Vigorous Enforcement Research Articles

Pistol Whipped: Baseless Lawsuits, Foolish Laws

Although Congress and the majority of state legislatures have resisted enacting draconian gun control laws, the courts are the final bulwark in safeguarding our constitutional right to keep and bear arms. Yet the courts of late have been the scene of unprecedented attacks on that right as gun control advocates have used the judiciary to make an end-run around the legislative process. Meritless litigation brought by government plaintiffs in multiple jurisdictions are just part of a scheme to force gun makers to adopt policies that legislatures have wisely rejected. Moreover, the suits are used by politicians to reward their allies -- private attorneys, many of whom are major campaign contributors -- with lucrative contingency fee contracts. Meanwhile, many of the same politicians have exploited a few recent tragedies to promote their anti-gun agenda. But gun controls haven't worked and more controls won't help. In fact, many of the recommended regulations will make matters worse by stripping law-abiding citizens of their most effective means of self-defense. Violence in America is due not to the availability of guns but to social pathologies -- illegitimacy, dysfunctional schools, and drug and alcohol abuse. Historically, more gun laws have gone hand in hand with an explosion of violent crime. Only during the past decade -- with vigorous law enforcement, a booming economy, and an older population -- have we seen dramatic reductions in violence, coupled with a record number of guns in circulation. Before we compromise constitutional rights expressly recognized in the Second Amendment, we ought to be sure of three things: first, that we've identified the real problem; second, that we've pinpointed its cause; and, third, that our remedy is no more extensive than necessary to fix the problem. The spreading litigation against gun makers fails all three tests as do the latest gun control proposals. Guns do not increase violence; they reduce violence. Banning or regulating firearms will not eliminate the underlying pathologies. And a less invasive remedy already exists: enforce existing laws.

Law Matters. Lawyers Matter.

My paper begins from the general premise -- reflected in powerful and dramatic ways in the events that followed on the tragedy of September 11 th -- that corporate managers do, in fact, struggle do the right thing. By this I simply mean that those folks who are entrusted with managing the company's business affairs generally do struggle to make the right decision, to make decisions that are in the best interests of the corporation, which includes consideration of all the constituencies represented by the body corporate. The purpose of my paper is to show that the rule of law matters in this decisionmaking process, particularly the law of fiduciary duty, because it provides support for these managers as they engage in this ongoing, daily process. Once I establish that law matters, then I will argue that this conclusion must, in turn, inform us as to the proper role for lawyers in advising their corporate clients. In other words, lawyers matter; that is, lawyers do, in fact, add more to the decisionmaking process of corporate managers than just their technical knowledge of the relevant legal rules. To demonstrate the truth of this assertion - that Law Matters - my paper will focus on a real world problem that has received significant attention lately in the financial press: the Wall Street practice known as spinning. Spinning refers to the practice reportedly used by Wall Street investment banking firms to allocate IPO shares in the hot equity/new issues market that prevailed in the late 1990's. My analysis of the culpability of those corporate managers who participated in such spinning activity clearly reflects the fundamental principle that fiduciary duty law matters. More specifically, the lessons to be learned from the story of spinning illustrate how vigorous judicial enforcement of fiduciary duty standards reinforces the role of social norms in establishing the standards of fair and ethical conduct that we can expect of modern corporate managers. These concerns are at the very heart of the corporate social responsibility theme that forms the basis for much of Progressive Corporate Law scholarship. By using the practice of spinning to illustrate how social norms influence the conduct of corporate managers, and further, how fiduciary duty law influences the development of these social norms, the story of spinning reinforces the continuing importance of vigorous judicial development of mandatory rules of fiduciary duty in the context of corporate law. In so doing, my analysis of the practice of spinning will also serve to illustrate why the modern approach of the law and economics paradigm - although providing very valuable analytical tools - does not provide a complete framework for analyzing problems that arise in the modern corporate environment. In telling the story of spinning, I will also underscore the continuing importance of the role of the damn good business lawyer in advising corporate managers, thereby demonstrating that the legal profession continues to have significant responsibilities that go well beyond that of a glorified scrivener. So, in the end, my paper concludes that the essential moral of the story of spinning is: Law Matters. . . . and Lawyers Matter. Period.

