Metro. Wash. Council of Gov’ts, Homelessness in Metropolitan Washington 21–22 (2017) (noting that 22 percent of single homeless adults and 32 percent of adults in homeless families are employed).

 [117]. Katherine Beckett & Steve Herbert, Banished: The New Social Control in Urban America 115–16 (2010) (“For many others, though, the fear of going to jail was simply not enough to compel compliance [with exclusion orders]. This was not because they particularly enjoyed jail, but rather that the locales from which they were excluded housed many important amenities, including social networks, contacts, and relationships; social services; a sense of safety and security; and a place they called home.”).

 [118]. Id. “[The judge] said, ‘Oh, there are other places.’ I said, ‘Your Honor, I don’t know how, understand? This is my home.’” Id. at 115 (alteration in original). “I mean as far as being homeless, that’s the only area you know.” Id.

 [119]. Warren v. State, 706 So. 2d 1316, 1318 (Ala. Crim. App. 1997) (holding that it made no difference that the defendant had agreed to this condition as a term of his negotiated plea agreement because the defendant could not consent to a sentence that was beyond the authority of the trial court).

 [120]. In re White, 158 Cal. Rptr. 562, 556–57 (Ct. App. 1979).

 [121]. United States v. Consuelo-Gonzalez, 521 F.2d 259, 265 (9th Cir. 1975).

 [122]. See Beckett & Herbert, supra note 117, at 114. (“Many reported that they resisted their banishment order because they needed access to important services. In particular, both parks and [exclusionary] zones housed services that rendered compliance with an exclusion order impractical . . . .”).

 [123]. People v. Baum, 231 N.W. 95, 96 (Mich. 1930).

 [124]. Manhattan Beach, Cal., Municipal Code § 4.140.130 (2019).

 [125]. Warren v. State, 706 So. 2d 1316,  1318 (Ala. Crim. App. 1997) (holding that it made no difference that the defendant had agreed to this condition as a term of his negotiated plea agreement because the defendant could not consent to a sentence that was beyond the authority of the trial court).

 [126]. “[A] person has been ‘seized’ within the meaning of the Fourth Amendment only if, in view of all of the circumstances surrounding the incident, a reasonable person would have believed that he was not free to leave . . . .” United States v. Mendenhall, 446 U.S. 544, 554 (1980). In this case a reasonable person would not have believed he was free to leave. Moreover, under Martin, a homeless individual caught sleeping outside may not be prosecuted in Manhattan Beach because it has no shelter beds. Therefore, an arrest is improper and transportation to a nearby shelter would constitute a seizure.

Rethinking Racial Entitlements: From Epithet to Theory – Article by Tristin K. Green

Article | Race and Legal Theory
Rethinking Racial Entitlements: From Epithet to Theory
by Tristin K. Green*

From Vol. 93, No. 2 (January 2020)
93 S. Cal. L. Rev. 217 (2020)

Keywords: Racial Entitlements, Voting Rights Act, Affirmative Action, Title VII

Abstract

From warnings of the “entitlement epidemic” brewing in our homes to accusations that Barack Obama “replac[ed] our merit-based society with an Entitlement Society,” entitlements carry new meaning these days, with particular negative psychological and behavioral connotation. As Mitt Romney once put it, entitlements “can only foster passivity and sloth.” For conservatives, racial entitlements emerge in this milieu as one insidious form of entitlements. In 2013, Justice Scalia, for example, famously declared the Voting Rights Act a racial entitlement, as he had labeled affirmative action several decades before.

In this Article, I draw upon and upend the concept of racial entitlement as it is used in modern political and judicial discourse, taking the concept from mere epithet to theory and setting the stage for future empirical work. Building on research in the social sciences on psychological entitlement and also on theories and research from sociology on group-based perceptions and actions, I define a racial entitlement as a state-provided or backed benefit from which emerges a belief of self-deservedness based on membership in a racial category alone. Contrary to what conservatives who use the term would have us believe, I argue that racial entitlements can be identified only by examining government policies as they interact with social expectations. I explain why the Voting Rights Act and affirmative action are not likely to amount to racial entitlements for blacks and racial minorities, and I present one way in which antidiscrimination law today may amount to a racial entitlement—for whites.

Theorizing racial entitlements allows us a language to more accurately describe some of the circumstances under which racial subordination and conflict emerge. More importantly, it gives us a concrete sense of one way in which laws can interact with people to entrench inequality and foster conflict. It uncovers the psychological and emotional elements of racial entitlements that can turn seemingly neutral laws as well as those that explicitly rely on racial classifications against broader nondiscrimination goals. This conceptual gain, in turn, can open up new avenues for research and thought. And it can provide practical payoff: ability to isolate laws or government programs that are likely to amount to racial entitlements for targeted change.

*. Professor of Law, University of San Francisco School of Law. This Article benefited from participation in the UCLA Critical Race Studies Symposium: Whiteness as Property (2014), where I first presented the idea, and the panel on Law, Discrimination, and Constructions of Inequality at the Annual Law and Society Meeting in Mexico City (2017), as well as from presentations at the University of Washington School of Law and USF School of Law. I also owe thanks to Rachel Arnow-Richman, Angela Harris, Peter Honigsberg, Osamudia James, Yvonne Lindgren, Orly Lobel, Rhonda Magee, Gowri Ramachandran, Jalen Russell, Leticia Saucedo, Michelle Travis, and Deborah Widiss for feedback on drafts. Most of all, thanks to Camille Gear Rich for intense re-tooling and inspired conversation about racial entitlements and more.

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The Impact of Artificial Intelligence on Rules, Standards, and Judicial Discretion – Article by Frank Fagan & Saul Levmore

Article | Legal Theory
The Impact of Artificial Intelligence on Rules, Standards, and Judicial Discretion
by Frank Fagan & Saul Levmore*

From Vol. 93, No. 1 (November 2019)
93 S. Cal. L. Rev. 1 (2019)

Keywords: Artificial Intelligence, Machine Learning, Algorithmic Judging

 

Abstract

Artificial intelligence (“AI”), and machine learning in particular, promises lawmakers greater specificity and fewer errors. Algorithmic lawmaking and judging will leverage models built from large stores of data that permit the creation and application of finely tuned rules. AI is therefore regarded as something that will bring about a movement from standards towards rules. Drawing on contemporary data science, this Article shows that machine learning is less impressive when the past is unlike the future, as it is whenever new variables appear over time. In the absence of regularities, machine learning loses its advantage and, as a result, looser standards can become superior to rules. We apply this insight to bail and sentencing decisions, as well as familiar corporate and contract law rules. More generally, we show that a Human-AI combination can be superior to AI acting alone. Just as today’s judges overrule errors and outmoded precedent, tommorrow’s lawmakers will sensibly overrule AI in legal domains where the challenges of measurement are present. When measurement is straightforward and prediction is accurate, rules will prevail. When empirical limitations such as overfit, Simpson’s Paradox, and omitted variables make measurement difficult, AI should be trusted less and law should give way to standards. We introduce readers to the phenomenon of reversal paradoxes, and we suggest that in law, where huge data sets are rare, AI should not be expected to outperform humans. But more generally, where empirical limitations are likely, including overfit and omitted variables, rules should be trusted less, and law should give way to standards.

*. Fagan is an Associate Professor of Law at the EDHEC Business School, France; Levmore is the William B. Graham Distinguished Service Professor of Law at the University of Chicago Law School. We are grateful for the thoughtful comments we received from William Hubbard, Michael Livermore, and Christophe Croux, as well as participants of the University of Chicago School of Law faculty workshop. 

 

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Protectors of Predators or Prey: Bystanders and Upstanders Amid Sexual Crimes – Article by Zachary D. Kaufman

Article | Criminal Law
Protectors of Predators or Prey: Bystanders and Upstanders amid Sexual Crimes
by Zachary D. Kaufman*

From Vol. 92, No. 6 (September 2019)
92 S. Cal. L. Rev. 1317 (2019)

Keywords: Bad Samaritan Laws, Bystanders, Sexual Violence Prevention

 

Abstract

In the wake of widespread revelations about sexual abuse by Harvey Weinstein, Larry Nassar, and others, the United States is reckoning with the past and present and searching for the means to prevent and punish such offenses in the future. The scourge of sexual crimes goes far beyond instances perpetrated by powerful men; this misconduct is rampant throughout the country. In some of these cases, third parties knew about the abuse and did not try to intervene. Scrutiny of—and the response to—such bystanderism is increasing, including in the legal world.

In order to align law and society more closely with morality, this Article proposes a more holistic, aggressive approach to prompt involvement by third parties who are aware of specific instances of sexual crimes in the United States. This Article begins by documenting the contemporary scope of sexual crimes in the United States and the crucial role bystanders play in facilitating them.

The Article next provides an overview and assessment of “Bad Samaritan laws”: statutes that impose a legal duty to assist others in peril through intervening directly (also known as the “duty to rescue”) or notifying authorities (also known as the “duty to report”). Such laws exist in dozens of foreign countries and, to varying degrees, in twenty-nine U.S. states, Puerto Rico, U.S. federal law, and international law. The author has assembled the most comprehensive global database of Bad Samaritan laws, which provides an important corrective to other scholars’ mistaken claims about the rarity of such statutes, particularly in the United States. Despite how widespread these laws are in the United States, violations are seldom, if ever, charged or successfully prosecuted.

Drawing on historical research, trial transcripts, and interviews with prosecutors, judges, investigators, and “upstanders” (people who intervene to help others in need), the Article then describes four prominent cases in the United States involving witnesses to sexual crimes. Each case provides insight into the range of conduct of both bystanders and upstanders.

Because not all such actors are equal, grouping them together under the general categories of “bystanders” and “upstanders” obscures distinct roles, duties, and culpability for violating those duties. Drawing on the case studies, this Article thus presents original typologies of bystanders (including eleven categories or sub-categories), upstanders (including seven categories), and both kinds of actors (including four categories), which introduce greater nuance into these classifications and this Article’s proposed range of legal (and moral) responsibilities. These typologies are designed to maximize generalizability to crimes and crises beyond sexual abuse.

Finally, the Article prescribes a new approach to the duty to report on sexual abuse and possibly other crimes and crises through implementing a combination of negative incentives (“sticks”) and positive incentives (“carrots”) for third parties. These recommendations benefit from interviews with sexual violence prevention professionals, police, legislators, and social media policy counsel. Legal prescriptions draw on this Article’s typologies and concern strengthening, spreading, and standardizing duty-to-report laws at the state and territory levels; introducing the first general legal duty to report sexual crimes and possibly other offenses (such as human trafficking) at the federal level; exempting from liability one of the two main bystander categories the Article proposes (“excused bystanders”) and each of its six sub-categories (survivors, “confidants,” “unaware bystanders,” children, “endangered bystanders,” and “self-incriminators”); actually charging the other main bystander category the Article proposes (“unexcused bystanders”) and each of its three sub-categories (“abstainers,” “engagers,” and “enablers”) with violations of duty-to-report laws or leveraging these statutes to obtain testimony from such actors; and more consistently charging “enablers” with alternative or additional crimes, such as accomplice liability. Social prescriptions draw on models and lessons from domestic and foreign contexts and also this Article’s typologies to recommend, among other initiatives, raising public awareness of duty-to-report laws and creating what the Article calls “upstander commissions” to identify and “upstander prizes” to honor a category of upstanders the Article proposes (“corroborated upstanders”), including for their efforts to mitigate sexual crimes. A combination of these carrots and sticks could prompt would-be bystanders to act instead as upstanders and help stem the sexual crime epidemic.

*. Associate Professor of Law and Political Science, University of Houston Law Center, with additional appointments in the University of Houston’s Department of Political Science and Hobby School of Public Affairs. J.D., Yale Law School; D.Phil. (Ph.D.) and M.Phil., both in International Relations, Oxford University (Marshall Scholar); B.A. in Political Science, Yale University. Research for this Article, including fieldwork, was generously facilitated by a grant from Harvard University as well as institutional support from Stanford Law School (where the author was a Lecturer from 2017 to 2019) and the Harvard University Kennedy School of Government (where the author was a Senior Fellow from 2016 to 2019).

The author primarily thanks the following individuals for helpful comments and conversations: Will Baude; Frank Rudy Cooper; John Donohue; Doron Dorfman; George Fisher; Richard Ford; Jeannie Suk Gersen; Hank Greely; Chris Griffin; Oona Hathaway; Elizabeth D. Katz; Amalia Kessler; Tracey Meares; Michelle Mello; Dinsha Mistree; Mahmood Monshipouri; Joan Petersilia; Camille Gear Rich; Mathias Risse; Peter Schuck; Kathryn Sikkink; David Sklansky; Kate Stith; Mark Storslee; Allen Weiner; Robert Weisberg; Lesley Wexler; Alex Whiting; Rebecca Wolitz; Gideon Yaffe; audiences at Yale Law School, Stanford Law School, Harvard University Kennedy School of Government, Stanford University Center for International Security & Cooperation, University of Virginia School of Law, University of Southern California Gould School of Law, Louisiana State University Paul M. Hebert Law Center, Penn State Law, University of Hawai’i Richardson School of Law, West Virginia University College of Law, University of Sydney Law School, University of Western Australia Law School, South Texas College of Law, University of Houston Department of Political Science and Hobby School of Public Affairs, and Colorado College; audiences at the 2018 conferences of the Harvard Law School Institute for Global Law & Policy, Law & Society Association, American Political Science Association, International Studies Association, and Policy History Association; and audiences at the 2019 conferences of the Law & Society Association, International Studies Association, CrimFest (at Brooklyn Law School), and the Southeastern Association of Law Schools. The author is especially indebted to his students in the reading group at Stanford Law School on “The Law of Bystanders and Upstanders” he led in spring 2019: Jamie Fine, Katherine Giordano, Bonnie Henry, Jeremy Hutton, Allison Ivey, Andrew Jones, Azucena Marquez, Camden McRae, Sergio Sanchez Lopez, and Spencer Michael Schmider. The author also thanks the following individuals for their valuable feedback: Fahim Ahmed, Matthew Axtell, Maria Banda, Adrienne Bernhard, Isra Bhatty, Charles Bosvieux-Onyekwelu, Sara Brown, Ben Daus-Haberle, Brendon Graeber, Melisa Handl, Janhavi Hardas, Elliot Higgins, Hilary Hurd, Howard Kaufman, Linda Kinstler, Chris Klimmek, Tisana Kunjara, Gabrielle Amber McKenzie, Noemí Pérez Vásquez, Tanusri Prasanna, and Noam Schimmel.

The author is grateful to the following individuals for granting interviews for this Article: an anonymous attorney involved in the Steubenville case; an anonymous employee of the Massachusetts Attorney General’s office; an anonymous employee of the Massachusetts Sentencing Commission; Jake Wark of the Suffolk County District Attorney’s office in Massachusetts; Manal Abazeed, Jehad Mahameed, Mounir Mustafa, and Raed Saleh of the White Helmets/Syria Civil Defense; Naphtal Ahishakiye of IBUKA in Rwanda; Holocaust survivors Isaac and Rosa Blum; Gili Diamant and Irena Steinfeldt of Yad Vashem in Israel; Alexandria Goddard; Martin Niwenshuti of Aegis Trust in Rwanda; Lindsay Nykoluk of the Calgary Police Service in Canada; Ruchika Budhraja, Gavin Corn, Neil Potts, and Marcy Scott Lynn of Facebook; Jessica Mason of Google; and Regina Yau of the Pixel Project.

For thorough, thoughtful research assistance, the author thanks Chelsea Carlton, Michelle Katherine Erickson, Jana Everett, Thomas Ewing, Matthew Hines, Ivana Mariles Toledo, and Allison Wettstein O’Neill. The author also thanks the following individuals for research assistance on particular topics: Kathleen Fallon, Alexandria Goddard, Josh Goldman, Farouq Habib, Naomi Kikoler, Mariam Klait, Shari Lowin, Riana Pfefferkorn, Kenan Rahmani, Yong Suh, Paul Williams, Regina Yau, and library staff at Harvard Law School (including Aslihan Bulut and Stephen Wiles), Stanford Law School (including Sonia Moss and Alex Zhang), and the University of Houston Law Center (including Katy Badeaux, Christopher Dykes, and Amanda Watson). Of these individuals, the author owes the most gratitude to Katy Badeaux.

Finally, the author thanks the editors of the Southern California Law Review (“SCLR”)—particularly Editor-in-Chief Kevin Ganley, Managing Editor Christine Cheung, Executive Senior Editor Rosie Frihart, Executive Editor Celia Lown, and Senior Editor Evan Forbes—for their excellent editorial assistance. The author was honored that SCLR selected this Article as the subject of its annual symposium held at the University of Southern California’s Gould School of Law on March 21, 2019.

The author’s public engagement on this topic has drawn on the research and recommendations contained in this Article. Those activities include advising policymakers on drafting or amending Bad Samaritan laws and other legislation (including the federal Harassment and Abuse Response and Prevention at State (HARPS) Act sponsored by Congressperson Jackie Speier) and publishing op-eds in the Boston Globe (When Speaking Up is a Civic Duty, on August 5, 2018) and the San Francisco Chronicle (No Cover for Abusers; California Must Close Gap in its Duty-to-Report Law, on June 23, 2019).

This Article is current as of September 27, 2019. Any errors are the author’s alone.

 

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Divergence in Land Use Regulations and Property Rights – Article by Christopher Serkin

From Volume 92, Number 4 (May2019)
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Divergence in Land Use Regulations and Property Rights

Christopher Serkin[*]

INTRODUCTION

For the past century, property rights—and in particular development rights—have been circumscribed and largely defined by comprehensive local land use regulations. As any student of land use knows, zoning across the country shares a common DNA. Despite their local character, zoning limits on development rights in almost every American jurisdiction share a deep family resemblance borne from their common origin in the Standard Zoning Enabling Act (SZEA). Zoning for much of the twentieth century therefore converged around a core goal of separating incompatible uses of land as a kind of ex ante nuisance prevention.[1] Of course, zoning went much farther than the common law of nuisance, but its animating justification was to minimize the externalized impacts of certain kinds of intensive development.

For decades, zoning created a relatively stable and predictable system defining development rights and also neighbors’ expectations about what could be built nearby. While municipalities innovated on the margins, the shared approach meant that developers could easily assess the developable envelope and permissible uses for any property, and many became sophisticated at navigating local zoning ordinances to maximize development potential. This also resulted in equally stable political dynamics. By and large, developers and conservative property rights advocates were allies in opposing restrictive zoning, while community groups and pro-regulation liberals advocated for zoning to protect community character, in-place residents, and the environment.[2]

More recently, however, zoning has been changing. Even first principles are up for grabs, and land use regulations increasingly diverge from each other. Some municipalities today deploy zoning as a framework for bargaining with developers.[3] Others focus on sustainable development, housing affordability, community preservation, and many other goals.[4] The proliferation of new zoning goals means that property and development rights may now be strikingly different between jurisdictions. This is a period of increasing divergence in the substantive content of development rights across municipalities.

This trend towards divergence in land use regulations has not, however, resulted in the wholesale jettisoning of traditional approaches to zoning and land use regulation. In fact, while the goals may increasingly diverge, zoning’s fundamental tools remain fairly consistent. Instead of wholesale divergence in zoning and development rights, what we are actually witnessing more closely resembles multimodal convergence, where zoning regimes coalesce around multiple points instead of a single goal.[5]

The question here is whether this divergence is beneficial on balance. Any divergence has its costs, primarily in the form of increased information costs for property owners and the deadweight costs of increased special interest group rent seeking. But it comes with benefits, too, as diversity in land use goals allows consumers to select their preferred set of property rights. Too little divergence and people are locked into regimes they may not want. Too much and information costs may grow too high.

Increasing divergence—or multimodal convergence—also explains some of the new political fights around zoning and property rights. Traditional conservative and liberal positions have become unsettled as progressives have increasingly blamed zoning for the affordability crisis in many cities.[6] Some liberal groups, however, continue to embrace restrictive zoning because they prioritize environmental or community-preservation concerns or favor mandatory inclusionary zoning as a better response to affordability.[7] Simultaneously, conservative suburbs that had previously rejected land use regulations in favor of a pro-growth agenda have had second thoughts and are deploying strict new limits on development partly to constrain the burden on congestible infrastructure like roads.[8] In short, restrictive zoning and strong property rights are no longer at opposite ends of a single spectrum. Making sense of zoning’s new landscape requires grouping land use regulations as focusing primarily on one of several different possible goals. These include, among others, affordability, environmental protection, aesthetics, historic preservation, community protection, fiscal concerns, and more invidious exclusion. Sometimes these are competing goals, and sometimes they are simply orthogonal to each other. This Article identifies the range of goals that local governments today pursue through zoning and then examines the costs and benefits of this new zoning reality.

