University of Wisconsin–Madison

Recent UW Law Faculty Scholarship: Making Sense of 303 Creative: A Free Speech Solution in Search of a Problem; The Lost Promise of Private Ordering; Time & Punishment; Pooling and Exchanging Competitively Sensitive Information Among Rivals: Absolutely Illegal Not Just Unreasonable; The Constitutional Case Against Exclusionary Zoning

Here is the latest faculty scholarship appearing in the University of Wisconsin Law School Legal Studies Research Papers series found on SSRN. 303 Creative purports to resolve a tension between freedom of speech and public accommodations laws as applied to “creative professionals” whose products or services are expressive. But this problem is largely theoretical. It did not really exist outside a small handful of ginned-up controversies between purportedly creative wedding-related businesses run by religious conservatives and their largely hypothetical same-sex couple-clients. The Court’s doctrinal “solution” to this supposed problem distorts free speech doctrine and needlessly threatens the foundations of antidiscrimination law. The case may be better understood as a political gesture, operationalizing the “promise” made in Obergefell v. Hodges, that the Court would treat continued, private resistance to same-sex marriage as legitimate and worthy of protection. In delivering on this “promise,” the Court has made the tension between free speech and public accommodation laws worse. The agency problem is corporate law’s most enduring challenge: when corporate managers spend investors’ money, how does the law protect investors from reckless management? Scholars of law, finance, and accounting have suggested that in one corner of corporate law—corporate debt—a powerful tool exists to mitigate the agency problem. Specifically, through loan covenants, lenders can force borrowers to comply with lenders’ preferences, thereby mitigating the agency problem in lending.But loan covenants are disappearing. Over the last decade, loan covenants have become fewer and skinnier, and so called “covenant-lite” or “cov-lite” loans have become dominant. If loan covenants do such a good job of mitigating agency costs, why have lenders willingly parted with them?This Article attempts to unravel the puzzle of disappearing covenants, and makes three contributions to literatures in law, finance, and accounting. First, using an original, hand-collected, and hand-coded dataset of 7,638 loan agreements spanning the last decade, this Article shows for the first time that financial covenants—the focus of most existing research—are not the only covenants disappearing. Rather, governance covenants, such as those that might give lenders the right to engage with the borrower’s board of directors, are also disappearing. This Article coins the term “gov-lite” to describe loans that have few governance covenants and shows, for the first time, how prevalent gov-lite loans have become, even in ways that sometimes diverge from the covlite trend. Second, this Article draws from original interviews with lawyers working in corporate lending to explain the source and importance of this trend. This qualitative empirical evidence shows that regulation, the structure of the loan industry, and the rise of shadow banking have all contributed to the cov-lite and gov-lite trends. Finally, this Article explores the important theoretical and practical implications of the covlite and gov-lite trends. It discusses how the disappearance of covenants exacerbates the agency problem for lenders and shareholders, and how can stakeholders use covenants to advance social interests. Every three minutes state agents remove a child from their home. Once a family is separated, impacted parents are up against a quickly approaching deadline–permanent legal separation looms at the end. In fact, impacted parents navigate three interrelated temporal dimensions: the race to permanent legal separation through the termination of parental rights, the time-consuming process of having to prove that they are fit parents, and the possibility that tomorrow, the state’s concerns will drastically change. The family regulation system–the system that has the power to separate families in this way–has been the subject of sustained critique by both academics and directly impacted families. One major critique is that instead of helping children and their parents, the system further marginalizes them. This Article introduces an underexplored layer of marginalization in the family regulation system: time.This Article argues that the construction of time in the system is not merely a benign or neutral force but instead profoundly shapes the family regulation process. Neutral conceptions of time fail to account for the ways temporal marginalization fixes parents in time, devalues time as a resource, reproduces social stratification, and privileges the state while disadvantaging families already at the margins. This Article builds on an emerging literature that critically examines time in legal systems. Drawing on multidisciplinary frameworks that conceptualize the relationship between time and power, this Article provides an aerial view of both the abstract problem of regulating parent-child relationships through a temporal frame, as well as the concrete legal timelines, procedures, and court processes that combine to exacerbate an already conflictual relationship between the state and marginalized families.