Insurance Policies: The Grandparents of Contractual Black Holes

In their recent article, The Black Hole Problem in Commercial Boilerplate, Professors Stephen Choi, Mitu Gulati, and Robert Scott identify a phenomenon found in standardized contracts they describe as “contractual black holes.” The concept of black holes comes from theoretical physics. Under the original hypothesis, the gravitational pull of a black hole is so strong that once light or information is pulled past an event horizon into a black hole, it cannot escape. In recent years, the theory has been reformulated and now the hypothesis is that some information can escape, but it is so degraded that it is virtually useless. In their article, Choi, Gulati, and Scott apply the black hole concept to certain standardized contractual boilerplate provisions. Although the focus of their article is on the contractual black hole nature of pari passu clauses that are used in sovereign debt contracts, Choi, Gulati, and Scott note that “[s]tandard insurance contracts appear to be another area with the potential for terms that have lost meaning.” They are correct that insurance policies are an area in which contractual black holes would appear quite likely to develop. In this essay, to test the hypothesis that insurance policies potentially are, or contain, contractual black holes, four policy provisions found in commercial insurance policies are considered: 1) “Sue and Labor” Clauses, 2) “Ensuing Loss” Clauses, 3) “Non-Cumulation” Clauses, and 4) the “Sudden and Accidental” Pollution Exclusion. An examination of these provisions demonstrates that some policy provisions have become contractual black holes, some provisions are only apparent contractual black holes, and other provisions on their way to becoming contractual black holes were saved before the original meaning of such provisions crossed the event horizon

Identification of models of the labor market

This chapter discusses identification of common selection models of the labor market. We start with the classic Roy model and show how it can be identified with exclusion restrictions. We then extend the argument to the generalized Roy model, treatment effect models, duration models, search models, and dynamic discrete choice models. In all cases, key ingredients for identification are exclusion restrictions and support conditions.Labor market

The changing pattern of wage growth for low skilled workers

We examine the key components that determine an individual's early career wage growth and how these factors have changed for less skilled workers over the last twenty years. In particular, we examine the relative importance of accumulating work experience as compared to the quality of job matches in influencing wage growth. Our main finding is that over this period, the vast majority of the variation in wage growth is due to variability in the return to experience.Wages ; Displaced workers

Federal Courts’ Recalcitrance in Refusing to Certify State Law COVID-19 Business Interruption Insurance Issues

Over 2,000 COVID-19 business interruption insurance cases have been filed in state and federal courts the past two years with most of the cases filed in or removed to federal courts. The cases are governed by state law. Rather than certify the novel state law issues presented in the cases to the respective state supreme courts that ultimately will determine the law applicable in the cases, each of the eight federal circuit courts to issue decisions on the merits in such cases to date has done so by making an Erie guess regarding how the controlling state supreme courts would decide the cases. This Essay argues the federal circuit courts’ decisions to make Erie guesses rather than certify the novel COVID-19 business interruption state law issues is a mistake that federal courts also have made in the past in regard to nationwide insurance coverage litigation governed by state laws. The Essay also argues that U.S. Supreme Court precedents regarding the abstention doctrine support state supreme court certification regarding the novel state law issues presented by COVID-19 business interruption insurance cases. Finally, the Essay discusses how early federal circuit court decisions on COVID-19 business interruption insurance claims are having a butterfly effect with respect to subsequent court decisions because other courts are relying upon, and adopting, the reasoning and holdings—right or wrong—of the federal circuit court decisions

English Justice for an American Company?

This Essay addresses the Halliburton Co. v. Chubb Bermuda Insurance Ltd. case, which is pending before England\u27s Supreme Court. The issue before the Court is whether it is appropriate for the neutral arbitrator, who has a history of serving as a party-appointed arbitrator for Chubb, to serve as the neutral arbitrator in the matter while simultaneously serving as a party-appointed arbitrator for Chubb in another related arbitration proceeding involving the same insurance policy form and the same underlying Deepwater Horizon incident. The lower courts declined to remove the arbitrator. The Essay also addresses the question of whether London arbitration proceedings under a Bermuda Form policy are sufficiently fair to American policyholders to justify their continued use if the lower courts\u27 rulings in the case are not reversed

A new semidirect product for association schemes

We propose a new definition for the semidirect product of association schemes, generalizing work of Bang, Hirasaka, and Song. We define an action of one scheme on another, and show how one can use such an action to construct all semidirect products satisfying a certain technical condition.Comment: 24 page

The Big Data Revolution and Its Impact on the Law: Introduction

Introduction to Penn State Law Review\u27s Symposium on Big Data. This article disucsses the impact of Big Data, defined as the collection of large amounts of data or information and the ability to analyze it in a meaningful way, on different people. Big Data\u27s influence on people\u27s behavior, insurers, social media and information sharing raise significant issues regarding privacy and people\u27s rights to their own data. The debate on this issue is ongoing, and its importance is further heightened with the rise of Big Data