The Political Reality of Diversity Jurisdiction by Richard D. Freer

Article | Civil Procedure
The Political Reality of Diversity Jurisdiction
by Richard D. Freer*

From Vol. 94, No. 5 (2021)
94 S. Cal. L. Rev. 1083 (2021)

Keywords: Diversity Jurisdiction, Politics

Support for diversity of citizenship jurisdiction has ebbed and flowed.[1] From the 1960s through the 1980s, the prevailing wind blew strongly against it.[2] A determined group, led mostly by academics and federal appellate judges, spearheaded an effort to have Congress abolish the general form of federal subject matter jurisdiction.[3] These critics were confident that diversity jurisdiction had outlived its need, which, they said, was to provide a federal court for out-of-state litigants who feared bias in the local state courts. Advances in travel and communication, critics asserted, had homogenized American culture and rid us of any reasonable fear of bias at the hands of local courts.[4] Abolishing diversity jurisdiction would free busy federal judges from the nettlesome requirement of divining and applying state law and allow them more time for limning and developing federal law.[5] The effort was so successful that the House of Representatives overwhelmingly passed a bill abolishing diversity jurisdiction in 1978.[6]

But that effort and another determined frontal assault on diversity jurisdiction in 1990 failed. Now, a generation and more later, one sees little support for abolishing diversity. Even as its place on the federal docket grows—now accounting for more than one-third of the civil cases filed in district courts—one does not find academics or federal judges urging that these state-law-based cases be taken from the federal court docket.[7] On the other hand, diversity is now becoming a topic of increasing scholarly interest. The current commentary, however, is focused mostly on rationalizing diversity doctrine, making it consistent with its presumed purpose, rather than on curtailing it.[8] The accepted wisdom seems to be that diversity jurisdiction is here to stay, but that it might be recalibrated here and there.

What accounts for diversity’s survival and apparent acceptance? In retrospect, those who sought to abolish diversity jurisdiction failed to appreciate three fundamental characteristics about diversity jurisdiction. These characteristics should not be overlooked in our new era; they should guide efforts to rationalize diversity doctrine.

First, critics failed to understand that diversity jurisdiction is not something to be considered in vacuo, as a freestanding grant of judicial authority. It is instead an integral part of the economic engine of interstate commerce. Its function, ultimately, is to support the policies underlying the commerce, full faith and credit, and privileges and immunities clauses of the Constitution.[9] One should alter the availability of diversity jurisdiction only after considering the impact of such a change on this broader constitutional mission.

Second, those who attempted to abolish diversity understated the policy bases for diversity jurisdiction. Though the traditional “bias rationale” was indeed fear of bias against out-of-state litigants in state courts, today diversity jurisdiction is more broadly grounded in at least two ways. One is subtle and based in jurisdictional legislation of 1875: that the fear backing diversity jurisdiction is not state-based bias, but region-based bias.[10] The other, an “efficiency rationale,” developed over time with the Supreme Court’s jurisprudence regarding the Fourteenth Amendment’s restriction on state-court personal jurisdiction. Specifically, it is that diversity jurisdiction facilitates efficient joinder in complex cases in ways that state courts (hemmed in by the Supreme Court’s restrictive interpretation of the Fourteenth Amendment) simply cannot.[11] This rationale led to a resurgence of jurisdictional grants based upon diversity jurisdiction in the early part of this century so that there are now more diversity-based grants of subject matter jurisdiction than ever before.

Third, those who attempted to abolish diversity failed to appreciate that jurisdiction is ultimately a political issue. Whatever the policy bases for diversity jurisdiction, Congress retains it because the practicing bar wants it. The point was demonstrated in 1978. After the House passed its bill to abolish diversity jurisdiction, the organized bar leapt into action and defeated the effort in the Senate.[12] Thus, even if critics can show that diversity jurisdiction has outlived its need, they cannot show that it has overstayed its welcome, at least not in the eyes of the politically powerful group that wants it and uses it.

These characteristics should guide any efforts to make sense of, to render consistent, the various threads of the diversity canon. In addition, these efforts should take into account two other considerations. One, that canon is the result of complex interactions between Congress, which passes jurisdictional statutes, and federal courts, which interpret them. The bench is understandably concerned about docket control and holds considerable power in shaping jurisdiction with that as one consideration. Two, a national legal culture has evolved over our 230 years of experience with diversity jurisdiction. That culture includes the dynamic of intersystemic federalism, by which the federal and state courts engage in an ongoing dialogue about the development of the substantive law and of civil procedure.

It is unlikely that Congress will ever abolish diversity jurisdiction. At most, the legislature will tinker with some aspect of diversity in an effort to ensure that the federal court caseload does not get out of hand. As long as we maintain a rough equilibrium between the practicing bar’s desire to retain diversity jurisdiction and the federal bench’s desire to keep caseloads manageable, the status quo is fine—as a matter of political reality.


