V. 6, Mustang Journal of Law & Legal Studies, 2014
Table of Contents
Mustang Journal of Law and Legal Studies
Volume 6 (2014)
Title . . . . . 1
Editor’s Notes . . . . . 3
Advisory Editors . . . . . 5-6
Table of Contents . . . . . 8
Announcement for Mustang Nashville Conference . . . . . 9
Announcements for Mustang Journals . . . . . 10-14
Best Paper Award Winners . . . . . 15-16
Adam Epstein . . . . . 18
The Trading Card Effect
Daniel Fernandez . . . . . 29
Assignment or Direction to Pay: Semantics or Conceptual Confusion?
Marty Ludlum & Darrell Ford . . . . . 37
Marijuana Legalization in Washington and Colorado: The Tipping Point in Policy
and Practical Implications
Eric Okojie & L.E. Enakemere . . . . . 53
A Critical Analysis of the Jurisdiction of Nigeria’s Investment and Securities
Tribunal
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V. 6, Mustang Journal of Law & Legal Studies, 2014
Call for Papers
Fifth Mustang International Academic Conference
Nashville, Tennessee on Oct. 9-11, 2014
Deadline for Submission is September 15, 2014
You are cordially invited to our upcoming conference in Music City USA, Nashville, Tennessee.
Our Fifth International Conference will provide a friendly and supportive environment for new
and established academicians an opportunity to share their research and works in progress with
members inside and outside their disciplines.
The Conference and the Journals invite submissions in all business and social science disciplines,
including accounting, anthropology, business, finance, communication, criminology, cultural
studies, economics, education, management, international business, marketing, history, political
science, psychology, sociology, social work, business ethics, and business law, in all areas
domestic and international. Pedagogy, case studies, teaching notes, book reviews, crossdisciplinary studies, and papers with student co-authors are especially welcome.
The Conference is affiliated with our six peer-reviewed journals:
The International Journal of Social Science Research,
The International Journal of Economics and Social Science,
The Mustang Journal of Management and Marketing,
The Mustang Journal of Accounting and Finance,
The Mustang Journal of Business, and
The Mustang Journal of Law and Legal Studies.
All accepted presentations will be published in the Conference Proceedings!
Top 3 Papers will receive a Distinguished Paper Award!
Students receive a discounted registration!
Conference website: http://www.MustangJournals.com
Submit an abstract for quick review to MustangJournals@aol.com
Can’t join us in Nashville? Our spring, 2015 conference will be announced soon!
2
V. 6, Mustang Journal of Law & Legal Studies, 2014
Call for Papers
The Mustang Journal of Accounting & Finance
Call for Papers: We are now accepting submissions for the Mustang Journal of Accounting & Finance.
Two issues per year, April and October. All submissions undergo a blind, peer- reviewed process. The
ISSN is 1949-1794 print and 1949-1786 online. The MJAF is listed in Cabell's Directory and Ulrich's
Directory, and is available in full text on Ebsco Host as well as on our website.
The scope of this journal is the discussion of current controversies and trends in all fields of
accounting and finance, both teaching and practice, in both the domestic and international sphere.
Papers are welcomed which use original research, add to existing theory, or discuss pedagogical
innovations developed for the classroom. Innovative research ideas which span discipline areas or which
incorporate other nations or cultures are especially encouraged. In addition, we welcome case studies,
teaching tips, book reviews, and multi-disciplinary papers.
The Editor of MJAF is Dr. David Ritter, CPA, JD, and DBA, Texas A&M University - Central Texas.
The Mustang Journal of Accounting & Finance had its premiere issue in 2011. To
submit, email your submission to MustangJournals@aol.com
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V. 6, Mustang Journal of Law & Legal Studies, 2014
Call for Papers
The Mustang Journal of Business & Ethics
Call for Papers: We are accepting submissions for the Mustang Journal of
Business & Ethics. Two issues per year, April and October. All submissions
undergo a blind, peer-reviewed process. The ISSN is 1949-1735 print and 19491727 online. The MJBE is listed in Cabell's Directory and Ulrich's Directory, and
is available in full text on Ebsco Host as well as on our website.
The scope of this journal is the discussion of current controversies and trends in
all fields of business, including accounting, finance, management, ethics,
marketing, and economics in both the domestic and international sphere. Papers
are welcomed which use original research, add to existing theory, or discuss
pedagogical innovations developed for the classroom. Innovative research ideas
which span discipline areas or which incorporate other nations or cultures are
especially encouraged. In addition, we welcome case studies, teaching tips, book
reviews, and multi-disciplinary papers.
The editor of MJBE is Dr. Brad Reid, Lipscomb University.
The Mustang Journal of Business and Ethics was started in 2009. Past authors
have been from 25 universities and 12 countries.
To submit, email your submission to MustangJournals@aol.com
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V. 6, Mustang Journal of Law & Legal Studies, 2014
Call for Papers
The Mustang Journal of Law and Legal Studies
Call for Papers: We are accepting submissions for the Mustang Journal of Law
and Legal Studies. Two issues per year, April and October. All submissions
undergo a blind, peer-reviewed process. The ISSN is 1949-1751 print and 19491743 online. The MJLL is listed in Cabell's Directory and Ulrich's Directory, and
is available in full text on Ebsco Host as well as on our website.
The scope of this journal is the discussion of current controversies and trends in
all fields of law and legal studies in business, including the domestic and
international spheres. Papers are welcomed which use original research, add to
existing theory, or discuss pedagogical innovations developed for the classroom.
Innovative research ideas which span discipline areas or which incorporate other
nations or cultures are especially encouraged. In addition, we welcome case
studies, teaching tips, book reviews, and multi-disciplinary papers.
The Editor of MJLL is Dr. Will Mawer, Dean of School of Education, Southeast
Oklahoma State University.
The Mustang Journal of Business and Ethics was started in 2009.
Past authors have been from 25 universities and 12 countries.
To submit, email your submission to MustangJournals@aol.com
5
V. 6, Mustang Journal of Law & Legal Studies, 2014
Call for Papers
The Mustang Journal of Management & Marketing
Call for Papers: We are accepting submissions for the Mustang Journal of
Management & Marketing. Two issues per year, April and October. All
submissions undergo a blind, peer-reviewed process. The ISSN is 1949-176x print
and 1949-1778 online. The MJMM is listed in Cabell's Directory and Ulrich's
Directory, and is available in full text on Ebsco Host as well as on our website.
Papers are welcomed in all areas of management and marketing which use
original research, add to existing theory, or discuss pedagogical innovations
developed for the classroom. Innovative research ideas which span discipline
areas or which incorporate other nations or cultures are especially encouraged. In
addition, we welcome case studies, teaching tips, book reviews, and multidisciplinary papers.
The interim editor of MJMM is Dr. Marty Ludlum, Legal Studies department, the
University of Central Oklahoma.
The Mustang Journal of Management & Marketing had its premiere issue in 2012.
