Vol. 96, Postscript Archives – Southern California Law Review

The Societal Interest Theory—Preserving the Marketplace of Ideas in the Twenty-First Century

March 2024April 2024Michelle Kim

With respect to free speech, the good is prior to the right: the goods achievable by the practice of free speech are the reason for protecting speech, and the protection should be shaped with those goods in mind.¹

On January 6, 2021, a mob of 2,000 to 2,500 supporters of then-President Donald Trump rushed into the Capitol building and disrupted a joint session of Congress in response to the former president’s allegations of vote fraud on Twitter.² Soon afterward, Twitter banned President Trump’s account on its platform. To justify the ban, a spokesman expressed concerns regarding the risks of keeping President Trump’s commentaries live.³ The spokesman stated, “[o]ur public interest policy—which has guided our enforcement action in this area for years—ends where we believe the risk of harm is higher.”⁴ Facebook and Instagram followed Twitter’s actions by barring former President Trump from posting on their social network platforms for twenty four hours.⁵ While some responded by pressing for more regulations to prevent future potential spread of misinformation and violent insurrections, others met the social media companies’ actions with criticism, alleging that these companies silenced “conservative viewpoints and ideas.”⁶ Within the broad range of responses were the Florida and Texas legislatures’ criticism of these companies’ actions. To express their disapproval, the two states passed legislation prohibiting social media companies from certain behaviors such as deplatforming a candidate in office.⁷ For example, the 2021 Florida legislature enacted Senate Bill 7072, which created three Florida statutes: section 106.072, section 287.137, and section 501.2041.⁸ The statutes were met with vigorous disapproval from major social media companies and unsurprisingly resulted in a lawsuit filed by NetChoice and the Computer & Communications Industry Association challenging the statutes’ constitutionality.⁹

In response to the district court’s grant of a preliminary injunction enjoining enforcement of the Florida statutes, Jameel Jaffer—the executive director of the Knight First Amendment Institute at Columbia University—and Scott Wilkens—an attorney at the Knight Institute—raised an interesting point:

The companies are right that the laws violate the First Amendment, but some of the arguments they are making are deeply flawed. If these arguments get traction in the courts, it will be difficult for legislatures to pass sensible and free-speech-friendly laws meant to protect democratic values in the digital public sphere . . . . [T]he companies’ arguments would make it almost impossible for legislatures to enact carefully drawn laws that protect the integrity of the digital public sphere. They would make it difficult for legislatures to impose even modest transparency requirements on the companies, to require the companies to share data with academic researchers or to require them to provide explanations to users whose posts are removed or . . . accounts are suspended.¹⁰

The discussion poses a pressing question: Is limited government regulation of private entities, particularly social media companies, justified to protect the integrity of public discourse on social media platforms? Although the First Amendment is ordinarily thought to apply only to government actions, is the fundamental value of free speech rights so essential to also warrant government regulation of private entities? This Note attempts to address these issues and argues that the societal interest of free speech values calls for government regulation of private social media companies to protect the integrity of the public squares of the twenty first century.

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Squeezed: the Narrow Bank, the Federal Reserve, and the Future of Full-Reserve Banking

March 2024March 2024Jack Frisbie

To say the U.S. Federal Reserve System (“Fed”) is the most important financial institution in the world is not so much a bold claim as a banal statement of fact. Since the Fed’s initial charter in 1913, the U.S. economy has grown from roughly $500 billion in gross domestic product (“GDP”)—a comprehensive measure of economic activity¹—to more than $23 trillion, from less than 19% of the world’s GDP, to almost 25% of it, even while other Western countries shrunk comparatively.² The Fed’s first century of existence has not been without crises, however, and each crisis catalyzed systematic changes in the U.S. banking system, as well as accretion of the Fed’s power. The most recent economic downturns are no exceptions. In the wake of the 2008 financial crisis, Congress passed the Emergency Economic Stabilization Act (“EESA”) and authorized the Fed to begin paying interest on excess reserves³ (“IOER”⁴). For the first time, a commercial bank⁵ could earn interest by holding its reserves instead of loaning them out, a complete inversion of the traditional banking model. And unlike interest on loans, IOER was a virtually riskless income stream.⁶

One corporation saw the potential for a viable full-reserve, or “narrow,” bank that would not lend any money, but instead collect IOER and pay depositors above-market interest on their savings, profiting a modest difference. The Narrow Bank (“TNB”) received a temporary endorsement from its state chartering authority, yet its business model was dependent on a master account⁷ at the Fed. After long deliberation, the Fed expressed concerns about TNB’s business model and opted to continue evaluating the bank’s economic implications. TNB sought a declaratory judgement of its entitlement to a master account, but its complaint was dismissed because the Fed did not officially reject its application but rather declined to rule on it.