"That's Not What We Meant to Do": Reform and Its Unintended Consequences in Twentieth-Century America

Someone once remarked that Prohibition failed because no one realized how innately American it was to drink. A similar disjunction of expectations and results pervades this fascinating study of five key areas of modern public policy—welfare, civil rights, mental health, immigration, and campaign finance reform. In a series of short essays, Steven M. Gillon demonstrates how institutions, politics, and events transform laws in unintended ways. Circumstances change. A key component of welfare, designed to keep a mother at home with her children, became anachronistic and dysfunctional in a later era when mothers were expected to enter the labor force. Ideologies change. The faith in integration that propelled the deinstitutionalization of the mentally ill was tested in a later era when the mentally ill morphed into the homeless. Other branches of government alter congressional intent, as in the vigorous bureaucratic enforcement of the 1964 Civil Rights Act that led to affirmative action. Furthermore, sometimes things simply do not work out as planned. The 1965 immigration law contained a section that allowed family members of foreigners legally settled in this country to live in this country. That section brought far more people of Asian origins to America than the authors of the legislation anticipated. In a similar manner, campaign finance reform unfolded in ways that would have surprised its original congressional proponents in the Watergate era.

The community impact of rogue transportation sources

This study investigates the contributions of atypical transportation noise sources to community noise and relates these contributions to policymaking and resource allocation. Small percentages of aircraft and surface transportation vehicles make a significant contribution to noise levels as measured by day-night sound level and other descriptors. Rogue sources are loosely defined in this study as anomalous sources that have a large impact on community noise. Included are sources that do not comply with regulatory standards due to intentional modifications or due to failure of noise suppression components. Also included are sources that produce noise levels well above reasonably attainable levels despite attainment of regulatory standards. Rogue source identification and assessment can be a component in policymaking and resource allocation. Cost savings can be realized by reducing noise at the source vice by the path. For instance, surface transportation noise standards based on best-available technology and vigorous enforcement can be more cost-effective than erection of noise barriers. In this case, the cost is borne by the offender rather than by the community at-large. The authors analyze and quantify the noise contribution of rogue sources and suggest appropriate noise mitigation.

Self-Reported Seat Belt Use in Four Countries: A Telephone Survey

A telephone survey was conducted in four countries in November 1998 to compare drivers in the United States with those in Australia, Canada, and the United Kingdom regarding their attitudes toward seat belts and belt use laws. More than 90 percent of the 2251 respondents said they thought seat belts are effective, but self-reported belt use was significantly lower in the United States than in the other countries. Respondents in Australia and the United Kingdom had similar views about what they thought were important reasons for using seat belts and had the highest self-reported use. Reasons given for using belts by Canadian and US respondents were quite similar to one another, yet US respondents had significantly lower self-reported use rates, a difference thought to be due to vigorous enforcement of the law in Canada. US drivers were less likely than Australian and UK drivers to say they used belts out of habit, to avoid a ticket, or because it is required by law and more likely to say they used belts for situational reasons. US drivers were least likely to be in favor of belt use laws. Canadian drivers reported the most experience being checked by police for belt use and were most likely to think that nonusers would be caught. US drivers in primary enforcement jurisdictions were more likely than those in secondary jurisdictions to think that drivers not using belts would be caught and more likely to say they always used belts. Results of this survey indicate that seat belt use in the United States could be increased by adoption of primary enforcement laws and highly visible enforcement programs of the type used in Canada, and that seat belt use could be increased in all countries by increasing the penalties for nonuse.