         *       Charles Howard Candler Professor of Law, Emory University. I have benefited from discussions with Tom Arthur, Pat Borchers, Collin Freer, Peter Hay, Dan Klerman, Dale Larrimore, Jonathan Nash, Rafael Pardo, Martin Redish, Robert Schapiro, Joanna Shepherd, and Howard Wasserman, for which I am grateful. I am indebted to the participants of the Federal Diversity Jurisdiction Conference held by the Emory Center on Federalism and Intersystemic Governance, in particular to Brooke Coleman for her insightful review of the Article. I am also grateful to Crystal Lee of the Emory Law Library, who provided invaluable assistance in locating historical materials.

         [1].     Congress granted diversity jurisdiction upon the federal trial courts in the original Judiciary Act of 1789. It did not confer general federal question jurisdiction until 1875. Thus, until 1875, diversity cases were the staple of the federal civil docket. In the late nineteenth century, increasing federal caseloads and invocation of diversity jurisdiction by corporations led to some calls for restriction. In the twentieth century, an increasing number of federal judges, including Justices Frankfurter and Jackson, and later Chief Justices Warren and Burger, attacked diversity jurisdiction as wasteful of federal judicial resources. The anti-diversity momentum gathered throughout the 1970s and peaked with the Report of the Federal Court Study Committee (“FCSC”) in 1990 [hereinafter Report, FCSC]. For an outstanding treatment of this history (from which the foregoing is gleaned), see James M. Underwood, The Late, Great Diversity Jurisdiction, 57 Case W. Rsrv. L. Rev. 179, 180–­98 (2006). The Report, FCSC is discussed infra Section V.B.

         [2].     The American Law Institute’s Study of the Division of Jurisdiction Between State and Federal Courts (1969) was particularly influential. The American Law Institute (“ALI”) undertook the study in response to a 1959 request by Chief Justice Warren. The study concluded that diversity jurisdiction should be curtailed for two general reasons: that local bias was less pronounced than in earlier years and that the limited resources of the federal courts would better be expended on federal question cases. See John W. Reed, The War on Diversity, 18 Int’l Soc’y Barristers Q. 291, 291–92 (1983) (“Over the past decade or more there have been strong pressures to abolish the diversity jurisdiction of the federal courts. . . . The attack on diversity jurisdiction has its most distinguished formulation in a major study sponsored by the American Law Institute.”).

         [3].     By the “general form” of diversity jurisdiction, I mean cases invoking § 1332(a)(1). Technically, no one favors the total abolition of federal jurisdiction based on the diversity power. For instance, all support retaining federal interpleader jurisdiction, which is, of course, based upon the diversity power. And no one advocates curtailing alienage jurisdiction under § 1332(a)(2). This Article addresses efforts to abolish or to curtail significantly this general form of diversity jurisdiction. Throughout this Article, my references to diversity are to its general form.

         [4].     Such arguments date to the late nineteenth century, with the assertion that the advent of steam and electric power, and the Civil War, had so unified the country as to justify abolition of diversity. Alfred Russell, Avoidable Causes of Delay and Uncertainty in Our Courts, 25 Am. L. Rev. 776, 795­–96 (1891). Justice Frankfurter favored abolition in the 1920s, saying “the mobility of modern life has greatly weakened state attachments. Local prejudice has ever so much less to thrive on than it did when diversity jurisdiction was written into the Constitution.” Felix Frankfurter, Distribution of Judicial Power Between United States and State Courts, 13 Cornell L.Q. 499, 521 (1928).

         [5].     See, e.g., David Crump, The Case for Restricting Diversity Jurisdiction: The Undeveloped Arguments, from the Race to the Bottom to the Substitution Effect, 62 Me. L. Rev. 1, 5 (2010) (“[A]bolition [of diversity jurisdiction] would preserve a federal forum for those with federal claims.”); Larry Kramer, “The One-Eyed Are Kings”: Improving Congress’s Ability to Regulate the Use of Judicial Resources, 54 L. & Contemp. Probs. 73, 77 (1991) (discussing reducing federal court workload by “reduc[ing] the scope of federal jurisdiction by eliminating unimportant categories of cases so that judges can devote more time to the cases that remain”). Dean Kramer served as a reporter of the FCSC, which concluded that no case had a “weaker claim” on the federal court docket than diversity jurisdiction. See infra note 130.

         [6].     H.R. 9622, 95th Cong. (1978) (proposing “to abolish diversity of citizenship as a basis of jurisdiction of Federal district courts”). The measure passed the House by a roll call vote of 266­ to 133 on February 28, 1978.

         [7].     The most recent calls for abolishing diversity jurisdiction appear to be Debra Lyn Bassett, The Hidden Bias in Diversity Jurisdiction, 81 Wash. U. L.Q. 119, 138–­45 (2003) and Crump, supra note 5, at 22 (concluding that “[t]oday, more than ever, there are persuasive arguments for the abolition or retrenchment of the general diversity statute”). For discussion of Professor Bassett’s proposal, see infra note 176 and accompanying text.