“Time and Punishment” is the first Article to bring the rich conversation on time and power to the family regulation context. It makes two central contributions. One, it identifies and discusses three temporal dimensions in the system, their combined impacts, and the legal frameworks that underlie them. Second, it brings two sets of literatures into conversation: family regulation scholarship and multidisciplinary research on time, power, and marginalization. In this way, it offers an epistemic intervention that complicates managerial conceptions of time and offers insights that are fruitful beyond the family regulation context. Ultimately, this Article concludes that taking account of time as experienced by impacted families is one step towards fully understanding and responding to temporal marginalization. This Article both explains the nature of the problems with the contemporary legal analysis of agreements to exchange or pool competitively sensitive information, and proposes a better analysis based on core functional principles central to Section 1 jurisprudence. Part I provides descriptions and definitions of key concepts. Part II follows with a functional analysis of communications to establish that in the usual case that communications sharing confidential business information among rivals lack any productive function and serve only to provide information that restricts competitive conduct. Thus, such agreements are naked restraints of trade. Part III describes and evaluates the evolution of legal doctrine governing the exchange of confidential competitive information among rivals. This evaluation links contemporary American doctrinal criteria to the factual and functional issues at stake. It also critiques the efforts of the FTC and DOJ to provide guidance even after the withdrawal of their past guidance. Finally, Part III describes European Union (“EU”) competition law and its stricter and more useful approach to this conduct. The implication of this analysis is that the central issue in these cases is the function of the information exchange rather than the exchange’s overall “reasonableness.” Part IV addresses the link between not unlawful “tacit collusion” and agreements to exchange competitively sensitive information, which do satisfy the requirements of Section 1 for liability. Part V then provides an analytic framework that employs a presumption of illegality as the central tool to focus on the functional character of such agreements. Part V also recognizes that in a limited number of cases the presumption of an illegal restraint on competition would not be appropriate. We argue that exclusionary zoning—the imposition of restrictions on the amount and types of housing that property owners are allowed to build— is unconstitutional because it violates the Takings Clause of the Fifth Amendment. Exclusionary zoning has emerged as a major political and legal issue. A broad cross-ideological array of economists and land-use scholars have concluded that it is responsible for massive housing shortages in many parts of the United States, thereby cutting off millions of people – particularly the poor and minorities – from economic and social opportunities. In the process, it also stymies economic growth and innovation, making the nation as a whole poorer.Exclusionary zoning is permitted under Euclid v. Ambler Realty, the 1926 Supreme Court decision holding that exclusionary zoning is largely exempt from constitutional challenge under the Due Process Clause of the Fourteenth Amendment, and by extension also the Takings Clause. Despite the wave of academic and public concern about the issue, so far, no modern in-depth scholarly analysis has advocated overturning or severely limiting Euclid. Nor has any scholar argued that exclusionary zoning should be invalidated under the Takings Clause, more generally.We contend Euclid should be reversed or strictly limited, and that exclusionary zoning restrictions should generally be considered takings requiring compensation. This conclusion follows from both originalism and a variety of leading living constitution theories. Under originalism, the key insight is that property rights protected by the Takings Clause include not only the right to exclude, but also the right to use property. Exclusionary zoning violates this right because it severely limits what owners can build on their land. Exclusionary zoning is also unconstitutional from the standpoint of a variety of progressive living constitution theories of interpretation, including Ronald Dworkin’s “moral reading,” representation-reinforcement theory, and the emerging “anti-oligarchy” constitutional theory. The article also considers different strategies for overruling or limiting Euclid, and potential synergies between constitutional litigation and political reform of zoning. For the full text of these works and additional scholarship from UW Law faculty and staff, visit the University of Wisconsin Law School Legal Studies Research Paper Series on SSRN. A free email subscription is available at the top right of the page.