I.  Zoning’s Common Origin

In our fragmented and diverse political system, the consistency of land use regulations between municipalities may seem surprising. In fact, however, zoning everywhere in the United States shares a common—and familiar—origin in the Standard Zoning Enabling Act (SZEA).[9] Promulgated in 1926 by the Department of Commerce, the SZEA was designed as model legislation for states to adopt that would empower local governments to enact comprehensive zoning and land use regulations.[10] The approach was a success. Following a tacit blessing by the Supreme Court in Village of Euclid v. Ambler Realty Co.,[11] almost every state in the country adopted some version of the SZEA within the ensuing decades, and zoning became ubiquitous.[12]

From that origin story comes a common set of concerns that zoning was meant to address. Zoning has long been seen as a kind of ex ante nuisance prevention.[13] It separated incompatible uses of land before they arose, keeping factories out of residential neighborhoods during the urbanization and industrialization of the early twentieth century.[14] And it protected singlefamily homes from more intensive uses, in effect stratifying much of the country into single-use zones. This had a pernicious underbelly, reinforcing divisions based on class and on race, keeping apartment buildings and other forms of multifamily housing out of more affluent single-family zones.[15] Indeed, this is zoning’s original sin.[16] But this is also the fundamental justification that the Supreme Court endorsed in Euclid.[17]

Political fights emerged quickly. The mainstream arguments were not over the project of zoning, but instead over its implementation. Few people objected to the idea of using regulations to separate genuinely incompatible land uses. Indeed, the regulatory goal of minimizing externalities was consonant with both liberal and conservative convictions. But zoning’s contours have been contested now for a long time. By and large, conservatives objected to regulatory restrictions on property rights and so have advocated for limited zoning that separates only the most conflicting uses. Others on the right have advocated for even more extreme regulatory minimalism, relying on private land use controls instead of zoning and invoking covenants and homeowners’ associations as remedies for regulatory overreach.[18] Liberals, on the other hand, embraced zoning. They were willing to take a more capacious view of the harms of neighboring uses and so promoted increasingly fine-grained land use regulations.[19] The conventional understanding of attitudes towards zoning could therefore be presented along a simple spectrum from anti-regulation to pro-regulation.[20] Slowly over time, local governments moved beyond these narrow goals. Today, the underlying goals of many land use regulations have nothing to do with ex ante nuisance controls.

II.  Divergence in the Purposes of Land Use Regulation

Local governments have become increasingly creative about pursuing a variety of municipal goals through land use regulations, and zoning has become concomitantly more nuanced and sophisticated. The result is a more complex regulatory apparatus that owners must navigate to develop property in many jurisdictions. It has also resulted in widening fissures in the political fights over zoning. Although not always noticed, even by local officials and developers let alone by courts and scholars, the presumptive conservative opposition to land use regulations and liberal support has, in many cases, flipped.[21] Odd political alliances dot the landscape of local land use disputes, with—for example—affordable housing advocates working alongside for-profit developers to resist restrictive zoning ordinances.

From a distance, the divergence in local uses of zoning creates what appears to be real instability. When the dispute over zoning was framed simply in terms of more versus less regulation, the stakes were predictable and relatively clear. But now with governments pursuing many different goals in their land use regulations—with apparent divergence in the purposes of zoning—this area of law appears quite chaotic.

Municipal land use regulations no longer converge around the central organizing goal of minimizing conflicting uses of property (if they ever truly did). This is not, however, a story of entirely disorganized divergence. The proliferation of goals still relies for the most part on conventional zoning tools, even if these tools are deployed somewhat differently. What one therefore observes, looking carefully, is multimodal convergence in land use controls. And identifying those various points of convergence can go a long way to discerning patterns in—and understanding the political stakes of—zoning fights wherever they occur. The first step, however, is to survey the many goals that land use regulations today can serve and how local governments tend to pursue them.

Many of the specific objectives are by now familiar. Scholars already distinguish between growth machine and homevoter jurisdictions.[22] Advocates for sustainable development clash with NIMBYs (Not in My Backyard) and BANANAs (Build Absolutely Nothing Anywhere Near Anything”) and are joined by California’s new YIMBYs (Yes in My Backyard”).[23] It is easy to observe these fights on the ground and to see how much jurisdictions can diverge in their land use priorities. But instead of seeing these as one-off battles or through the realpolitik lens of interest-group conflicts, it is worth stepping back and canvassing the range of goals that local governments today pursue through their land use regulations.

Looking broadly, modern land use regulations often represent an effort to pursue one or more of the following goals. These are not mutually exclusive. Some are congruent with each other, but others are in inextricable tension. Many implicate a voluminous academic literature. They are presented here in only their most cursory outlines. The value of this Article is not in the exhaustive explication of any particular land use goal but instead in a broad survey of many of them together to identify the resulting content of the land use regulations that each of these goals tends to produce. What begins to emerge is a sense of real divergence in the objectives that local officials pursue through land use regulations, the implementation of which nevertheless converges around a few key zoning tools.

A.  Minimizing Harms from Neighbors

Minimizing conflicting uses of property is the original justification for zoning, and conventional land use tools are well-suited to this goal by separating residential, commercial, and industrial uses. Debates persist over what counts as incompatibility and what sorts of externalized harms need to be regulated.[24] Nevertheless, this overarching goal—and the resulting approach to zoning—are straightforward. Indeed, this objective continues to dominate land use regulation in many suburbs, where residents continue to protect low-intensity residential development by minimizing incursions of more intensive uses.[25]

B.  New Urbanism and Mixed Use

In many other areas, however, the traditional view of incompatible uses has broken down. People increasingly seek mixed uses and walkable neighborhoods, preferring that vibrancy to single-use residential areas.[26] New urbanism champions these land use goals.[27] New urbanists may still accept at least implicitly the goal of separating incompatible uses, but they adopt a very different view of what counts as incompatible.

New urbanist land use regulation therefore looks quite different from conventional Euclidean zoning. The regulatory regime still regulates land uses and development density, but it seeks vibrant and diverse uses instead of homogenous ones. In addition to some rigid use districts, then, it permits forms of mixed-use development.[28] Some zoning ordinances do this explicitly, predesignating certain zones for mixed use buildings.[29] Others do this through overlay districts or through special exceptions and variances.[30] The result is mixing more intensive and commercial uses with residential ones, often on arterial streets or in places located near mass transit.

C.  Encouraging Growth

Following Professors Harvey Molotch and William Fischel, land use literature has long divided municipalities into “growth machine” and “homevoter” jurisdictions.[31] The former seek to attract development and mobile capital and to encourage investments in new local developments. But this can be further subdivided into a number of different specific motivations. Most obviously, as the “growth machine” name implies, this pro-development attitude can reflect a straightforward desire to benefit the local development community. Builders, architects, realtors, lawyers, bankers, and others all have a strong financial interest in increased development activity.[32] Others favor growth for its own sake. A growing city feels dynamic and vibrant, even as it puts pressure on existing communities.[33] Still others are more instrumental, favoring growth for the increased economic activity that it sometimes produces and also for the services and amenities that size brings, whether a restaurant, professional sports team, or symphony, to name just some of the most obvious examples.[34]

Whatever the specific reason, this pro-growth agenda translates into a broad hostility to strict land use regulations. Municipalities that impose onerous regulatory hurdles are at a competitive disadvantage when it comes to attracting development and will expect to see development activity decrease, all else being equal. The resulting approach to zoning is therefore to minimize regulatory hurdles in order to encourage growth.

D.  Discouraging Growth

The opposite goal is also commonplace: discouraging growth. Just as some people seek growth for the amenities it brings, others may object because of increasing congestion or changes in municipal character that can accompany substantial new development.[35] It can also come simply from status quo bias.[36]

Again, whatever the specific motivation, the anti-growth agenda embraces zoning and land use regulations of all kinds. The clearest regulatory strategy to preserve the status quo is to erect as many regulatory hurdles as possible to prevent new development. Strict zoning requirements, including designating large areas of a municipality as effectively off-limits for development, are the most obvious techniques.[37] But adding new layers of regulation can be equally if not more effective. One study has demonstrated that every new regulation reduces building permits for multifamily units by 6%.[38] Historic preservation rules, strict subdivision ordinances, development impact fees, and so forth can also create an atmosphere hostile to development that drives growth elsewhere.

E.  Zoning for Tax Revenue

Zoning is increasingly bound up with issues of municipal finance. Sometimes this is direct, like using regulatory concessions as opportunities to raise money or develop infrastructure.[39] But more often, this is indirect, like using zoning to encourage land uses that have net positive budget impacts. Public schools, in particular, are often the largest expense for local governments and therefore drive land use decisions.[40]

While normatively controversial, local governments often seek to exclude affordable housing because low-income households generate relatively little revenue and yet place significant burdens on municipal budgets through impacts on schools and other municipal services. On the flip side, local governments seek land uses that generate substantial tax revenue while creating few costs.[41] Depending on the nature of the tax base, this often means seeking to attract high-valued homes for people with few if any school-aged children.

Traditionally, these dynamics have produced large-lot zones, limits or bans on multifamily housing, and other familiar, if troubling, forms of exclusionary zoning. By requiring housing that consumes more land per unit, a local government can reduce the amount of housing that can be built in any area and also can increase the land costs associated with housing, driving up prices. Admittedly, this dynamic has been shifting somewhat in recent years. Changing consumer preferences means that dense, mixed-use, multifamily development can sometimes be the most expensive, with new high-rise areas in cities like Nashville generating by far the most net tax revenue per square foot.[42] Nevertheless, in much of the country and especially in suburbs, the conventional wisdom still holds. Those places still deploy large lot zoning and bans on multifamily housing in order to exclude lower-income households and to attract and retain housing for the affluent.[43]

F.  Zoning for Fees

A more direct form of fiscal zoning comes from the bargaining opportunity that land use regulations can represent. Several decades ago, Professor Carol Rose demonstrated that zoning can be seen through the competing lenses of planning and dealing.[44] Under the dealing model, land use regulations should be seen as a kind of opening offer. Developers then must petition governments for more permissive regulations—like increases in density—and provide certain financial or in-kind benefits in exchange for regulatory largesse. Some people view this as a kind of graft, others simply as a way of ensuring that developers internalize more of the costs of increased density.[45] Regardless, many local governments have become increasingly sophisticated about enacting land use regulations that create a framework for bargaining.

The most familiar example is the imposition of impact fees or exactions. These are explicit mechanisms by which local governments charge developers for the burdens of new development, either through prespecified legislated fees or ad hoc bargains.[46] But other zoning approaches also create bargaining moments for local governments. For example, some local governments place large amounts of land into holding zones, typically industrial or agricultural zones where no other uses are permitted.[47] These do not reflect the municipality’s judgment about the highest and best use for the property but instead create such strict limits that anyone wanting to develop the property will have to seek a rezoning. Since property owners are rarely entitled to rezonings as of right, this gives municipalities discretion and so creates a meaningful opportunity to bargain for developer contributions to infrastructure, and so forth.

More generally, then, zoning ordinances can generate revenue either by imposing prespecified impact fees or by giving local officials discretion in land use decisionmaking. Vague zoning standards—like a requirement that development be “consistent” with existing community—allow local officials to deny land use applications.[48] This discretion therefore also allows officials to grant the applications but only upon certain concessions or contributions by the developer.

G.  Zoning to Increase Property Values

According to Professor Fischel’s leading account of suburbs and small local governments, homeowners dominate the political landscape and are primarily motivated by property values.[49] Most homeowners’ primary asset is their house, and so they are keenly interested in property values, seek policies and regulations that will increase local property values, and reward local politicians who provide them.[50]

There is no magic zoning bullet that will automatically create higher values. Instead, the relationship between zoning and property values is dynamic and depends tremendously on local context. Nevertheless, it is generally the case that restricting the supply of developable land will tend to increase property values. In fact, it amounts to a kind of transfer from new entrants who have to pay higher housing costs to in-place residents who see their property values climb.[51]

This does not always work. Sometimes, depending on elasticity in local markets, strict regulations can produce economic stagnation. If demand for housing is weak or very responsive to price, then overly restrictive zoning can be self-defeating.[52] But where demand is strong, as in many affluent and developed communities, restrictions on supply can increase property values for in-place property owners.

H.  Affordability

Not everyone benefits from rising property values. A countervailing pressure in many municipalities is the desire to encourage more affordable housing options.[53] Rents and home prices that are too high can drive out important members of the community—like teachers, government employees, artists, low-wage workers, and so forth—which can have adverse economic effects and can also deplete social capital.[54]

Local governments have a number of tools at their disposal to address housing affordability, but each comes with limitations. Obvious, but much maligned, tools include rent regulation and the provision of public housing.[55] But land use regulations can also be deployed to encourage affordable housing. Inclusionary zoning, for example, offers developers density bonuses in exchange for developing some number of affordable units or sometimes requires a number of affordable units outright as a condition for building.[56] More generally, too, simply increasing the supply of any form of new housing can also put downward pressure on price.[57] Cities today are experimenting with ways of relaxing density limits in order to increase the supply of new housing and thereby address affordability. In 2018, New York, for example, changed its off-street parking requirements for certain kinds of buildings, dramatically increasing the number of residential units that could be developed on any given lot.[58] The most extreme example is the YIMBY movement in California, which pushed for a change in 2018 that would have all but eliminated density limits on residential development anywhere near mass transit.[59] This would have unlocked an enormous amount of development potential throughout California’s cities. The measure failed, but there can be no doubt that affordability is motivating increasing political pressure.[60]

Not everyone agrees that unlocking development potential will help with affordability. Indeed, it might seem that developing high-end market rate housing would increase not decrease local housing costs. But the law of supply and demand is powerful, and even market-rate housing eases the demand for more modest existing housing elsewhere in the municipality and so puts downward pressure on price. In 2019, Professor Vicki Been et al. surveyed the economic literature and concluded that unlocking supply, even without explicit inclusionary zoning requirements, helps make housing more affordable, whereas supply restrictions drive prices up.[61] While responses remain controversial and contested, zoning for affordability involves lowering regulatory barriers, reducing development restrictions and unlocking increased development potential, or directly regulating price either through rent regulation or inclusionary zoning.

I.  Historic Preservation

Although not squarely “zoning” in many places, historic preservation can motivate local officials who seek to protect buildings or neighborhoods of historic significance. Designating property as historically significant can create a new layer of regulatory oversight. It therefore triggers a kind of additional veto right that can make it more difficult to build.[62] Historic preservation ordinances vary in their details and in their strength but generally require property owners to apply for a certificate of appropriateness when seeking to tear down or modify a structure designated as historically significant.[63]

J.  Community Preservation

More than historic preservation, community preservation motivates a significant amount of land use regulation. In fact, historic preservation is often a kind of rough proxy for the real concern of preventing displacement of the existing community. Development can threaten community in a number of different ways. Most directly, an influx of new residents can affect existing social ties and threaten existing social capital.[64] Development can simultaneously price some residents out of the neighborhood.[65] This gentrification—a perennial issue in local government and land use law[66]—creates its own winners and losers. The former includes primarily in-place property owners; the latter includes renters. Nevertheless, people concerned with preserving the existing in-place community will usually object to development that changes the character of a place.[67]

Some local governments have begun to experiment with community preservation directly, enacting community preservation ordinances that do not require a showing of historical significance but rather community significance to preserve a building.[68] Most use zoning’s blunter tools, again seeking to restrict new development by erecting regulatory hurdles. While this can sometimes prove self-defeating, creating stagnation and capital flight, community members will often take that risk in order to protect their social capital and communities. There is no doubt that concerns about the fragility of existing communities motivate a significant amount of restrictive zoning.

K.  Aesthetic Regulation

Today, in many places, the motivation for many land use regulations appears to be as much aesthetics as anything else. Neighbors are concerned about the impact of new development on the look of their neighborhood for its own sake and often oppose development primarily because they think it will be ugly.[69]

Sometimes, this concern is explicitly included in zoning ordinances by requiring architectural review.[70] Such architectural review provisions tend to create greater homogeneity in building design, often specifying a narrow list of appropriate architectural styles for any new buildings.[71] Homogeneity does not ensure beauty, of course, and can in fact create the opposite.[72] But it is a proxy for uncontroversial buildings and so minimizes aesthetic outliers.

Some jurisdictions have also turned away from traditional use-based zoning ordinances to form-based codes instead. As their name implies, these codes focus on the particular form that buildings can take—on bulk, shape, and so forth—instead of on the permitted uses. These often impose quite specific design requirements that function like de facto aesthetic regulations.[73]

L.  Environmental Protection: Sustainable Development

We have now long understood the important role that land use regulations can play in climate change.[74] Real estate development contributes significantly to carbon emissions. The sprawl associated with single-family residential suburbs is much more carbon intensive than dense development closer to people’s jobs and to commercial centers.[75]

Energy conservation is a backdrop for many discussions about new development. This can translate directly into land use regulation. Zoning that minimizes sprawl and that encourages denser development near transportation will lower carbon emissions.[76] Indeed, this is the explicit goal of sustainable development, which has generated an enormous amount of zoning activity and scholarly interest.[77] The blueprint for sustainable development remains contested, but experts broadly agree that urban living produces much less carbon than suburban and rural living. They therefore favor increasing density in the urban core while discouraging the land-consuming sprawl that has characterized development for much of the past century.[78]

M.  Environmental Protection: Animals and Habitats

A related motivation for land use regulation, especially in rural areas, is more traditional environmental protection and specifically the protection of environmental resources like wetlands. Wetland regulations are often administrated at the state level, rather than the local level.[79] Nevertheless, they function as sometimes dramatic limits on development. Other kinds of environmental regulations have a similar effect. Septic regulations can prove more restrictive than zoning in controlling density in rural areas without municipal wastewater.[80] Explicit environmental review through the National Environmental Policy Act (“NEPA”) or its state analogues also shape large-scale development.[81]

Other municipalities focus environmental efforts on wildlife habitat. The most sophisticated efforts involve taking an inventory of animal pathways and then seeking to create habitat connectivity by preventing development that interferes with those pathways.[82] Wildlife overlay districts seek to preserve critical habitat and to promote ecological health. More often, however, local governments pursue what is better characterized as aesthetic environmentalism. The goal is to promote a community character that includes vegetation, trees, open space, and a general sense of nature, regardless of the actual impact on wildlife or natural resources. Proponents often object to cookie-cutter suburbs and promote more large-lot development that preserves a more rural feel.

The result for zoning is increased restriction on development, but the location for these restrictions is motivated by a concern for natural resources and not by aesthetics, community character, and so forth.

N.  Economic Intervention

Zoning and land use controls can be an important if sometimes problematic tool for local governments to affect economic outcomes. At the most parochial level, land use regulations can be used as a kind of economic protectionism for in-place businesses by excluding competition.[83] Prohibitions on new entrants, coupled with grandfather protection for existing businesses, can create a kind of regulatory mini-monopoly. This can look like pure rent seeking or just naked economic favoritism for in-place businesses.[84] Sometimes, however, local governments can justify anti-competitive zoning on broader economic grounds. For example, some local governments have tried to use zoning and land use controls to exclude large box stores like Wal-Mart, ostensibly to preserve smaller businesses and downtown commercial areas, and the positive externalities they generate.[85]

Local governments can also use zoning to pursue specific economic goals. For example, noncumulative zoning in industrial areas is best understood as a kind of subsidy for industry by keeping property values lower for industrial land.[86] In other instances, local governments can create what amount to aspirational zones for uses they seek to attract—like New York City creating a new biomedical zone.[87] And even more broadly, local governments may use land use regulations to try to generate agglomeration surplus through a sufficient density of a particular kind of business or industry: think, here, of tech in Silicon Valley; insurance in Hartford, Connecticut; theater on Broadway; and so forth.[88] These places and industries may all have their own specific land use needs, and local governments are often especially solicitous of these industry-driven zoning requirements.[89]

O.  Exclusion and Segregation

In addition to the more-or-less principled justifications for land use regulation identified above, there are also more overtly pernicious ones that are important to acknowledge. Zoning can be used to exclude disfavored groups or businesses. This is most obvious and familiar in the context of racially motivated zoning. Although explicitly race-based zoning is clearly unconstitutional and illegal, exclusionary zoning often has a racially discriminatory impact, if not motivation. Because this can be so difficult to detect and to prove, it remains widespread.[90] For example, opposition to affordable housing or simply to less expensive multifamily housing may well be motivated for some people by racial animus.[91] The political fights over such housing are therefore often accompanied by charges of racism and can be bitter and ugly.[92]

Table 1 summarizes the different municipal goals described in this Section and the resulting implications for zoning.