         [8].     Scott Dodson, Beyond Bias in Diversity Jurisdiction, 69 Duke L.J. 267, 309 (2019) (noting contemporary justification of diversity jurisdiction on efficiency grounds); Steven Gensler & Roger Michalski, The Million Dollar Diversity Docket, 47 BYU L. Rev. (forthcoming 2022) (studying a broad range of docket effects of increasing amount in controversy in diversity cases); Daniel E. Klerman & Jonathan R. Nash, Aligning Diversity Jurisdiction with Its Bias Rationale (2021) (unpublished manuscript on file with author) (calling for rationalization of diversity doctrine in line with its traditional bias rationale); Patrick Woolley, Diversity Jurisdiction and the Common-Law Scope of the Civil Action, 99 Wash. U. L. Rev. (forthcoming 2022) (asserting that diversity doctrine should be understood against the backdrop of common law joinder rules).

         [9].     See infra Part I.

       [10].     See infra Part II.

       [11].     See infra Part III.

       [12].     Indeed, the matter never came to a vote in the Senate. S. 2389, 95th Cong (1978). See Underwood, supra note 1, at 199 n.91.


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Time to Go Auer Separate Ways: Why the Bia Should not Say What the Law is by Tatum Rosenfeld

Note | Immigration Law
Time to Go Auer Separate Ways: Why the BIA Should Not Say What the Law is
by Tatum P. Rosenfeld*

From Vol. 94, No. 5 (2021)
94 S. Cal. L. Rev. 1279 (2021)

Keywords: Board of Immigration Appeals (“BIA”), Auer

Neither fully legislative nor fully judicial, federal administrative agencies are tasked with “policing the minutiae.”1 They codify and enforce the details of the regulatory scheme set out by Congress.2 Simply put, administrative agencies administer the law. Agency regulations, however, like other legal sources, can be ambiguous.3 Thus, interpretation is inevitably necessary either to confront a novel circumstance or to resolve an inherent semantic ambiguity. This then raises the question: Who should be called upon to resolve such ambiguities? The Supreme Court’s solution is to put agencies in charge. Auer deference says an agency’s interpretation of its own rule controls so long as it is not “plainly erroneous or inconsistent with the regulation.”4 In effect, after an agency promulgates a regulation, it then maintains the latitude to fill in the gaps by interpreting its own regulation.

The Court has offered no good reason why Auer, while reasonable in some situations, should be applied indiscriminately to all agencies. A multitude of federal agencies exist to effectuate policies touching on everything under the sun—including housing, education, social benefits, food, agriculture, commerce, health, and the environment—but there is one agency in particular whose special attributes suggest that it should not be treated the same as all the others. That is the agency in charge of immigration appeals. One might reasonably think deference, for example, to the Food and Drug Administration’s expert interpretation of what constitutes an “active moiety,” promotes a robust and efficient government necessary for modern complexities. It follows that such agencies deserve deference from a court that is less well versed in the expertise involved in rendering such a judgment. However, immigration presents an entirely different set of policy concerns. 

This is because deference to the Board of Immigration Appeals (“BIA”) under Auer risks political manipulation at the expense of immigrants’ liberty and freedom. Nested under the Department of Justice (“DOJ”), and more specifically the Executive Office of Immigration Review (“EOIR”), the BIA and lower immigration courts operate as quasi-judicial bodies, specifically “prone to political manipulation because of their unique combination of structure, history, and function.”A “clarifing” interpretation by the BIA can dictate the scheme by which people are welcomed into or rejected from the United States. The BIA is the unsuspecting gatekeeper, capable of molding the rules by interpretation to advance an anti-immigrant political agenda. Auer, therefore, acts as another tool in the political toolbox to restrict immigration in what is already a labyrinth of proceedings, paperwork, and fear.

This Note argues that Auer deference, even in light of the Supreme Court’s recent clarification of the doctrine, is an inappropriate approach for courts to take when they review the BIA’s rulings. Because the BIA lacks political accountability while simultaneously commingling government powers, deference to the BIA undermines key constitutional principles, such as separation of powers and democracy. Such principles must be enhanced, rather than undermined, more than ever when there is a heightened threat to
liberty. Therefore, a close look is needed to determine whether
Auer deference is warranted for an agency in which the very freedoms of immigrants are at stake. 
The problem actually goes even further. Even if federal courts decided to eschew deference to BIA interpretations, the courts’ own interpretations would still not be an adequate mechanism to protect immigrants from unjust results. With ever-growing caseloads, Article III judges are not equipped with the requisite resources, time, and experience with immigration laws to adjudicate thousands more life-altering decisions in a timely, just manner.Immigration matters deserve to be adjudicated with proper accountability and more formalistic separations of power than those that currently stand. To achieve this, immigration courts and the BIA should, as many others have suggested before, be reformulated as Article I legislative courts to best serve democratic and separation of powers purposes. Liberty for immigrants can be salvaged through fairer adjudications and independent interpretations that are more insulated from political manipulation and the polarized ideologies that waft in and out of power.