Of Firewalls and Subsidiaries: The Right Stuff for Expanded Bank Activities

The extent and structure of non-banking activities for commercial banks has been a long-standing policy concern for the United States. Recently, three alternative models for the undertaking of non-traditional activities -- the universal bank, the separate subsidiary of the holding company, and the operating subsidiary of the bank -- have come to the fore. After reviewing the history of activity restrictions on banks and providing an analytical framework for considering the appropriate structure, we conclude that the op sub approach has modest advantages, but that even it carries substantial risks and requires vigorous monitoring and enforcement.

Waiting for the Omelet to Set: Match Specific Assets and Minority Oppression in the Close Corporation

We argue that the close corporation form is uniquely suited to enterprises with a high density of match specific assets, particularly where the assets are not yet fully developed, as in an omelet factory. The corporate law limitations on exit, combined with the corporate law rules against non pro rata distributions, largely prevent opportunistic behavior by the majority shareholder towards the minority. By locking both into the enterprise, the majority shareholder, in maximizing its own wealth, also maximizes the wealth of the minority. The projects are given the opportunity to develop without concern that parties could threaten to remove their capital in order to secure a greater share of the profits. Indeed, as we show, many of the persistent features of the stylized close corporation can best be understood as self-enforcing mechanisms to protect the participants from opportunistic behavior by fellow participants. Starting from this view of close corporations, we analyze the classic problem(s) of minority oppression in the close corporation. We argue that minority oppression can best be understood as a combination of two separate and separable dimensions, with two distinct legal responses. The first dimension is a version of precisely the same problem that, in law, arises under the heading of employment at and is best handled with the same judicial passivity, absent explicit agreements to the contrary. To do otherwise is unnecessary and threatens to undermine the self-enforcing structure in place. The second dimension of the problem is fundamentally different from at will, and involves attempts by the controlling shareholder to make non pro rata distributions of firm assets. Here, we show that vigorous judicial enforcement of a prohibition on such distributions, including the vigorous protection of ancillary rights to information, is necessary to enforce norms of non-opportunism. We further show that courts are much better at sorting out issues of this sort than at will type issues because doing so does not require either relying on unverifiable factors, nor valuing assets that the courts cannot value. Out of our appreciation of the beauty of the close corporation form comes the implication that courts further the purposes of the close corporation when they hold narrowly within the corporate form and avoid ad hoc adjudication of substance. In this model of the close corporation, courts remain passive in the face of the issues that animate many bitter close corporation cases. By contrast, courts take an active role in blocking the attempts by majority shareholders to enter into self-dealing transactions with the corporation as a way around the sacred prohibitions on non pro-rata distributions.

Regulatory Oversight of Natural and Alternative Landscapes

In their attempts to be more environmentally sensitive, many thousands of homeowners propose, or actually implement, alternatives to conventional lawn maintenance. In many cases, the perception of “naturalness” incorporates un-mowed grasses and forbs believed by the homeowner to be reminiscent of fields and pastures. A previous study of municipal attitudes toward this phenomenon revealed a wide variety of responses, ranging from laissez-faire, through official recognition and registration to strict prohibition and vigorous enforcement. The current expansion of this study focused on larger cities and their suburbs, especially newer subdivisions. In contrast to the general air of tolerance expressed by many smaller, midwestern towns for alternative landscape plans, provided they are well-maintained, larger cities and suburbs appear generally much less tolerant of nonstandard lawn maintenance. Failure to maintain lawn grasses at a standard height will almost certainly lead to enforcement of lawn maintenance and weed control ordinances in a majority of the cities surveyed, no matter what the intentions of the homeowner.

Employment Discrimination Against Older Workers

Pairs of resumes, one for a 57-year-old and the other for a 32-year-old, were mailed to 775 large firms and employment agencies across the United States. Although the resumes presented equal qualifications, the older job seeker received a less favorable employer response 26.5% of times when a position appeared to be vacant. Vigorous enforcement of equal opportunity laws as well as initiatives to change employer attitudes are appropriate responses to such discrimination. The technique of employment testing, demonstrated in this research, can be useful in both efforts.