 

What should be immediately apparent is the extent of convergence in the resulting approaches to zoning, even as land use objectives continue to diverge. Clearly, Table 1 obscures, through simplification, important limits on the extent of convergence. New urbanists, for example, will not favor relaxed zoning restrictions in all of the same places, or in the same way, as environmentalists. Nor are these interests mutually exclusive, even in the same person or political body. Someone can prioritize aesthetic concerns in one place and affordable housing in another in the same municipality. There is nothing inherently inconsistent in those views.

Indeed, questions of location and scale create persistent tensions in each of these approaches. Increased density in one place might increase property values but make other parts of the municipality more affordable. Local renters who might find themselves priced out of that particular neighborhood might therefore object, even though the effect of increased supply is to improve affordability.[93] Similarly, favoring density, transitoriented development, or a more urban mixed-use streetscape does not mean favoring those elements everywhere. They can conflict with concerns over historic or community preservation in particular locations in ways that are not internally inconsistent.

III.  Evaluating MultiModal Convergence

A.  The Costs and Benefits of Divergence

The diverging goals of land use regulations—and the resulting property and development rights that they circumscribe—create both costs and benefits. They also create new political alliances that can make the real stakes of zoning fights increasingly opaque. Being clear eyed about these dynamics allows for a more careful assessment of the changing landscape of land use regulations.

The most obvious cost of the proliferation of land use goals comes from the difficulty in navigating divergent regulatory regimes. When zoning codified the straightforward goal of separating incompatible uses of property, it was relatively easy for property owners and developers to anticipate ahead of time what uses would be permitted on any particular property. Comprehensive plans gave a sense of the municipality’s preferences and priorities, while the zoning ordinance prescribed broad categories of uses and densities that it would allow. A developer seeking to build new multifamily housing or a new commercial center would look for property with the right physical and regulatory characteristics to decide what land to buy and where to develop. And this process was relatively transparent.

Divergence in land use goals can obscure some of zoning’s signaling and channeling functions. Today, the content of the zoning ordinance does not necessarily reveal the municipality’s underlying purposes and goals and so can make the regulatory treatment of land more opaque. The fact that property is zoned as agricultural, for example, does not necessarily mean the municipality is hostile to development there. It might mean, instead, that local officials are open to a rezoning for a price.[94] Likewise, the fact that development will require a normally routine special use permit, or a less routine variance, does not mean a developer should expect to get it if the development will occupy land that local officials believe is important for habitat or the local officials are simply opposed to growth. In other words, divergence in the underlying purposes of land use regulations—especially in specific locations within a municipality—means that it can be difficult for property owners and developers to know ahead of time what uses will be permitted in any particular place. The contours of property rights and development potential are therefore rendered at least partially obscure.

Divergence in land use regulations creates another cost, too, in the form of special interest group rent seeking.[95] Support for—or opposition to—some land use approval can now include special interest group pressure from many different directions. Those interventions are costly themselves, but they can also create a more complex and less transparent set of choices for local officials. The results can be less effective regulations, whether judged by efficiency, by public preference, or any other metric.

There are benefits of the seeming divergence, however. Most importantly, multiplicity in land use regulations can allow people to better satisfy their individual preferences by choosing to live in a place that pursues their particular regulatory priorities. And they will not always choose to live in the place where their property rights are the most expansive. Indeed, it is quite to the contrary. While no one likes to be told what they can and cannot do on their own property, almost everyone likes being able to tell neighbors what they can do on theirs. Many people will willingly trade greater restrictions on their own land for equivalent restrictions on their neighbors. The proliferation of common interest communities, many of which are subject to much more burdensome property restrictions than any local zoning ordinance would ever impose, is proof that many people prefer this tradeoff.[96] Just as people can choose to live in a place with good public schools, or low taxes, or mass transit, or lots of open space, regulatory priorities can be important selection criteria for homeowners.

Relatedly, satisfying consumers’ regulatory preferences facilitates Tieboutean sorting.[97] This has structural benefits. Desirable regulatory regimes will be capitalized into property values, at least to some extent. That provides an important feedback mechanism for local governments seeking to satisfy consumer preferences. Where regulatory choices are limited to the binary options of “more” or “less,” price becomes an unhelpful or even perverse signal. More regulation will tend to restrict supply and so drive up prices, all else being equal. The pressure from sorting will always favor more restrictive zoning. But in a world of multimodal convergence, where local governments pursue a variety of regulatory objectives, sorting starts to generate meaningful price signals in property values. For example, the fact that many local governments have sought to brand themselves as “green” cities, partly through their land use regulations, demonstrates at least their perception of the benefits of such sorting.[98]

In theory, then, the proliferation of attitudes towards land use regulations, as well as the regulations themselves, should allow for consumers to satisfy their regulatory preferences and to purchase the bundle of property rights that they want. To the extent they are visible to outsiders—sometimes an unrealistic assumption—land use priorities allow for more efficient sorting.[99]

The tension between predictability and clarity in property rights on the one hand and satisfying diverse preferences on the other creates a meaningful limit on the goals that local governments should be able to pursue and how they pursue them. Too much divergence and information costs become too high. But too little and more people will be stuck in regimes that do not actually reflect their interests. Multimodal convergence therefore represents a surprisingly appropriate compromise between the certainty of unidimensional land use goals and more chaotic divergence. It also means that not everyone in a municipality must agree on the same goals to still be able to agree on an approach to zoning. The fact that different substantive goals can produce the same attitude towards zoning in a particular dispute means that more people can satisfy their regulatory preferences with fewer options.

This is not to say that the extent of the observed divergence that exists today is appropriate. It may be too great, and so the information costs are already too high. Or it may not be enough, and people are being forced into regulatory regimes that do not satisfy their preferences. This is, fundamentally, an empirical question, and one that would require further exploration to try to resolve. The observation here is simply that some degree of divergence is desirable, and that multimodal convergence reflects a kind of tacit compromise between an overly rigid set of land use goals and a regulatory free-for-all.

Multimodal convergence also provides a useful way of thinking about political alignments and narratives in contemporary land use fights. It explains why many land use disputes today involve such unlikely bedfellows. For example, the motives of the growth machine and affordable housing advocates may be very different, but their view of zoning may be quite consistent.[100]

These dynamics also make it more difficult to understand the “real” stakes of many land use disputes. Does opposition to multifamily housing in a particular place come from concern about habitat loss, from aesthetic preferences, or from racist opposition to the likely low-income residents who are predicted to move in? Any of those views would be consistent with a vote against the new development.

The purpose of highlighting these dynamics is not, ultimately, to favor one over another. Appropriate concerns in one place may be entirely inappropriate somewhere else. But bringing awareness to the diversity of goals that can be implicated by modern land use disputes should allow for more explicit evaluations of the trade-offs in any zoning decision. Even if the motivation for restrictive zoning is aesthetic, for example, it is important to recognize the impact on affordability. Conversely, encouraging growth may help affordability or create opportunities for agglomeration, but with the possibility of burdening infrastructure beyond what it can easily support and displacing in-place local residents.

But these dynamics do reveal that different groups sometimes end up advocating for land use regulations against their expressed interests. These groups are either being disingenuous about their actual motivations or are mistaken about how different substantive policies translate into land use regulation. The survey of land use goals in the previous part makes it easier to identify these unexpected positions and to explore alternative explanations.

B.  An Example: Nashville’s Music Row

Consider a recent land use fight in Nashville, Tennessee. There is nothing particularly special about this example. Indeed, its point here is its banality—if interesting local color. Nor does it implicate every different interest identified above. But it does reveal the complicated goals of modern land use controversies.

Nashville’s Music Row is two long, multiblock streets near and roughly parallel to the campus of Vanderbilt University. Its name comes from the many recording and music studios located along these long strips.[101] The buildings, however, look residential and are an eclectic hodgepodge that includes craftsman-style bungalows from the first half of the twentieth century, some modern buildings, and a few small office buildings. Increasing development pressure, however, has led to the redevelopment of many of these music-industry uses into new apartment buildings.[102] This has led to heated conflict over the future of Music Row, culminating in a two-year building moratorium that recently ended.[103]

At first glance, fights over the future of Music Row look entirely conventional. Groups arrayed against the development include NIMBY neighbors as well as preservationists. One of the most hard-fought development battles on Music Row concerned RCA Studio A. In 2014, when a developer announced plans to tear down and redevelop the property, singer-songwriter Ben Folds wrote an open letter to the musical community imploring that the building be saved.[104] He listed the musicians who recorded hit records there, including The Beach Boys, Dolly Parton, Jewel, Kesha, Hank Williams Jr., and many, many others. Folds was himself the tenant at the time, and he organized an aggressive and ultimately successful effort to buy the building and preserve it as a recording studio.[105]

While Studio A was saved through a voluntary transaction for $5.7 million, other building and redevelopment plans remain fiercely contested by preservationists. But historic preservation is an awkward fit because many of the buildings are not historical in any way. The historic preservationists are focused less on the buildings than on the musical history that they represent. In fact, it appears that their interests are not about preserving the architecture but are instead about preserving the music industry more broadly. One preservationist, for example, articulated the agenda this way: “We can’t just sit back and let Nashville’s unique history be destroyed and its present-day musical culture lost.”[106]

Other opposition to development appears to be more about preserving the community’s character than about any historic resources.[107] One longtime bartender said of the development on Music Row: “It’s not Nashville anymore. It used to be a little place, with a little airport, that had some fantastic music and big personalities and millions of different stories. Now it’s a metropolis, this is a big city.”[108] Others have focused their opposition on the associated infrastructure burdens and, in particular, on traffic.[109] Indeed, traffic has become a flashpoint in Nashville. There is no consensus about how to address it, but many people oppose all new development until a plan is in place.[110]

Finally, additional opposition comes from community groups who worry about affordability.[111] Any new construction in and around Music Row is likely to be very expensive. Many people worry that any new housing will be unaffordable, and that this will displace current residents. Housing costs in Nashville have been skyrocketing, putting particular pressure on affordable housing. According to one study, Nashville has lost 18,000 affordable housing units since 2000, and 44% of Nashville renters are housingcost burdened.[112] Opponents of new development often focus on affordability as a central objection.[113]

On the opposite side are developers who see a significant financial opportunity in the Music Row redevelopment.[114] Their interests are predictable. But the City also sees a substantial fiscal upside. Not only does new development generate more property tax revenue, but also its net fiscal impact is even more positive. Where dense urban infill has occurred nearby, the net tax revenue per square foot is dramatically higher than anywhere else in the metro area because of the relatively low cost of building out infrastructure and the high property values.[115] This, coupled with the City’s generally lax approach to land use regulation, makes redevelopment of Music Row appear all but inevitable, despite the interests aligned on the other side. Whoever wins, the controversy seems entirely predictable and conventional.

A closer look at the stakes, however, reveals a more complicated dynamic, and one that is increasingly representative of modern land use fights. Consider, first, the effect on traffic: a central source of opposition. This is a perplexing reason to oppose redevelopment. Music Row is adjacent to Vanderbilt and in the heart of the City. Yes, new residential buildings will increase local traffic to some extent, but it should marginally reduce traffic in the City more broadly. It is not exactly transit-oriented development since there is no meaningful transit in Nashville. But it is development that is closer to the places people work and play and so will result in fewer vehicle miles traveled. Traffic has a lot of political valence, and it makes tactical sense for opponents to use it as a reason to push back against development, but it seems misguided as a basis for objecting new buildings on Music Row. For this same reason, those concerned with sustainable development should favor dense infill in places like Music Row over suburban sprawl. This also reduces development’s total carbon footprint.

Increased housing costs citywide are also a poor reason to oppose the redevelopment of Music Row. While new housing may well precipitate a change in the character of the particular neighborhood and increase prices there, the best evidence demonstrates that adding supply will decrease median property values in the City and increase affordability. This is true even if the new housing stock is exclusively market rate and expensive. Such is the power of supply and demand.[116] Opposition to new development by immediate neighbors on grounds of affordability is rational if parochial—what Professor Been has labeled City NIMBYs.[117] Opposition based on concerns about housing costs throughout the city makes little sense.

There are countervailing peculiarities on the other side as well. Focusing on the fiscal impact of redevelopment, tax implications are only part of the story. Many business leaders and politicians have argued that it is in Nashville’s economic interest to preserve the music industry.[118] Preventing redevelopment of Music Row means that music studios do not need to compete with residential developers and so amounts to a kind of subsidy for the music business. There are agglomeration economies that come from the clustering of music studios in one particular area: musicians and songwriters frequently collaborate throughout the day, musicians record together, industry executives meet and do business in person up and down Music Row.[119] And, as traffic problems worsen throughout the city, the value of spatial proximity is only increasing.

Yes, market pressures demonstrate that the property is more valuable as residential or mixed-use development. Putting the property to a higher and better use unlocks value, by definition. However, the music industry produces significant benefits—positive externalities—for the City as a whole and should perhaps be preserved for that reason. It generates significant economic activity and also creates a kind of identity that attracts businesses and residents. If those benefits exceed the marginal value of redevelopment, then the City has a fiscal reason to subsidize the industry and prevent redevelopment, even if that means missing out on some increased tax revenue.

None of this reveals what the right answer is for Nashville. But it does demonstrate how the stakes of modern land use and zoning fights often go far beyond the traditional proregulation and antiregulation camps. It also reveals how different groups’ interests do not converge around any singular goal. Instead, different constituencies are motivated by very different underlying goals. Ultimately, people choose to live, to work, and to invest in Nashville for very different reasons. Some like the small-city feel of the place, others the music industry, still others the statewide emphasis on property rights and economic liberties, and others the appealing and new housing stock in increasingly dense mixed-use neighborhoods. But ultimately, these are all different views that can be reflected in different land use policies. Allowing Nashville to make decisions about which goals it will prioritize will give voters and property owners the opportunity to pursue or protect those aspects of the city that they most want.

 


[*] *..  Elizabeth H. & Granville S. Ridley, Jr. Professor of Law, Vanderbilt Law School. Christina Jeffcoat provided excellent research assistance.

 [1]. For the seminal Supreme Court case recognizing the utility of zoning in this area, see Village of Euclid v. Ambler Realty Co., 272 U.S. 365, 387–89 (1926).

 [2]. Christopher Serkin, The New Politics of New Property and the Takings Clause, 42 Vt. L. Rev. 1, 3–6, 13 (2017).

 [3]. Robert C. Ellickson et al., Land Use Controls 95, 332–33 (4th ed. 2013) (discussing revenue related purposes of zoning and “dealmaking” by local governments); Carol M. Rose, Planning and Dealing: Piecemeal Land Controls as a Problem of Local Legitimacy, 71 Calif. L. Rev. 837, 879 (1983) (discussing local governments’ desire to retain flexibility to bargain ad hoc with developers).

 [4]. Ellickson et al., supra note 3, at 114–15, 121, 328, 858 (discussing local governments’ ability to zone for more purposes than originally anticipated in the SZEA and examples of local governments that use zoning to achieve sustainability, affordability, and preservation goals); see also Melvyn R. Durchslag, Forgotten Federalism: The Takings Clause and Local Land Use Decisions, 59 Md. L. Rev. 464, 464–65 (2000) (discussing various municipal land use goals); Serkin, supra note 2, at 6–7 (comparing differing political attitudes toward environmental zoning versus rent regulations).

 [5]. Thanks to Professor Edward Cheng for labeling the phenomenon of multimodal convergence.

 [6]. See Conor Friedersdorf, San Francisco’s Self-Defeating Housing Activists, Atlantic (Dec. 29, 2015), https://www.theatlantic.com/politics/archive/2015/12/san-francisco-is-confused-about-the-villain-thats-making-it-unaffordable/422091; Ilya Somin, Why More Liberal Cities Have Less Affordable Housing, Wash. Post: Volokh Conspiracy (Nov. 2, 2014), https://www.washingtonpost.
com/news/volokh-conspiracy/wp/2014/11/02/more-liberal-cities-have-less-affordable-housing/?utm_ter
m=.b355844b719a. See generally Vicki Been, City NIMBYs, 33 J. Land Use & Envtl. L. 217 (2018) (exploring increasing “Not In My Backyard” (“NIMBY”) policies in cities and the resulting effect on urban housing costs).

 [7]. Serkin, supra note 2, at 14–15.

 [8]. See Emily Badger, The Bipartisan Cry of ‘Not in My Backyard’, N.Y. Times (Aug. 21, 2018), https://www.nytimes.com/2018/08/21/upshot/home-ownership-nimby-bipartisan.html; Mike Rosenberg, Housing Construction in Local Suburbs Is at Historic Lows, While Seattle Is Setting Records, Seattle Times, https://www.seattletimes.com/business/real-estate/king-county-suburbs-slow-their-housing-growth-canceling-out-seattle-building-boom (last updated Aug. 11, 2018, 12:49 AM).

 [9]. A Standard State Zoning Enabling Act (Advisory Comm. on Zoning, U.S. Dep’t of Commerce, rev. ed. 1926).

 [10]. See, e.g., Christopher Serkin, Existing Uses and the Limits of Land Use Regulation, 84 N.Y.U. L. Rev. 1222, 1232–33 (2009) (briefly describing the history of the SZEA and citing sources on the topic).

 [11]. Village of Euclid v. Ambler Realty Co., 272 U.S. 365, 394–95 (1926).

 [12]. See, e.g., Rose, supra note 3, at 848–49 & n. 29 (briefly describing history of zoning in the United States).

 [13]. See, e.g., Brian Galle, In Praise of Ex Ante Regulation, 68 Vand. L. Rev. 1715, 1724 (2015) (“[Z]oning laws restrict development before it results in unwanted burdens on neighbors, while nuisance suits impose liability after the damage has begun.”); G. Donald Jud, The Effects of Zoning on Single-Family Residential Property Values: Charlotte, North Carolina, 56 Land Econ. 142, 142 (1980) (“One of the principal purposes of municipal zoning ordinances is to protect property owners from the deleterious external effects that may arise when incompatible land uses exist within the same neighborhood.”); Carol M. Rose, Property Rights, Regulatory Regimes and the New Takings Jurisprudence—An Evolutionary Approach, 57 Tenn. L. Rev. 577, 588 (1990) (“As land resources became more developed, we progressed from a regime of ‘anything goes’ with one’s landed property, to a regime of post hoc judicial control on ‘nuisances,’ to a regime of legislatively defined, ex ante regulation.”); Mariana Valverde, Taking ‘Land Use’ Seriously: Toward an Ontology of Municipal Law, 9 Law Text Culture 34, 52 (2005) (identifying a “religion of incompatible land uses that was codified in the 1916 New York City zoning ordinance”).

 [14]. See Euclid, 272 U.S. at 386–91 (analogizing a town’s ability to prevent industry from building in residential areas to the law of nuisances).

 [15]. See Ambler Realty Co. v. Village of Euclid, 297 F. 307, 316 (N.D. Ohio 1924) (stating that the true purpose of separating single-family residences and apartment buildings was to further economic class divisions), rev’d 272 U.S. 365 (1926); Richard H. Chused, Euclid’s Historical Imagery, 51 Case W. Res. L. Rev. 597, 613–14 (2001) (discussing how the Supreme Court’s language in Euclid’s majority opinion created a negative, stereotypical image of apartment buildings, validating zoning as a way to segregate based on race and class).

 [16]. Christopher Serkin, Capitalization and Exclusionary Zoning, Interdisc. Ctr. Herzliya (forthcoming 2019) (manuscript at 5) (on file with author).

 [17]. Village of Euclid v. Ambler Realty Co., 272 U.S. 365, 394–97 (discussing the effects of apartment buildings on single-family residences and concluding that as apartments come very near to being nuisances, it is within a municipality’s police powers to exclude them from single-family residential areas); see also Chused, supra note 15, at 614.

 [18]. The intuition appears to be that burdens imposed by voluntary associations, like the private governance of a homeowner’s association, are preferable to public regulatory authority. It is not obvious why that should be since people can choose their local governments just as they can choose their residential subdivisions. For early endorsement of more but not exclusive reliance on nuisance law, see Robert C. Ellickson, Alternatives to Zoning: Covenants, Nuisance Rules, and Fines as Land Use Controls, 40 U. Chi. L. Rev. 681, 68283, 761–62 (1973).

