Current Print Issue

Volume 91.1
Power and Politics in Original Jurisdiction
Zachary D. Clopton
Professor of Law, Northwestern Pritzker School of Law.

Thank you for helpful feedback to Roger Alford, Sam Bray, Christian Burset, Kevin Clermont, Erin Delaney, David Fontana, Maggie Gardner, Nicole Garnet, Tracey George, Paul Gowder, Allison Orr Larsen, Maggie Lemos, Marin Levy, Lloyd Mayer, John McGinnis, Tejas Narechania, Jide Nzelibe, Jim Pfander, Teddy Rave, Judith Resnik, Tom Schmidt, Kate Shaw, Mila Sohoni, Adam Sopko, Jay Tidmarsh, Xiao Wang, and Justin Weinstein-Tull. Thank you for assistance with research to Zachary Barron, Matthew Caister, Brigid Carmichael, Akiva Frishman, Martha Kiela, Addie Maguire, Leah Regan-Smith, Sarah Reis, Erin Wright, and Ken-Terika Zellner.

The original jurisdiction of the U.S. Supreme Court is a topic of scholarly interest but little practical significance. The original jurisdiction of state supreme courts is exactly the opposite—it is virtually absent from the scholarly literature but of significant practical importance. For example, dozens of cases related to elections, COVID-19 responses, and abortion were filed in the original jurisdiction of state supreme courts in the last few years. Legislatures also recognize the importance of original jurisdiction, as state legislators have proposed dozens of recent bills to change the scope of original jurisdiction. This Article offers a comprehensive review of the original jurisdiction of state supreme courts. The Article and its Appendix include a catalog of the original jurisdiction law of all fifty states; a survey of scores of recent original actions related to elections, COVID-19, and abortion; and a review of relevant legislation from the last decade. This Article also analyzes the distinct functional and institutional considerations relevant to state original jurisdiction. Functionally, original jurisdiction limits opportunities for appellate review, shifts fact-finding responsibility, and has the potential to permit quicker resolution of disputes. Original jurisdiction also has the capacity to streamline litigation, presenting cleaner questions to the high court without the frictions of lower court litigation. Institutionally, original jurisdiction distributes agenda-setting power among courts, parties, and legislatures. Original jurisdiction takes power from lower courts, depriving them of any opportunity to shape the course of litigation. Meanwhile, original jurisdiction often gives power to the state supreme court, though original jurisdiction also may make it more difficult for courts to engage in “avoidance” maneuvers that sometimes serve their interests. Original jurisdiction also interacts with party control, as it affects the ability of parties to shop for friendly forums. Aware of these effects, legislatures can use original jurisdiction to achieve their preferred outcomes, for example by channeling cases to ideologically friendly high courts—and away from ideologically hostile lower courts that might make mischief along the way. This analysis has both theoretical and practical relevance. Theoretically, the capacity of decisions about original jurisdiction to advantage some political parties and causes over others shows its familial resemblance to the more often studied phenomena of court curbing and court-packing. Practically, while original jurisdiction is often designed to serve neutral values, it has the capacity to serve partisan ends—and given our political polarization, we should expect partisanship to play an increasing role in these seemingly neutral choices.

Volume 91.1
The Neoclassical View of Corporate Fiduciary Duty Law
Zachary J. Gubler
Marie Selig Professor of Law, Arizona State University, Sandra Day O’Connor College of Law.

Thanks go to John Coyle, Rhett Larson, Troy Rule, Ann Lipton, Ed Rock, Andrew Verstein, and participants at the ASU Faculty Colloquium and the 2022 BYU Winter Deals Conference. All errors are mine.