This Note proceeds as follows: Part I briefly details a background of the BIA, and a current understanding of Auer deference. This discussion includes Auer’s political implications, and how the Supreme Court chose not to overrule the doctrine in Kisor v. Wilkie. This Section then explores the relationship between Auer and the BIA, including why the BIA’s political vulnerability makes the agency particularly unfit for Auer deference. Certain appointees to this agency have been rewarded with a position as a board member by openly declaring their hostility to the very people who are the object of the agency’s mission, and whose fragile life prospects are in their hands. Ironically, this flips the partisan commitments normally seen in the world of administrative law as follows: Those who would classically support increasing agency discretion by according Auer deference should be worried about giving heightened power to the self-declared, anti-immigrant agenda pervading the BIA, while those who would classically resist excessive delegation and deference to agencies, because of their limited accountability, seek to endow the BIA with vast independence and partisan manipulation. Part II argues that even in the wake of Kisor v. Wilkie, deference to the BIA’s interpretations of immigration regulations presents a heightened threat to constitutional principles of separation of powers and democracy. Part III then provides a potential solution to the inadequacy of Auer deference and the judicial role in the realm of regulatory gap filling for immigration laws. 

* Executive Development Editor, Southern California Law Review, Volume 94; J.D. Candidate 2021, University of Southern California Gould School of Law; B.A., 2017, University of Michigan, Communications and Minor in Law, Justice & Social Change. I am so deeply grateful for my family and their unending support, especially my dad for always being my sounding board and biggest cheerleader. I want to thank Professor Rebecca L. Brown for her invaluable guidance and inspiring perspective in drafting this Note. And, thank you to the talented Southern California Law Review staff and editors for their thoughtful work throughout this publication process.

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Not a Vara Big Deal: How Moral Rights, Property Rights, and Street Art Can Coexist

Note | Intellectual Property Law
Not a Vara Big Deal: How Moral Rights, Property Rights, and Street Art Can Coexist
by Mary Daniel*

94 S. Cal. L. Rev. 927 (2021)

Keywords: Street Art, Copyright Law, VARA, 5Pointz

“Art Murder”—the accusation was sprayed in red paint onto the side of real estate developer Jerry Wolkoff’s Long Island City building.1 Underneath the denunciation was a patchy layer of white paint, and underneath that layer, decades of graffiti art that once made up 5Pointz, “the world’s premier graffiti mecca.”2 Aerosol artists from around the world travelled to the Queens neighborhood for a chance to contribute to the de

facto street art museum.3 However, the buildings that served as the artists’ canvas belonged to Wolkoff, and in 2013, hoping to benefit from the growing housing market in Long Island City, Wolkoff announced plans to raze the former factory buildings to make room for luxury high-rise condominiums.4 The potential destruction of 5Pointz caused a frenzy in the art community as artists scrambled to prevent the popular site’s demolition.5 Then, all hopes of preserving the artwork ended on the morning of November 19, 2013, when 5Pointz’s curator, Jonathan Cohen,6 awoke to discover that, at the direction of Wolkoff, more than 10,000 artworks covering 200,000 square feet were unceremoniously covered over with white paint in the middle of the night.7

Artists responded to the whitewashing by bringing suit under the Visual Artists Rights Act of 1990 (“VARA”), codified at 17 U.S.C. §106A, claiming that the destruction of the artwork was a violation of the artists’ moral rights.8 Moral rights are a relatively new feature of United States law and a feature that seemed improbable through much of the development of copyright law.9 However, in a surprising decision, the district court found in favor of the artists. Holding that painting over 5Pointz was unlawful, Judge Block ordered Wolkoff to pay the artists $6.7 million in damages.10 The decision marked the first time graffiti art was extended VARA protection.11 Wolkoff immediately appealed the district court’s decision, but in February 2020, the Second Circuit upheld Judge Block’s decision in its entirety.12

The ruling has been heralded by many as a big win for artists’ rights

that signifies courts’ growing recognition and respect for artists working in atypical mediums.13 However, many others have expressed concern that such an expansion of VARA is at odds with property law and signifies a dangerous trend of artists’ rights superseding property owners’ rights.14 Moral rights run counter to the United States’ traditionally utilitarian approach to copyright law, and the 5Pointz ruling exemplified the inevitable conflict between moral rights and property rights. Additionally, the street art movement has a reputation as a fringe community, with the term “street art” often used to describe both lawfully and unlawfully created artwork. By extending VARA protection to the unconventional medium, opponents worry that the court lowered VARA’s standard and opened the door for other mediums to push the limits of the statute.15 Fueling this anxiety, there have been other artists seeking the shelter of VARA following the 5Pointz ruling. For example, the Blued Trees movement, started by artist and activist Aviva Rahmani, is an art installation affixed to trees along planned natural gas pipeline pathways.16 Rahmani has successfully filed the project for copyright registration and hopes to use the moral rights granted by VARA to prevent the removal of the trees.17 These concerns have led to demands for the 5Pointz ruling to be overturned or for VARA to be amended, or even repealed, so as to limit its interference with property rights.18

This Note argues that VARA’s application to street art is appropriate and not something for property owners to fear. While moral rights undoubtedly conflict with property rights, it is important for the United States to recognize moral rights in order to keep up with international standards and encourage creation. Additionally, street art is no longer the fringe movement it once was; artists such as Jean-Michel Basquiat, Keith Haring, and Banksy have helped sway the public opinion of street art away from viewing it as vandalism and towards viewing it as a legitimate artistic

medium worthy of additional copyright protection.19 Finally, the language of VARA is intentionally limiting and leaves a lot of interpretation to the courts.20 Generally, courts have been hesitant to apply VARA unless clearly warranted, suggesting that cases such as Blued Trees should not be a cause for panic given the court’s careful application of VARA.21