To submit, email your submission to MustangJournals@aol.com
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V. 6, Mustang Journal of Law & Legal Studies, 2014
International Journal of Economics and Social Science
International Journal of Social Science Research
All submissions to the IJESS and IJSSR undergo a blind, peer-reviewed process. Papers are
welcomed in all areas of the social sciences, including anthropology, communication,
criminology, cultural studies, economics, education, history, human geography, political
science, psychology, sociology, and social work which use original research, add to existing
theory, or discuss pedagogical innovations developed for the classroom. Innovative research
ideas which span discipline areas or which incorporate other nations or cultures are especially
encouraged. In addition, we welcome case studies, teaching tips, book reviews, and multidisciplinary papers. The International Journal of Economics and Social Science and the
International Journal of Social Science Research had their inaugural issue in May, 2013. B o t h j
o u r n a l s r e l e a s e i s s u e s i n A p r i l a n d O c t o b e r . Submissions are
accepted now. To submit, email your submission to MustangJournals@aol.com
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V. 6, Mustang Journal of Law & Legal Studies, 2014
Distinguished Paper Awards
Mustang International Academic Conferences!
Past winners include:
Las Vegas, Spring 2014 Conference:
Thomas Liesz, Scott Metlen, University of Idaho
Using Excels Solver to Enhance Student Understanding of the Financial Planning
Process
Patrick Rishe, Webster University
Pricing Insanity at March Madness: Exploring the Causes of Secondary Price Markups
at the 2013 Final Four
Joseph Blake, Jelena Vucetic, University of Phoenix
The Influence of Financial Literacy on Faith-Based Epistemology: A Case Study of
Arizona Church Members
Dallas, Texas, Fall, 2013 Conference:
Richard Hauser, Gannon University & John Thornton, Kent State University
Dividend Policy and Corporate Valuation
Thomas Krueger, Texas A&M University - Kingsville
Paying for Acceptance: A Study of Academic Management Journals
Aimee Tiu Wu, Teachers College, Columbia University
The Balancing Act of Dr. Mommy
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V. 6, Mustang Journal of Law & Legal Studies, 2014
Distinguished Paper Awards
Mustang International Academic Conferences!
Past winners include:
Las Vegas, Spring 2013 Conference:
Joseph Groch, Florida Gulf Coast
Satisfaction: A Path to Success for the Golf Industry
Shawn Schooley, Auburn University
Appreciative Inquiry: Answering the Call of the New Public Service by Creating a
Democratic Discursive Space through Positive Storytelling wherein Direct Citizen
Participation can Flourish
Yue Yuan, University of Chicago
Examining Stock Returns through Anomalous Volume: 1966-2009
Oklahoma City, Fall, 2012 Conference:
Kusum Singh
LeMoyne-Owen College
Paper: Distance to the Border: The Impact of Own and Neighboring States’ Sales Tax
Rates on County Retail Activity
Daniel Adrian Doss, Russ Henley & David McElreath
University of West Alabama
Paper: The Arizona Border with Mexico: A Pearson Correlation Coefficient Analysis of
US Border Crossing Data versus US Reported Cybercrime Incidents
Ralph Bourret & Dana Roark
Northwest Oklahoma State University
Paper: Are Routine Retiring CEOs More Closely Monitored in their Last Year?
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V. 6, Mustang Journal of Law & Legal Studies, 2014
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V. 6, Mustang Journal of Law & Legal Studies, 2014
THE TRADING CARD EFFECT
Adam Epstein*
Central Michigan University
ABSTRACT
This article demonstrates a teaching method that I have used for the last several years and
have found to be effective particularly during the challenging final weeks of the semester. I
reward students with trading cards for answering questions currently during an unannounced
quiz to provide positive reinforcement in an engaging way. Students form teams and receive a
relevant and classic trading card that they can keep as a souvenir to the class and the course.
While many of today’s students might view sports trading cards as an antiquated hobby by a
previous generation, I have found that the majority of the students appreciate the gesture,
receiving something that day to think about other than homework. The Trading Card Effect
reinforces successful and scientific pedagogical approaches including working in teams
among an active-learning environment. I summarize my teaching method, observations and
formal assessment from a pedagogical perspective.
INTRODUCTION
The purpose of this article is to demonstrate a teaching method that I have used for the last
several years and have found to be effective. The impetus behind this exercise came from my
challenge to maintain student attention just after the post-spring break window before final
exams. My motivation was to inspire and enhance student learning1 and to motivate my own
students in my course Sports Law, having found that competing with the first week of Major
League Baseball, the National Collegiate Athletic Association (NCAA) March Madness
basketball tournament, the late-April National Football League draft, and better weather was
sometimes met with resistance and lack of classroom attendance.
After brainstorming ways in which I could keep their attention, I realized that much of the
material that I was introducing during this end of semester time-frame focused on individual
athletes who were involved in significant law cases that have impacted the sports law landscape
today. 2 I also noticed a consistent them: these same individuals, most of whom were professional
athletes, were also members of my shoebox collection of sports trading cards, a hobby of my
youth long before the world-wide-web existed. My guess was that many of these students who
grew up with Google, YouTube, Facebook, and now Twitter and Instagram, most likely did not
pursue collecting cards as a hobby.
* Special thanks for guidance, survey construction and research suggestions to Eron Drake, Ed.D., Assistant Director, and Brian
Roberts, Faculty Center for Innovative Teaching (FaCIT) at Central Michigan University in Mount Pleasant, Michigan.
1
See L. Dee Fink, Integrated Course Design, IDEA CENTER (2005), available at
http://www.theideacenter.org/sites/default/files/Idea_Paper_42.pdf (last visited Jan. 20, 2014) (stating, “The purpose of
instruction (and any other learning activity) is the promotion of student learning.”); see also Marilla D. Svinicki, Student Goal
Orientation, Motivation, and Learning, IDEA CENTER (2005), http://www.theideacenter.org/sites/default/files/Idea_Paper_41.pdf
(last visited Jan. 20, 2014) (stating, “Of the factors that influence student learning, motivation is surely one of the most potent.”).
2
Discussed further infra, text accompanying notes 12-19.
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V. 6, Mustang Journal of Law & Legal Studies, 2014
I decided to use sports trading cards to provide positive reinforcement when a question was
correctly during an unannounced quiz during the final weeks of the semester to engage the
students, and maintain their interest in an active-learning environment. 3 As a result of a correct
answer, which is always ultimately the case, the students receive a relevant and classic football,
baseball, basketball, hockey, or other trading card that they can keep as a souvenir to the class
and the course. 4 My guess was that there would be different levels of appreciation when it came
to distribution of a sports trading card, but my intent was to give something to the students
directly relevant to the subject matter at hand, at a relatively minimal cost, something easily
portable, and hopefully, at least in some cases, something that could be cherished for years after
graduation.
Thus, while many of today’s students might view sports trading cards as an antiquated hobby
by a previous generation, I have found that the majority of the students appreciate the gesture,
receiving something that day to think about other than homework. 5 I call this the Trading Card
Effect. I have found that this one-time quiz exercise, which is actually a game of sorts, reinforces
successful and scientific pedagogical approaches including working in teams among an activelearning environment. 6 This article summarizes my teaching method, observations and
assessment 7 from a pedagogical perspective. I hope that it could serve as a basis for others to
consider ways to engage students during the final push to the end of the term in their own way.
CLASS EXECUTION
As mentioned, I focus this class exercise during the post-spring break (or post-Thanksgiving
holiday) timeframe when I have found it challenging to retain student attendance and attention.