 [19]. See Serkin, supra note 2, at 6–7, 13.

 [20]. William A. Fischel, The Homevoter Hypothesis 14–16, 18 (2001) (comparing “growth machine” jurisdictions with “homevoter” jurisdictions).

 [21]. For some recognition of these changes, see Been, supra note 6, at 219–23; Serkin, supra note 2, at 13–16.

 [22]. See Been, supra note 6, at 218 (noting that cities have traditionally been viewed as “growth machines” and suburbs as favoring NIMBY policies to protect “homevoter” property values).

 [23]. See Edward H. Ziegler, Sustainable Urban Development and the Next American Landscape: Some Thoughts on Transportation, Regionalism, and Urban Planning Law Reform in the 21st Century, 42 Urb. Law. 91, 92–99 (2010) (discussing the NIMBY’s opposition to sustainable development); Ben Lockshin, Beyond NIMBY: Understanding Different Affordable Housing Advocates and Detractors (Part 1), Greater Greater Wash. (Sept. 26, 2017), https://ggwash.org/view/64879/beyond-nimby-understanding-different-affordable-housing-advocates-detractors (discussing the differences between NIMBYs and BANANAs); Alana Semuels, From ‘Not in My Backyard’ to ‘Yes in My Backyard’, Atlantic (July 5, 2017), https://www.theatlantic.com/business/archive/2017/07/yimby-groups-pro-dev elopment/532437 (discussing the rise of YIMBY views in California in response to the need for high-density housing).

 [24]. See generally Holly Doremus, Takings and Transitions, 19 J. Land Use & Envtl. L. 1 (2003) (discussing the effects of changing morals, technology, and scientific understanding on land use regulations); William A. Fischel, The Law and Economics of Cedar-Apple Rust: State Action and Just Compensation in Miller v. Schoene, 3 Rev. L. & Econ. 133 (2007) (concluding that the government should regulate land uses that harm uses with higher commercial values).

 [25]. See Wayne Batchis, Enabling Urban Sprawl: Revisiting the Supreme Court’s Seminal Zoning Decision Euclid v. Ambler in the 21st Century, 17 Va. J. Soc. Pol’y & L. 373, 379–80 (2010) (explaining that the single-use zoning structure exists in the majority of U.S. jurisdictions); Nicole Stelle Garnett, Save the Cities, Stop the Suburbs?, 116 Yale L.J. Pocket Part 192 (2006), http://yalelawjournal.org/forum/save-the-cities-stop-the-suburbs (discussing the persistence of single-use zoning in suburbs).

 [26]. See, e.g., J. Peter Byrne, The Rebirth of the Neighborhood, 40 Fordham Urb. L.J. 1595, 1596–97 (2013) (arguing that new urban residents seek vibrant, mixed-use neighborhoods).

 [27]. Doris S. Goldstein, New Urbanism—Planning and Structure of the Traditional Neighborhood Development, 17 Prob. & Prop. 9, 9 (2003) (“New Urbanism is a land planning philosophy advocating compact, mixed-use, pedestrian-friendly development.”).

 [28]. See id. at 10 (discussing how new urban developments separate residential and commercial sections but also allow a mixture of uses in residential sections).

 [29]. For an example of explicit mixed-use zoning, see Seaside, FL., Code of Ordinances ch. 158, no. 83-10 (1983); Samantha Salden, The Seaside Code: The Poster That Started It All, Seaside Res. Portal, https://seaside.library.nd.edu/essays/the-code (last visited May 11, 2019) (discussing the Seaside Code as the first application of new urbanism in a form-based code).

 [30]. Brian W. Ohm & Robert J. Sitkowski, The Influence of New Urbanism on Local Ordinances: The Twilight of Zoning?, 35 Urb. Law. 783, 785 (2003) (comparing flexible techniques such as overlay zoning to the rigidity of single-use districts); Scott B. Osborne, Planning Issues in Mixed-Use Developments, 21 Prac. Real Est. Law. 29, 30 (2005) (discussing new urbanist zoning through conditional use permits and special zoning designations).

 [31]. Fischel, supra note 20, at ix, 15–16; Harvey Molotch, The City as a Growth Machine: Toward a Political Economy of Place, 82 Am. J. Soc. 309, 30910 (1976).

 [32]. S. Rodgers, Urban Growth Machine, in 12 International Encyclopedia of Human Geography 40, 41–42  (Rob Kitchin & Nigel Thrift, eds., 2009) (describing the property investors, developers, financiers, etc. that make up the growth machine).

 [33]. See Office of Policy Dev. & Research, U.S. Dep’t of Hous. & Urban Dev., Ensuring Equitable Neighborhood Change: Gentrification Pressures on Housing Affordability 5–6 (2016), https://www.huduser.gov/portal/sites/default/files/pdf/Insights-Ensuring-Equitable-Growth.pdf (discussing the burdens of rapid urban growth on existing communities).

 [34]. See William K. Jaeger, The Effects of Land-Use Regulations on Property Values, 36 Envtl. L. 105, 112–17 (2006) (discussing how land use decisions can increase property values and “amenity” benefits); see, e.g., Scott Cohn, New Insights on How Cities and States Stack Up in the Race to Win Amazon’s $5 Billion HQ2, CNBC, https://www.cnbc.com/2018/07/05/new-clues-on-how-cities-stack-up-in-the-race-to-win-amazons-hq2.html (last updated July 10, 2018, 7:42 PM) (explaining that Amazon’s criteria for new headquarters includes an area with more than one million people and urban locations that can attract and retain talent).

 [35]. See Michelle Shortsleeve, Challenging Growth-Restrictive Zoning in Massachusetts on a Disparate Impact Theory, 27 B.U. Pub. Int. L.J. 361, 380 (2018) (describing how municipalities use zoning to limit population growth, and thus constrain congestion and preserve community aspects).

 [36]. Eric A. Cesnik, The American Street, 33 Urb. Law. 147, 173–84 (2001) (discussing how metropolitan planning is constrained by the status quo or the existing look and function of the area).

 [37]. See Robert C. Ellickson, Suburban Growth Controls: An Economic and Legal Analysis, 86 Yale L.J. 385, 390–92 (1977) (describing the various ways municipalities prevent all development in certain areas).

 [38]. Kristoffer Jackson, Do Land Use Regulations Stifle Residential Development? Evidence from California Cities, 91 J. Urb. Econ. 45, 54 (2016); see also Been, supra note 6, at 227–28.

 [39]. See infra Section II.F.

 [40]. Ellickson et al., supra note 3, at 649–50 (discussing the high public costs of public schools). For an analysis of the interplay between fiscal land use decisions and public schools, see Eric A. Hanushek & Kuzey Yilmaz, Land-Use Controls, Fiscal Zoning, and the Local Provision of Education, 43 Pub. Fin. Rev. 559, 563–67 (2015).

 [41]. See Paul G. Lewis, Retail Politics: Local Sales Taxes and the Fiscalization of Land Use, 15 Econ. Dev. Q. 21, 24–26 (2001) (arguing that the quest for retail development and its resulting sales tax revenue motivates California’s land use decisions).

 [42]. Christopher Serkin & Leslie Wellington, Putting Exclusionary Zoning in Its Place: Affordable Housing and Geographic Scale, 40 Fordham Urb. L.J. 1667, 1684 (2013); Smart Growth Am., Fiscal Impact Analysis of Three Development Scenarios in Nashville-Davidson County, TN 11 (2013), https://smartgrowthamerica.org/app/legacy/documents/fiscal-analysis-of-nashville-develop ment.pdf (showing the tax revenue generated by the one high-rise area as compared to two other developments).

 [43]. Been, supra note 6, at 21923.

 [44]. Rose, supra note 3, at 882, 889–91.

 [45]. See, e.g., Vicki Been, Impact Fees and Housing Affordability, 8 Cityscape 139, 143–47 (2005) (discussing the advantages and disadvantages of development fees); Arthur C. Nelson, Development Impact Fees: The Next Generation, 26 Urb. Law. 541, 548–53 (1994) (addressing various objections to development fees).

 [46]. See Jim Rossi & Christopher Serkin, Energy Exactions, 104 Cornell L. Rev. (forthcoming 2019).

 [47]. See Robert C. Ellickson, The Role of Economics in the Teaching of Land-Use Law, 1 UCLA J. Envtl. L. & Pol’y 1, 7 (1980).

 [48]. See Erin Ryan, Zoning, Taking, and Dealing: The Problems and Promise of Bargaining in Land Use Planning Conflicts, 7 Harv. Negot. L. Rev. 337, 347–49 (2002) (noting the increasingly discretionary practice of land use decisionmaking).

 [49]. Fischel, supra note 20, at 18.

 [50]. Id. at 5–6.

 [51]. Vicki Been, “Exit” as a Constraint on Land Use Exactions: Rethinking the Unconstitutional Conditions Doctrine, 91 Colum. L. Rev. 473, 483 (1991); Molly S. McUsic, Looking Inside Out: Institutional Analysis and the Problem of Takings, 92 Nw. U.L. Rev. 591, 62526 & n.162 (1998).

 [52]. Been, supra note 51, at 504, 509 (discussing how one community’s overly stringent regulation may result in an otherwise beneficial development being taken to a community with better regulatory policies).

 [53]. See Been, supra note 6, at 22729 (noting the contributions of restrictions on housing supply to the lack of affordable housing options).

 [54]. Steven J. Eagle, “Affordable Housing” as Metaphor, 44 Fordham Urb. L.J. 301, 306–21 (2017) (discussing the diverse economic and social benefits of affordable housing); see also Keith Wardrip et al., Ctr. for Hous. Policy, The Role of Affordable Housing in Creating Jobs and Stimulating Local Economic Development 10–13 (2011), https://providencehousing.org/wp-con tent/uploads/2014/03/Housing-and-Economic-Development-Report-2011.pdf.

 [55]. Serkin, supra note 16 (offering a tentative justification for rent regulation).

 [56]. For an overview of inclusionary zoning, see Cecily T. Talbert et al., Recent Developments in Inclusionary Zoning, 38 Urb. Law. 701, 70203 (2006).

 [57]. See Vicki Been et al., Supply Skepticism: Housing Supply and Affordability, 29 Housing Pol’y Debate 25, 29 (2019).

 [58]. N.Y.C., NY, The Zoning Resolution, art. II, ch. 5 (2018), https://www1.nyc.gov/site/ planning/zoning/access-text.page.

 [59]. Benjamin Schneider, YIMBYs Defeated as California’s Transit Density Bill Stalls, Citylab (Apr. 18, 2018), https://www.citylab.com/equity/2018/04/californias-transit-density-bill-stalls/558341.

 [60]. See id.

 [61]. Been et al., supra note 57, at 27–29.

 [62]. See Vicki Been et al., Preserving History or Restricting Development? The Heterogeneous Effects of Historic Districts on Local Housing Markets in New York City, 92 J. Urb. Econ. 16, 17 (2016) (“We find that construction activity falls in districts after designation, as expected given the rules accompanying designation.”).

 [63]. For a description of zoning for historic preservation, see J. Dennis Doyle, Historic Preservation Zoning in Maryland, 5 Md. L.F. 100, 101–05 (1976).

 [64]. See Catherine Hart, Community Preference in New York City, 47 Seton Hall L. Rev. 881, 905 (2017) (explaining that the influx of high-income individuals into low-income communities “replaces local residents and deprives long-time residents of the stake they have built in their community”).

 [65]. Been, supra note 6, at 242–44.

 [66]. See Sheryll Cashin, The Failures of Integration 32427 (2004); Rachel D. Godsil, The Gentrification Trigger: Autonomy, Mobility, and Affirmatively Furthering Fair Housing, 78 Brook. L. Rev. 319, 335–37 (2013) (discussing a more nuanced approach to gentrification).

 [67]. The built environment is also important for community preservation, even independent of the financial pressures that can come from gentrification. As Professor Carol Rose observed decades ago, buildings can be important for constituting community, and indeed preservation efforts should be evaluated to that end. See Carol M. Rose, Preservation and Community: New Directions in the Law of Historic Preservation, 33 Stan. L. Rev. 473, 488–91 (1981).

 [68]. See William A. Fischel, Neighborhood Conservation Districts: The New Belt and Suspenders of Municipal Zoning, 78 Brook. L. Rev. 339, 347–49 (2013) (discussing community preservation techniques other than those based on historic status).

 [69]. See, e.g., Dan Grossman, Think Those Slot Homes in Denver Are Ugly? You’re Not Alone, 9 News, https://www.9news.com/article/money/personal-finance/real-estate/think-those-slot-homes-in-de
nver-are-ugly-youre-not-alone/73-490912391 (last updated Nov. 10, 2017, 2:44 PM) (discussing Denver residents’ aesthetic opposition to homes described as “Minecraft characters, Lego characters,” and  “robots”).

 [70]. See Shawn G. Rice, Zoning Law: Architectural Appearance Ordinances and the First Amendment, 76 Marq. L. Rev. 439, 446–48 (1993) (discussing the ways that architectural appearance ordinances can limit the aesthetics of communities).

 [71]. Id. at 446 (describing architectural appearance ordinances as limiting “excessive dissimilarity” and requiring “conformity” or “harmony” (citations omitted)).

 [72]. See Edward Scissorhands (20th Century Fox Dec. 6, 1990).

 [73]. For a description of form-based codes, see Nicole Stelle Garnett, Hoover Inst., Upscaling the Neighborhood 18–32 (2018), https://www.hoover.org/sites/default/files/upscaling_ the_neighborhood_revised_final_garnett_0.pdf.

 [74]. For an overview of this dynamic, see generally David Markell, Climate Change and the Roles of Land Use and Energy Law: An Introduction, 27 J. Land Use & Envtl. L. 231 (2012) (discussing the effect that “land use, energy efficiency, and mobile and stationary source emission reduction approaches” can have on climate change).

 [75]. See Reid Ewing et al., Smart Growth Am., Measuring Sprawl and Its Impact 18–19 (2002), https://www.smartgrowthamerica.org/app/legacy/documents/MeasuringSprawl.PDF.

 [76]. Patricia E. Salkin, Sustainability and Land Use Planning: Greening State and Local Land Use Plans and Regulations to Address Climate Change Challenges and Preserve Resources for Future Generations, 34 Wm. & Mary Envtl. L. & Pol’y Rev. 121, 147–56 (2009) (surveying regulatory land use techniques meant to increase sustainability).

 [77]. See, e.g., John R. Nolon, An Environmental Understanding of the Local Land Use System, 45 Envtl. L. Rep. 10215, 10220–21 (2015).

 [78]. Other kinds of less conventional responses are possible as well. For an example of one, see Rossi & Serkin, supra note 46.

 [79]. See George F. Gramling, III, Wetland Regulation and Wildlife Habitat Protection: Proposals for Florida, 8 Harv. Envtl. L. Rev. 365, 37778 (1984).

 [80]. See Christopher Serkin, Public Entrenchment Through Private Law: Binding Local Governments, 78 U. Chi. L. Rev. 879, 913 (2011) (discussing how building infrastructure with limited capacity can be more controlling than zoning).

 [81]. See Bradley C. Karkkainen, Whither NEPA, 12 N.Y.U. Envtl. L.J. 333, 349 (2004) (arguing that environmental-informative requirements function as regulatory penalties, creating incentives to upgrade environmental standards early in projects).

 [82]. Critical Paths for Vermont Wildlife, Nat’l Wildlife Fed’n, https://www.nwf.org/Our-Work/Habitats/Wildlife-Corridors/Northeast (last visited May 12, 2019).

 [83]. See, e.g., Ensign Bickford Realty Corp. v. City Council of Livermore, 137 Cal. Rptr. 304, 309 (Ct. App. 1977); Sprenger, Grubb & Assocs., Inc. v. City of Hailey, 903 P.2d 741, 74849 (Idaho 1995).

 [84]. See Coniston Corp. v. Village of Hoffman Estates, 844 F.2d 461, 466–67 (7th Cir. 1988).

 [85]. A downtown commercial district may generate significant positive effects, which a big-box store at the edge of town can threaten. See Scott L. Cummings, Law in the Labor Movement’s Challenge to Wal-Mart: A Case Study of the Inglewood Site Fight, 95 Calif. L. Rev. 1927, 194852 (2007).

 [86]. Roderick M. Hills, Jr. & David Schleicher, The Steep Costs of Using Noncumulative Zoning to Preserve Land for Urban Manufacturing, 77 U. Chi. L. Rev. 249, 25356 (2010) (acknowledging the prevalence of the use of noncumulative zoning for these purposes but ultimately arguing against it).

 [87]. Transwestern, New York City Life Science Market 5 (2017), https://download.trans
western.com/public/Media/NY-Life-Science-Outlook_2Q2017.pdf.

 [88]. See Roderick M. Hills & David Schleicher, Planning an Affordable City, 101 Iowa L. Rev. 91, 11516 (2015) (“Many cities have no adequate substitutes, because they create agglomeration economies that rivals cannot duplicate.”).

 [89]. Broadway enjoys a special zoning district. For an interesting overview of New York’s zoning code, see Allison Meier, How Zoning Laws Shaped New York City over the Last Century, Hyperallergic (Dec. 14, 2016), https://hyperallergic.com/341092/mastering-the-metropolis-mcny.

 [90]. See Donald J. Smythe, The Power to Exclude and the Power to Expel, 66 Clev. St. L. Rev. 367, 39799 (2018) (analyzing the continued use of exclusionary zoning by local governments).

 [91]. See, e.g., Timothy J. Choppin, Breaking the Exclusionary Land Use Regulation Barrier: Policies to Promote Affordable Housing in the Suburbs, 82 Geo. L.J. 2039, 2054 (1994) (“Discrimination, both racial and economic, is one reason suburban residents oppose affordable housing.”).

 [92]. See Mick Dumke, Amid Affordable Housing Dispute, Conservatives Seek a Home on the Northwest Side, Chi. Sun-Times (May 23, 2018, 10:48 AM), https://chicago.suntimes.com/news/
affordable-housing-chicago-northwest-side-gop-conservative-republicans-northwest-side-jefferson-park-illinois-policy-institute (describing a political fight over a proposed affordable housing project in Chicago).

 [93]. See Been et al., supra note 57, at 2527.

 [94]. See Rose, supra note 3, at 862–63, 897; see also Melanie Yingst, Commission OKs Rezoning of Properties, Troy Daily News (June 14, 2018), https://www.tdn-net.com/news/43184/commission-oks-rezoning-of-properties (discussing an Ohio local zoning commission’s decision to rezone two agricultural properties to allow residential development of the area).

 [95]. See generally Jonathan R. Macey, Promoting Public-Regarding Legislation Through Statutory Interpretation: An Interest Group Model, 86 Colum. L. Rev. 223 (1986) (discussing interest-group rent seeking).

 [96]. See Robert H. Nelson, Privatizing the Neighborhood: A Proposal to Replace Zoning with Private Collective Property Rights to Existing Neighborhoods, 7 Geo. Mason L. Rev. 827, 833 (1999) (arguing that the proliferation of common interest communities demonstrates their appeal).

 [97]. Charles M. Tiebout, A Pure Theory of Local Expenditures, 64 J. Pol. Econ. 416, 417–20 (1956).

 [98]. See Denise Ryan, The $31b “Green” Branding of Vancouver, Vancouver Sun (Jan. 31, 2016), http://www.vancouversun.com/business/green+branding+Vancouver/11686117/story.html.

 [99]. See Tiebout, supra note 97, at 418.

 [100]. Serkin, supra note 2, at 13–15.

 [101]. See Jessi Maness, The History of Music Row: 60 Years of Greatness, Sports & Ent. Nashville (Oct. 13, 2015), http://sportsandentertainmentnashville.com/the-history-of-music-row-60-years-of-greatness.

 [102]. See, e.g., Michelle C. Kroft, Show Your Support—Help Save Music Row at the Rally the Row Event July 24th!, Hist. Nashivlle, Inc. (July 16, 2018), http://historicnashvilleinc.org/show-your-support-help-save-music-row-at-the-rally-the-row-event-july-24th [https://perma.cc/UVK8-R89Z] (“Since 2013, 43 buildings with music industry connections have been demolished—most to make way for apartment buildings.”); see also Margaret Renkl, The Day the Music Died, N.Y. Times (Jan. 21, 2019), https://www.nytimes.com/2019/01/21/opinion/nashville-music.html (outlining the gentrification of Music Row).