Part II of this Note explores the development of United States copyright law. Particular emphasis is put on the resistance to the concept of moral rights. Part III discusses the 5Pointz ruling and analyzes critics’ arguments against the holding and against moral rights in general. This Part also explores the potential ramifications of the 5Pointz ruling. Part IV argues that this recent application is appropriate and not a cause for concern about overreaching. The arguments against V ARA are also addressed and concluded to be unpersuasive. The appropriateness of the application of VARA to street art is supported by public opinion and judicial interpretation, while future overreaching is prevented by the statute’s limiting language and a careful court. Blued Trees is used as an illustration of the ease with which a court can deny VARA protection. Finally, Part V suggests that VARA offers appropriate coverage presently, but future expansion of VARA may be necessary.


*. Executive Senior Editor, Southern California Law Review, Volume 94, J.D. Candidate 2021, University of Southern California Gould School of Law; B.A. Communications and Fine Art 2015, Loyola University Maryland. Thank you to Professor Sam Erman for his guidance during the drafting of this Note. Additionally, thank you to my friends and family for their support and feedback. Finally, thank you to all the Southern California Law Review editors for their hard work.


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Get Out the Vote (or Else): Testing the Constitutionality of Compulsory Voting

Note | Constitutional Law
Get Out the Vote (or Else): Testing the Constitutionality of Compulsory Voting
by Ryan Eason*

94 S. Cal. L. Rev. 963 (2021)

Keywords: Election Law, Voting, Constitutional Law

The Preamble to the United States Constitution envisions a nation governed by “We the People.”1 The United States has never been governed by the people, however. Instead, the United States is and always has been run by the voters. Voters are wealthier, more educated, older, and whiter than “the People.”2 These differences have consequences. Since voters hold the key to lawmakers’ job security, representatives are often more responsive to voters’ interests than nonvoters’ interests.3

The reason voters differ so much from the population4 as a whole is that voter turnout is consistently low in the United States. In federal midterm elections since the passage of the Voting Rights Act in 1965, voters have only constituted an average of 41.4% of the population.5 Even in presidential elections, in which voters usually do make up a majority of the population, the majority is usually bare.6 Consequently, the winners of those elections

are chosen by nowhere near a majority of the population. For example, President Donald Trump was elected by roughly 27% of the population in 2016.7 Even President Joe Biden, who won the largest number of votes for a presidential candidate in United States history, was elected by roughly 34% of the population in 2020.8 These low voter turnout figures set the United States apart from most of the developed world.9

Of course, low levels of voter turnout do not delegitimize elections in the United States. Other major democracies also do not achieve full voter turnout.10 Electoral legitimacy would be impossible to realize if it depended on full voter turnout in every election. However, many argue that low voter turnout in the United States is a serious problem.11 To the extent a country values majoritarianism,12 its elections arguably serve that purpose better

when the gap between its voters and its population is minimized. One day, Congress may agree with this argument. Therefore, this Note imagines a world in which Congress takes a decisive step to fix low voter turnout: compel every eligible American adult to vote.13

Congress is unlikely to pass such a transformative piece of legislation in the near future. However, it might enact compulsory voting someday. Far from being a fringe or radical idea, it has been implemented by several democracies,14 and it has been successful where actually enforced.15 Indeed, commentators often cite compulsory voting as a solution to the United States’ low voter turnout problem.16 Compulsory voting legislation has even been recently proposed at the statewide level in California.17

But if Congress decided to pass compulsory voting legislation, it would face a substantial and unanswered question: would it be constitutional? This Note intends to answer that question by analyzing how compulsory voting would fare in various constitutional challenges.18 Part I explores how compulsory voting might be structured in the United States if Congress based its legislation on Australia’s. Part II addresses the most likely constitutional challenges to compulsory voting. The structural argument addressed in Section II.A concerns whether Congress has the constitutional power to pass compulsory voting if it conflicted with state legislation. I conclude that it does because the Elections Clause gives Congress the power to supersede

state election regulations, even when states have not acted. The rights-based arguments addressed in Section II.B concern whether compulsory voting would violate the right not to speak or a potential right not to vote. I conclude that while the voting is expressive conduct, compulsory voting would not violate the First Amendment by compelling it. I also conclude that there is likely no such thing as a right not to vote. However, if there is a right not to vote, the interests served by compulsory voting would outweigh the light burden upon it. Finally, Section II.C argues that compulsory voting legislation could be legally justified as a tax.


*.2021, University of Southern California Gould School of Law. This Note has benefited greatly from the guidance of Professor Sam Erman; the support from my fiancée, Katie Bayard; and the astute editing of my colleagues at the Southern California Law Review.