So, I surprise the students by announcing a pop-quiz at the beginning of class. 8 After the
discontent and inquisitive confusion, I assure the students that they will take the quiz together:
but it will not be graded. At this point, most students usually call for an explanation. I explain to
them that I have prepared a pop-quiz by using multiple-choice questions which will be displayed
3
See Gerry Hess, Paula Lustbader & Laurie Zimet, Principles for Enhancing Legal Education, INST. FOR LAW SCHOOL TEACHING
of LAW (2001), available at http://lawteaching.org/publications/videos/principlesforenhancing.php (last
visited Jan. 20, 2014) (establishing that effective learning environments “Promote student-faculty contact; Articulate clear, high
expectations; Use time effectively; Respect differences among students; Foster cooperation; Provide prompt feedback; and
Encourage active learning.”).
4
I work with the students to ensure that they give the correct answer out loud even if their first choice is incorrect.
5
See, e.g., Mike Tierney, Fewer are Investing Hearts and Money into Baseball Cards, N.Y. TIMES (June 30, 2013),
http://www.nytimes.com/2013/07/01/sports/baseball/fewer-are-investing-hearts-and-money-into-collecting-baseballcards.html?partner=rss&emc=rss&_r=2& (discussing the fading interest in card collecting, a once passionate hobby). I am
referencing Lily Tomlin, “I like a teacher who gives you something to take home to think about besides homework.” See
6
See Robin A. Boyle, Employing Active-Learning Techniques and Metacognition in Law School: Shifting Energy from Professor
to Student, 81 U. DET. MERCY L. REV. 1, 27 (2003) (emphasizing that in order to become better teachers, law professors should
recognize that there are a variety of student learning styles and that utilization of the traditional, Socratic method of instruction
alone “rarely reaches its intended purpose.”); see also Michael Prince, Does Active Learning Work? A Review of the Research, 93
J. ENG’G EDUC. 223-31 (2004), available at http://www4.ncsu.edu/unity/lockers/users/f/felder/public/Papers/Prince_AL.pdf
(discussing support of a variety of active learning environments including cooperative learning and problem based learning); see
also Charles C. Bonwell, Active Learning: Creating Excitement in the Classroom, ACTIVE LEARNING WORKSHOPS (2000)
available at http://www.ydae.purdue.edu/lct/hbcu/documents/Active_Learning_Creating_Excitement_in_the_Classroom.pdf.
7
See Barbara Glesner Fines, Classroom Assessment Techniques for Law School Teaching, EIGHTH ANNUAL CONF. FOR LAW SCH.
TEACHING (2001), available at http://law2.umkc.edu/faculty/profiles/GlesnerFines/cats.htm (offering, inter alia, “Frequent,
timely and focused assessment is critical to improving student learning.”)
8
I tip the students the week before in-person and via Blackboard that there will be a surprise for them and I strongly encourage
them to attend. I have observed that many suspect something “big” is going to happen such as a quiz and attendance usually
increases, at least for this particular class period.
AT GONZAGA UNIV. SCH.
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V. 6, Mustang Journal of Law & Legal Studies, 2014
by the visualizer (over-head projector). I offer that these multiple-choice questions are utilized
with the intent that the students would see the same (or very similar) questions on the final exam.
In this way, I emphasize the importance of their knowing the question and answer for now and
for future reference such as on the final exam. 9
I have already prepared on small bits of paper a single number ranging from #1-#40
(assuming a class of 40 students). These numbers are placed in a baseball hat or bucket that is
passed around the room. Each student reaches in and pulls out one of the numbers. I tell the
students to keep their number confidential, at least for the moment. Meanwhile, I have already
written on the whiteboard the numbers #1-#40 as the numbers are being passed around. As soon
as each student has drawn a number, I select one student to start this exercise and to pick three
other numbers from the board. I assure the student that there is no right or wrong selection. The
student (for example #17) chooses #3, #18 and #29 from the whiteboard. I then ask the students
to reveal who possesses that number. Once discovered, I erase these numbers from the board and
the four students become a “team” to answer one of ten multiple-choice questions that will be
answered by the class member-teams on that day. The following represents a basic yet typical
question from the pop quiz:
Associating oneself with a major tournament such as the Olympics, FIFA World Cup, Super
Bowl, or NCAA March Madness basketball tournament, when one has not paid the fee to be
associated with that event, is known as what type of marketing?
A.
B.
C.
D.
Sneaky
Silly
Ambush
Surprise
I reveal the first multiple-choice question on the visualizer (i.e., the modern version of the
overhead projector), and this team of students to work together to select their “final answer.” 10 I
encourage them to discuss the answer among themselves. Once the question is answered
correctly-hopefully on the first try-each member of that first team of students is given the
opportunity to reach into small plastic bucket and choose one trading card. 11 When the card is
selected (blindly), I ask the student to show and announce to the class the name of the person on
the card and to tell me why and how that person was relevant during the study of the material
that semester.
9
It would be disingenuous if I did not therefore utilize the same or similar questions, albeit limited in number, on the final exam
that I use during this exercise.
10
Of course, I am referencing one of the catchphrases from the television show Who Wants to be a Millionaire. See Carrie
Grosvenor, Top Game Show Catch Phrases, ABOUT.COM (2014), available at
http://gameshows.about.com/od/quizzestrivia/tp/Top-Game-Show-Catch-Phrases.htm (referencing popular catchphrases from
television game shows and noting that both “I’d like to phone a friend” and “Is that your final answer” both emerged from this
show). I sometimes ask my students if they would like to phone a friend as well. More recently I have found that it would be
more appropriate if I ask my students, “Would you like to text a friend?”
11
If the students do not answer correctly on the first try, I work with them to get the correct answer and I will ask other students
to assist if necessary. I have found that many students are eager to join the discussion when this happens even though they are not
on the team-at-hand.
13
V. 6, Mustang Journal of Law & Legal Studies, 2014
For example, after reaching into the hat, student #17 reads the card and says, “Curt Flood” to
the class. 12 I assure the student that this is a great baseball card selection and explains how Curt
Flood’s federal antitrust lawsuit and ultimate Supreme Court decision in 1972 paved the way for
modern free agency in professional sports leagues. 13 Other cards might include, for example,
Spencer Haywood (NBA), 14 John Mackey (NFL), 15 Reggie White (NFL), 16 and other
professional athletes, 17 incidents 18 or issues 19 which I have demonstrated the relevancy to my
course. I then randomly choose another student who selects numbers from the whiteboard to
form a team and repeat the process again. 20 I inform the students that they will likely see these
questions again, and most take notes during the exercise accordingly. As the exercise proceeds,
some students have asked me, “Did you pay for these out of your own pocket?” I assure the
students the cards were purchased by me. 21 Some have asked me, “What’s the catch?”
When everyone has a card and the session is over, I announce that they made trade among
themselves or trade for remaining cards in the bucket with me. I have found that many students
ask for a trade as soon as the class ends. By engaging students this way, I strive to reinforce
12
I am simply offering a hypothetical example.
See Flood v. Kuhn, 407 U.S. 258, 282 (1972) (referencing Federal Baseball Club of Baltimore, Inc. v. Nat’l League of
Professional Baseball Clubs, 259 U.S. 200 (1922)). The Washington Senators was the team that MLB player Curt Flood
eventually played for after refusing to be traded to the Philadelphia Phillies. Flood sat out the 1970 season and was traded to the
Senators the next year, though his career ended when he retired after playing only 13 games for the Senators in 1971. This led to
the CURT FLOOD ACT OF 1998, 15 U.S.C. § 26b (2013);
14
Haywood v. Nat’l Basketball Ass’n, 389 F. Supp. 867, 401 U.S. 1204 (1971), Denver Rockets v. All-Pro Mgmt., Inc., 325 F.