Antitrust Enforcement and Non-Enforcement as a Barrier to Import in the Japanese Automobile Industry

Foreign automobile manufacturers long have found it difficult to compete in the Japanese automobile market. For decades, governmentally imposed restraints prevented foreign manufacturers from gaining a foothold in the Japanese market. In recent decades, these governmental restrictions have been replaced by private restraints which create equally formidable barriers to entry. Many private restraints persist despite repeated informal investigations and administrative guidance by the Japan Fair trade Commission (JFTC). The endurance of these private restraints raises the question of what mechanisms may be available to make the Japanese automobile market more contestable. While vigorous and transparent enforcement of Japan's Antimonopoly Law by the JFTC is the preferred mechanism, other mechanisms for alleviating these private restraints include the extraterritorial enforcement of U.S. antitrust laws by U.S. antitrust enforcement authorities, mediation by the OECD or the enforcement of an international competition code in an international forum.

Threatened plants of New Caledonia: Is the system of protected areas adequate?

~With 76 % of its 3063 native species of flora endemic, the New Caledonia biodiversity hotspot has long been recognized as having a high potential for conservation. Under the new IUCN Red List categories, 25 % of the endemic plants are at risk (Conservation Dependent, Vulnerable, Endangered, Critically Endangered), and five species are already extinct. A review of their distribution demonstrates that 83 % of the threatened species do not occur at all in a conservation area, and only 11 % have their conservation status improved by a protected area. The protected area network is geographically and floristically very unbalanced, with the rainforest and high altitude maquis in the south concentrating most of the conservation effort. Conversely, the middle and northern segments of the island, as well as all of the dry west coast, are left without adequate conservation area. Two vegetation types, the sclerophyll forest and the unique low/middle altitude maquis, are virtually totally unprotected. We conclude that the current network of protected areas needs to be considerably expanded, in terms of both geographical/floristic subregions within New Caledonia and vegetation type covered. With only 54 % of the conservation area covered by strict mining restrictions, existing reserves need to have their conservation efficiency improved by a more vigorous enforcement of their status, and by extending mining bans to all of them.

The use of feedback signs to increase observed daytime seat belt use in two cities in North Carolina

Well publicized enforcement programs in North Carolina have raised seat belt use to about 80%. In an effort to find techniques to raise belt use further, signs providing feedback to drivers on belt use rates were introduced in two communities, Asheboro (population 18,000) and Greensboro (population 183,000). Feedback signs remind motorists about belt use and imply a constant and vigorous enforcement presence. The signs were prominently posted by the roadside at high volume locations; belt use information was changed weekly based on observational surveys. Observed daytime driver belt use in Asheboro increased from an average of 75% before the signs to 89% after the signs were established. At urban sites in Greensboro, driver belt use increased from 80% to 86%. Right front passenger belt use increased significantly in Asheboro but not in Greensboro. There were no changes in belt use at two interstate exit sites in Greensboro. Reasons for the differential success rates may relate to differences in initial belt use rates, community size, amount of publicity, and numbers of encounters with the signs. It is clear, however, that feedback signs can be an important supplement to belt use enforcement programs.

The Fort McMurray Demonstration Project in social marketing: health- and safety-related behaviour among oil sands workers.

This is the first round in a series of surveys conducted in Fort McMurray as part of the Fort McMurray Demonstration Project in social marketing. This component of the survey was intended to focus on the most prominent group of employed workers in the community and to compare their patterns of response with the community as a whole. Respondents to the survey were overwhelmingly male (96%), married (72.9%) and living in households of two to five persons (87.9%). They were predominantly aged 30-44 (55%) and graduates of high school (53.5%). Younger male workers (below age 30) were more likely to have a high school diploma (78.3%) or some additional technical or vocational training (21.7% compared to 12.5% overall) and to be unmarried or separated. Attitudes toward safety-related behaviours were stronger than for respondents from the community as a whole. Approximately 70-100% of all age groups and both sexes showed strong agreement with attitudes involving child car seats and the unacceptability of drinking and driving. These attitudes include strong advocacy of vigorous enforcement of occupational health and safety standards. However, they showed a variability similar to the community as a whole in behaviour at home compared to work, generally reporting more consistent use of personal protection on the job than in their own homes, particularly hearing protection. Even so, they were much less likely to perform stretching and warm-up exercises prior to exertion than community residents in general. The potential may exist to transfer the technology and attitudes from workplace health and safety to community safety. One possible strategy to accomplish this is to involve workers in this industry directly in community initiatives. This strategy may be generalizable to any community in which there are major employers who place a heavy emphasis on risk control and occupational health and safety.