On its face, the challenge to a central bank’s discretion in determining which institutions can avail themselves of its services may seem arcane, inconsequential, and distant from the legal issues that affect most Americans. Its consequences, however, are broad and far-reaching. Since the Fed began paying IOER, interest paid on retail (consumer) savings accounts and certificates of deposits (“CDs”) has lagged significantly. TNB, on the other hand, was designed to pass nearly all of its earned interest to account holders, providing them a more attractive savings option and incentivizing them to save more—a nudge toward financial security in a country where the median family’s bank account balances total $8 thousand.⁸

The Fed’s opposition to TNB was rooted in concerns that a full-reserve bank could destabilize the economy by challenging the Fed’s ability to regulate liquidity and interest rates. But beyond the economic effects of full‑reserve banking, which have been debated by scholars for almost a century, the conflict between TNB and the Fed raises important, relatively unexplored legal issues and implicates sociopolitical questions related to fairness and federalism. This Note contributes to full-reserve banking scholarship by exploring those legal and social topics and situating them in an assessment of full-reserve banking’s future, using TNB USA Inc. v. Federal Reserve Bank of New York, No. 18-cv-7978, 2020 U.S. Dist. LEXIS 62676 (S.D.N.Y. Mar. 25, 2020), as a guidepost.

The Note proceeds in three parts. Part I examines the history of the U.S. banking system and, in particular, the Fed. It also introduces full-reserve banking and outlines economic arguments for and against its adoption. Part II analyzes TNB USA and the legality of the Fed’s decision to deny TNB a master account. Part III explores the future of full-reserve banking in the United States, explains its relevance, and argues that the Fed’s restrictions on full-reserve banking are undesirable from legal and social perspectives because they rob start-up banks and depositors of the opportunity to capitalize on programs that perpetually benefit large, legacy financial institutions. A short conclusion follows.

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The Trading Game: An Analysis of Robinhood’s Use of Digital Engagement Practices

February 2024February 2024Antoinette Petkov

In December 2020, the Enforcement Section of the Massachusetts Securities Division of the Office of the Secretary of the Commonwealth filed an Administrative Complaint against Robinhood Financial LLC (“Robinhood”), a registered broker-dealer, in part, “for violations of Massachusetts law in connection with Robinhood’s . . . use of strategies such as gamification to encourage and entice continuous and repetitive use of its trading application [“app”].”¹ This action is part of a growing trend in which regulators have voiced potential concerns² about broker-dealer use of digital engagement practices (“DEPs”), which include “behavioral prompts, differential marketing, game-like features (commonly referred to as “gamification”), and other design elements or features designed to engage with retail investors on digital platforms.”³

This Note will evaluate the novel use of gamification, or game-like features, by broker-dealers in their online and mobile platforms. “A broker-dealer . . . is a person or firm in the business of buying and selling securities for its own account or on behalf of its customers” that serves several important roles like “providing investment advice to customers [and] . . . facilitating trading activities.”⁴ Broker-dealer use of gamification to perform these functions will specifically be analyzed in relation to two potential legal issues that the Financial Industry Regulatory Authority (“FINRA”) has already identified. These issues are whether broker-dealer marketing and advertising using game-like features follow regulations governing communications with the public and whether broker-dealers are making recommendations in compliance with relevant rules relating to recommendations when broker-dealers use game-like features.⁵ Ultimately, this Note concludes that the current use of game-like features, at least by Robinhood, does not violate existing regulations. However, additional information is necessary to complete the proposed analysis, which will hopefully be available following the Securities and Exchange Commission’s (“SEC”) recent request for public comment on broker-dealer use of DEPs.⁶ Therefore, based on the proposed analysis, if regulators want to rein in broker-dealer use of gamification, they will probably need to amend existing regulations. This is a favorable objective given critical policy concerns, like protecting retail investors, or “non-professional investor[s]” participating in the securities market,⁷ especially those that are inexperienced or young.