Supp. 1049 (C.D. Cal. 1971) (offering ultimately that professional basketball does not enjoy an exemption from antitrust laws);
15
Mackey v. Nat’l Football League, 543 F.2d 606 (8th Cir. 1976) (holding that the Rozelle Rule, named after the league
commissioner, was a violation of antitrust law).
16
White v. Nat’l Football League, 822 F. Supp. 1389, 1394 (D. Minn. 1993), motion for final approval of settlement granted, 836
F. Supp. 1458 (D. Minn. 1993), aff’d, 41 F.3d 402 (8th Cir. 1994). As a result of the White litigation, the players received free
agency and the league received a salary cap. See Chris Deubert, Glenn M. Wong & John Howe, All Four Quarters: A
Retrospective and Analysis of the 2011 Collective Bargaining Process and Agreement in the National Football League, 19
UCLA ENT. L. REV. 1, 12 (2012) (providing that the players gained the right to unrestricted free agency in exchange for a hard
salary cap by the NFL); see also Adam Epstein, Missouri Sports Law, 20 JEFFREY S. MOORAD SPORTS L. J. 495, 510-11 (2013).
17
See Clarett v. Nat’l Football League, 369 F.3d 124 (2d Cir. 2004) [Clarett II], cert. denied, 125 S.Ct. 1728 (2005); see also
Adam Epstein, The Empire Strikes Back: NFL Cuts Clarett, Sacks Scheindlin, 22 ENT. & SPORTS LAW 12-17 (2005) (discussing
the case involving football player Maurice Clarett who sued in order to be eligible for the NFL draft even though it apparently
had a rule that required him to be three full seasons removed from his high school graduation. Clarett won at the district court
level, but the Second Circuit Court of Appeals vacated the district court’s order that he be declared eligible for the 2004 NFL
draft. Clarett was ultimately drafted in the third round by the Denver Broncos in the 2005 draft, but he did not make the team; see
also McNeil v. NFL, 790 F. Supp. 871 (D. Minn. 1992). Freeman McNeil (New York Jets) and seven others, as former members
of a decertified union, sued alleging that the NFL’s Plan B free agency violated section 1 of the Sherman Act. Plan B had been
implemented in 1989 and allowed clubs to protect the rights to 37 players from entering the free agent market. The jury found
that NFL compensation rules were more restrictive than reasonably necessary to achieve the objective of establishing or
maintaining competitive balance, causing economic harm to the players).
18
Another useful example is the now-infamous Sausage-gate incident of 2003. In this incident, Pittsburgh Pirates first baseman
Randall Simon was cited for disorderly conduct, fined $2,000 by MLB and $432 for disorderly conduct by the local sheriff’s
office for knocking the Italian Sausage character to the ground during the Milwaukee Brewers’ famous sausage race. See Adam
Epstein, Teaching Torts with Sports, 28 J. LEGAL STUD. EDUC. 117, 132-33 (2011).
19
See, e.g., Harlem Wizards Entm’t Basketball, Inc. v. NBA Props., 952 F. Supp. 1084, 1088-89 (D.N.J. 1997) (summarizing
history of the professional NBA basketball team nickname dispute between the Harlem Wizards and the Washington Wizards);
Pro-Football, Inc. v. Harjo, 415 F.3d 44 (D.C. Cir. 2005) (discussing the case and other potential “immoral, deceptive, or
scandalous” matters involving trademarks and Native American nicknames and connotations with regard to ethnic-based mascot
issues).
20
If there are not enough students in the class, I will actually go to what I call “Round 2” and keep the same teams and give them
the opportunity to select a second additional card as well.
21
I purchase them on eBay. I recognize that not all professors may have the means to spend freely on eBay for items, but
generally my purchases do not exceed $60.00 for the semester.
13
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V. 6, Mustang Journal of Law & Legal Studies, 2014
learning and interest in my course. At the very least, I hope it encourages class attendance by
those less motivated.
I have observed that students follow-up with many “thanks,” while others will leave the class
bewildered that something is being given to them without a fee, though pleasantly surprised. A
few students have told me much the card is worth on eBay. Others respectfully demonstrate no
interest in the cards and gave them away or back to me.
UNIVERSITY ASSISTANCE
I decided to contact the university’s teaching and learning center (TLC) for advice as to
establish the legitimacy of my efforts pedagogically, to explore the relevant literature, and to
conduct a survey among my students to assess its efficacy. 22 Since I am not a trained teacher, per
se, I wondered whether or not there was a science behind my efforts and how I could provide
other law professors-whether in colleges of business, law schools or otherwise-a summary of
what I do to so that it might inspire new and refreshing ways to deliver legal education in their
own class.
I was encouraged by our TLC to conduct a formal-albeit brief-study involving an anonymous
survey of my students who participated in the activity. In this way, I might have more concrete
evidence to demonstrate whether or not The Trading Card Effect was actually effective.
However, since human subjects are involved, the university teaching center cautioned that
consideration must be given to file a protocol and receive Institutional Review Board (IRB)
approval first.
INSTITUTIONAL REVIEW BOARD
Since my students are involved in this exercise and I intended on formally surveying (and
publishing) the effectiveness of my efforts, I was cautioned by the TLC that any time human
subjects are involved in the research, it would be appropriate to seek approval of from the
university’s Institutional Review Board (IRB) first. Having heard of the IRB before in the most
general of terms, but never thinking I would actually need to use it, I enrolled in the Basic
Course for Training in Human Subjects Research sponsored by the University of Miami’s
Collaborative Institutional Training Initiative (CITI). 23 This involved hours’ worth of reading
and taking quizzes in order to receive a positive Curriculum Completion Report. 24 I took the
quizzes over two days and passed successfully. 25 Surprised, I received an email response which
determined that my “…project does not meet the definition of human subject research under the
purview of the IRB according to federal regulations.” 26 Thus, I was encouraged to proceed freely
22
The impetus behind the survey was by Dr. Eron Drake, Assistant Director of FaCIT. I had not considered conducting my own,
in-class survey prior to discussion with her and Brian Roberts. Dr. Drake worked with me to conduct a survey design based upon
her formal training and experience doing the same for others at our university.
23
See COLLABORATIVE INSTITUTIONAL TRAINING INITIATIVE, available at www.citiprogram.org (last visited Jan. 20, 2014).
24
Particular emphasis was given to Office of the Secretary, Dept. of Health, Education and Welfare, THE BELMONT REPORT (Apr.
18, 1979), available at http://www.hhs.gov/ohrp/policy/belmont.html (last visited Jan. 20, 2014) (emphasizing , inter alia, that
when conducting research involving human subjects that there are boundaries between practice and research, that informed
consent is vital, and that there are three basic ethical principles including Respect for Persons, Beneficence [defined as an
obligation to 1) do not harm and 2) maximize possible benefits and minimize possible harms], and Justice.). Today the Dept. of
Health, Education and Welfare is known as the United States Dept. of Health & Human Services.
25
Reference ID: 11810318.