 [103]. See Tony Gonzalez, Music Row Apartments Halted, Prompting New Study, Tennessean (Feb. 12, 2015 6:44 PM), https://www.tennessean.com/story/news/local/2015/02/12/music-row-apartment-plan-halted-prompting-study/23324495.

 [104]. Open Letter from Ben Folds, owner of Grand Victor Sound (June 24, 2014), https://musicrow.com/2014/06/ben-folds-open-letter-rca-studio-a-to-be-sold.

 [105]. See Richard Fausset, Deal Saves Historic Nashville Studio, N.Y. Times (Oct. 3, 2014), https://www.nytimes.com/2014/10/04/us/deal-saves-historic-nashville-studio.html.

 [106]. Jessica Nicholson, National Trust for Historic Preservation and Historic Nashville to Hold Rally the Row Event, Music Row (July 20, 2018) (quoting Carolyn Brackett, Senior Field Officer, National Trust for Historic Preservation), https://musicrow.com/2018/07/national-trust-for-historic-preservation-and-historic-nashville-to-hold-rally-the-row-event [https://perma.cc/2DR2-6QU6%5D; see also id. (“We have to act now to save this place that is iconic and historically priceless.” (quoting Trey Bruce, Vice President, Historic Nashville)).

 [107]. See, e.g., Nashville Metro. Planning Dep’t, Music Row Detailed Plan app. (2016) [hereinafter Music Row Detailed Plan], https://www.nashville.gov/Portals/0/SiteContent/Planning/
docs/MusicRow/Music%20Row%20Detailed%20Plan%20Draft%20Recommendations__withAppendix.pdf (Survey 1 Responses Organized by Question) (listing comments from survey respondents about preserving Music Row, including: “To me, the individual buildings create an overall feel that binds the community. It’s humble and full of character.”).

 [108]. Nikki Junewicz, Historic Buildings in Danger in Music Row Redevelopment Proposal, Fox 17 Nashville (May 20, 2018) (quoting Jonathan Long, local bartender), https://fox17.com/news/local/
historic-buildings-in-danger-in-music-city-row-redevelopment-proposal [https://perma.cc/HDK4-RGL3%5D.

 [109]. See Music Row Detailed Plan, supra note 107, at app. (“GROW[TH] SHOULD NOT OCCUR BY BUILDING . . . . That would only worsen the traffic and will be less inviting for tourism.”); see also E-mail from John Dotson, Parks Broker, e-Pro, to Planning Commissioners (Dec. 6, 2016, 11:40 AM), https://www.nashville.gov/document/ID/cdd7797e-1ed5-49c7-8e20-7fc9ef4fd8a9/
December-8-2016-public-comments-received-through-December-7 (“We are most concerned about traffic, parking and infrastructure.”).

 [110]. See, e.g., Music Row Detailed Plan, supra note 107, at app. (commenting the following on getting around Music Row: “[I]nfrastructure should be considered BEFORE approval of millions of square feet of new construction, not after.”). Cf. Hiroko Tabuchi, How the Koch Brothers Are Killing Public Transit Projects Around the Country, N.Y. Times (June 19, 2018), https://www.nytimes.com/
2018/06/19/climate/koch-brothers-public-transit.html (discussing the support and opposition for a new transit plan in Nashville and other cities across the United States).

 [111]. See Office of the Mayor Megan Barry, Housing Nashville: Nashville & Davidson County’s Housing Report 1112, 40–42 (2017) [hereinafter Nashville Housing Report], https://www.nashville.gov/Portals/0/SiteContent/MayorsOffice/AffordableHousing/Housing%20Nashville%20FINAL.pdf; see also Music Row Detailed Plan, supra note 107, at app. (commenting the following concerning how to strengthen the Music Row community: “Affordability. Nashville can’t chase out all of us median income people . . . .”).

 [112]. Nashville Housing Report, supra note 111, at 11, 16.

 [113]. See David Plazas, The Costs of Growth and Change in Nashville, Tennessean, https://www.tennessean.com/story/opinion/columnists/david-plazas/2017/01/29/costs-growth-and-change-nashville/97064252 (last updated Jan. 10, 2018, 6:50 PM) (discussing how the development boom in Nashville has led to increasingly high housing costs); Stephen Trageser, Music Row Development and Neighborhood Character, Nashville Scene (Sept. 25, 2018 3:00 PM), https://www.nashvillescene.com/news/pith-in-the-wind/article/21024081/music-row-development-and-neighborhood-character (“[W]ith Nashville real estate prices as high as they are today, the chances of [neighborhood business] finding a comparable spot nearby seem slim.”) (discussing the pressure to develop Music Row and its effect on existing businesses).

 [114]. Staff Reports, Music Row Project Lands $12.8M Permit, Nashville Post (Apr. 4, 2018), https://www.nashvillepost.com/business/development/article/20999454/notes-music-row-project-lands-128m-permit (reporting that a development company has obtained a permit to build a Music Row office building expected to be worth $35 million).

 [115]. Smart Growth Am., supra note 42, at 10–11 (analyzing the significantly positive fiscal impact and tax benefit of the Gulch, a dense infill development, compared to two other Nashville developments).

 [116]. See Emily Hamilton, Three Lessons from Nashville’s Building Boom, Market Urbanism (Apr. 27, 2018), http://marketurbanism.com/2018/04/27/three-lessons-nashvilles-building-boom (“While there’s no way to legislate that great music will continue to come out of Music Row, the best way to make Nashville a good place for up and coming artists is to allow for new housing construction that will allow affordable neighborhoods to stay that way.”) (arguing that development has kept rents in other neighborhoods more affordable).

 [117]. See Been, supra note 6, at 242–43.

 [118]. See Patrick Sisson, On a Mission to Preserve Nashville’s Music Row, Meridian, https://www.meridian.net/tennessee/2016/11/10/13592846/nashville-live-music-row (last visited May 12, 2019) (describing the outsize impact Music Row has had on Nashville’s economy).

 [119]. See Carolyn Brackett & Randall Gross, Nat’l Trust for Historic Pres., A New Vision for Music Row 15 (2016), https://www.nashville.gov/Portals/0/SiteContent/Planning/docs/
MusicRow/Music%20Row%20Recommendations%20Report%20April%202016.pdf (“Like in the early days of Music Row, many industry leaders and participants still walk between offices and meet up for lunch, networking, contracting, or collaboration.”).

 

Convergence and the Circulation of Money Judgments – Article by Aaron D. Simowitz

 

From Volume 92, Number 4 (May 2019)
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Convergence and the Circulation of Money Judgments

Aaron D. Simowitz0F[*]

For half a century at least, the several states of the United States have taken a liberal attitude toward the recognition and enforcement of foreign country money judgments. The U.S. Supreme Court invoked the “grace” of sovereign nations to justify a restrictive approach to the recognition of judgments in the famous case of Hilton v. Guyot. The New York Court of Appeals laid out a more generous approach based in the vindication of private rights. Simply put, private rights won. In 1962, the Uniform Law Commission promulgated the Uniform Foreign Money-Judgments Recognition Act, which codified a liberal approach to the cross-border circulation of money judgments. The many U.S. states that adopted the uniform act were trying to lead by example. The hope was that, if they accepted incoming judgments, judgments exported to the rest of the world would be accepted, recognized, and enforced. For decades, this effort was regarded as a failure. The European Union continued to draw a sharp distinction between E.U. judgments and U.S. judgments—though acceptance of U.S. judgments by E.U. member states crept up over time. Some of the world’s largest economies—most notably, China—outright rejected recognition of U.S. money judgments.

Change has been recent and dramatic. In 2017, a Chinese court recognized and enforced a U.S. money judgement for the first time. Chinese law requires reciprocity between nations in order to recognize a foreign money judgment. The United States has no reciprocal judgment recognition treaty with any country. A U.S. district court recognized and enforced a Chinese judgment in 2009. This “reciprocity in fact” was sufficient for a Chinese court. A few months later, China announced that it would sign The Hague Convention on Choice of Court Agreements (COCA), obligating Chinese courts to recognize and enforce judgments rendered under a choice of court clause selecting the courts of any contracting state. The COCA has already entered into force between the European Union, Mexico, and Singapore. The United States has signed, but not ratified, the agreement. Meanwhile, The Hague Judgments Project gathers steam to require the free circulation of judgments arising in all but a few contexts. The drivers of this apparent convergence are obscure and likely diverse. This Article will analyze the causes of this recent, dramatic shift and will attempt to assess the likelihood of further convergence.

Introduction

The recognition of foreign judgments goes back at least as far as the sixteenth century, in the English courts of admiralty.[1] It was addressed by the 1774 Massachusetts Bay Act, the Articles of Confederation, the United States Constitution, and the First Congress.[2] The drafters of the U.S. Constitution and the creators of the European Union recognized the circulation of judgments as a key component of an integrated economic system.[3]

It is no exaggeration to say the circulation of judgments has been improving for at least five centuries. But the second half of the twentieth century was something of a pause. As judgments circulated ever more freely within economic units, like the United States or the European Union, recognition across countries stalled. Many courts of E.U. member states remained skeptical of U.S. judgments. The courts of the People’s Republic of China did not recognize a single U.S. money judgment. Indeed, this reluctance contributed to the rise of international commercial arbitration.

The Chinese approach changed dramatically in the summer of 2017. For the first time, a Chinese court recognized a U.S. commercial money judgment. Chinese law requires reciprocity: a creditor seeking recognition of a foreign money judgment in China must demonstrate that the courts of the country that rendered the judgment would recognize and enforce Chinese judgments. Previous courts had required such reciprocity to be established by treaty. In the case Liu Li v. Tao Li and Tong Wu, the Intermediate People’s Court of Wuhan City dispensed with this requirement, instead turning to the concept of “de facto reciprocity,” which it held was satisfied with regard to U.S. courts.[4]

The Chinese government followed this development quickly with an announcement that China would sign the fledgling Hague Convention on Choice of Court Agreements (COCA). The COCA came out of the ashes of the attempted Convention of Jurisdiction and Recognition of Judgments. In light of the failure of that ambitious project, the drafters prepared a more limited treaty that applied only to agreements to resolve commercial disputes in a particular national forum and, crucially, obligated signatory states to recognize judgments arising from those proceedings. At the time of the announcement, only the European Union and Mexico had permitted the treaty to enter into force. The United States had signed the treaty but refused to ratify it. Since then, the list of COCA countries has continued to grow.

China has decisively opened its courts to foreign judgments at the same time the Xi government has dramatically closed other economic doors. For example, the Xi government has imposed Maoist-era currency controls—an act of profound economic self-sabotage, in the view of most observers.[5] China has asserted aggressive claims to monetary,[6] informational,[7] and territorial sovereignty.[8] And yet it seems eager to cede ‘decisional sovereignty’ to foreign courts. Following these developments, scholars of international law queried whether China was pursuing an agenda of economic integration or economic power. The answer, naturally, is yes.

It is not yet clear whether we are entering a new era in the convergence of recognition of foreign judgments, in which national court judgments will resume their long march towards greater circulation among (and not merely within) economic units. It is far from clear whether China’s about-face will be lasting. The future of the COCA—and of the more ambitious Hague Judgments Project—remains uncertain. And not least of all, the consequences of the long-running inability of the United States to implement the COCA remain unclear.

This Article discusses the recent shift in China’s approach. It then proceeds to assess the forces that have lately led to greater convergence in the circulation of national court judgments.

I.  Foreign Money Judgments in Chinese Courts

The Liu decision alone would have been noteworthy, but probably not enough to significantly change the expectations for transnational dispute resolution involving China. The Liu decision coupled with China’s move to join the COCA, however, indicated a dramatic shift in the recognition and enforcement of foreign judgments in China.

A.  The Old Approach: Reciprocity by Treaty

The relevant Chinese law sets out “three channels[9] for recognition and enforcement of foreign money judgments—applicable domestic statutes, bilateral judgment recognition and enforcement treaties, and international conventions on circulation of judgments. Until recently, the third category was a null set. China has quite a few bilateral judgment treaties, but none with its largest trading partners, including the United States.[10] With the “limited impact” of treaties, Chinese domestic law has been the “predominant” channel.[11]

Chinese law “follows a modified civil/political” system.[12] The domestic legislation applicable to recognition of foreign money judgments is mainly found in the Civil Procedure Law (“CPL”). The limited provisions applying to recognition of foreign judgments were enacted in 1991 as part of the overarching CPL and have not changed since.[13] The CPL and related laws[14] provide only a general public policy defense and a reciprocity requirement.[15]

This thin legislative background has left the Supreme People’s Court (SPC) with broad influence in shaping the interpretation of the relevant law. The Chinese legal system does not have binding precedent in the common-law sense. However, the SPC has a profound effect on interpretation, both through its decisions and by issuing official interpretations of particular statutes.[16] The SPC has used this authority to “to interpret the relevant laws, including the CPL, in a conservative way, thus hindering the” recognition and enforcement of foreign judgments.17F[17]

This conservative approach was most clearly demonstrated in the SPC’s “infamous” decision in Gomi Akira v. Dalian Fari Seafood,18F[18] which touched off a “Sino–Japanese recognition feud.”[19] In Gomi Akira, the SPC rejected arguments in favor of presumed or legal reciprocity in favor of a strict interpretation of de facto reciprocity. Thus, Gomi Akira became “the most fundamental and frequently cited ground for the non-recognition of foreign judgments in China.”[20] This led China straight into a reciprocity trap—a stalemate in which recognition of foreign judgments was almost non-existent. This defensive attitude led commentators in both China and the United States to describe the Chinese approach to recognition and enforcement of foreign judgments as overly conservative and parochial.[21]

In practice, this left recognition by reciprocal treaty as the only functional “channel” by which to obtain recognition and enforcement of judgments in China. China has reciprocal judgment enforcement treaties with thirty-three countries, accounting for over 14 percent of its total trading volume.[22] Nevertheless, this “network of enforcement treaties” has been dismissed as “patchy.”[23] This may be due to the Chinese courts’ lack of awareness of the treaties, the uncertainties in the treaties (both because of their drafting and subsequent interpretation by the courts), and the ineffectiveness in enforcing commercial judgments.” Indeed, the advantages of the COCA over the patchwork of bilateral treaties may have influenced China’s adoption of the multilateral treaty.[24]

B.  The New Approach: “De Facto” Reciprocity

On June 30, 2017, a Chinese court recognized a U.S. commercial money judgment—a first in Sino-U.S. history. It was not the first time, however, that a Chinese court had recognized a foreign commercial money judgment.

In 2014, the High Court of Singapore recognized and enforced a commercial money judgment issued by the Intermediate People’s Court of Suzhou City in Jiangsu Province.[25] Two years later, the Intermediate People’s Court of Nanjing City in Jiangsu Province in Kolmar v. Jiangsu Textile recognized and enforced a commercial money judgment issued by the High Court of Singapore.[26] The following year, the Supreme People’s Court included that recognition judgment in its Second Series of Typical Cases illustrating the “One Belt and One Road” program.[27]

The Belt and Road Initiative has become the organizing economic program of the Xi government. It was first mentioned in 2013, when President Xi spoke in Kazakhstan, but this “seemingly out-of-the-way event in an out-of-the-way country has since mushroomed into the keystone policy initiative of the Xi presidency.”[28] The program draws its name from the ambition to recreate a land and maritime “Silk Road” with China as the hub, but “the undertaking became a sort of catchall for much more than new openings for international trade and investment for China” and has grown “to include developments in law in particular that can be seen as enhancing both international trade and China’s image in the global community.”[29] In 2015, the “Vision and Actions on Jointly Building Silk Road Economic Belt and 21st-Century Maritime Silk Road” laid out the mission statement for the initiative, including that “China will stay committed to the basic policy of opening-up, build a new pattern of all-round opening-up, and integrate itself deeper into the world economic system.”[30] A 2015 statement issued by the Supreme People’s Court specifically called on Chinese courts to “promote the mutual recognition and enforcement of judgments rendered by countries along the ‘Belt and Road.’”[31] And in 2017 (only a few weeks before the Liu decision), the second China-ASEAN Justice Forum, hosted by the Supreme People’s Court, produced a statement explicitly calling “for a presumption of reciprocity, even in the absence of a treaty.”[32]

“On [June 30th,]  2017, for the first time in history, [a] Chinese court recognized and enforced a U.S. commercial monetary judgment.”[33] The plaintiff, Liu Li, concluded a Share Transfer Agreement in the United States to purchase a 50 percent stake in a California corporation owned by Tao Li. Liu transferred 125,000 dollars to Tao. Liu alleged that Tao then transferred the money to his wife, Tong Wu, and then they absconded together. Liu filed an action for fraud in California state court.[34] When direct service was unsuccessful, the California court authorized service by publication. The defendants defaulted, and the court then entered a default judgment against them with both pre-judgment interest and costs.[35]

The debtors had their habitual residence in Wuhan City, where they also owned real estate that could be used to satisfy the judgment.[36] Liu petitioned the Intermediate People’s Court of Wuhan City to recognize and enforce the U.S. money judgment.[37] The Wuhan City court held that it had jurisdiction to hear the petition due to the presence of defendants’ real property.[38] The court rejected defendants’ arguments that service had been improper and declined defendants’ invitation to reexamine the merits of the case.[39]

As the United States and China have no reciprocal judgment recognition treaty, the court noted the application would have to satisfy the requirement of de facto reciprocity. Liu pointed to the decision of the U.S. District Court for the Central District of California in Hubei Gezhouba Sanlian Industrial Co. v. Robinson Helicopter Co., [40] a products liability case in which the U.S. court had recognized and enforced a money judgment rendered by the Higher People’s Court of Hubei Province China.[41] The Wuhan City court held that this provided adequate evidence of de facto reciprocity and, after dispensing with the debtors’ final defense that the judgment violated Chinese public policy, recognized and enforced the U.S. judgment.[42]

This case goes beyond the approach to de facto reciprocity endorsed in Kolmar. In Kolmar, the de facto reciprocity between China and Singapore was established between the same courts on the same claims—the outgoing Chinese judgment was on a contract claim and was recognized by the High Court of Singapore; the incoming judgment was rendered by the High Court of Singapore in a contract action.[43] After Kolmar, doubts remained as to whether Chinese courts “would require the same cause of action and how Chinese court[s] would apply de facto reciprocity if the requested judgment is rendered in a federal country.”[44] In recognizing the U.S. money judgment, the Chinese court did not require the same cause of action—the outgoing judgment had been on a tort claim; the incoming judgment sounded predominantly in contract.

Nor did the Chinese court dwell on the influence of a particular federal or state decision in a judicial system of both horizontal and vertical federalism. In the United States, judgment recognition and enforcement law is state, rather than federal, law. Therefore, state courts have the ultimate authority to interpret U.S. judgment recognition law. The Hubei Gezhouba Sanlian Industrial v. Robinson Helicopter decision was issued by a federal court interpreting California state law. Arguably, a state court might therefore have greater influence in setting a persuasive precedent for reciprocity. No decision based on California law would bind U.S. federal or state courts applying other states’ judgment recognition laws. (Of course, a trial court decision is not binding precedent, regardless.)

The U.S. decision that was presented as evidence of de facto reciprocity had another important facet that was not mentioned by the Chinese court. The Hubei decision stemmed from a so-called “boomerang” suit.[45] The plaintiff, a Chinese corporation, brought a tort suit in a U.S. district court. The U.S. court dismissed the action on the basis of forum non conveniens. This is not particularly unusual. U.S. courts, including the U.S. Supreme Court, have dismissed transnational actions in favor of a Chinese forum.[46] In the context of the forum non conveniens standard, such a dismissal includes the finding that Chinese courts present an “adequate alternative forum.”[47] (Indeed, this is one of the reasons that it is perhaps unsurprising that U.S. courts eventually opened their doors to Chinese court judgments.) It would have been rather odd, though not unprecedented,[48] for a U.S. court to initially find that Chinese courts provided an adequate forum and then, at the judgment enforcement stage, deny recognition to the very judgment for which it was responsible. But this very particular procedural posture was not considered by the Wuhan court.