Traditionally, corporate fiduciary duties are said to run to the corporation itself. But what does this mean? Something, this Article argues, that is quite different from what both shareholder and stakeholder value maximization proponents think. Specifically, the argument is that corporate fiduciary duties are owed not to any flesh-and-blood stakeholder, including current shareholders, but rather to a hypothetical permanent investor whose holding period is forever. Like any statement of corporate purpose, this “permanent equity maximization norm” is rooted in an underlying model of the corporation. In this case, the underlying model must be one that sees the corporation as a vehicle uniquely designed for long-term capital allocation and therefore emphasizes the corporation’s perpetual existence as the most important attribute for understanding its nature. This interpretation of corporate fiduciary duties—what this Article calls the “neoclassical view”—does a better job than alternatives in explaining various puzzling features of corporate law, including the apparently conflicting focus on shareholder value maximization on the one hand and the reluctance, on the other, to hold corporate fiduciaries who engage in insider trading liable for common law fraud. It also explains the allocation of decision rights in the corporation, including why decision-making power is located in the board but also why shareholders have the right to bring derivative lawsuits and vote on certain matters. Under this view, the shareholder franchise is less about giving voice to shareholders and more about providing a tool the board can use at its choosing to generate information to help it in the difficult task of long-term capital allocation. Perhaps the most important implication stemming from this neoclassical view of corporate fiduciary duty law is that, although a corporation deals in contracts, the corporation itself is not a creature of contract, and corporate law is not necessarily contractarian as a fundamental matter. Rather, the corporation represents a policy decision to create an entity designed for extreme long-term capital allocation without sacrificing a liquid securities market. More generally, this analysis demonstrates that the concern over “short-termism” in the corporation is not simply a passing fancy but rather is deeply embedded in fiduciary duty law and lies at the core of what a corporation is.

Volume 91.1
Roy Baharad
Fellow, the Aumann-Fischer Center for Law, Economics and Public Policy, Hebrew University Faculty of Law.
Stuart Minor Benjamin
William Van Alstyne Professor of Law, Duke Law School.
Ehud Guttel
Bora Laskin Professor of Law, Hebrew University Faculty of Law; Visiting Professor of Law, Duke University.

For comments and suggestions, we thank Christopher Buccafusco, Edward Cheng, Daniel Levy, Ittai Paldor, Gideon Parchomovsky, Arti Rai, and Alex Stein. Gal Aharoni, Elza Bouhassira, Sarah Couillard, Noa Dadon Raveh, Neta Dagan, Ariel Melitz, Jessica Miller, Daniel Raas Rothschild, Shira Solow, and Rachel Taragin provided excellent research assistance.

Conventional wisdom has long perceived the patent and tort systems as separate legal entities, each tasked with a starkly different mission. Patent law rewards novel ideas; tort law deters harmful conduct. Against this backdrop, this Essay uncovers the opposing effects of patent and tort law on innovation, introducing the “injurer-innovator problem.” Patent law incentivizes injurers—often uniquely positioned to make technological breakthroughs—by allowing them to profit from licensing their inventions to competitors. Yet tort law, by imposing liability for failures to invest in care, forces injurers to incur the cost of implementing their own inventions. When the cost of self-implementation exceeds the revenues that may be reaped from patenting new technologies, injurers are better off refraining from developing socially desirable inventions. The injurer-innovator problem remarkably persists under both negligence and strict liability regimes, and in the face of different victim types. Multiple real-world examples demonstrate the extent and pervasiveness of this phenomenon. To realign the incentives provided by the patent and tort systems, this Essay proposes a new legal construct: anti-patents. While a standard patent grants an inventor the exclusive right to use its invention, an anti-patent creates the converse exclusivity regime: the inventor, and only the inventor, is not required to use the invention. Importantly, anti-patents retain the existing patent protection, allowing injurer-innovators to charge monopolistic prices from competitors but simultaneously eliminating the obstacle created by tort law. An injurer-innovator who owns an anti-patent will enjoy immunity from the heightened standard of care to which the rest of the industry would now be subject. The Essay further shows that the anti-patent mechanism not only succeeds at harmonizing patent and tort law toward the advancement of technological progress but also outperforms alternative schemes employed to stimulate innovation (i.e., prizes, grants, and tax benefits). Finally, it ties the logic that underlies anti-patents to existing doctrines designed to elicit the disclosure of private information.