This Note will evaluate the issue of gamification in the context of popular online broker-dealer, Robinhood. The company was founded in 2013⁸ and, over the past few years, has grown into a major player in the securities industry.⁹ As of March 2021, the company had 18 million Net Cumulative Funded Accounts.¹⁰ However, the company has proven particularly popular with millennial and Generation Z investors; the company stated in its Form S-1 filed during its initial public offering in 2021 that “as of March 31, 2021, approximately 70% of our [Assets Under Custody] came from customers on our platform aged 18 to 40, and the median age of customers on our platform was 31,”¹¹ which will prove relevant to the issues analyzed in this Note.

This Note will proceed in several parts. Part I will present the concept of gamification, including its potential risks, the DEPs that Robinhood has implemented in its platform, the history of how broker-dealers came to use these features, including the development of the modern technologies that have made these features possible, and the legal issues raised by broker-dealer use of gamification. Part II will introduce the regulatory bodies that govern the U.S. securities industry, the specific regulations that are relevant to evaluating the legal issues in this Note, and the policy goals that underlie the U.S. securities regulation system. Finally, Part III will analyze whether Robinhood’s use of game-like features violates existing securities regulation, will summarize the legal and legislative actions that have already been taken regarding this issue, and will present policy concerns that lean in favor of increased regulation.

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Prosecuting Cybercrimes: The Case for Making the Computer Fraud and Abuse Act a Predicate Act Under the Racketeer Influenced and Corrupt Organizations Act

November 2023February 2024Diana Chung

During the first six months of 2021, financial services firms throughout the United States raised alarms concerning nearly $600 million of transactions that were flagged as suspected payments to perpetrators of ransomware attacks.¹ Meanwhile, the U.S. Department of Treasury identified another $5.2 billion of potential ransomware payments that were funneled through bitcoin transactions.² In total, global ransomware attacks were expected to have accounted for about $20 billion of loss in 2021³ and are predicted to result in $265 billion of loss by 2031.⁴ Ransomware is just one of twenty-four different categories of internet crimes identified by the Federal Bureau of Investigation (“FBI”) in its annual Internet Crime Report, and the figures cited in the report represent only a fraction of the total amount lost to cybercrime every year.⁵ As the number of cybercriminals and the sophistication of their methods continue to grow and evolve, the true cost of cybercrime worldwide is estimated to reach a disastrous $10.5 trillion by 2025.⁶

The scale and scope of cyberattacks have increased dramatically in recent years, spurred by a growing reliance on technology, increased connectivity among users, and the rise in popularity of virtual currency exchanges. Another contributing factor is that the very nature of cybercrime makes it difficult to block these attacks or punish those responsible. For example, cybercriminals frequently rely on a variety of techniques to hide their identities and evade detection by law enforcement, such as by operating out of the dark web or routing their activities through a virtual private network (“VPN”). The increasing use of virtual currencies also contributes to this problem by making it more difficult to trace monetary payments made by victims of cybercrime.

Prosecutions of cyberattacks have been constrained by decades-old statutes that are either inapplicable or insufficient to address rapidly changing social and technological environments that contribute to the proliferation of new cybercrimes. In addition to these challenges, many cybercriminals often reside in or flee to countries that are beyond the jurisdictional reach of the United States. In several widely publicized cases, cyberattacks were also believed to be sponsored by hostile foreign state actors. Unfortunately, many victims of these cybercrime attacks are reluctant to report them, usually due to the fact that while reporting an attack does little to address the harm caused, doing so may draw unwanted publicity or attention. Therefore, if the United States wishes to properly address the rise of cybercrime and its accompanying harm to the global economy, Congress must first pass legislation that would authorize the government to overcome these barriers and increase prosecutorial power over cybercrime.

One proposition that appeared before Congress was to expand the Racketeer Influenced and Corrupt Organizations (“RICO”) Act, codified in 18 U.S.C. §§ 1961–1968. This proposition was included in Section II of the International Cybercrime Prevention Act, which was originally presented in 2018 and was later reintroduced by a bipartisan group in June 2021.⁷ After it was referred to the U.S. Senate Committee on the Judiciary, the bill stalled and ultimately failed to pass.⁸ The status of the bill reflects the general shortage of political capital when it comes to prioritizing cybercrime despite the FBI’s characterization of “malicious cyber activity” as a threat to “the public’s safety and our national and economic security.”⁹

To raise awareness about the threats posed by cybercrimes, this Note will analyze the proposal to expand RICO and, in particular, examine the benefits of making a violation of the Computer Fraud and Abuse Act (“CFAA”) a predicate act for RICO offenses. While a few successful prosecutions of organized cybercrime rings have already been brought under RICO, this Note will evaluate the limitations of those prosecutions when it comes to computer crimes. The Note will conclude that despite the many challenges associated with tackling cybercrime, the constructive application of RICO carries great potential in prosecuting cybercriminals.