The Impact of Trade Liberalization and Competition Policy on Domestic Pricing

date cast doubt on the ability of any one policy instrument to establish competitive domestic markets, with domestic entry, open international trade, and vigorous enforcement of domestic competition policy all essential in promoting competitive pricing. Especially over the past fifteen years, economists have devoted much effort to empirically examining the ability of domestic producers to raise prices above competitive levels. This research has noted the

Black farmers/farms: The search for equity

Black farmers are still Black farmers, yet now are considered a part of minority or small or limited resource farmers/ranchers (SLRF/R) by the Department of Agriculture. Except for a few Southern states, their numbers have fallen from a remnant to a fragment in recent years. They continue to leave agriculture at a faster rate than whites. What few programs the Department has for this category of producers (SLRF/R) show genuine promise, provided they are pursued diligently by the Congress and the Department. Also vigorous enforcement of civil rights laws and directives of the Secretary and the new initiatives by the Office of Civil Rights Enforcement (OCRE) have to be sustained.

Commitment with Selfish Regulators

The recent literature on hierarchies departs from the traditional literature on regulation by opening the Black Box of the regulatory body and separating it into at least two layers of control: Congress1 and the regulatory agency. Tirole (1986) and Tirole arid Laffont (1988) show that if the regulator is self-interested, the possibility of collusion between the regulator and the firm always decreases welfare because there are additional incentive compatibility constraints to be satisfied. In this paper I propose that the possibility of collusion between the regulator and the regulated can be beneficial. I argue that delegation to a self-int;erested agent who does not hesitate to accept bribes from the firm is essential to a solution of the regulatory holdup problem. Furthermore, I demonstrate that this solution is robust to the possibility of re-negotiation between the principal and the agent. This paper sheds light on the following problems of the internal organization of regulatory agencies. First, as others have pointed out, the law enforcement branches of federal regulatory agencies usually have limited budgets and insufficient staff to maintain vigorous enforcement. For example, the Occupational Safety and Health Administration (OSHA) in the U.S. has so few staff that firms expect to be subject to one on-site inspection per century. Furthermore the enforcement officials are usually not political appointees over whom the U.S. Congress can exercise control. They tend to be career bureaucrats with life-long employment contracts and whose preferences are not necessarily aligned with those of Congress. The question is: Why doesn't Congress attempt to allocate more resources to and exercise more control over law enforcement? Second, the evidence is well-documented that possibilities exist for collusion between the regulator and the regulated. There are numerous examples of the so-called revolving doors, 2 whereby retired regulatory officials take lucrative jobs with firms formerly under their jurisdiction. For

Phoenix Companies and Corporate Regulatory Challenges

This paper reviews findings from one of the first empirical studies of the phoenix company problem in Australia. The phoenix company phenomenon is a disturbing one, especially as it seems to reflect the emergence of a business culture in which a substantial number of businesses see the payment of debt as being optional, as some insolvency practitioners have begun to suggest. Whilst changing corporate and business cultures is as important as changing or simplifying corporate laws and vigorous law enforcement, any regulatory compliance program needs to pay particular attention to changing attitudes to debt and debt enforcement in Australia. This research suggests that unless grass roots activity such as the use of phoenix companies is adequately attended to, the broader corporate culture may be affected and lead to the further spread of phoenix type attitudes into other areas.

Trusting Outsiders To Do Your Research: How Does Industry Learn To Do It?