26
Memorandum regarding The Trading Card Effect, Reference #546862-1, from Central Michigan University Institutional
Review Board 1 to Adam Epstein, J.D., via email dated Dec. 8, 2013, on file with the author. The TLC informed me that it was
15
V. 6, Mustang Journal of Law & Legal Studies, 2014
with this activity since my goal was to determine the degree to which my students enjoyed (or
did not enjoy) The Trading Card Effect exercise to determine whether they felt it added value to
their learning experience...” in my class. 27
Accordingly, I invited two members from the TLC to attend my class and I explained to my
students that these attendees were there to observe only. 28 Unbeknownst to the students, I had
also agreed with the TLC members that we would conduct our own anonymous survey at the end
of the semester, in addition to the standard anonymous course evaluations. 29 Everything went
according to plan, although the class size that semester was smaller than usual having only 14
students. A few weeks later, I stepped out of the room as the TLC Assistant Director conducted
the carefully crafted anonymous survey at the beginning of the last day of class. 30
PEDAGOGY AND BEST PRACTICES
I was directed to various pedagogical research by the TLC. After exploring the various
articles, studies and reports, I realized that The Trading Card Effect was in line with many
effective teaching techniques though I was previously unaware of the vernacular. For example, I
was unaware that there was literature related to the use of games in teaching, more formally
known as gaming in education. 31 However, the most significant law-related pedagogical
production, in my opinion, that I explored is BEST PRACTICES FOR LEGAL EDUCATION by Roy
Stuckey and others. 32 This comprehensive 2007 production is available online and focuses
primarily on best practices for legal education at the law school level, espousing seven categories
of best practices. 33 After reading the production it became apparent that I was utilizing many of
the best practices without knowing it. 34
important to seek IRB approval since human subjects were involved, in this case my own students, so as to avoid an appearance
that conducting such research would affect their grade in any way (which it did not). Even though it was determined that what I
was doing was not deemed to be human research since I was seeking student opinions, it was quite a relief to receive the green
light to proceed.
27
Id.
28
I also invited a faculty member from my department to conduct a peer evaluation of me as well at the same time.
29
I conducted the university’s standard Student Opinion Survey (S.O.S.) the last week of class, but not last day of class. For the
fall semester, 2013 Individual Opinion Survey, students responded to the question, “What are some specific things your instructor
does that help you learn in this course?” with “Enjoyed the final exam review w/ [sic] trading cards.”; “Played a study game in
class.”; “Use of examples and interacting with the class.; Activities like the card game was fun.”; and “Trading card game was
good.” (on file with the author).
30
Dr. Drake provided a survey she crafted and then we worked together to fashion it for the class and the exercise.
31
See generally Katie Larsen McClarty, Aline Orr, Peter M. Frey, Robert P. Dolan, Victoria Vassileva & Aarron McVay, A
Literature Review of Gaming in Education, PEARSON (June, 2012), available at http://researchnetwork.pearson.com/wpcontent/uploads/Lit_Review_of_Gaming_in_Education.pdf; see also Laura A. Sharp, Unexpected Learning Opportunities
Through Games, J. INSTRUCTIONAL RESEARCH, available at http://www.gcu.edu/Academics/Journal-of-Instructional-Research/Unexpected-Learning-Opportunities-Through-Games-.php (last visited Jan. 20, 2014).
32
Roy Stuckey & Others, BEST P RACTICES FOR LEGAL EDUC. (2007), available at
http://www.cleaweb.org/Resources/Documents/best_practices-full.pdf (offering, on p. 27, “The Best Practices Project was
undertaken in the spirit of fixing our own house before reform is imposed from the outside. Hopefully, the product of our work
will help law schools broaden their educational goals, improve the preparation of students for practice, and become more
accountable for their products and more consumer oriented in their educational practices.”); see also Christine N. Coughlin, Lisa
T. McElroy & Sandy C. Patrick, See One, Do One, Teach One: Dissecting the Use of Medical Education’s Signature Pedagogy
in the Law School Curriculum, 26 GA. ST. U. L. REV. 361 (2010) (referencing BEST P RACTICES FOR LEGAL EDUC. throughout).
33
Stuckey, supra note 32, at 5 (“We divide our discussion of best practices into seven categories: 1) setting goals, 2) organizing
the program of instruction, 3) delivering instruction, generally, 4) conducting experiential courses, 5) employing non-experiential
methods of instruction, 6) assessing student learning, and 7) evaluating the success of the program of instruction.”).
34
See, e.g., Joseph R. Codde, Applying the Seven Principles for Good Practice in Undergraduate Education, MICHIGAN STATE
UNIV. (Aug. 26, 2006), available at https://www.msu.edu/user/coddejos/seven.htm (emphasizing undergraduate education); see
16
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For example, in Chapter 4: Best Practices for Delivering Instruction, the chapter is divided
up into several areas including: A. Know Your Subjects Extremely Well; 35 B. Continuously Strive
to Improve Your Teaching Skills; 36 and C. Create and Maintain Effective and Healthy Teaching
and Learning Environments. 37 Having reached out to the TLC coupled with my interest in
developing a new and effective way of presenting the material, I feel that I complied with the
spirit of these principles. 38 By using trading cards, I tried to make students feel welcome and
included, another tenet of these best practices. 39
There are various other principles from this same work that I incorporated including
collaboration and cooperative (i.e., team) learning, 40 engaging in active learning, 41 taking delight
in teaching, 42 brain-based learning, 43 and enhancing learning with technology, 44 just to name a
also generally, Ernest L. Boyer, SCHOLARSHIP RECONSIDERED: P RIORITIES OF THE P ROFESSORATE 23-25 (1990), available at
http://depts.washington.edu/gs630/Spring/Boyer.pdf (discussing the “scholarship of teaching”).
35
Stuckey, supra note 32, at 76-77 (“Principle: The teachers know their subjects extremely well. It also states, however: The
most knowledgeable teachers, however, are not necessarily excellent teachers. [The best teachers], unlike so many others, have
used their knowledge to develop techniques for grasping fundamental principles and organizing concepts that others can use to
begin building their own understanding and abilities. They know how to simplify and clarify complex subjects, to cut to the heart
of the matter with provocative insights, and they can think about their own thinking in the discipline, analyzing its nature and
evaluating its quality. That capacity to think metacognitively drives much of what we observed in the best teaching.” citing Ken
Bain, WHAT THE BEST COLLEGE TEACHERS DO 15,16 (2004). However, it then goes on to say, “So, although one cannot become a
great teacher without knowing the subject extremely well, more than knowledge is required to excel.”).
36
Id. at 76.
37
Id. at 80. I only focus on the first three, but other areas in this chapter include D. Explain Goals and Methods to Students; E.
Choose Teaching Methods That Most Effectively and Efficiently Achieve Desired Outcomes; F. Use Multiple Methods of
Instruction and Reduce Reliance on the Socratic Dialogue and Case Method.; and G. Employ Context-Based Education
Throughout the Program of Instruction.
38
Id. at 81 (“In the end, therefore, the single most important keys to effective teaching are a teacher’s desire to be an
excellent teacher and a willingness to work hard at becoming one.”).
39
Id. at 89.