None of this is to say that the Wuhan court erred. Quite the opposite. The Hubei decision likely is persuasive evidence that U.S. courts are open to recognition and enforcement of Chinese judgments when coupled with additional factors. Such factors include the overall liberal attitude of U.S. law towards foreign judgments and the tendency of U.S. courts to conclude in other contexts that Chinese courts are an adequate forum. But the Wuhan court did not consider these factors—and touched only lightly on other issues, such as the service by publication and the default nature of the judgment.[49] This suggests either a lack of familiarity with certain aspects of the U.S. legal system,[50] an enthusiasm for the recognition of foreign judgments, or perhaps both.

C.  The New Treaty: The Hague Convention
on Choice of Court Agreements

On September 12, 2017, the People’s Republic of China signed the Hague Convention of 30 June 2005 on Choice of Court Agreements—commonly referred to as the COCA.[51] It joined the European Union, Mexico, Singapore, Ukraine, and the United States as signatory nations. The COCA had already entered into effect between the European Union, Mexico, and Singapore as those nations had ratified and otherwise acceded to treaty.[52]

In 1992, The Hague Conference on Private International Law began negotiations on a dual convention on both jurisdiction and circulation of judgments. The United States initially supported the project, but disagreements principally concerning jurisdiction eventually scuttled the proposed convention. The COCA rose from the ashes as a less ambitious treaty addressing only the least controversial aspects of the failed jurisdiction and judgments convention. The COCA is a “double convention” in the sense that it addresses both jurisdiction and judgment recognition, but only applies to disputes under forum selection clauses in cross-border commercial agreements. In essence, the COCA obligates the courts of member states to take jurisdiction over international business-to-business disputes when their courts are selected by an exclusive forum selection clause—and judgments arising from those proceedings are entitled to recognition and enforcement in the other contracting states. It has been described as a New York Convention for judgments.[53]

The COCA will radically change the Chinese approach to foreign commercial money judgments. However, the treaty creates little actual tension with Chinese statutory law.[54] In some areas, Chinese law does not permit parties to contract around grants of exclusive jurisdiction55F[55]—but the COCA permits contracting states to enter into a declaration excluding certain subject areas from the treaty’s scope. Chinese law and the COCA endorse the exclusivity of the parties’ chosen court—the derogated courts must dismiss any parallel action.[56] The COCA obligates the chosen court to hear a dispute even if it has no connection to the forum—but Article 19 of the COCA permits contracting states to issue a declaration that their court need not entertain purely foreign disputes.[57] Such a declaration would bring the COCA into alignment with Chinese domestic law.[58]

A U.S. commentator noted that “China’s signing is a hopeful sign, particularly in light of a Chinese court’s recent decision” in Liu.[59] Some suggested that the United States’ liberal recognition policy had finally had an influence and hoped the reverse might hold true—that China’s move to embrace the COCA would break the U.S. stalemate on ratification.[60]

D.  The New Questions: The Future of Foreign Judgments in Chinese Courts

These new recognition decisions, coupled with the decision to join the COCA, have dramatically changed China’s place in the framework of international litigation. Many questions remain, however.[61]

On a doctrinal level, these decisions do not resolve serious issues such as what law Chinese courts will apply to determine whether the judgment-rendering court had power to render the judgment, in terms of jurisdiction or service. Chinese courts will have to address whether any aspects of U.S. procedure or substantive law offend Chinese approaches to due process or to substantive public policy. For example, it is far from clear how Chinese courts will approach U.S. courts’ grants of punitive damages, an issue that has bedeviled the U.S.-E.U. relationship.[62]

Although China has yet to ratify the COCA, its effects are being felt in Chinese courts. On April 20, 2017, a Chinese court rendered a decision referring to the COCA—even before it was signed. In Cathay United Bank v. Gao,[63] a Taiwanese bank and a Chinese national residing in Shanghai entered into a guaranty contract with a choice of forum clause selecting a Taiwanese court to resolve disputes.[64] The Chinese party sued in a Shanghai court.[65] The clause did not specify whether it was exclusive or not,” and Chinese domestic law does not provide a rule for choice of forum clauses that are silent on exclusivity.[66] To fill the gap, the court referred to Article 3 of the COCA, which states that choice of forum clauses shall be construed to be exclusive, unless the parties expressly state otherwise.[67] The Shanghai court therefore declined jurisdiction.[68]

It is not even clear whether there is a basis in Chinese domestic law for reference to an unsigned and unratified international convention. As Professor Sophia Tang has observed, “Article 9 of the Chinese Supreme Court’s Judicial Interpretation of Chinese Conflict of Laws Act allows the Chinese courts to apply international conventions, which have not entered into effect in China, to decide the parties’ rights and obligations.”[69] However, “such an application is subject to party autonomy,” and therefore would require the parties themselves to reference the COCA as a source of applicable law.[70] Professor Tang notes that “a more relevant provision is Article 142(3) of the PRC General Principle of Civil Law, which provides that international customs or practice may be applied to matters for which neither the law of the PRC nor any international treaty concluded or acceded to by China has any provisions.”[71] This is a striking suggestion: that the COCA had attained the status of international custom or practice even before it had been signed by China (or by many other countries). Placed in context with the other developments described above, perhaps it is not too optimistic to observe a certain eagerness in the Chinese courts for greater cross-border circulation of money judgments.[72]

China’s decision to join the COCA may have decisive effects well beyond any impact that the Liu decision would have had alone. One decision, even a very promising decision, would not persuade any cross-border transactional lawyer to trust the receptivity of Chinese courts to foreign judgments over China’s long-running support of international commercial arbitration.[73] Even if China accedes to the COCA, questions will remain about whether China will support judgment circulation with the same vigor as arbitral award circulation.[74]

Days after the announcement that China would sign the COCA, Wuhan University Law School hosted the “Global Forum on Private International Law,” devoted to the theme of “Cooperation for Common Progress.”[75] Subjects included both the COCA and the Hague Judgments Project. The closing address was delivered by Professor Xiao Yongping, who focused the address on three points: (1) “the Asian regional cooperation needs a set of effective dispute settlement mechanisms;” (2) “the current international dispute settlement mechanism is dominated by western developed economies” and it “is the time for Asian countries to establish a dispute resolution body with regional characteristics;” and (3) construction of “a more equitable and reasonable regional dispute resolution body should be the ideal choice for all Asian countries to promote regional cooperation.”[76]

II.  Understanding the Improving Circulation of Judgments

China is in the midst of a dramatic shift regarding the circulation of foreign judgments. But questions remain about both the reasons behind this shift and the likelihood that it will be both effective and long-lasting. To assess these practical questions, it is important to assess the theoretical questions behind the converging (or diverging) circulation of judgments. Despite its obvious importance, relatively little theoretical attention has been paid to the circulation of judgments, compared to other areas of private international law.[77]

A.  Prevailing Economic Rationales

Three different rationales have dominated the economic approach to explaining the cross-border circulation of judgments. Individually, none of these theories has demonstrated compelling explanatory or predictive power. However, the congruencies of these theories may help in understanding China’s sudden shift and permit some inferences about likely future behavior.

The first theoretical approach to the circulation of judgments imagines sovereigns in the classic prisoner’s dilemma.[78] Each sovereign desires the judgments of its courts be freely recognized abroad, encouraging litigants to use the sovereign’s courts, exporting that sovereign’s legal norms, and offering greater relief to domestic plaintiffs that may disproportionately choose domestic courts. This account supposes that the overall optimal solution is for both sovereigns to freely recognize each other’s judgments. But neither sovereign has sufficient incentive to act first in a one-shot game. However, the recognition and enforcement of foreign judgments is a long-term, iterative process with repeat players. Therefore, the long-term benefits of cooperation overcome the short-term incentives to defect, leading to the greater circulation of national court judgments. Under this account, sovereigns can induce cooperation, as defection can be readily punished.

A second account proposes that the recognition and enforcement of foreign judgments is a “weakly dominant strategy”[79]—in essence, permitting the circulation of judgments is a unilateral good, not unlike permitting free trade.[80] The recognition and enforcement of foreign judgments prevents waste by preventing the re-litigation of previously adjudicated disputes and reducing burdens on national courts.[81] (This assumes that the costs of re-litigation are less than those of recognition and enforcement.) Therefore, even if other sovereigns refuse to recognize and enforce foreign judgments, it is still in a particular sovereign’s interest to permit free circulation of these judgments.

Neither of these accounts is entirely persuasive. The prisoner’s dilemma account is undermined by the following historical facts: (1) the United States did move first to welcome foreign judgments; and (2) decades passed before the circulation of judgments among economic units seemed to thaw (perhaps as a result of U.S. leadership, perhaps not). This severaldecade long pause also seems to undermine the unilateral good argument. But perhaps this is asking too much, too quickly. The prisoner’s dilemma account rests on the importance of long-term incentives—perhaps those are only now bearing fruit. And the United States’ behavior is consistent with the unilateral good hypothesis—though the behavior of other nations is largely not. And the “demise of the reciprocity requirement” in U.S. law seems to undercut the prisoner dilemma’s hypotheses, while supporting the unilateral good argument.8[82]

In a 2010 article, Professor Yaad Rotem offers a third theory, which focuses on the problem of asymmetric information.”[83] Rotem posits that a “forum would prefer that its judgments always be recognized abroad while retaining the ability to pick and choose which foreign judgments it itself recognizes.”[84] On the other hand, the “worst-case scenario for a forum in this regard is to recognize foreign judgments but have its own judgments ignored abroad.”[85] The difficulty arises because of limited information among sovereigns—specifically, that sovereigns are unable to assess the causes of any particular judgment of non-recognition. Therefore, a sovereign attempting to export its judgments cannot reliably determine when refusals to recognize judgments by another sovereign’s courts are merely sporadic—which would be acceptable, yet annoying—or a genuinely selective sorting of some types of judgments from others.

Professor Rotem’s account suffers for two reasons, both related to the doctrine of judgment circulation. First, virtually all laws of judgment recognition and enforcement permit non-recognition on the ground that the incoming judgment violates the public policy of the nation where recognition is sought. Indeed, this is a genuine point of convergence among national laws on the subject. Therefore, it is broadly accepted that national law can and should have an explicit ground for selective non-recognition. Second, this ground is seldom used, and when it is used, it is often subject to serious criticism. Even Chinese authorities have described the public policy ground as a very unruly horse” in the context of making the case for joining the COCA.[86] It is certainly possible that national courts are using other grounds for non-recognition to avoid invoking the disfavored ground of public policy. Though there is some evidence to suggest such behavior by Chinese provincial courts,[87] neither the practitioner nor the academic literature identify this particular sort of opportunism as a notable problem.

Simply put, broadly convergent doctrine permits an explicit ground for selective non-recognition of foreign judgments. And national courts use the public policy exception and explicitly state when they want to be selective about recognizing foreign judgments. If the public policy ground were to get out of hand, this would pose other problems for the circulation of judgments—but it is not a problem of asymmetric information. Professor Rotem’s account does prompt the question of why the public policy exception exists and is not used more often. The answer must lie, however, in the underlying incentives to create a judgment circulation system.

B.  The Spillover Effect of International Arbitration

China has embraced international commercial arbitration as the dominant mode of cross-border dispute resolution. China acceded to the U.N. Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”) in 1987. The New York Convention is arguably the most successful commercial treaty in history, with over 180 contracting states. The New York Convention sets the overarching framework for international commercial arbitration, obligating contracting states to enforce arbitral agreements and to recognize and enforce arbitral awards, subject to limited and exclusive defenses.

China has been enthusiastically supportive of international commercial arbitration for over two decades. In the 1990s, the SPC became concerned that provincial Chinese courts were being insufficiently deferential in their review of international arbitral awards and therefore not complying with China’s obligations under the New York Convention.[88] In 1987, China acceded to the New York Convention. In 1995, the SPC announced the “Prior Reporting System,” with further expansions of the program in 1998 and 2017. Under this system, there is an “automatic appeal” from any decision denying recognition. If a people’s court decides to refuse recognition and enforcement of a New York Convention award, it must report the decision to the appropriate high people’s court. If the high people’s court approves the rejection, it must refer the decision to the Supreme People’s Court. Only after approval from the Supreme People’s Court can the court of first instance refuse to recognize the award. This system has had a demonstrable effect on recognition rates, and likely on liberalizing doctrine as well.[89] China has also liberalized its approach to selecting arbitral institutions and procedures.

Many have described arbitration and litigation as competitors. Though this is sometimes true, it is just as often true to say that they are complements.[90] The system of international arbitration relies on national courts to enforce arbitration agreements, to recognize and enforce awards, and to offer interim assistance to arbitral tribunals. Even courts that have rejected an active role in international litigation—like China’s until recently—have become active purveyors of international arbitration.

Arbitration is appealing to nations concerned about decisional sovereignty (or the perception of infringements on sovereignty) because it appears more denationalized. Every New York Convention arbitration must be governed by a national seat, but an award rendered in a foreign seat can still seem more palatable than a judgment rendered by a foreign court. But the difference may not be so extreme. In practice, advocates of the denationalization of arbitration equate it with subservience of national courts, which in their view ought to never (or hardly ever) question arbitral award enforcement.

Even if national courts have taken a more robust view of their review of awards, they have become competitors for the business of international commercial arbitration. China is a case in point. Shanghai has actively competed to become a major center of international commercial arbitration. New arbitration centers are being opened in Beijing and Shenzhen, reflecting regional as well as national competition for the business of international arbitration. It will come as no surprise that new international commercial courts have opened in Shenzhen and Xi’an, with another coming in Beijing.[91] Relevant international and domestic law reflects the close relationship between the circulation of arbitral awards and the circulation of judgments. The COCA was deliberately modeled on the New York Convention. Even earlier, there was well-documented transmission of ideas between the New York Convention, the uniform U.S. state laws on the recognition of judgments, and proposed U.S. federal law on the recognition of judgments.

The Chinese experience liberalizing arbitration law has not been without speedbumps—especially among provincial courts[92]—but it has largely been a success. The China International Economic and Trade Arbitration Commission (CIETAC) became the leading provider of international arbitration in Asia and was regarded as both reputable by foreign parties (though perhaps giving Chinese parties a certain home-court advantage) and politically acceptable to the central government. To the extent that CIETAC, headquartered in Beijing, became a dominant provider of international arbitration services, it also provided an opportunity to centralize international dispute resolution—centralization being an ongoing priority of the Xi government. However, CIETAC splintered into three arbitral bodies in 2012, effectively empowering regional authorities in Shanghai and Shenzhen.[93] It may well be the case that, just as international arbitration once presented an opportunity to expand economic opportunity while centralizing power,[94] transnational litigation in Chinese courts now presents a similar opportunity. Particularly if the same tools, such as the automatic appeal of non-recognition judgments, are used.

C.  Free Riders in Transnational Dispute Resolution

Not all sovereigns are necessarily interested in exercising decisional sovereignty. Rather, a liberal judgment recognition policy allows sovereigns to freeride on other highly sophisticated judicial systems, particularly in commercial disputes. This freeriding approach allows resource-constrained nations to enjoy the benefits of a sophisticated transnational dispute system without internalizing any of the costs of developing such a system.

The only “cost” is the reduced ability to apply local laws and norms to transnational disputes. That concern, however, is muted in commercial disputes. Sophisticated contracting parties will exercise their autonomy to select a transnational dispute mechanism, forum, and law that suits them. Therefore, any application of foreign norms and laws to domestic litigants must flow through the expressed choice of those very domestic litigants. If domestic litigants in certain industries are subject to consistent bargaining power discrepancies, national legislatures can provide prophylactic protections specific to those industries.

China is clearly not attempting to freeride—it is attempting to leverage this effect. It is telling that each statement about “opening-up” also emphasized the need to move away from Westerndominated modes of dispute resolution. The emphasis is on developing modes of transnational dispute resolution that reflect the norms of East and South Asia—the heart of the Belt and Road—as opposed to norms and laws imposed by the West. China is attempting to carve out a decisional “sphere of influence.” It hopes that other nations on the Belt and Road will be willing to leverage the extensive benefits of commercial extraterritorial litigation,[95] while tolerating the imposition of Chinese, rather than Western, norms and laws. Under this account, China may care little about occasionally importing a U.S. or German judgment. To the extent that doing so burnishes the reputation of Chinese courts as exporters of commercial judgments, it may be beneficial. But China may not be competing with the Western centers of dispute resolution. Its ambition is to become the preeminent center of transnational dispute resolution within the aspirational Belt and Road economic unit.[96]

D.  Heterogeneous Incentives

The freeriding effect is one example of a larger concern absent from the prevailing economic theories of judgment circulation: heterogeneous incentives among the players in the “recognition game.”[97] Each of the prevailing economic approaches to understanding the circulation of judgments counterfactually assumes homogenous incentives: that all sovereigns want to export all of their judgments to all countries and to refuse to import judgments from all countries; that all countries want to import all judgments; or that all judgments want their judgments recognized abroad and will tolerate sporadic, but not selective, non-recognition.

There are more things in heaven and earth than are dreamt of in this philosophy.[98] There are nations that are predominantly judgment exporters or predominantly judgment importers. There are nations that are predominantly capital exporters or capital importers. These positions change over time, which explains some of the significant recent shifts in transnational dispute resolution; for example, the West is increasingly skeptical of international investment arbitration, as countries like the United States and Germany import more capital, with the strings attached that they themselves strung. Some nations, such as the United States, Great Britain, and Singapore, aim to export judgments to the entire world. Some nations, such as China, may aim to export judgments only to a region. These distinctions matter in determining what strategies sovereigns will adopt in their approach to recognition of foreign judgments.

Transnational law is dictated by domestic interests. Even among countries that one might expect to have similar overall strategies, particular domestic constituencies will demand different approaches to transnational law. New York is a transnational litigation hub and the lending capital of the world. The dominance of large financial institutions drives a transnational litigation system that elevates the enforcement of financial obligations. Accordingly, exporting judgments is crucial, while importing judgments is either irrelevant or advantageous. London has been shaped as a transnational litigation hub by Britain’s history as a commercial and maritime center. London’s ambition is therefore to market its expertise in commercial and maritime matters to the world—accordingly, U.K. courts want badly to export judgments, but are nonetheless less welcoming to incoming judgments than their U.S. counterparts. Chinese courts exist in the context of a political-legal system responsive to the desires of the central and regional governments. It is plainly the ambition of the Xi government to establish regional economic dominance along the so-called Belt and Road. Accordingly, China’s new international commercial courts may see themselves in competition with other Asian courts (and with each other) and not with New York or London at all.

Finally, the “recognition game” may be one where a player can occupy a strategy and effectively exclude others. There is only one preeminent global financial center—and therefore, only one player can adopt the appropriate strategy for circulation of judgments. China aims to be the dominant economic power in the so-called Belt and Road—only one player can adopt the transnational litigation strategy that comes with that position, if it is achieved.

Conclusion

Only a couple years ago, “the Chinese example” was discussed as the most prominent resistance to the growing circulation of foreign money judgments.[99] China now stands, for the moment, as the most prominent example of how quickly a nation can adopt a pro-recognition and enforcement policy after decades of refusal. The “Chinese example,” however, prompts several questions, including what forces drove the change and whether the change will stick. Prevailing theories of competition or cooperation among nations fail to adequately explain or predict the development of the circulation of judgments. This Article has sought to offer some brief suggestions as to approaches that better reflect the behavior of nations with heterogeneous incentives and strategies, embedded in a web of transnational dispute resolution in which litigation may be just one mode among many.

 


[*] *.. Assistant Professor, Willamette University College of Law; Affiliated Scholar, The Classical Liberal Institute at New York University School of Law. I owe great thanks to the participants in the CLI-NYU Symposium on Convergence and Divergence in Private International Law, as well as to Ronald Brand, Pamela Bookman, Alyssa King, Linda Silberman, and Symeon Symeonides. Thank you as well to the editors at the Southern California Law Review for their hard work and patience and to the Classical Liberal Institute for providing the occasion and support for this piece and presentation. I am also indebted to my wife for her insights into the game-theoretic consequences of heterogeneous incentives.

 [1]. David E. Engdahl, The Classic Rule of Faith and Credit, 118 Yale L.J. 1584, 1597 (2009) (footnote omitted) (“As early as 1536, there was a case for ‘execution of sentence of French Court.’”). 

 [2]. See generally id. (describing the historical underpinnings of the Full Faith and Credit Clause through a discussion of these legal regimes).