Top R&D leadership recognizes that leveraging external resources is critical. A Du Pont veteran explains why--and how. OVERVIEW: Success in the global marketplace requires restructuring and rethinking of all aspects of business management, including, in the case of technology-based companies, how technology itself is acquired and improved. Because new technology development is often so risky in either cost or time to the marketplace, and is available from so many eternal sources, it is vital that companies learn how to tap into these eternal sources as effectively as they have managed their own internal R&D organizations for so long. These eternal sources include partnerships with other companies, universities and research institutes, and various government laboratories and development facilities around the world. American companies would seem to have a unique opportunity at this time in history, as our great university and government laboratory systems are being driven by similar global pressures to team up with us in new and more effective ways. While obtaining technology from the outside is not unusual behavior for American industry, the idea of having someone on the outside do your most critical research does seem unusual for most of us. I think the same thing is true for many other cultures, although many of our European competitors have been entrusting external institutions and universities with augmentation of their internal research for decades. It seems strange that U.S. companies have done so little of this, considering our magnificent university system. But examination of recent history, over the past 50 years, shows this to be the case. The reasons are fairly clear: U.S. companies were either afraid to get involved with outsiders or saw no need to do so. David A. Hounshell, co-author of Science and Corporate Strategy, the history of Du Pont R&D from 1902 to 1980 (Cambridge University Press, 1988), contends that the fear factor came from the historically vigorous enforcement of antitrust law. He also points out that we had no real need for outside research, because after both world wars the United States was in pretty good shape compared to the rest of the world. Our main need was to exploit the rich technology and marketing positions we possessed. Chemistry was making rapid progress, man-made polymers were coming into their own, pharmaceuticals and electronics were gathering momentum, and so forth. Worldwide competition was not calling the tune because other countries were not competitive. Rather, the tune was being called by the great worldwide marketplace and the U.S. was at that time the major contender, with plenty of opportunities to apply its skills and to grow in profitability. Industry's main interest in the universities was for the scientists and engineers they graduated. Technology was transferred from universities mainly through the people we hired. Government labs were no factor at all. Their chief task was to serve the defense arm of the government. Hounshell predicts that industry will now more and more return to the practices of the early days of the Industrial Revolution and acquire more of its technology externally. His thesis is that this is actually more normal--that the behavior of the last 50 years was abnormal. We will have to see whether Hounshell is right about this, but for now, at least, the direction he speaks of is certainly correct. My own company, Du Pont, is beginning to take outsourcing very seriously, although we are still novices in this activity and I am personally not sure how much of this Du Pont will actually end up doing over the next several years. As all of my industry experience has been with Du Pont, I shall devote the remainder of this article to how things are progressing in a company that certainly personifies the do-it-yourself research mentality. The main questions I shall cover are: Why do it? …

The Foreign Corrupt Practices Act and the Omnibus Trade and Competitiveness Act of 1988: Did They Change Corporate Behavior?

The author examines the Foreign Corrupt Practices Act (FCPA), the Omnibus Trade and Competitiveness Act of 1988, and some of the cases decided under each bill. A survey of the Chief Legal Counsels of Fortune 500 companies was done to determine whether U.S. corporations had adopted new codes of ethics and/or conduct to ensure their firms’ compliance with the FCPA and its amendments. The survey also studied whether the firms had changed their sales and marketing practices after these laws were passed. The results indicate that many of the responding firms made some changes; however, new allegations of foreign bribery by American firms probably indicate that vigorous enforcement of the FCPA must be continued.

The water pollution control policy in Hong Kong

The Hong Kong government has formulated a comprehensive and integrated strategy to tackle water pollution. The scheme tackles existing pollution sources through the development and vigorous enforcement of environmental legislation, and aims to prevent new pollution from arising in the future. Following the practical advice given in last month's Journal, Daniel Lau, Lawrence Wong and Pak‐kan Chiu of the Environmental Protection Department explain the government's plans, focusing particularly on the legislative framework.