40
Id. at 88. (“Principle: The teachers encourage collaboration among students and teachers.” “An extensive body of research
documents the benefits of cooperative learning methods. Over the past 100 years, more than 600 studies have demonstrated that
cooperative learning produces higher achievement, more positive relationships among students, and psychologically healthier
students than competitive or individualistic learning.” quoting a reference to Gerald F. Hess, Heads and Hearts: The Teaching
and Learning Environment in Law School, 52 J. LEGAL EDUC. 75, 94 (2002) and (citing David W. Johnson et al., COOPERATIVE
LEARNING: INCREASING COLLEGE FACULTY INSTRUCTIONAL P RODUCTIVITY 1 (1991); Vernellia R. Randall, Increasing Retention
and Improving Performance: Practical Advice on Using Cooperative Learning in Law Schools, 16 T. M. COOLEY L. REV. 201,
218 (1999)).
41
Id. at 91, citing Hess at 101, “Students learn better when they are actively engaged in the learning process.” The work also
states “It has long been known that active methods of learning are more effective than passive ones. Indeed, conference papers
demonstrating that fact no longer reach the research journals.” citing DONALD A. BLIGH, WHAT’S THE USE OF LECTURES? 254
(2000).
42
Id. at 92, citing Hess at 104, “The teacher’s attitude, enthusiasm, and passion are main ingredients of an effective teaching and
learning environment. Students regularly identify teacher enthusiasm as the most important component
of effective instruction. In Lowman’s model of exemplary teaching, the most common descriptor of excellent
teachers from students and other faculty was enthusiastic. A teacher’s passion for both teaching and the
subject is a critical factor in student motivation.”
43
See Glenn Omatsu, Teaching for Social Change: Learning How to Afflict the Comfortable and Comfort the Afflicted, 32
LOYOLA L.A. L. REV. 791, 795 (1999) (referencing brain-based learning and stating, “Researchers have found that people learn
best in situations of social interaction, or cooperative learning, and that students learn the most when situations are structured to
promote both sensory and emotional stimulation - which leads to the discovery of new knowledge - rather than through
memorization and repetition.”); see also Coughlin et al., supra note 32, at 414 (“…students learn from repetition, reward and
punishment (characteristic of behaviorism); brain-based learning, sorting, encoding, and retention of material from short-term to
long-term memory (characteristic of cognitivism); and, most importantly, the ability to apply learned concepts and ideas to new
situations (deriving from both cognitivism and constructivism.”).
44
Stuckey, supra note 32, at 117, “If technology is not the future of legal education, it is at least part of the future.” (citing
various articles that delve into the merits and specific details of using technology in law schools to include Kristin B. Gerdy, Jane
H. Wise & Alison Craig, Expanding Our Classroom Walls: Enhancing Teaching and Learning Through Technology, 11LEGAL
WRITING 263, 263-66 (2005); David M. Becker, Some Concerns About the Future of Legal Education, 51 J. LEGAL EDUC. 469,
17
V. 6, Mustang Journal of Law & Legal Studies, 2014
few. In my opinion, BEST PRACTICES FOR LEGAL EDUCATION is for anyone who looks to improve
their teaching and desires to be a better teacher of law at any level. 45 It certainly gave me
reassurance that The Trading Card Effect was in line with many pedagogical principles though I
may not have been able to elucidate these principles previously otherwise. 46
ASSESSMENT
I worked closely with the Assistant Director of the TLC to develop a survey to assess The
Trading Card Effect, which I discovered later was also consistent with Chapter 7: Best Practices
for Assessing Student Learning and in particular conducting a formative assessment during the
semester. 47 With regard to formative assessments,
“Formative assessments also help teachers know whether their coverage of a topic is sufficient
or whether they need to review the material again or present it in a different manner.
Educational experts advocate assessing student learning throughout the learning process and
afterwards for the purpose of determining how to improve instruction and whether to continue
or discard it. “If it becomes apparent that all or most of the students fail to comprehend a
particular area of a course or a particular point made by the professor, this data indicates that
the problem may be attributable to the professor.” 48
477-85 (2001); Gerald F. Hess et al., Seven Principles for Good Practice in Legal Education, 49 J. LEGAL EDUC. 367 (1999)
(developing seven principles for good practice in legal education, which he modeled after seven principles for good practice in
undergraduate learning, offering that good practice in legal education: encourages student-faculty contact; encourages
cooperation among students; encourages active learning; gives prompt feedback; emphasizes time on task; communicates high
expectations; and respects diverse talents and ways of learning.); see also Paul L. Caron & Rafael Gely, Taking Back the Law
School Classroom: Using Technology to Foster Active Student Learning, 54 J. LEGAL EDUC. 551 (2004) (discussing application
of technology in the classroom in the context of the seven principles).
45
See also Barbara J. Millis, Becoming an Effective Teacher Using Cooperative Learning: A Personal Odyssey, P EER REVIEW
(Spring 2009), available at http://www.aacu.org/peerreview/pr-sp09/pr-sp09_millis.cfm (“Effective teachers also teach
intentionally, reflecting on their teaching and making changes. Many of them deliberately sequence assignments and activities to
build for deeper learning even if they are unfamiliar with the specific research literature. They plan carefully to design structured
assignments. Students understand what is expected of them. And, often because they are motivated by an inspired, inspiring
teacher, they strive to meet or exceed those expectations. They are often motivated by a caring teacher. Teaching is a science
more than an “art.” A few “natural” teachers seem to develop expertise effortlessly. Most of us labor in the teaching vineyards
because we care about our teaching, about our students, and about our students’ learning and professional growth. Sometimes we
labor far longer than we should. Learning to teach effectively is typically an evolving process. Caring teachers grow over time,
aided by self-reflection, reading, workshops, peer mentors, and faculty developers. Even in these “tough economic times,”
teaching centers, with some lamentable exceptions, continue to flourish. They help caring teachers grow and develop; they play
instrumental roles in helping institutions commit to student learning, and because effective teachers help produce better educated
students, ultimately, they serve the needs of a democratic society.”).
46
I was unaware that utilizing teams as a successful teaching strategy is known as cooperative learning. See generally Clifford S.
Zimmerman, “Thinking Beyond My Own Interpretation:” Reflections on Collaborative and Cooperative Learning Theory in the
Law School Curriculum, 31 ARIZ. ST. L.J. 957 (1999).
47
Stuckey, supra note 32, at 191, (stating, “It is important to know what we will do with the information our assessments will
produce. The purpose of an assessment can be formative, summative, or both. Formative assessments are used to provide
feedback to students and faculty. Their purpose is purely educational, and while they may be scored, they are not used to assign
grades or rank students. A summative assessment is one that is used for assigning a grade or otherwise indicating a student’s level
of achievement.”… “It is important to know what we will do with the information our assessments will produce. The purpose of
an assessment can be formative, summative, or both. Formative assessments are used to provide feedback to students and faculty.
Their purpose is purely educational, and while they may be scored, they are not used to assign grades or rank students. A
summative assessment is one that is used for assigning a grade or otherwise indicating a student’s level of
achievement.”…“Providing formative feedback to students ought to be the primary form of assessment in legal education.”).
48
Id. at 192, quoting-apparently-Gerald F. Hess & Steven Friedland, TECHNIQUES FOR TEACHING LAW 286 (1999).
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The Assistant Director collected the anonymous data and provided me with results via email but,
as agreed, only after I submitted my final grades at the end of the semester so as to avoid any
appearance that the data might influence a student’s grade.
