784 research outputs found

    Protecting Property with Puts

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    Optimal Pooling in Claims Resolution Facilities

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    The various claims resolution facilities discussed in this symposium exhibit a number of distinctive qualities and governing principles. A common characteristic of many of these facilities, however, is an attempt to avoid the litigation costs of individualized proof of damages by channeling mass tort claims into rough categories for compensation. All claimants within a particular category receive similar compensation, even though they might be able to prove disparate damages through litigation. This article seeks to analyze the efficiency of pooling disparate claims through the categorical compensation of claims facilities. An efficiency standard for evaluating tort law usually focuses on the ability of the legal rules to induce efficient levels of precaution; the costs of implementing the rules are relegated to a second order of importance. But this standard often is inapplicable to claims resolution facilities because many of the settlements that establish the facilities place an absolute cap on the defendant\u27s liability. Ken Feinberg, trustee of the Dalkon Shield Claimants Trust, stressed the importance of such caps to the feasibility of establishing claims facilities: The breakthrough in Agent Orange... and the breakthrough in Dalkon Shield was a court imposed cap on liability. That gives the company total peace .... That is why, once the companies put the money in, they disappeared. Even if aggregate caps are not imposed by judicial fiat, they will be imposed by de facto economic fiat whenever the total liabilities of the defendant corporation exceed its net assets

    Using Tort Settlements to Cartelize

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    New Rules for Promissory Fraud

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    This article summarizes the authors’ recommended reforms to the law of promissory fraud. These recommendations are presented as a Draft Prestatement of the Law of Insincere Promising. The basic propositions of the Prestatement are taken, with some modification, from the authors’ book, Insincere Promises: The Law of Misrepresented Intent (2005). This article adds extensive comments, in the style of the Restatements, and a prose introduction identifying three reforms we deem most important. First, courts should drop their insistence that every promise represents an intent to perform, and treat that representation instead as a default. Second, courts faced with claims of promissory fraud should pay more attention to scienter. This means both that promissory fraud claimants should be required to produce separate evidence of intent or recklessness, and that courts should recognize the largely overlooked possibility of negligent promissory misrepresentation. Finally, courts should acknowledge that promissory representations of intent are material only because they say something about the objective probability of performance, and should interpret a representation of intent to perform as saying, absent evidence to the contrary, that there is at least a fifty-percent chance that the promisor will perform

    The Refund Booth: Using the Principle of Symmetric Information to Improve Campaign Finance Regulation

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    On March 22, 2006, Professor of Law, Ian Ayres of Yale Law School, delivered the Georgetown Law Center’s twenty-sixth Annual Philip A. Hart Memorial Lecture: The Refund Booth: Using the Principle of Symmetric Information to Improve Campaign Finance Regulation. The article, The Secret Refund Booth, was co-authored with Professor Bruce Ackerman of Yale University. Ian Ayres is a lawyer and an economist. He is the William K. Townsend Professor of Law and Anne Urowsky Professorial Fellow in Law at Yale Law School and a Professor at Yale\u27s School of Management. He is the editor of the Journal of Law, Economics and Organization. Professor Ayres is a regular commentator on public radio’s Marketplace and a columnist for Forbes magazine and regularly writes opeds for The New York Times. He received his B.A. (majoring in Russian studies and economics) and J.D. from Yale and his Ph.D in economics from M.I.T. Professor Ayres clerked for the Honorable James K. Logan of the Tenth Circuit Court of Appeals. He has previously taught at Illinois, Northwestern, Stanford, and Virginia law schools and has been a research fellow of the American Bar Foundation. Professor Ayres has published eight books and over 100 articles on a wide range of topics

    Evidence and Extrapolation: Mechanisms for Regulating Off-Label Uses of Drugs and Devices

