Kill the Monster: Promissory Estoppel as an Independent Cause of Action

Contract rules may be dissolving into tort-type notions of unfairness and injustice. Traditionally, promissory estoppel was viewed as a substitute for consideration in situations where promisors made promises knowing that promisees would act in reliance on them, the promisees did act on the promises, and the promisors refused to do what they promised to do, to the promisees detriment. The purpose of promissory estoppel was clearly one of fairness and preventing injustice by enforcing a promise not supported by consideration in very limited circumstances. In recent cases, however, courts have been approving the use of promissory estoppel as an independent cause of action to provide remedies for alleged contracts that otherwise would be unenforceable. If contract rules are frequently displaced by ad hoc decisions about unfairness, the predictability and reliability of business transactions will diminish to the detriment of all who engage in them. This Article will review the development of the doctrine of promissory estoppel and the variations in its acceptance among the states. It will consider the classification of promissory estoppel as an action at law or in equity and the doctrines weakening of traditional contract rules, particularly the statute of frauds. This Article concludes that it is not in the interest of businesspeople for their contractual obligations to be governed by the communitys shared sense of fairness rather than their specific bargained-for exchanges of promises, as governed by classic contract rules. The former provides no reliability or predictability, just confusion and more opportunity for litigation

The Extraterritoriality Doctrine of the Dormant Commerce Clause is Not Dead

In 1895, the New York Court of Appeals, in refusing to enforce a Kansas statute, referred to “a principle of universal application, recognized in all civilized states, that the statutes of one state have . . . no force or effect in another.” In 1897, the Court of Appeals of Kentucky noted that “[t]he statute of another state has, of course, no extraterritorial force.” That old notion describes the extraterritoriality doctrine of the dormant Commerce Clause. In recent years, the doctrine has become problematic for several reasons. One, the line between intrastate and interstate business has become blurred with many fewer transactions falling clearly in the former category. Two, when Congress does not act on issues that affect many, if not all, states, it creates the impression that federalism is not working and states need to undertake a larger role in regulating commerce. Three, there is a clear two-part test for the out-of-state-discrimination strand of the dormant Commerce Clause, so it is easy to confuse it with an appropriate test for the extraterritoriality doctrine. Therefore, some commentators have said that the extraterritoriality doctrine serves no useful purpose. This article argues that there is a reasonably clear test for extraterritoriality, and the doctrine serves the important purposes of discouraging undue burdens on interstate commerce and of not giving preference to one state’s policy decisions over the decisions of other states

Executive Compensation: Reining in Runaway Abuses-Again

This Article describes the new SEC rules relating to executive compensation, discusses their chances of success in curbing abuses, and to suggest other reforms-in addition to disclosure-that might rein in runaway compensation abuse and improve business success

How Much Is “Substantial Evidence” and How Big Is a “Significant Gap”?: The Telecommunications Attorney Full Employment Act

The late U.S. Supreme Court Justice Antonin Scalia described the Telecommunications Act of 1996 as “a model of ambiguity or indeed even self-contradiction.” Legal wags have also described the Act as the Telecommunications Attorney Full Employment Act. Twenty years after the Act became law, it is still being interpreted by courts all over the country and costing taxpayers millions of dollars as local governments defend their telecom decisions in lawsuits. The Act’s basic notion was to allow local zoning authorities to maintain their control over their territories with a few new limitations that would encourage cell phone service companies to provide access to everyone. This Article focuses on two of the Act’s limitations on local governments when they want to deny a request to construct a cell phone tower. The Act requires such a denial to be supported by substantial evidence, and it prohibits local governments from preventing a telecommunications company from closing a significant gap in cell phone service. The Article concludes that Congress should amend the Act to reflect a changed telecommunications landscape and direct the FCC to issue rules that clarify the contentious issues. All stakeholders should recognize that alternative conflict resolution techniques initiated when a tower project is first considered could eliminate costly litigation and benefit all stakeholders

Financing Plaintiffs\u27 Lawsuits: An Increasingly Popular (and Legal) Business

In the late eighties and early nineties there were a few publicized cases in which the plaintiffs invited investors to finance their litigation in exchange for a share of the awards if the plaintiffs won. This kind of arrangement provides access to the justice system which might otherwise be denied impecunious plaintiffs with meritorious claims. The problem with this kind of arrangement is that it is champerty, which is prohibited in most states. This Article discusses Massachusetts\u27 recent rejection of the champerty prohibition, the expansion of exceptions to the prohibition in this country and others, and the emergence of firms whose business is investing in litigation. The Article concludes that any potential evils associated with champerty are addressed in a variety of other laws and, therefore, champertous agreements should be enforceable

Compliance Officers: More Jobs, More Responsibility, More Liability

In response to a great deal of new rule making by federal agencies in the last few years, corporate compliance departments are becoming larger and more involved in businesses in an effort to eliminate regulatory violations and to reduce fines in the event of an offense. At the same time, chief compliance officers who head these departments are becoming increasingly concerned that they will be held liable for the actions of others at their companies merely because they are in charge of their companies’ compliance programs. This article looks at examples of laws that give rise to compliance mandates and the costs to companies of failing in compliance, the role of the chief compliance officer in firms, theories for holding chief compliance officers liable for compliance failures, and federal actions against chief compliance officers. This article concludes that, of course, chief compliance officers should be responsible for their own affirmative illegal behavior, but they should not have supervisory liability for the infractions of others unless they truly are those persons’ supervisors. To settle this liability issue, the Securities and Exchange Commission should issue clear guidelines using a “control” definition for supervisor that the U.S. Supreme Court has used in another context