Table of Contents
Articles
The Tax Insurance Trap
Benjamin Silver
Conventional wisdom holds that tax uncertainty is an unavoidable consequence of our tax law’s complexity. On this view, tax insurance—a financial product allowing taxpayers to shift tax risk to an insurer for a fee—is merely a hedge against the IRS’s potential disagreement with any given tax position. With this understanding in mind, some commentators have proposed imposing restrictions on tax insurance so that the IRS, not taxpayers, can harness its full potential.
This Article offers a different account of tax uncertainty and tax insurance. It argues that persistent tax law uncertainty is not a brute fact but a policy choice. In contrast to general principles of administrative law, the Anti-Injunction Act bars pre-enforcement judicial review for taxpayers, forcing them to transact first and litigate later. Thus, while substantive complexity might create tax uncertainty, that uncertainty persists because of procedure. Viewed in this light, tax insurance functions as a synthetic pre-enforcement challenge, enabling taxpayers to resolve tax risk reliably.
This Article therefore urges caution before restricting the tax insurance market. Yet, as the industry grows, tax insurance might evolve in ways that no longer mimic pre-enforcement review. Accordingly, some policy changes are appropriate. Subject to certain conditions, this Article proposes clarifying the tax treatment of tax insurance itself, aligning it with the tax treatment of a would-be pre-enforcement challenge.
Merger Remedies Unbound
Dhruv Aggarwal, Albert H. Choi & Geeyoung Min
How should foundational contract law doctrines apply to corporate mergers? This Article argues that recent changes in Delaware law grant parties expansive contractual freedom to define their preferred remedies in merger agreements, untethered from the limits imposed by traditional contract law. A new provision in the Delaware corporate code, or the Delaware General Corporation Law (DGCL), permits penalty clauses in merger agreements, notwithstanding the traditional “anti-penalty doctrine” that forbids punitive liquidated damages in contracts. Delaware courts have also shown deference to specific performance provisions, treating them as presumptively enforceable commitments instead of retaining their traditional judicial discretion over the choice of remedies. Given that Delaware law governs the vast majority of major corporate transactions, these developments reflect a significant shift toward contractual freedom in merger law. Merging parties can now customize their contractual remedies with minimal judicial intervention.
This Article, however, argues that such expansion of contractual freedom can carry undesirable and unanticipated risks. Allowing parties to move away from the traditional anti-penalty doctrine could lead to inflated liquidated damage provisions, including termination fees, that impede efficient dealmaking. These inflated terms can also exacerbate issues relating to information asymmetry between negotiating parties, allow managers to prioritize their own interests over those of the shareholders, and harm third parties, including competing bidders who cannot acquire the target and consumers adversely affected by the successful completion of anticompetitive mergers.
To address these concerns, this Article proposes legislative and judicial solutions to mitigate the risks of relying exclusively on the transacting parties to craft merger remedies and to curb the excessive application of contractual freedom in merger law. Legislators should consider amending the DGCL to restore the traditional contract law limits that are suitable for merger transactions. Courts, for their part, could invalidate excessive or socially inefficient merger remedies and only order specific performance when they deem monetary damages to be inadequate. Together, these interventions would preserve the benefits of contractual flexibility while restraining its most distortionary effects.
In Lieu of the NLRA
Gali Racabi
The National Labor Relations Act (NLRA) deteriorates due to constitutional attacks and political sabotage. As labor law buckles, its preemption regime, a keystone of U.S. labor governance, has become unsustainable. This Article argues that, to survive, labor law must flip its federal default by empowering and expanding state-level labor institutions and by prying open the NLRA preemption doctrine. Eighteen states already maintain NLRA-like statutory frameworks, and fourteen more, as a state public policy, recognize workers’ rights to unionize and act collectively. These under-examined laws hint at an alternative labor governance model in lieu of the NLRA.
Building on emerging preemption challenges, weaknesses in federal enforcement, and employers’ own challenges to the NLRA, this Article outlines legal strategies turning retreat into opportunity. After describing the slew of state private sector labor laws, this Article uncovers a hidden labor law principle against the use of preemption arguments that create regulatory “no-man’s-lands,” where workers have no recourse in state or federal labor law. It also introduces a “catch-22” argument, whereby employers who deny NLRA coverage or authority cannot shield themselves from state law with preemption arguments. Then, this Article explores how emerging state labor laws utilize novel trigger mechanisms and the ways regional cooperation can signal the outlines of a bottom-up labor governance model.
Interstate Extradition
Ethan Lowens
An interstate extradition crisis is brewing. As states increasingly criminalize conduct whose protection is a core public policy of other states, such as abortion, gender-affirming care, and gun possession, it appears imminent that a governor will receive an unwelcome extradition demand. Under many circumstances, federal law requires that governors arrest and extradite fugitives upon demand of the state from which they fled. This mandate presents a grave and immediate threat to interstate comity and the rule of law.
There is, however, another way forward. The states may, through collective action, provide governors the power to reject unwelcome extradition demands without running afoul of the U.S. Constitution or federal law. Surprisingly, this end run would realign extradition practice with nearly two hundred years of history and tradition. From the nation’s founding until the U.S. Supreme Court decided Puerto Rico v. Branstad in 1987, the federal government declined to enforce federal extradition law. To fill this vacuum, the states created laws and practices that diverged from federal law in many ways, including allowing governors to refuse extradition demands on equitable grounds.
How well did this more flexible approach work in actual practice? An original analysis of newspaper coverage of equitable extradition refusals between 1930 and 1987 reveals that governors used this power judiciously: refusing extradition rarely and typically in cases featuring extraordinary facts. Though many of these cases touched on the most polarizing issues of their time—including Black refugees from chain gangs and lynch mobs in the Jim Crow South—even the most contentious refusals engendered only muted responses. Thus, the prior state-driven regime of extradition discretion seemingly succeeded in policing itself. In a moment when the Supreme Court increasingly turns to history and tradition to interpret the Constitution, in the extradition context, the states might turn to history and tradition to circumvent it.