Part I of this Note provides the historical context behind RICO and examines its role in the downfall of the American Mafia. It specifically looks at the provisions in RICO that uniquely positioned it for prosecuting organized crime groups as well as legitimate business enterprises that violated state and federal laws. Part II provides an analysis of how RICO applied to traditional organized crime groups and how cybercrime groups can fall under its broad definition of “enterprise.” It also provides further context on the rise of cybercrime and introduces examples of RICO charges that were brought against two cybercrime enterprises. Part III introduces the CFAA and points to key provisions that could be used against cybercrime. It also seeks to address criticisms of the proposal to make violations of the CFAA a predicate act under RICO and evaluates key policy considerations involved in this discussion.

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Respect for Marriage in U.S. Territories

November 2023February 2024Christopher R. Leslie

The 2010s were a watershed decade for marriage equality in the United States. In 2013, the Supreme Court in United States v. Windsor struck down section 3 of the so-called Defense of Marriage Act (“DOMA”),¹ which denied federal recognition to valid state marriages between same-sex couples. The opinion left intact section 2 of DOMA, which “allow[ed] States to refuse to recognize same-sex marriages performed under the laws of other States.”² Two years after Windsor, the Supreme Court in Obergefell v. Hodges invalidated all state laws against same-sex marriage.³ The opinion effectively invalidated section 2 of DOMA and went one step further: states had to not merely recognize out-of-state same-sex marriages but also had to perform same-sex marriages in state as well. Obergefell brought marriage equality to every state.⁴

Although Obergefell seemed to guarantee same-sex couples the constitutional right to marry, marriage equality became vulnerable in the summer of 2022. In addition to providing the critical fifth vote to reverse Roe v. Wade in Dobbs v. Jackson Women’s Health Organization,⁵ Justice Thomas wrote a concurrence calling for the complete repudiation of substantive due process.⁶ Ominously, he wrote “in future cases, we should reconsider all of this Court’s substantive due process precedents, including . . . Obergefell.”⁷

Justice Thomas’s concurrence in Dobbs reinvigorated congressional efforts to pass the Respect for Marriage Act (“RFMA”), a statute that would require states to grant full faith and credit to out-of-state marriages regardless of race, gender, ethnicity, or national origin.⁸ The marriage equality movement succeeded when President Biden signed the RFMA into law in December 2022.⁹ Despite the recent controversy of Thomas’s Dobbs concurrence, the RFMA was not new legislation; versions of the RFMA had been proposed in Congress for over a decade, before either the Windsor or Obergefell opinions were issued.¹⁰ The RFMA did not simply codify Obergefell, as the Act does not invalidate any state’s prohibition on licensing same-sex marriage within its own borders. Instead, the RFMA effectively repealed section 2 of DOMA and affirmatively requires states to recognize same-sex marriages legally performed in other states.¹¹

Opponents of the RFMA argued that the legislation was unnecessary because Obergefell already protects marriage equality.¹² They seem unimpressed with Justice Thomas’s shot across the bow in Dobbs.¹³ For example, one month after Justice Thomas announced his intention to reconsider and perhaps reverse Obergefell, Senator Marco Rubio belittled the RFMA as a “stupid waste of time.”¹⁴ Iowa Senator Chuck Grassley voted against the RFMA, asserting that the “legislation is simply unnecessary. No one seriously thinks Obergefell is going to be overturned so we don’t need legislation.”¹⁵ He implied that RFMA supporters were seeking “to fabricate unnecessary discontent in our nation.”¹⁶

The argument that the RFMA was unnecessary because marriage equality was already the law of the land failed to appreciate how constitutional law reaches the shores of U.S. territories. Even if Justice Thomas fails in his mission to overturn Obergefell, the RFMA is still essential now to bring the protections of Obergefell to all corners of the American empire. Before the RFMA, the U.S. territory of American Samoa refused to follow Obergefell and continued to restrict marriage licenses to opposite-sex couples.¹⁷

While Obergefell instantly brought marriage equality to every state, the path toward marriage rights has been more complicated in U.S. territories: American Samoa, Guam, the Commonwealth of the Northern Mariana Islands (“CNMI”), the U.S. Virgin Islands (“USVI”), and Puerto Rico.