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Due Process in Antitrust Enforcement: Normative and Comparative Perspectives

Article | Anti-trust Law
Due Process in Antitrust Enforcement: Normative and Comparative Perspectives 
by Christopher S. Yoo*, Thomas Fetzer†, Shan Jiang‡, and Yong Huang§

94 S. Cal. L. Rev. 843 (2021)

Keywords: Anti-trust Law, Due Process, Competition Law

A global consensus has emerged recognizing the central role that competition law plays in promoting a nation’s prosperity. As the briefing notes on trade and competition policy for the 2003 Cancún World Trade

Organization (“WTO”) Ministerial acknowledged, there is a “growing realization that mutually supportive trade and competition policies can contribute to sound economic development, and that effective competition policies help to ensure that the benefits of liberalization and market-based reforms flow through to all citizens.”1 Although competition law was eventually deleted from the agenda of the Doha Round of General Agreement on Tariffs and Trade (“GATT”) negotiations, having an effective competition law regime has become a de facto prerequisite for joining the WTO.2 The number of competition law enforcement agencies has continued to grow, with the membership of the global group of competition law authorities known as the International Competition Network (“ICN”) now including more than 130 countries.3

Adherence to basic principles of due process has long been recognized as an essential aspect of proper competition law enforcement. The rule of law is generally understood to include several critical procedural components, such as “due process, judicial review (by an independent judiciary), equal application of the law, and transparency” in decision- making processes.4 The WTO recognized that clarifying “core principles including transparency, non-discrimination and procedural fairness” represented one of the key mandates for its Working Group on the Interaction between Trade and Competition Policy.5

China has also increasingly embraced the importance of due process in the wake of its accession to the WTO.6 For example, in 2018, the Chinese Securities Regulatory Commission has also instituted a system of independent administrative adjudicators to bring Chinese practice in line with international norms.7

Recent judicial decisions have further underscored the importance of fair procedures and adequate judicial review. The Chinese Hainan District Court, for instance, recently reversed an Anti-Monopoly Law (“AML”) decision by the local Development and Reform Commission (“DRC”). Although the Hainan High Court later reversed the district court’s decision,8 it further resulted in a retrial by the Supreme People’s Court. It was an important sign that decisions by enforcement agencies cannot avoid judicial review. Likewise, on September 6, 2017, the European Court of Justice (“ECJ”) sent a competition law case against Intel Corp. back to the General Court with instructions to examine all the arguments put forward by Intel.9 Additionally, the ECJ agreed with the ombudsman’s conclusion that enforcement authorities must maintain full records of both formal and informal meetings with competitors and held that the European Commission had erred in merely providing a nonconfidential summary of an interview to Intel, although the court concluded error did not influence the decision.10 This rare rebuke pushed the Commission to adhere more carefully to the procedural rules protecting due process. Both judicial decisions underscore the importance of reasoned decisionmaking, internal controls, and transparency associated with fair enforcement procedures.

The past year has borne witness to an upsurge of interest in due process in the competition law community. For example, at its most recent annual meeting, the ICN adopted its Recommended Practices on Investigative Process, which represents the most authoritative type of document the ICN typically adopts,11 and sixty-two agencies became inaugural signatories of the ICN’s new Framework for Competition Agency Procedures (“CAP”).12

In addition, the Organization for Economic Co-operation and Development (“OECD”) extended its prior work on procedural fairness and transparency13 by conducting additional roundtables on the topic.14 It also began consideration of a Draft Recommendation of the Council on Transparency and Procedural Fairness in Competition Law, which lays out principles that could serve as benchmark for due process in antitrust enforcement.15 As a follow up to its best practices issued in 2015,16 the American Bar Association (“ABA”) Antitrust Section’s International Task Force conducted an assessment of the extent to which different agencies were complying with them.17 The Association of Southeast Asian Nations (“ASEAN”)18 and the International Chamber of Commerce (“ICC”)19 have offered similar guidance.

While the existing guidelines and best practices are helpful, they are pitched at a high level of generality and stop short of detailed application to national law. This Article strives to fill that void by engaging in a detailed comparison of procedures employed by competition law officials in China, the European Union (“EU”), and the United States and making nine recommendations that would improve due process.

It is now a fitting moment to assess the state of enforcement processes. China’s AML celebrated its tenth anniversary of implementation in 2018, and China is currently considering possible revisions. The National People’s Congress Standing Committee recently revised China’s Administrative Litigation Law to make it more conducive to economic growth.20 At the same time, President Xi Jinping led a major anti-corruption campaign designed to stop government decisions that are motivated by personal or parochial interests and other abuses of power.21 All are part of broader efforts to balance the government-market relationship and make enterprises operating in China more market responsive and efficient.


*. John H. Chestnut Professor of Law, Communication, and Computer & Information Science and Founding Director of the Center for Technology, Innovation and Competition (CTIC), University of Pennsylvania.