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    A recurring, foundational issue for evidence-based regulation is deciding whether to extend governmental approval from an existing use with sufficient current evidence of safety and efficacy to a novel use for which such evidence is currently lacking. This extrapolation issue arises in the medicines context when an approved drug or device that is already being marketed is being considered (1) for new conditions (such as off-label diagnostic categories), (2) for new patients (such as new subpopulations), (3) for new dosages or durations, or (4) as the basis for approving a related drug or device (such as a generic or biosimilar drug). Although the logic of preapproval testing and the precautionary principle—first, do no harm—would counsel in favor of prohibiting extrapolation approvals until after traditional safety and efficacy evidence exists, such delays would unreasonably sacrifice beneficial uses. The harm of accessing unsafe products must be balanced against the harm of restricting access to effective products. In fact, the Food and Drug Administration\u27s (FDA\u27s) current regulations in many ways reject the precautionary principle because they largely permit individual physicians to prescribe medications for off-label uses before any testing tailored to those uses has been done. The FDA\u27s approach empowers physicians, but overshoots the mark by allowing enduring use of drugs and devices with insubstantial support of safety and efficacy. This Article instead proposes a more dynamic and evolving evidence-based regime that charts a course between the Scylla and Charybdis of the overly conservative precautionary principle on one hand, and the overly liberal FDA regime on the other. Our approach calls for improvements in reporting, testing, and enforcement regulations to provide a more layered and nuanced system of regulatory incentives. First, we propose a more thoroughgoing reporting of off-label use (via the disclosure of diagnostic codes and detailing data) in manufacturers\u27 annual reports to the FDA, in the adverse event reports to the FDA, in Medicare/Medicaid reimbursement requests, and, for a subset of FDA-designated drugs, in prescriptions themselves. Second, we would substantially expand the agency\u27s utilization of postmarket testing, and we provide a novel framework for evaluating the need for postmarket testing. Finally, our approach calls for a tiered labeling system that would allow regulators and courts to draw finer reimbursement and liability distinctions among various drug uses, and would provide the agency both the regulatory teeth and the flexibility it presently lacks. Together, these reforms would improve the role of the FDA in the informational marketplace underlying physicians\u27 prescribing decisions. This evolutionary extrapolation framework could also be applied to other contexts

    Promissory Fraud Without Breach

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    This Article, in keeping with the theme of this Symposium, explores the possibility of promissory fraud liability where there is no breach of contract. It is well known that mere breach of contract is not sufficient to make out a claim of promissory fraud. This rule makes eminent sense, for a promisor who initially intended to perform may have later changed her mind. Here we pose the converse question: is it possible to have promissory fraud liability without a breach

    Using the False Claims Act to Remedy Tax-Expenditure Fraud

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    The federal False Claims Act (FCA) may be a tool for combating fraudulent claims regarding tax expenditures. The FCA has been used to protect the public fisc by imposing liability upon anyone who makes a false or fraudulent claim relating to an expenditure of federal funds. A substantial share of government spending is implemented through tax credits and deductions granted to individuals and entities for taking particular actions promoted by the tax code—so-called “tax expenditures.” Funds subsidized by such tax expenditures can themselves be the objects of fraud. For example, a taxpayer could be defrauded of retirement funds that the government has indirectly subsidized through tax deductions granted to the defrauded taxpayer. This Article explores how the FCA might be invoked to combat fraud that targets the recipients of tax expenditures, as well as doctrinal counterarguments to such an application. We touch on the potential breadth of the FCA’s reach insofar as it encompasses such claims, as well as the prospect of using other whistleblower mechanisms to achieve similar results

    Relational Investing and Agency Theory

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    This Article analyzes how, and when, corporate governance could be improved by utilizing "relational investing." The term relational investing is just coming into vogue and there does not yet seem to be a consensus on what it means. Although the term has been trumpeted on the cover of Business Week, before the Conference on Relational Investing at Columbia University, relatively little legal writing had been published on the subject. For the purposes of this Article, we define relational investing to encompass commitments to buy and hold significant blocks of a corporation's stock. And it is particularly important that the relational investors commit not to tender their shares to hostile bidders. Using our definition, relational investing is used to foreclose or reduce hostile takeover threats, replacing this form of external discipline with enhanced internal discipline by the relational investors. The long-term investment induces the relational shareholders to invest more in acquiring information about the effectiveness of management. To be effective internal monitors, however, relational investors must be able to use this information to influence corporate policy. At a minimum, relational investors must be "provocable" -- they must be able to increase the likelihood that poor management or poor policies will be changed. Relational investors might accomplish these changes through either internal (informal negotiation or proxy contest) or external (tender offer) means.Relational Investing; Takeovers; Agency Costs; Moral Hazard
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