When asked to rate the importance of various activities throughout the semester relative to the
students ability to learn and retain essential course concepts, 33.3% rated it extremely important,
33.3% rated it very important, and 33.3% rated it moderately important. 49 When asked to
indicate the extent to which the students agreed or disagreed with various teaching methods,
55.6% strongly agreed that “The Trading Card activity helped me to learn course content,” while
44.4% agreed. 50 Student comments specifically with regard to the effectiveness of the Trading
Card exercise as a learning experience in the course included:
1. Clicker game/Trading Card game gave new perspective to the material. Cases could be
tough to follow along with. Lectures/PowerPoint Notes were extremely helpful;
2. All of the names were a little bit overwhelming. Going over the questions is really
valuable;
3. It was a fun way to stay engaged the whole class period;
4. It was a creative way to remember material, wish we could’ve had more time-it felt
rushed;
5. Different way of learning so it made me remember more information;
6. High energy kept the class period upbeat and fun;
7. It was a great exercise! Proved I knew more than I thought! Great way to keep the
material fresh in our minds!;
8. Help remember some of the key players and individuals involved in the ever changing
world of sports law.
I was pleased to receive the positive feedback. With the help of the TLC, I was able to assess
students in an anonymous way which confirmed that my exercise works for me.
Finally, I do recognize the limitation of the application of using trading cards as a form of
positive reinforcement of concepts and individuals. Using professional athletes’ images and
cards might not work for you. I do not propose specific suggestions for how one might find an
innovative method of teaching for your class as it certainly depends upon your interests, the
subject matter, and so on. I wanted to try something new to keep student interest as the
semester’s end was in sight.
Still, The Trading Card Effect works for me and I will continue to use it as long as I feel it is
effective (and fun) in this class. Upon reflection, I certainly learned a lot about pedagogy in
general and the science behind effective teaching and methods. Reaching out to the university’s
TLC for the first time also enabled me to operate outside my comfort zone, seek IRB approval
(something I thought was just for the sciences) and work with individuals who have had formal
training in teaching methods, course design and development. I think the act of giving students
49
The six activities polled were Lectures, Cases, Trading Card Activity, Writing Assignment, Clickers (Personal Response
Systems), and Tests. The possible responses were Extremely important, Very important, Moderately important, Slightly
important, and Not at all important. The sample size was small (9) but only 14 students were enrolled for the course that
semester.
50
The rating choices included, “1. The lectures helped me to learn course content; 2. The course materials (PowerPoints, notes,
etc.) helped me to learn course content; 3. The course information posted to the Blackboard site helped me prepare for this
course; 4. The Case Quiz did NOT help me to learn course content; 5. The Trading Card activity helped me to learn course
content; 6. The Writing Assignment did NOT help me to learn course content; and 7. The Guest Speakers helped me to
understand course content.” Possible responses were Strongly Agree, Agree, Disagree, Strongly Disagree.
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something tangible that they can remember from your course could have an impressionable,
positive impact for that student on that day and beyond.
CONCLUSION
I have found that utilizing sports trading cards is a fun and engaging way to bridge a hobby
from yesteryear to connect with today’s students. I give my students a tangible time on that day
to take with them, and I hope that the non-recorded, pop-quiz exercise creates a memorable
learning experience over evaluation. I am confident that this exercise is consistent with
pedagogical research and other teaching suggestions. The value and assistance of the university’s
teaching and learning center cannot be underestimated.
Shortly after class or the semester, I hope that students who believed that there was still a
“catch” might return to their ubiquitous, virtual world and realize that they were able to
appreciate the class in retrospect with the receipt of that tangible sports trading card. I have
found that The Trading Card Effect possibly impacts me more than my students, but at least it
represents a way to connect with students without having to use Wi-Fi.
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21
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ASSIGNMENT OR DIRECTION TO PAY: SEMANTICS OR CONCEPTUAL
CONFUSION?
Daniel P. Fernandez, J.D.
Florida Gulf Coast University
ABSTRACT
It is not unusual for related legal terms to be confused. The
concepts of “assignment” and “direction to pay” are among those
that are sometimes misused. However, the law is clear with regard
to the distinctions. In an assignment the assignee steps into the
shoes of the assignor and may enforce in his own name the
contractual right against the original obligor. And, the assignor
retains no rights to enforce the contract right after it has been
assigned.
In contrast, a direction to pay is essentially the
appointment of an agent to carry out a task. It does not confer any
rights to that third party. Accordingly, this article will begin with
some basic contract law principles and then define and contrast
the concepts of “assignment” and “direction to pay,” including
the proper use (and misuse) of these terms, hopefully resolving the
confusion.
INTRODUCTION
Sometimes legal concepts are confused and misused.
The terms “assignment” and
“direction to pay” are good examples. An assignment transfers rights. 1 On the other hand, a
“direction to pay” is something in the nature of a limited power of attorney, appointing an agent
and serving as an administrative convenience. 2 Yet, sometimes these concepts are confused and
used interchangeably or inappropriately For instance, if an insured instructs its insurer to pay a
service provider directly, is that an assignment of rights or a direction to pay? One Business Law
textbook provides this example citing the Restatement (Second) Contracts: “…Eve delivers to
Harold a writing addressed to Mary stating, ‘Pay Harold for his own use $1,000 out of the
amount you owe me.’ This writing is a legally sufficient assignment. Restatement, Section 325,
Illustration 1.” 3 But is this correct? Possibly, but it will depend on certain other factors. For
example, Comment a., which precedes Illustration 1, provides in part: “An order communicated
only to the debtor is not an assignment unless there is some additional manifestation of intention
1
See Joseph M. Perillo, Calamari and Perillo on Contracts § 18.1 (5th ed. 2003); see also Restatement (Second)
Contracts §317(1).
2
See, e.g., Allianz Life Ins. Co. of N. America v. Riedl, 444 S.E. 2d 736 (Ga. 1993); Kelly Health Care v. Prudential
Ins. Co., 309 S.E.2d 305 (Va. 1983).
3
Richard A. Mann & Barry S. Roberts, Smith and Roberson’s Business Law 289 (15th ed. 2012).
22
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to assign.” 4 Interestingly, Restatement Section 325 is entitled “Order as Assignment,” alluding
that an order in certain situations may be considered an assignment.
However, perhaps Section 317, entitled “Assignment of a Right,” is a better starting point
for analysis of these terms. Section 317(1) states: “An assignment of a right is a manifestation of
the assignor’s intention to transfer it by virtue of which the assignor’s right to performance by
the obligor is extinguished in whole or in part and the assignee acquires a right to such
performance.” And, Illustration 1, of Section 317 explains: “A has a right to $100 against B. A
assigns his right to C. A’s right is thereby extinguished, and C acquires a right against B to
receive $100.” Note, that in this example, A’s right is extinguished. Thus, for an effective
assignment, more is required than simply the words purporting to assign, at a minimum, a
manifestation of intention and extinguishment of the assignor’s rights. 5 And, what appears to
be an assignment may be actually a direction to pay. Accordingly, this article will begin with
some basic contract law principles and then define and contrast the concepts of “assignment” and
“direction to pay,” including the proper use (and misuse) of these terms, hopefully to resolve the
confusion.
ASSIGNMENT OF RIGHTS
Assignment of Rights. Contracts create rights and duties. 6 For example, John promises to sell
Mary a computer and Mary promises to pay John $500 in ten monthly installments.