Acquired primarily from colonial powers by purchase or as the spoils of war, U.S. territories hold a precarious position in our constitutional structure. Beginning in 1901, the Supreme Court issued a series of opinions known as the Insular Cases.¹⁸ This line of authority prevented constitutional rights from automatically protecting territorial residents. Instead, the Court held that “the Constitution is applicable to territories acquired by purchase or conquest, only when and so far as Congress shall so direct.”¹⁹ In the absence of congressional directive, the Insular rubric provides that federal courts can hold that a constitutional right applies to one or more territories when the court determines that the right is “fundamental” and that recognizing the right would not be “impracticable and anomalous” for that territory.²⁰ Under this test, for example, the district court in King v. Andrus²¹struck down rules denying jury trials in criminal cases in American Samoa, finding that it would not be impractical and anomalous to require American Samoa to provide jury trials to criminal defendants, given the structure of the American Samoan judicial system.²²

Conversely, in rejecting calls to provide birthright citizenship to individuals born in American Samoa,²³ The Court of Appeals for the D.C. Circuit in 2015 in Tuaua v. United States held that it would be “anomalous to impose citizenship over the objections of the American Samoan people themselves”²⁴ and federal judges should not “forcibly impose a compact of citizenship—with its concomitant rights, obligations, and implications for cultural identity.”²⁵ In 2021, the Tenth Circuit in Fitisemanu v. United States followed suit and used the Insular framework to block birthright citizenship for American Samoans.²⁶

The Fitisemanu plaintiffs petitioned the Supreme Court for certiorari.²⁷ Some commentators saw the case as the perfect vehicle for challenging the Insular Cases.²⁸ The hope was not far-fetched. Respected scholars advocate the reversal of the Insular Cases.²⁹ Significantly, in his concurrence in United States v. Vaello Madero in April 2022,³⁰ Justice Gorsuch observed the following:

A century ago in the Insular Cases, this Court held that the federal government could rule Puerto Rico and other Territories largely without regard to the Constitution. It is past time to acknowledge the gravity of this error and admit what we know to be true: The Insular Cases have no foundation in the Constitution and rest instead on racial stereotypes. They deserve no place in our law.³¹

On October 17, 2022, however, the Supreme Court denied certiorari in Fitisemanu,³² thus leaving the Insular Cases intact. While not obvious at first glance, that decision has implications for marriage equality in U.S. territories.

This Article proceeds in three parts. Part I examines how the governments of the five U.S. territories responded to the Obergefell decision. Because of the Insular Cases, Obergefell did not necessarily automatically apply to the territories. Of the most concern, the territorial government of American Samoa has refused to recognize either Obergefell or marriage equality. Part II explains how the RFMA provides a partial solution to the problem created by the Insular Cases. It discusses the unappreciated significance of the RFMA for residents of U.S. territories. The RFMA brings a form of marriage equality to American Samoa for the first time. Less historic, but also important, the RFMA would ensure the continuation of marriage equality in those U.S. territories where the right to same-sex marriage is currently recognized but uniquely vulnerable because of the Insular Cases. Part III exposes some of the limitations of the RFMA. For example, the RFMA requires that states and territories provide full faith and credit to marriages legally performed in other states and territories; same-sex couples still cannot get legally married in American Samoa. They must leave home to get married, a burden not imposed on opposite-sex couples.

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Chinese State Capitalism and the Holding Foreign Companies Accountable Act

October 2023February 2024Paul Rose

In an age of unicorns that “[m]ove fast and break things,”¹Chinese startup Luckin Coffee Inc. (“Luckin Coffee” or “Luckin”) moved at exceptional speed. Founded in October 2017, the Chinese Starbucks-equivalent² grew from a single Beijing location to nearly 4,400 self-operated stores, over 1,600 partnership stores, and about 1,100 Luckin Coffee “EXPRESS” machines in over 220 cities in China by the end of 2021.³ Yet while the company was achieving tremendous growth—quickly overtaking Starbucks as the leading coffee chain in China—company management attempted to make the company appear even more successful through a series of fraudulent financial statements. Among other things, company executives created a “fake operations database,” altered bank records, and engaged in sham sales designed to create the appearance of faster growth, while simultaneously hiding their misconduct from regulators and their own finance department.⁴ The company overstated its revenues by 27% in the second quarter of 2019, and by 45% in the third quarter of 2019, while also understating its net losses for those quarters by 15% and 34%, respectively.⁵