†. Chair of Public Law, Regulation Law, and Tax Law, School of Law and Economics, University of Mannheim, and Academic Director of the Mannheim Centre for Competition and Innovation (MaCCI). ‡. Associate Professor and Researcher of the Competition Law Center, University of

International Business and Economics (UIBE) School of Law.
§. Professor of Law and Director of the Competition Law Center, UIBE School of Law. The authors would like to thank Professor Lixia (Nell) Zhou of UIBE, Professors Guobin Cui and Yuan Hao of the Tsinghua University School of Law, Professor Shen Kui of Peking University Law School, Roger Alford, Maria Coppola, Kris Dekeyser, Ian Forrester, Douglas Ginsburg, Andrew Heimert, Elizabeth Kraus, John Temple Lang, Valeria Losco, Philip Lowe, Paul O’Brien, Giovanni Pitruzzella, Ronald Stern, Randolph Tritell, Marc van der Woude, and the participants in the conferences conducted at the Penn Wharton China Center, Seoul National University’s Center for Competition Law, Chung Yuan Christian University, University of Southern California Gould School of Law’s Center for Transnational Law and Business, and Luxembourg for the comments on earlier drafts of this paper. Thanks to Louis Capozzi, Allie Gottlieb, Jennifer Mao-Jones, and Hendrik Wendland for their expert research assistance.

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The Corporate Purpose of Social License by Hilary A. Sale*

Article | Corporate Law
The Corporate Purpose of Social License
by Hillary A. Sale*

94 S. Cal. L. Rev. 789 (2021)

Keywords: Corporate Law, CSR, Social License

This Article deploys the sociological theory of social license, or the acceptance of a business or organization by the relevant communities and stakeholders, in the context of the board of directors and corporate governance. Corporations are generally treated as “private” actors and thus are regulated by “private” corporate law. This construct allows for considerable latitude. Corporate actors are not, however, solely “private.” They are the beneficiaries of economic and political power, and the decisions they make have impacts that extend well beyond the boundaries of the entities they represent.

Using Wells Fargo and Uber as case studies, this Article explores how the failure to account for the public nature of corporate actions, regardless of whether a “legal” license exists, can result in the loss of “social” license. This loss occurs through publicness, which is the interplay between inside corporate governance players and outside actors who report on, recapitulate, reframe and, in some cases, control the company’s information and public perception. The theory of social license is that businesses and other entities exist with permission from the communities in which they are located, as well as permission from the greater community and outside stakeholders. In this sense, businesses are social, not just economic, institutions and, thus, they are subject to public accountability and, at times, public control. Social license derives not from legally granted permission, but instead from the development of legitimacy, credibility, and trust within the relevant communities and stakeholders. It can prevent demonstrations,

boycotts, shutdowns, negative publicity, and the increases in regulation that are a hallmark of publicness—but social license must be earned with consistent, trustworthy behavior. Thus, social license is bilateral, not unilateral, and should be part of corporate strategy and a tool for risk management and managing publicness more generally.

By focusing on and deploying social license and publicness in the context of board decision-making, this Article adds to the discussions in the literature from other disciplines, such as the economic theory on reputational capital, and provides boards with a set of standards with which to engage and address the publicness of the companies they represent. Discussing, weighing, and developing social license is not just in the zone of what boards can do, but is something they should do, making it a part of strategic, proactive cost-benefit decision-making. Indeed, the failure to do so can have dramatic business consequences.


*. Associate Dean for Strategy, Agnes Williams Sesquicentennial Professor of Law, and Professor of Management at Georgetown University. Thanks go to Olivia Brown, Hollie Chenault, Claire Creighton, Samantha Glazer, and Jing Xu at Georgetown and Kelsey Bolin and Colin Pajda from Washington University for their invaluable research assistance, and to Brian Tamanaha, Bob Thompson, Don Langevoort, Michael Diamond, Urska Velikonja, Saul Levmore, David Hyman, Bob Rasmussen, Cynthia Williams, Bill Buzbee, Marty Lipton, Elizabeth Pollman, Andrew Tuch and the Georgetown and Michigan Law Faculties.

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The Certificate of Division and the Early Supreme Court by Jonathan Remy Nash and Michael G. Collins

Article | Constitutional Law
The Certificate of Division and the Early Supreme Court
by Jonathan Remy Nash* and Michael G. Collins†

94 S. Cal. L. Rev. 733 (2021)

Keywords: Constitutional Law; Certification by Division

The history and development of Supreme Court review over state courts in the early republic is well known. The equally important history and development of Supreme Court review of federal trial courts under the “Certificate of Division” is not. This Article addresses this largely forgotten yet critically significant feature of the early Court’s appellate power. During much of the nineteenth century, the main federal trial courts were generally staffed with two judges—a Supreme Court Justice riding circuit and a resident district judge. As a result, there were often tie votes on questions of law. Congress’s remedy was the certificate of division, which called for mandatory interlocutory Supreme Court review when the judges were divided. This unusual and understudied appellate mechanism proved critical to the development of law and the role of the Court during the Chief Justiceships of Marshall and Taney, and it implicated procedural issues that are still relevant today.