 [3]. See, e.g., Ronald A. Brand, Recognition of Foreign Judgments as a Trade Law Issue: The Economics of Private International Law, in Economic Dimensions in International Law 592, 640 (Jagdeep S. Bhandari & Alan O. Sykes eds., 1998) (“Economic theory demonstrates the the free movement of judgments is an essential element of a liberal trading system.”); Antonio F. Perez, Consumer Protection in the Americas: A Second Wave of American Revolutions?, 5 U. St. Thomas L.J. 698, 713 (2008) (“The greatest free trade areas in modern history, the United States and the European Union (EU), both have included recognition and enforcement of member-state judgments in the genome of their political economy.”); Jeffrey Wald, A Clash of Two Courts: Baker, Full Faith and Credit, and Montana’s Refusal to Recognize A North Dakota Declaratory Judgment, 89 N.D. L. Rev. 143, 143 (2013) (“The Full Faith and Credit Clause of the United States Constitution is one of the most important, but least understood, constitutional clauses.”).

 [4]. Liú táolǐ tóng (刘莉诉桃李和吴彤) [Liu Li v. Tao Li & Tong Wu], Yue Wuhan Zhong Min Shang Wai Chu Zi No. 00026 (Interm. People’s Ct. of Wuhan City, Hubei Province June 30, 2017) (China).

 [5]. See Tom Mitchell & Gabriel Wildau, China’s State Council Puts Seal on Capital Controls, Fin. Times (Aug. 18, 2017), https://www.ft.com/content/3a638d1c-8405-11e7-a4ce-15b2513cb3ff.

 [6]. See Katharina Pistor, From Territorial to Monetary Sovereignty, 18 Theoretical Inquiries L. 491, 493 (2017) (arguing that “if the question of sovereignty was tied not to effective control over territory and people but to effective control over money,” then the “only states that may be deemed sovereign in monetary terms are the United States, the United Kingdom, Canada, Japan, Switzerland, Australia, and the People’s Republic of China”).

 [7]. See Radim Polc̆ák & Dan Jerker B. Svantesson, Information Sovereignty: Data Privacy, Sovereign Powers and the Rule of Law 2 (2017); Philip Chwee, Note, Bringing in a New Scale: Proposing A Global Metric of Internet Censorship, 38 Fordham Int’l L.J. 825, 862–63 (2015) (“[M]aintaining national security and social stability are some of the PRC’s utmost important objectives. By regulating the Internet from the ground up, the PRC is able to control the data that enters and leaves its borders . . . while maintaining compliance from its end-user citizens with their broad censorship laws.” (footnotes omitted)).

 [8]. See David Tweed, China’s Territorial Disputes, Bloomberg (Oct. 3, 2018), https://www.
bloomberg.com/quicktake/territorial-disputes.

 [9]. Wenliang Zhang, Sino–Foreign Recognition and Enforcement of Judgments: A Promising “Follow-Suit” Model?, 16 Chinese J. Int’l L. 515, 518 (2017).

 [10]. King Fung Tsang, Chinese Bilateral Judgment Enforcement Treaties, 40 Loy. L.A. Int’l & Comp. L. Rev. 1, 5–6 (2017) (“Although it is true that China has never entered into bilateral enforcement treaties with her largest trading partners, it does not necessarily mean that the countries with which she has entered into bilateral treaties are insignificant.”).

 [11]. Zhang, supra note 9, at 519.

 [12]. Pamela Bookman, The Adjudication Business, 44 Yale J. Int’L L. (forthcoming 2019) (manuscript at 36) (available at https://ssrn.com/abstract=3338152); see also Guangjian Tu, The Hague Choice of Court ConventionA Chinese Perspective, 55 Am. J. Comp. L. 347, 350 (2007) (“China is a country which has inherited the civil law tradition. Thus, its law comes essentially from the legislature; judges cannot make law. International jurisdiction as well as recognition and enforcement of foreign judgments fall within the scope of basic laws which are enacted by the National People’s Congress.” (footnotes omitted)).

 [13]. See Zhang, supra note 9, at 520.

 [14]. See Wenliang Zhang, Recognition and Enforcement of Foreign Judgments in China: Rules, Practice and Strategies §§ 2.04.06, at 206–36 (2014).

 [15]. See Hu Zhenjie, Recognition and Enforcement of Foreign Judgments in China: Rules, Interpretation and Practice, 46 Neth. Int’l L. Rev. 291, 294 (1999).

 [16]. See Note, Chinese Common Law? Guiding Cases and Judicial Reform, 129 Harv. L. Rev. 2213, 221617 & n.24 (2016).

 [17]. Zhang, supra note 9, at 520 (emphasis omitted).

 [18]. Zuìgāo rénmín fǎyuàn guānyú Wǒguó Rénmín Fǎyuàn Yīngfǒu Chéngrèn Zhíxíng Rìběn Guó Fǎyuàn Jùyǒu Zhàiquán Zhàiwù Nèiróng Cáipàn de Fùbán (最高人民法院关于我国人民法院应否 认和执行日本国法院具有债权债务内容裁判的复函) [The Reply of the Supreme People’s Court of China Concerning Recognition and Enforcement of Japanese Judgment and Rulings on Credit and Debt], Min Ta Zi No. 17 (Sup. People’s Ct.1995) (China).

 [19]. Zhang, supra note 9, at 520.

 [20]. Id. at 521.

 [21]. See id. at 522; Jason Hsu, Judgment Unenforceability in China, 19 Fordham J. Corp. & Fin. L. 201, 201 (2013) (“Plaintiffs may then be in for a rude awakening when they bring their U.S. money judgments abroad, for such judgments are routinely unenforceable. China has proven no exception, and foreign judgments are rarely, if ever, enforced there.”).

 [22]. For a complete list of the treaties and an extensive analysis, see Tsang, supra note 10, at 2 (“[S]eek[ing] to dispel the misperception that bilateral treaties are not important due to the lack of such treaties with China’s major trading partners.”).

 [23]. Id. at 5 (quoting Michael Moser, Dispute Resolution In China 395 (Michael Moser ed., 2012)).

 [24]. Id. at 21, 33 (quoting Yongping Xiao & Zhengxin Huo, Ordre Public in China’s Private International Law, 53 Am. J. Comp. L. 653, 654 (2005)) (focusing on the COCA’s superior approach to the “very unruly horse” of the public policy ground for rejection).

 [25]. See Giant Light Metal Tech. Co. (Kunshan) v. Aksa Far E., [2014] 2 SLR 545 (Sing.).

 [26]. See (“尔集团股份有限公 与江苏省纺织工业(集团)进出口有限公司申请承认和执行外国法院民事判决 裁定特别程序民事裁定书) [Kolmar Grp. AG Co. v. Jiangsu Textile Indus. Imp. & Exp. Co.], Su 01 Xie Wai Ren No. 3 (Nanjing Interm. People’s Ct. of Jiangsu Province 2016) (China).

 [27]. See Sup. People’s Ct. People’s Republic China, Second Batch of Typical Cases Involving the “Belt and Road” (May 15, 2017, 11:23 PM), http://www.court.gov.cn/zixun-xiangqing-44722.html, translated in China Guiding Cases Project, B&R Typical Case 13, Stan. L. Sch. (May 15, 2017), https://cgc.law.stanford.edu/belt-and-road/b-and-r-cases/typical-case-13.

 [28]. Ronald A. Brand, Recognition of Foreign Judgments in China: The Liu Case and the “Belt and Road” Initiative, 37 J. L. & Com. 29, 30–40 (2018). Professor Brand’s article provides an extensive analysis of the context that preceded the Liu judgment, as well as an in-depth discussion of the decision itself. See id.

 [29]. Id. at 40.

 [30]. Nat’l Dev. & Reform Comm’n et al., Vision and Actions on Jointly Building Silk Road Economic Belt and 21st-Century Maritime Silk Road (Mar. 28, 2015), http://en.ndrc..gov.cn/news release/201503/t20150330_669367.html.

 [31]. Supreme People’s Court, Several Opinions of the Supreme People’s Court on Providing Judicial Services and Safeguards for the Construction of the “Belt and Road” by People’s Courts, Peking U. L. Sch. ¶ 6 (June 16, 2015), http://en.pkulaw.cn/display.aspx?cgid=251003&lib=law.

 [32]. Brand, supra note 28, at 44–45. 

 [33]. Jie Huang, Chinese Court Recognizes US Commercial Money Judgment, Letters Blogatory (Sept. 4, 2017), https://lettersblogatory.com/2017/09/04/chinese-court-recognizes-us-commercial-money-judgment.

 [34]. Id.

 [35]. Id.

 [36]. Id.

 [37]. Id.

 [38]. Id.

 [39].  Id.

 [40]. Hubei Gezhouba Sanlian Indus. Co. v. Robinson Helicopter Co., No. 2:06-cv-01798-FMC-SSx, 2009 U.S. Dist. LEXIS 135891 (C.D. Cal. Sept. 25, 2009), aff’d mem., 425 Fed. Appx. 580 (9th Cir. 2011).

 [41]. Huang, supra note 33. For other examples of U.S. courts recognizing Chinese judgments, see generally Mark Moedritzer et al., Judgments ‘Made in China’ But Enforceable in the United States?: Obtaining Recognition and Enforcement in the United States of Monetary Judgments Entered in China Against U.S. Companies Doing Business Abroad, 44 Int’l Law. 817 (2010).

 [42]. The U.S. judgment was obtained with service by publication, authorized by the U.S. court after other methods were unsuccessful. The Wuhan court touched on the issue but seemed to “provide clear deference to the U.S. court in determining proper service.” Brand, supra note 28, at 36.

 [43]. Huang, supra note 33.

 [44]. Id. (emphasis omitted).

 [45]. See M. Ryan Casey & Barrett Ristroph, Boomerang Litigation: How Convenient is Forum Non Conveniens in Transnational Litigation?, 4 BYU Int’l L. & Mgmt. Rev. 21, 22 (2007) (coining the term “boomerang litigation” to refer to cases that return to a forum from which they were previously dismissed).

 [46].               See Sinochem Int’l Co. v. Malay. Int’l Shipping Corp., 549 U.S. 422, 435–36 (2007); Guimei v. Gen. Elec. Co., 172 Cal. App. 4th 689, 701–02 (2009).

 [47].               Iragorri v. United Techs. Corp., 274 F.3d 65, 73 (2d Cir. 2001) (articulating the standard for forum non conveniens dismissal and noting that, “[i]nitially, the court must consider whether an adequate alternative forum exists”).

 [48]. Although the standards for forum non conveniens dismissal and for recognition of a judgment are different, it takes an extraordinary case to deny recognition to such a “boomerang” judgment. See, e.g., Chevron Corp. v. Donziger, 974 F. Supp. 2d 362, 630–31 (S.D.N.Y. 2014), aff’d, 833 F.3d 74 (2d Cir. 2016).

 [49].               See Huang, supra note 33.

 [50].  This lack of familiarity may be particularly plausible with regard to the federal structure of the U.S. system, which is a constant source of confusion to foreign observers. See, e.g., Chibli Mallat, Federalist Dreams for the Middle East, Lawfare (Aug. 16, 2018, 1:59 PM), https://www.lawfareblog.
com/federalist-dreams-middle-east (“Federalism in the Middle East is a loaded word. It is contradictory and misunderstood. But this is not unique to the region.”).

 [51]. See China Signs the 2005 Choice of Court Convention, Hague Conf. Priv. Int’l L. (Sept. 12, 2017), https://www.hcch.net/en/news-archive/details/?varevent=569.

 [52]. See Status Table: Convention of 30 June 2005 on Choice of Court Agreements, Hague Conf. Priv. Int’l L., https://www.hcch.net/en/instruments/conventions/status-table/?cid=98 (last updated Aug. 23, 2018).

 [53]. See Glenn P. Hendrix et al., Memorandum of the American Bar Association Section of International Law Working Group on the Implementation of the Hague Convention on Choice of Court Agreements, 49 Int’l Law. 255, 256 (2016) (noting that the COCA “is the litigation counterpart” to the New York Convention framework for arbitral awards); Thomas N. Pieper & Samuel L. Zimmerman, The Hague Convention on Choice of Court Agreements: A Game Changer for Dispute Resolution Clauses?, 21 Int’l B. Ass’n Arb. News 101, 101 (2016) (noting that the COCA “provides a mechanism for the parties to an international commercial contract to ensure that a judgment received in the court of a member state will be enforced in the courts of other member states, much in the way arbitral awards are currently enforced under the New York Convention.”).

 [54]. See Tu, supra note 12, at 365 (“A survey of Chinese law pertaining to the key issues raised by the Convention has demonstrated that there are no unresolvable conflicts between Chinese law and the Convention although China may make some declarations in order to preserve features of its domestic law. China can and should ratify this Convention.”).

 [55]. See id. at 35354 (“The courts of the People’s Republic of China shall have exclusive jurisdiction over disputes arising out of performance in China of contracts of Sino-foreign equity joint ventures, Sino-foreign contractual joint ventures and Sino-foreign cooperative exploration and development of natural resources.” (footnote omitted)); see also id. (“[T]he court for the place where the harbor is located shall have exclusive jurisdiction over disputes arising out of harbor operations . . . .” (footnote omitted)).

 [56]. See Hu Zhenjie, International Jurisdiction of Chinese Courts in Contractual Matters: Rules, Interpretation and Practice, 46 Neth. Int’l L. Rev. 204, 20708 (1999).

 [57]. Tu, supra note 12, at 358.

 [58]. See id. at 35859 (discussing Articles 25 and 244 of China’s 1991 Civil Procedure Law).

 [59]. Ted Folkman, China Signs COCA, Letters Blogatory (Sept. 13, 2017), https://letters blogatory.com/2017/09/13/china-signs-coca.

 [60]. See id. (explaining that a “liberal US practice on judicial assistance might have borne some fruit in encouraging the Chinese decision,” and asking whether “China’s decision to sign the Convention [would] encourage [the United States] to overcome the Byzantine politics that have so far prevented the Senate from considering the treaty”).

 [61]. Suni Gong, The Chinese Court’s Enforcement of a U.S. Civil Judgement, N.Y.U. Ctr. for Transnat’l Litig., Arb., & Com. L. (Apr. 17, 2018), https://blogs.law.nyu.edu/transnational/2018/04/ the-chinese-courts-enforcement-of-a-u-s-civil-judgement.

 [62]. See Huang, supra note 33.

 [63]. (國泰聯合銀行訴高) [Cathay United Bank v. Gao], Hu Min Xia Zhong No. 99 (Shanghai High People’s Ct. 2016) (China). 

 [64].               Sophia Tang, Chinese Courts Made Decision Taking into Account of the Hague Choice of Court Convention, ConflictofLaws.net (Nov. 14, 2017), http://conflictoflaws.net/2017/chinese-courts-made-decision-taking-into-account-of-the-hague-choice-of-court-convention.

 [65]. Id.

 [66]. Id.

 [67]. Id.

 [68]. Id.

 [69]. Id.

 [70]. Id.

 [71]. Id.

 [72]. Id. 

 [73]. See Dan Harris, China Enforces United States Judgment: This Changes Pretty Much Nothing, Harris Bricken: China L. Blog (Sept. 5, 2017), https://www.chinalawblog.com/2017/09/china-enforces-united-states-judgment-this-changes-pretty-much-nothing.html; Aaron Lukken, Enforcement of U.S. Judgment in China—Don’t Pop Any Corks Just Yet, Hague L. Blog (Sept. 6, 2017), https://www. haguelawblog.com/2017/09/enforcement-u-s-judgment-china-dont-pop-corks-just-yet.

 [74]. See infra Section II.B.

 [75]. Guo Yujun & Liang Wenwen, Global Forum on Private International Law & 2017 Annual Meeting of China Society of Private International Law: Cooperation for Common Progress? Evolving Role of Private International Law” Held in Wuhan, China, ConflictofLaws.net (Oct. 4, 2017), http://conflictoflaws.net/2017/global-forum-on-private-international-law-2017-annual-meeting-of-china -society-of-private-international-law-cooperation-for-common-progressevolving-role-of-private-inter national-law-h.

 [76]. Id. Scholars have also been enthusiastically discussing ways out of the reciprocity “deadlock” for China’s other major trading partners, such as Japan and South Korea. See Wenliang Zhang, Mutual Recognition and Enforcement of Civil and Commercial Judgments Among China (PRC), Japan and South Korea, ConflictofLaws.net (Dec. 26, 2017), http://conflictoflaws.net/2017/mutual-recognition-and-enforcement-of-civil-and-commercial-judgments-among-china-prc-japan-and-south-korea.

 [77]. Professor Michael Whincop described the theoretical literature on recognition and enforcement of judgments, with some hyperbole, as a “scholarly desert.” Michael J. Whincop, The Recognition Scene: Game Theoretic Issues in the Recognition of Foreign Judgments, 23 Melb. U. L. Rev. 416, 416 (1999). It might better be described as a scholarly dessert—it comes after everything else, is overlooked by those who should know better, and is the best part of the meal.

 [78]. Michael J. Whincop & Mary Keyes, Policy and Pragmatism in the Conflict of Laws 15760 (2001); see also Brand, supra note 3, at 62526. Professor Ronald Brand hypothesized that judgment recognition and enforcement could follow the prisoner’s dilemma, in which the highest payoff for the individual player is to defect while the other players cooperates, but is likely better described by the stag hunt, in which the highest individual payoff occurs when both players cooperate. Professor Brand argued that “[r]egardless of whether the prisoners’ dilemma or stag hunt model is considered the most reflective of the judgment recognition paradigm, mutual cooperation is beneficial,” and therefore economic analysis “supports the negotiation of a multilateral judgments recognition treaty.” Id; see also Whincop, supra note 77, at 41628 (“There is no theory of judgment recognition which explains the incentives of states to recognise judgments and enter recognition conventions, or the theoretical relationship between recognition and choice of law and jurisdiction.”).

 [79]. Yaad Rotem, The Problem of Selective or Sporadic Recognition: A New Economic Rationale for the Law of Foreign Country Judgments, 10 Chi. J. Int’l L. 505, 510 (2010).

 [80]. See Milton Friedman, Free Trade, Newsweek, Aug. 17, 1970, at 71 (“However, we only increase the hurt to us—and also to them—by imposing additional restrictions in our turn. The wise course for us is precisely the opposite—to move unilaterally toward free trade.”). Professor Brand draws the connection between the two bodies of law explicitly, arguing that “any system developed to facilitate free movement of economic rights . . . must contain both rules regarding free movement and rules regarding legal acknowledgment of the existence and value of the the underlying economic rights involved in the exchange process.” Brand, supra note 3, at 613. Therefore, “the rationale for the elimination of barriers to the free movement of economic rights is also the rationale for the elimination of barriers to the free movement of of judgments.” Id.

 [81]. See Arthur T. von Mehren & Donald T. Trautman, Recognition of Foreign Adjudications: A Survey and a Suggested Approach, 81 Harv. L. Rev. 1601, 1603 (1968) (noting the need “to avoid the duplication of effort and consequent waste involved in reconsidering a matter that has already been litigated”).

 [82]. Rotem, supra note 79, at 510.

 [83]. Id.

 [84]. Id.

 [85]. Id. at 51011.

 [86]. See Tsang, supra note 10, at 33 (footnote omitted).

 [87]. See Sapna Jhangiani, Enforcement in China – What the Cases Show, Kluwer Arb. Blog (Dec. 6, 2013), http://arbitrationblog.kluwerarbitration.com/2013/12/06/enforcement-in-china-what-the-cases-show.

 [88]. This phenomenon is not limited to arbitral award enforcement. See Yun-chien Chang & Ke Xu, Decentralized and Anomalous Interpretation of Chinese Private Law: Understanding a Bureaucratic and Political Judicial System, 102 Minn. L. Rev. 1527, 1531–32 (2018) (“Because of the political and bureaucratic court system in China, examples and instances of decentralized and anomalous interpretations are far more numerous than casual observers would expect. That is, decentralized and anomalous interpretations in China have the same root: the sociopolitical pressure on courts, often from the political branch.”).

 [89]. See Jhangiani, supra note 87.

 [90].                See Bookman, supra note 12 (manuscript at 2) (“[M]any states conceive of different kinds of dispute resolution services as complementary offerings rather than solely as substitutes or competitors.”).

 [91]. See Brand, supra note 28, at 46.

 [92]. See Chang & Xu, supra note 88, at 1533–34.

 [93]. See Jie Zheng, Competition Between Arbitral Institutions in China – Fighting for a Better System?, Kluwer Arb. Blog (Oct. 16, 2015), http://arbitrationblog.kluwerarbitration.com/2015/10/16/ competition-between-arbitral-institutions-in-china-fighting-for-a-better-system.