Luckin provided these false statements in earnings calls with investors and in filings with the U.S. Securities and Exchange Commission (“SEC”), including offering documents for its 2020 initial public offering of $418 million in stock and its convertible bond issuance of $446.7 million.⁶ However, some investors were suspicious, and a “cryptic email” sent to numerous short sellers in January, 2020, warned that a “new generation of Chinese Fraud 2.0 has emerged,” with “[c]ompanies that start off as fundamentally and structurally flawed business model [sic] that evolves into fraud.”⁷ The email offered to share customer receipts and videos from Luckin locations, and included an eighty-nine-page report about the company that the anonymous sender suggested could be published under the name of one of the short sellers. Carson Block, an investor and founder of Muddy Waters LLC, posted the report on Twitter on January 31, 2020.⁸

The stock price hardly moved after the posting, with much of the information in the report seemingly having already been impounded into the market price before it was broadly disseminated. But the stock took a tumble several weeks later as new information emerged and the full extent of the scandal began to take shape. Among other things, investigations later revealed that Luckin executives engaged in conflicted transactions, such as the sale of vouchers for tens of millions of cups of coffee to companies tied to Luckin’s controlling shareholder and chairman, Charles Lu.⁹

Luckin Coffee’s fraud was a large but not unusual kind of corporate scandal. Similar (and even larger) accounting scandals contributed to the bursting of the Dot-Com Bubble in 2000, including frauds at HealthSouth, Tyco, WorldCom, and Enron. As a result of these scandals, Congress passed the Sarbanes-Oxley Act of 2002,¹⁰ which imposed a series of measures designed to ensure that corporate financial statements are accurate and fairly present the financial position of the company. Part of these regulations included the creation of a new quasi-governmental regulator, the Public Company Accounting Oversight Board (“PCAOB”),¹¹ which was designed to scrutinize the auditors who themselves scrutinize the financial statements of public companies. For the PCAOB to properly perform its work in protecting against accounting frauds, it must have access to the information that the auditors used to perform their audits.

The PCAOB’s access requirement brings the PCAOB in conflict with recently enacted Chinese law and policy, which not only limits what Chinese companies can share with external parties but also formally prohibits their cooperation with the PCAOB.¹² In response to China upping the ante in a high-stakes game of sovereignty over financial regulation, the United States recently played its strongest hand: the SEC, at the direction of Congress, blacklisted Chinese companies listed on U.S. securities exchanges, threatening them with expulsion from U.S. securities markets unless the Chinese government allows access to the PCAOB. The blacklisting regulation, promulgated under the Holding Foreign Companies Accountable Act (“HFCAA” or “the Act”), includes not only suspect companies like Luckin Coffee but also any company headquartered in China and operating under Chinese law. Further, preventing accounting fraud is only part of the purpose of the HFCAA, and a fulsome understanding of the Act requires consideration of the political, economic, and regulatory context from which the Act emerged.

The HFCAA gambit seems to have been successful, as Chinese regulators recently agreed to allow PCAOB officials review audit records in Hong Kong—though some practitioners are skeptical that the agreement reached between Chinese and U.S. regulators will ultimately hold.¹³ Much is at stake because, while the HFCAA helps protect investors against accounting frauds of the type Luckin is alleged to have committed, the effects of the Act are subtler and more far-reaching, and the Act’s purpose in blacklisting foreign companies is as much (if not more) about foreign policy as it is about investor protection.

This Essay examines market blacklisting—a term the Essay uses to describe extraordinary government restrictions that limit a corporation’s ability to trade freely in U.S. markets—as a regulatory tool used to deny the benefits of U.S. markets to Chinese firms. Analyzing and recharacterizing the recently enacted HFCAA as a foreign-policy-oriented regulation, this Essay argues that jarring and serious accounting frauds such as Luckin’s are not the most important—or even primary—target of the Act. While capital markets blacklisting operates in opposition to the traditionally open posture of U.S. financial markets, blacklisting can also serve to achieve strategic foreign policy goals. In particular, the passage of the HFCAA demonstrates that, in response to recent Chinese investment activity, the United States increasingly considers its financial markets as a rivalrous national resource and is becoming less willing to share that resource with its greatest economic competitor.