As this Article will show, many of the early Court’s most important cases came to it via certificate of division. And certification produced almost as many Supreme Court decisions as did the Court’s direct review of the state courts, the more widely studied practice. In addition, because review was obligatory when there was division, disagreement between the judges

was sometimes feigned, in order to steer certain legal questions to the Court that the judges wished it to hear, many of which might otherwise have escaped review. In this regard, we include a heretofore unavailable dataset that collects all cases—civil and criminal—that reached the Court via certification. And we undertake an empirical analysis of the dataset to ascertain, among other things, which Justices used (and sometimes abused) the practice. This Article will also show how certification by division allowed for practices that scholars tend to assume arose much later. For example, it provided an early opportunity for interlocutory appeals from lower federal courts, and it provided Supreme Court Justices with a form of discretionary control over the Court’s docket (simply by disagreeing with the district judge), long before discretionary review became the norm. Finally, certification was important as one of a variety of possible approaches that judicial systems use to break ties—here, by allowing an appeal as of right to a higher court.

*. Robert Howell Hall Professor of Law and Associate Dean for Research, Emory University School of Law; Director, Center on Federalism and Intersystemic Governance, Emory University School of Law; Director, Center for Law and Social Science, Emory University.

†. Joseph M. Hartfield Professor of Law and Joseph W. Dorn Research Professor of Law, University of Virginia School of Law. We are grateful to Barry Cushman, Miguel de Figueiredo, Deborah Dinner, Michael Gilbert, Daniel Klerman, Ronald Krotoszynski, Leandra Lederman, Kay Levine, Caleb Nelson, Barak Richman, Fred Smith, Dane Thorley, Ted White, John Witte, and Ann Woolhandler for helpful discussions and suggestions and to Kedar Bhatia, Lucy Gauthier, and Justin Ian Sia for excellent research assistance. We received valuable feedback from presentations at the Midwest Political Science Association annual meeting (especially the input of Justin Wedeking, who served as discussant for the paper), the Canadian Law and Economics Association annual meeting, and the Midwestern Law and Economics Association annual meeting.

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How the First Amendment’s Commitment to Religious Freedom Could Ironically Save Roe v. Wade . . . If We Let It by Abigail Sellers

Article | Consitutional Law
How the First Amendment’s Commitment to Religious Freedom Could Ironically Save Roe v. Wade . . . If We Let It
by Abigail Sellers*

From Vol. 94, No. 3
94 S. Cal. L. Rev. 691 (2021)

Keywords: First Amendment, Reproductive Health, Abortion, Roe v. Wade

On May 15, 2019, Alabama Governor Kay Ivey signed the Alabama Human Life Protection Act into law.1 The Act imposes serious punishments on doctors who perform an abortion unless it “is necessary in order to prevent a serious health risk to the unborn child’s mother,” there is an ectopic pregnancy, or the fetus has a “lethal anomaly.”2 Notably, the Act does not provide an exception for pregnancies resulting from rape or incest.3 Of particular interest to this Note are statements made by Alabama lawmakers indicating this law was passed to comport with their and Alabama citizens’ religious belief that “every life is a sacred gift from God.”4 Furthermore, Alabama lawmakers are keenly aware the law is in violation of a woman’s right to terminate a pregnancy as protected under the Fourteenth Amendment Due Process right to privacy.5 In fact, the Act was designed to challenge the cases establishing and upholding this right—Roe v. Wade and Planned Parenthood v. Casey—in the hopes that the Supreme Court will overrule these precedents.6

Even more disconcerting to reproductive health advocates, Alabama was only one of seven states that passed laws in 2019 severely restricting access to abortions.7 The six other states—Georgia, Kentucky, Louisiana, Missouri, Mississippi, and Ohio—criminalized abortion after six to eight weeks of pregnancy when a fetal heartbeat can be detected.8 These are aptly referred to as “heartbeat laws.” The passage of these laws was marked by religious statements from state lawmakers, and some of these laws have been expressly designed to challenge Roe.9

With a challenge to each of these laws making its way through various federal courts,10 it is possible that the Supreme Court will hear a case involving one or more of these laws and will once again get a chance to reconsider its holdings from Roe and Casey.11 This Note will argue that the Court should never reach the privacy issue at the heart of Roe and Casey. Instead, exercising judicial restraint, the Court should decide only as much as is necessary to resolve the case in front of it12 and should deem the Alabama Human Life Protection Act and the six heartbeat laws unconstitutional under the First Amendment’s Establishment Clause. Under current Supreme Court precedent, when a law lacks a sincere secular purpose, it violates the Establishment Clause,13 and as the previously mentioned religious statements by lawmakers indicate, the purpose behind these laws is not secular. Thus, the Court should never reach the privacy issue.

This Note will (1) examine the history of the debate surrounding abortion in American politics to show how Roe and Casey are once again ripe to be challenged, (2) explain the need for a new approach to challenge the abortion laws in question based on the current composition of the Supreme Court, (3) argue that the laws violate the Establishment Clause, and (4) explain why an Establishment Clause claim is worth pursuing.

*. Editor-in-Chief, Southern California Law Review, Volume 94; J.D. Candidate 2021, University of Southern California Gould School of Law; B.S. Biochemistry & B.A. Spanish, 2018, Arizona State University. I would like to thank Melissa Sellers, Dave Sellers, Perry Vargas, and the rest of my Sellers & Vargas family members for their support throughout my time in law school. I would also like to thank Professor Rebecca Brown for her feedback. Finally, many thanks to all the Southern California Law Review for their invaluable work on my piece.

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