 [94]. The theme of the 2014 annual plenary meetings of the Chinese Communist Party’s top leadership was 法治, which can be translated as “rule of law” or “rule by law.” See Josh Chin, ‘Rule of Law’ or ‘Rule by Law’? In China, a Preposition Makes All the Difference, Wall St. J. (Oct. 20, 2014, 2:03 PM), https://blogs.wsj.com/chinarealtime/2014/10/20/rule-of-law-or-rule-by-law-in-china-a-preposition-makes-all-the-difference.

 [95]. See Jens Dammann & Henry Hansmann, Globalizing Commercial Litigation, 94 Cornell L. Rev. 1, 1 (2008).

 [96]. This also raises the possibility that greater circulation of judgments among economic units—celebrated at the outset of this Article—may be simply the happy side-effect of attempts to promote circulation within the aspirational Belt and Road economic unit, at least as far as China is concerned.

 [97]. Whincop, supra note 77, at 418.

 [98]. With apologies to William Shakespeare. William Shakespeare, Hamlet act 1, sc. 5.

 [99]. Béligh Elbalti, Reciprocity and the Recognition and Enforcement of Foreign Judgments: A Lot of Bark but Not Much Bite, 13 J. Priv. Int’l L. 184, 201 (2017) (“One of the most restrictive reciprocity systems is the one adopted in China. . . . In other words, recognition is still refused on this basis regardless of how liberally foreign judgments are recognized and enforced in the rendering State.”).

 

Bluffing in Business-to-Business Contract Negotiations – Article by Stefanie Jung

 

From Volume 92, Number 4 (May 2019)
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Bluffing in business-to-business contract negotiations

The relationship between moral intuition, Rechtsgefühl, and the law in the United States and Germany

Stefanie Jung[*]

Introduction

Bluffing, deceptions, lies and misrepresentations[1] are ubiquitous parts of business-to-business (B2B) contract negotiations.[2] The literature on negotiations even explicitly proposes corresponding negotiation tactics and considers bluffing an essential skill of a good negotiator.[3] This Article investigates the relationship between the following four topics with regard to lies in B2B contract negotiations:[4]

(1) the ideas of traditional moral philosophers;

(2) people’s actual moral intuition;

(3) people’s sense of how the law should be, or, in German the “Rechtsgefühl.[5] More specifically, this concerns people’s belief regarding the question of whether legal consequences should be ordered. This then reveals their “Rechtsgefühl” since there are only legal consequences for unlawful behavior; and lastly

(4) the lawthe actual legal situationin the United States and Germany.

Put simply, the relationship between the aforementioned four aspects is as follows: Many traditional moral philosophersfrom Aristotle to St. Augustine and from Thomas Aquinas to Immanuel Kantstrictly reject almost any forms of lies. However, the results of an internationally conducted survey[6] on people’s actual moral intuition demonstrate that the survey participants from Germany and the United States do not share the same ideas as these philosophers. In fact, the respondents in both countries are more lenient with respect to bluffs and lies in negotiations. The latter is confirmed by the fact that the majority of the respondents classify several lies as morally acceptable. To a certain extent, participants do not even condemn so-called “harmful lies.” Hence, the moral intuition of people living in the United States and Germany in this day and age differs significantly from the ideas of traditional moral philosophers.

Most importantly, the study also investigates people’s Rechtsgefühl (sense of how the law should be) and reveals clearly detectable differences between the participant’s moral intuition and their Rechtsgefühl. People who assess a certain behavior as immoral do not necessarily also believe that this behavior should be unlawful. In fact, in only a few cases do the majority of U.S. and German respondents favor having legal consequences. Altogether, this Article promotes the idea that closer attention should be placed on the Rechtsgefühl. Likewise, the Rechtsgefühl should be clearly distinguished from people’s individual moral intuition as the two aspects do not necessarily go handinhand. In this Article, it is presumed that, instead of only emphasizing the relationship between morality (in the form of moral-philosophical ideas and people’s moral intuition) and the law, it is worthwhile to put more emphasis on the relationship between people’s Rechtsgefühl and the law. In general, both aspects should not drift too far apart. Hence, this Article defends the idea that the Rechtsgefühl should have a stronger effect on the law dealing with bluffs in contract negotiations compared to moral-philosophical concepts and people’s moral intuition. Moral intuition and moral-philosophical concepts regularly go beyond the Rechtsgefühl, and the study shows that people do not believe that those stricter concepts and intuition should be translated one-to-one into law.

According to the ideas put forward here, the law in Germany and the law in the United States should be alike, as the Rechtsgefühl is similar in both countries. Surprisingly, however, German and U.S. law show significant differences. In fact, only U.S. law largely corresponds with the Rechtsgefühl and is therefore in line with the theory put forward here. German law, in contrast, neither corresponds with people’s prevalent moral intuition nor with their stated Rechtsgefühl but goes beyond both of these concepts. German law rather reflects the ideas of traditional moral philosophers as it deems almost all lies unlawful. This conclusion is also astonishing from a legal-historical perspective because German law is rooted in Roman law, which distinguished lawful from unlawful forms of deception. But what caused German law to develop away from the initial Roman legal approach and to diverge from U.S. law, even though the moral intuition and the Rechtsgefühl are similar in the two countries? Different general values and legal differences in related areas in the United States and Germany partly explain the current legal divergence of German law from Roman and U.S. law. In addition, this Article argues that the German legislature was influenced by the concepts of moral philosophy.[7] In particular, this Article promotes the idea that Kant’s moralphilosophical ideas played a significant role in shaping German law, since they influenced important legal scholars like Friedrich Carl von Savigny. Moreover, the current legal interpretation in Germany has its origins in the fact that a differentiation of lies is renounced while a discussion on lies that do not concern the subject matter of the contract (“Leistungsgegenstand”) has not been initiated.

In conclusion, this Article encourages a thorough reflection of the relationship between the Rechtsgefühl and the law. In particular, it is explored whether German law should leave room to consider at least some bluffs in contract negotiations as lawful in order to better reflect people’s Rechtsgefühl.

I.  Moral Intuition and Rechtsgefühl in the United States and Germany

A.  International Study on Lies in Contract Negotiations

The international study on lies in contract negotiations referred to in this Article was conducted with the cooperation of Professor Peter Krebs of the University of Siegen. As of now, 1,896 participants from thirteen different countries,[8] including Germany and the United States, have filled out a questionnaire on the topic, each in their mother tongue. The study distinguishes between four different target groups: judges, lawyers, professional negotiators, and students. In Germany, answers from all four groups were gathered.[9] In the United States, lawyers and students participated.[10] An extensive analysis of the data will be published soon. As a preliminary overview, this Article only presents a few initial findings of the analyzed data gathered from the United States and Germany.

The questionnaire describes nine different scenarios in which one party of a business-to-business negotiation deceives the other party.[11] The lies range from simple bluffs (in other words, bluffs about a better offer, product availability, internal company policies, deadlines, personal preferences, and reservation price) to more severe deceptions (namely, deceptions about the subject matter of the contract itself and the legal situation).[12] All scenarios in the questionnaire are constructed in such a way that one side deliberately deceives the other party. Further, the other party is actually deceived and demonstrably relies on the information provided in the lie. Lastly, there is also a definite causal link between the deception and the conclusion of the contract.[13] The participants are then asked whether they consider the behavior of the lying party to be either morally acceptable or morally unacceptable (moral intuition). In a second step, the respondents are invited to state their individual opinion on whether the deceived business partner should be entitled to rescind the contract or not.[14] In this regard, the second question is not directed towards inquiring the factual legal situation, but which consequence the participants would personally favor. They are thus supposed to state their own beliefs about an entitlement to rescind the contract, specifically assessing whether a rescission should be among the available options to legally address deceptions. At the same time, this questioning method is designed to reveal their Rechtsgefühl because legal consequences only exist for unlawful behavior. The study deliberately refrains from directly inquiring about the Rechtsgefühl (for instance, there are no questions such as “Do you think this behavior should be lawful or unlawful?”) as this would be too abstract. Instead, the chosen type of question intends to exclude the possibility that the respondents confuse unlawfulness with morality. Most respondents find it easier to form an opinion on a somewhat more specific aspect. Explicitly differentiating the questions about morality and the Rechtsgefühl allows the participants to draw clear lines between these two terms. In order to avoid distorted results, the survey’s design enables the respondents to take on the role of a neutral observer.[15]

B.  Preliminary Results with Regard to the United States and Germany

First of all, the study’s results emphasize that the moral assessment of the participants is not in accord with the ideas of many traditional philosophers.[16] For example, Aristotle, St. Augustine, Thomas Aquinas, and Kant condemn almost all forms of lies.[17] Their views on deception are also shared by some modern thinkers.[18] However, the participants of the study are more permissive when it came to lying. Even when regarding a lie about the subject matter of the contract, the seemingly “most reprehensible” form of deception the survey has investigated, some participants state that they would assess this behavior as morally acceptable.[19] In four out of the nine scenarios in the survey, a majority of U.S. lawyers and students and German students consider the presented lies to be moral. A majority of German judges deem five out of the nine scenarios to be “morally acceptable” deceptions. German lawyers and professional negotiators even state this view in seven out of nine cases. As a matter of fact, the study illustrates that people, to a certain extent, accept so-called “harmful lies,[20] or in other words, lies that cannot be excused or justified on the grounds that they are somehow favorable, or at least neutral, from the point of view of the deceived party.[21]

The moral assessment varies depending on the viewed group (judges, lawyers, professional negotiators, or students). In a direct comparison of German and U.S. lawyers, the results indicate that, on average, U.S. lawyers appear to hold higher moral standards. This may be due to ethics courses which are commonly offered at American universities[22] and may also be a consequence of the Model Rules of Professional Conduct that U.S. lawyers must study and follow.[23] Moreover, this may be linked to the clear differentiation of “good” and “bad” moral behavior in the everyday lives of U.S. citizens. With regard to the Rechtsgefühl, the observed differences between U.S. and German lawyers were overall less pronounced.

The study also shows that distinguishing between moral intuition and the Rechtsgefühl is indispensable, because the answers vary significantly in that respect. This applies to all surveyed groups in Germany and the United States as well as equally to all other studied countries. With regard to clear-cut examples, such as lies about the subject matter of a contract and the reservation price, the moral assessment and the Rechtsgefühl still go hand-in-hand.[24] However, in some cases, people assess a lie as immoral, yet simultaneously do not favor ordering legal consequences. For example, such a distinction is made with regard to bluffs about product availability. In this case, 85% of American lawyers consider such a lie to be immoral, but only 15% favor ordering legal consequences. Similarly, moral intuition and the Rechtsgefühl also do not go hand-in-hand with regard to lies concerning another offer.

An initial analysis of the data also demonstrates that the given answers on the moral assessment can only partly explain the Rechtsgefühl. However, if respondents consider a behavior morally acceptable, they generally do not favor ordering any legal consequences. In contrast, the fact that the participants assess a certain behavior as immoral does not directly allow one to draw conclusions on their Rechtsgefühl. Hence, people do not believe that everything that is immoral should necessarily also be unlawful. They rather opt for differentiating between morality and law. People generally favor law provisions that set a standard below the standard of appropriate moral behavior. Viewing morality and the legal situation should thus be complemented by viewing the Rechtsgefühl.[25] This applies all the more, since opinions on how the law should be (Rechtsgefühl) vary less between the groups than is the case for people’s moral intuition.

With regard to the different deceptions, the preliminary results draw the following picture: bluffs about personal preference (for example, bluffs about a party’s favorite football or soccer team) are seen as morally acceptable by the majority of the participants. In line with that assessment, the participants do not favor legal consequences for those lies. The same applies for bluffs about deadlines and budget limitations. In the case of such bluffs, moral intuition and the Rechtsgefühl go hand-in-hand. In contrast, lies about the subject matter of the contract are seen as morally unacceptable by the majority of respondents. In such cases the respondents advocate for legal consequences. The survey also includes a question, setting a scenario, where one party presents a lawful behavior as illegal in order to block demands by the other side. Besides the lie about the subject matter of the contract, this is the only deception scenario, where across all surveyed groups a majority favors a right of the deceived party to rescind the contract. In line with this, a majority in all surveyed groups also assesses these kinds of lies as immoral.

Regarding bluffs on internal company policies and guidelines, opinions vary. More than half of the questioned German students (59.4%), American students (52.9%), and U.S. lawyers (56%) assess the behavior as immoral as opposed to the German professional negotiators, where only 13% classify this behavior as immoral. Similarly, German lawyers and judges do not view these kinds of lies as particularly problematic.[26] For the German students, the results allow the assumption that the moral assessment also influences the Rechtsgefühl, since almost 47% support the option of challenging the contract. For U.S. students, the percentage is a bit smaller (35.6%). The same is true for U.S. lawyers (33%). Among the professional negotiators, lawyers, and judges from Germany, there is a nearconsensus about the fact that this kind of deception should not entitle the deceived party to challenge the contract.[27]

Lying about another offer that is in fact non-existent is also assessed diversely by the participants. The majority of the students from both countries (71.2% from the United States and 60.1% from Germany) as well as a majority of the German judges (69%) and U.S. lawyers (80%) assess the tactic as immoral. Among German lawyers and professional negotiators, however, only a minority of the participants classify the behavior as morally unacceptable (48% of German lawyers, 36% of German professional negotiators). Regarding the Rechtsgefühl, the observed discrepancies are smaller. In none of the questioned groups does a majority favor the option of challenging the contract. The proponents of legal consequences fluctuate between 14% (German professional negotiators) and round about 44% (U.S. students).

Regarding lies on the availability of a product, the results are similar. In all groups, the majority of questioned participants view this kind of deception as immoral (for example, 54% of German judges and 85% of U.S. lawyers), with the exception of German professional negotiators (24%) and German lawyers (45%). In no group does a majority support the right to rescind the contract.

Overall, the results illustrate that there are different views about the Rechtsgefühl depending on a person’s profession or nationality. In contrast to the variations of the moral assessment, variations regarding the Rechtsgefühl do not, however, change the overall majority (in other words, as for the result for a specific question, the majority in all groups either favors or objects to legal consequences). This further indicates the importance of the Rechtsgefühl regarding law. The Rechtsgefühl in the context of lies in contract negotiations also derives its importance from the fact that all business participants can generally put themselves in the position of both sides (either the party experiencing the bluff or the party that conducts the bluff). Thus, the evaluation is carried out from a rather neutral perspective, which probably leads to a “balanced” view. German negotiators, especially, seem to consider that they occasionally use bluffs during negotiations, which leads them to hold a more “generous” view on this matter.

Above all, it should be noted that the international study confirms that Germany and the United States are relatively similar as to their results regarding moral intuition and the Rechtsgefühl. The differences with regard to results from other countries are generally greater.[28] The following table ranks the U.S. and German students’ responses to the nine scenarios of the questionnaire. The answers are ranked from most immoral to least immoral and high results in favor of rescission to low results in favor of rescission:


If the Rechtsgefühl is similar in both countries and the actual usage of such lies is approximately equal as well (as it can be initially assumed at this instance), it seems apt to infer a similar legal situation because it is difficult for any legal order to set rules contrary to a consistent Rechtsgefühl (and the actual practice).[29] Hence, it is interesting to discuss whether the observed similarities between Germany and the United States, as well as the distinction between moral intuition and Rechtsgefühl, are reflected in the actual legal situation.

II.  The Legal Situation in the United States and Germany

A.  The United States

1.  Applicable Law

Lies in contract negotiations have diverse facets and are regulated by different sets of rules. In B2B contract negotiations, however, the concept of misrepresentation is essential.[30] The following part primarily analyzes the Restatement of Contracts’ view of misrepresentations since the Restatement attempts to illustrate the legal state with all of its essential elements in simple terms. In addition, the basic differences to the Restatement of Torts on misrepresentation are outlined, and relevant case law will be discussed.

2.  Misrepresentation According to the Restatement of Contracts and the Restatement of Torts

In general, the rescission of a contract is subject to four prerequisites.[31] First and foremost, a misrepresentation must be given. A misrepresentation requires “an assertion that is not in accord with the facts.[32] Rescissions based on misrepresentations of opinion, matters of law, or intentions are subject to major restrictions.[33]

In addition, the misrepresentation has to be either fraudulent or material to grant the deceived party the right to rescind the contract.[34] This Article only addresses deceptions that are to be classified as fraudulent misrepresentations.[35] According to the Restatement of Contracts, the misrepresentation does not necessarily have to be “material.[36] However, in practice, courts often demand fulfilment of this condition[37] or indirectly require “materiality” by means of the prerequisite of “justified reliance” or “inducement” (for both see further below).[38] This aspect is one of the main differences in comparison with damage claims for the tort of deceit, which the Restatement of Torts addresses, as in that respect a misrepresentation must be fraudulent as well as material.[39] Materiality is a difficult term to define. Thus, in practice, the possible interpretations vary.[40] Generally, a matter is material according to section 538 of the Restatement of Torts if “a reasonable man would attach importance to its existence or nonexistence in determining his choice of action in the transaction in question.[41]

Another prerequisite is “inducement.[42] Based on the lie, the deceived party needs to have been induced to assent to the contract.[43] Nevertheless, it is not necessary that the deception was the main or only reason to enter into the contract. However, the lie must have been “substantial” for the decisionmaking process.[44] In this respect, in the course of the rescission, the claim is indirectly based upon the requirement of materiality.[45] With regard to the tort of deceit, “causation” is also discussed intensively.[46]

Moreover, the reliance must be justified.[47] In essence, the deceived party must have relied on the false statement and the established reliance must have been legitimate.[48] Circumstances under which a justified reliance is rejected are inter alia, misrepresentations “of only peripheral importance to the transaction” or false statements that are not expected to be taken seriously.[49] In this respect, the customary practice of market participants is also taken into account.[50] Hence, the prerequisite of “justified reliance” imposes a certain degree of individual responsibility on the deceived party.[51] Irrational behavior can serve as an indicator to determine that the deceived party did not actually rely on the lie.[52] If it can, however, be proven that the deceived party did place trust in the statement made, neither stupidity nor irrationality is harmful.[53] Only “a failure to act in good faith and in accordance with reasonable standards of fair dealing”[54] can cause a different assessment. The element of self-responsibility gains even more importance when looking at the tort of deceit.[55]

If all requirements are fulfilled, the deceived party can challenge the contract or enforce damage claims.[56] In the course of damage claims based on the tort of deceit, the deceived party also has to prove a pecuniary loss.[57] This requirement is not explicitly stated as a prerequisite for rescission.[58] Yet, in practice, some courts seem to view pecuniary loss as a prerequisite.[59]

Section 549 of the Restatement of Torts defines what is to be regarded as “pecuniary loss” in the context of the tort of deceit. There are several forms of pecuniary losses. One relevant loss is described by the out-of-pocket rule. According to this rule, it is only important whether the misrepresentation causes a situation in which the value of the purchased object is lower than its purchase price.[60] This also includes indirect or consequential damages.[61] Yet, both cases are not relevant for deceptions outside the scope of the subject matter of the contracts, which are mainly analyzed in this Article. Nevertheless, there is the option to replace the advantage the deceived party would have gained from entering into the contract. This approach refers to the so-called “benefit of the bargain.”[62] Yet, this possibility is restrained by the burden of proof. According to the latter, the deceived person has to prove his or her loss “in accordance with the usual rules of certainty in damages.[63] The question arises, whether damages based on lies about aspects other than the actual subject matter of the contract are included.

3.  Case Law

Though the relevant case law on misrepresentations will not be illustrated in great detail here, it is clear that in mostthough not in allcases concerning deceptions about the subject matter of the contract, a rescission is possible. If, however, a seller makes statements about the quality of his or her product with the help of general adjectives, like it is “a good car,” usually, an assertion of opinion is assumed,[64] and the rescission of the contract is therefore granted only in exceptional circumstances. The same rationale applies to statements on the value of an object (for example, “the goods are worth $10,000”[65]).[66] Remarks on the price, such as “this is a good price” and so forth, are generally also regarded as opinions.[67] More specific deceptions that concern the nature of the price (for example, deceptions regarding the cost or stock market price), may, however, support a claim for rescission.[68] Neither U.S. literature nor traceable case law addresses how statements such as, “this is a friendship price, shall be treated. Yet, the discussion on misrepresentations of value and price indicates that such a bluff would probably not justify a rescission.[69] As for now, there also seems to be no case law on lies about the reservation price.[70]

An “assertion as to matters of law” can take two forms: (1) a statement of fact or (2) a statement of opinion.