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The Double Jeopardy Clause and Successive Prosecutions by Separate Sovereigns for the Same Act

October 2023February 2024David R. Dow

Under the so-called dual sovereignty doctrine (“DSD”), the Fifth Amendment’s Double Jeopardy Clause (“DJC”) is not implicated by successive prosecutions brought by separate sovereigns against the same defendant for the same act. For example, if a defendant is prosecuted first by the federal government for a certain crime, that defendant’s right not “to be twice put in jeopardy of life or limb”¹ for the same offence does not protect him against a subsequent prosecution by a state government for a crime involving the same conduct. As the Court put it in the recent case of Gamble v. United States,² “a crime under one sovereign’s laws is not ‘the same offence’ as a crime under the laws of another sovereign.”³

I argue in this Article that this DSD errs in two respects, one of which has drawn a bit of attention, and one of which has gone entirely unnoticed in the cases and academic literature. First, as suggested by Justices Ginsburg and Gorsuch in their separate Gamble dissents,⁴ and as I elaborate, the DSD rests on a mistaken originalist view of how successive prosecutions by separate sovereigns were regarded at common law; consequently, the inference as to how the eighteenth-century English doctrine applies to the United States, which rests on a concept of divided sovereignty alien to the common law, is fundamentally flawed.⁵

Second, the current and longstanding view of the DJC assesses whether that Clause is implicated by focusing on whether the same offense (or conduct) forms the basis for successive prosecutions by separate sovereigns. I offer an entirely different methodology that does not depend (as does this orthodox view) on an unsound originalist analysis.⁶ Rather than focusing on what a defendant did or how a sovereign has defined an offense, the better approach to determining whether successive prosecutions by separate sovereigns violate the DJC is to focus on what the jury found. The methodology I propose hones in on the elements of the crime with which a criminal defendant is charged in the initial prosecution because the outcome of that trial will turn on the factfinder’s evaluation of those elements. To my knowledge, nobody has previously proposed this approach to analyzing double jeopardy challenges to successive prosecutions brought by separate sovereigns.

My starting point is the Supreme Court’s recent decision in Gamble, which I summarize in Part I. Next, in Part II, I identify what I refer to as the twin errors that animate the Gamble holding, one entirely historical, and the other primarily analytical. In Part III, I propose a new methodology for examining whether successive prosecutions violate the DJC; I refer to this methodology as an “elements-based approach.” In Part IV, I compare the analytical method outlined in Part III with Gamble itself and illustrate how Gamble would have been decided using an elements-based approach. In Part V, I turn to the principles of issue preclusion and full faith and credit and argue that an elements-based approach to double jeopardy analysis is symmetrical to a similar inquiry in the civil domain. Finally, I conclude by pointing to the DJC-DSD cases the courts have adjudicated over the past two decades, and I ask how consequential the modification I sketch would be on criminal defendants.

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Climate, Controversy, and Courts

October 2023February 2024Todd Aagaard

The Supreme Court’s 2022 decision in West Virginia v. EPA, along with other recent cases in which federal courts have grappled with the ongoing climate crisis, offers an opportunity to assess the role of the judiciary in helping the United States adopt effective responses to monumental threats such as the climate crisis. Courts reviewing legislative and executive actions must find ways to enforce constitutional limits without preventing the political branches from implementing effective policy responses to potentially catastrophic problems. Three relatively recent climate cases—West Virginia v. EPA, Utility Air Regulatory Group v. EPA, and Juliana v. United States—illustrate the need for courts to balance their competing obligations. In West Virginia and in Juliana, courts lost their balance, disregarding practical consequences in West Virginia and neglecting institutional limits in Juliana. Utility Air Regulatory Group, despite other shortcomings, emerges as the best example of a court striking the proper balance between its dual responsibilities. The fact that Justice Scalia, an ideologically conservative Justice, could write an opinion that constrained EPA’s regulatory authority without impairing the effectiveness of the agency’s policy supplies some basis for optimism that courts can play a constructive role in supporting the development of practical solutions to pressing problems. West Virginia, by contrast, provides a discouraging cautionary example of a court thoroughly out of balance.

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