John’s
right under the contract is to receive payment from Mary. Conversely, his duty is to deliver the
computer to Mary. Mary’s right under the contract is to obtain the computer from John, and her
duty is to pay John. As a general rule, rights may be assigned and duties may be delegated. 7 An
assignment of rights occurs when there is a voluntary transfer of rights under the contract. 8 Using
the same example, if John assigned to George, for $400 cash, his right of ten monthly payments
from Mary, John would be the assignor, George would be the assignee now having the right to
receive payment from Mary.
Delegation of Duties. In contrast to assignment of rights, delegation occurs when one party
transfers his duties or liabilities under a contract to another, i.e., a third party. 9 For instance,
assume that John transfers to Adam, a third party, his duty to deliver the car to Mary. In this
scenario, John has delegated his duty to Adam, and Adam would be obligated to deliver the car
to Mary. 10 However, it should be noted that in delegation of a duty, the delegator also retains the
duty to perform until performance is completed by the delegate.
Third Party Perspective. It is also useful to distinguish third party beneficiaries. While a
contract need only involve two parties, the concepts of “assignment” and “delegation” concern
third parties, “…who are not parties to the contract but have a right to, or an obligation for, its
performance.” 11 These rights and duties result either from an assignment of rights or a
4
Restatement (Second) Contracts §325, Comment a.
See, e.g., Edmunds v. CBC Enterprises, Inc., 544 S.E.2d 324 (Va. 2001).
6
Smith and Roberson’s Business Law 288.
7
Id.; See also, Calamari and Perillo § 18.1.
8
Id.; See also Restatement (Second) Contracts §318.
9
Id.
10
See Restatement (Second) Contracts §318(3).
11
Richard A. Mann & Barry S. Roberts, Smith and Roberson’s Business Law 288 (15th ed. 2012).
5
23
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delegation of duties. 12 And, the rights of the third party assignee arise subsequent to the
execution of the contract in contrast to third party beneficiaries whose rights come about at the
time of contract formation. 13 A key distinction between a third party beneficiary and an assignee
is in the origin of the third party’s rights. 14 The rights of a third party beneficiary are created by
the contract between the contracting parties. 15 Whereas the rights of an assignee arise only
when a party having rights under an existing contract transfers those rights to an assignee. 16 A
third party is an intended beneficiary of a contract between two other parties only if a direct and
primary object of the contracting parties was to confer a benefit on the third party. 17 If the
contracting parties had no such purpose in mind, any benefit from the contract reaped by the
third party is merely “incidental,” and the third party has no legally enforceable right in the
subject matter of the contract. 18 Thus, a third party is, “… an intended beneficiary, and thus able
to sue on a contract, only if the parties to the contract intended to primarily and directly benefit
the third party.” 19
The Shoes of the Assignor. With a few exceptions, it is the common law that primarily
governs assignments. 20 A traditional assignment of rights is a situation where the assignee
“steps into the shoes of the assignor.” 21 An assignment is the “…voluntary transfer to a third
party of the rights arising from a contract.” 22 It can also be said that it is "…a transfer or setting
over of property, or of some right or interest therein, from one person to another….. Essentially,
it is the voluntary act of transferring an interest…. Importantly, once transferred, the assignor no
longer has a right to enforce the interest because the assignee has obtained all rights to the thing
assigned.’" 23 An assignment is a transfer of all the interests and rights to the thing assigned. 24
12
Id.
Id.
14
Calamari and Perillo § 18.1.
15
Id.
16
Id.; see also Foundation Health v. Westside EKG Assocs., 944 So.2d 188, 195 (Fla. 2006) holding that to establish
third-party beneficiary status, the party must prove four elements: “(1) existence of a contract; (2) the clear or
manifest intent of the contracting parties that the contract primarily and directly benefit the third party; (3) breach of
the contract by a contracting party; and (4) damages to the third party resulting from the breach.” (Internal
quotations omitted); and Maryland Casualty Co. v. State Dep’t of Gen. Servs., 489 So.2d 57, 58 (Fla. 2d DCA
1986), rev. dismissed, 494 So.2d 1151 (Fla. 1986), where the court held that, “…a third party is an intended
beneficiary, and thus able to sue on a contract, only if the parties to the contract intended to primarily and directly
benefit the third party.”; but see, Henderson Investment Corp. v. International Fidelity Ins. Co., 575 So. 2d 770 (Fla.
th
5 DCA 1991), distinguishing the requirement of “intended beneficiary” in the context of a surety.
17
See Restatement (Second) Contracts § 302: "… a beneficiary of a promise is an intended beneficiary if recognition
of a right to performance in the beneficiary is appropriate to effectuate the intention of the parties and ... the
circumstances indicate that the promisee intends to give the beneficiary the benefit of the promised performance."
18
See Thompson v. Commercial Union Ins. Co. of N.Y., 250 So.2d 259, 262 (Fla. 1971); see also Restatement
(Second) Contracts § 302(2) (1981).
19
Maryland Casualty Co. v State Dep’t of Gen. Servs., 489 So.2d 57, 58 (Fla. 2d DCA), rev. dismissed, 494 So.2d
1151 (Fla. 1986).
20
Smith and Roberson’s Business Law 288; see also, Calamari and Perillo § 18.1., noting that the Uniform
Commercial Code is relevant to assignment of rights in contracts for the sale of goods, assignments made to secure
performances, and assignments regarding rights to payment for goods sold or leased, or for services rendered.
21
Id. at 290.
22
Id. at 511; see also Restatement (Second) Contracts §317.
23
Continental Cas. Co. v. Ryan Inc. Eastern, 974 So. 2d 368, 376 (Fla. 2008) (Emphasis in original; internal
citations and quotations omitted); distinguished by MDS (Canada) Inc. v. Rad Source Technologies, Inc., 720 F.3d
833 (11th Cir. 2013)
13
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Accordingly, “The assignee thereafter stands in the shoes of the assignor and may enforce the
contract against the original obligor in his own name. Because an assignment vests in the
assignee the right to enforce the contract, an assignor retains no rights to enforce the contract
after it has been assigned.” 25
This distinction is significant in determining what rights, if any,
remain in the assignor.
Objective Manifestation of Intention. Crucial to a valid assignment "…is a manifestation of
the assignor’s intention to transfer it….." 26 There are no special forms or magic words required
to effect an assignment. As long as the language conveys an objective manifestation of intent to
make the assignee the owner of the right, any words may be sufficient. 27 For instance, “…if A in
a signed writing states, ‘I sell and transfer this account against David Mead to William
Richardson,’ an assignment is created, a manifestation by the assignor (A) to presently transfer a
right that A has against David Mead (obligor) to William Richardson (assignee).” 28
DIRECTION TO PAY
Order to Pay. Not every transfer of an interest is an assignment. 29 Generally, an order to pay
does not constitute an assignment. 30 Thus, a check is simply an order to a bank to make payment
to a payee; it is not an assignment even if it is delivered to the payee. 31 For instance, “If D owes
C $1,000 and C writes D, ‘Please pay T $1,000 out of the amount you owe,’ this does not
amount to an assignment.” 32 A check does not create an assignment of the drawer's funds that are
in the drawee's possession, rather an order to pay some portion of them. 33
Direction to Pay. 34 In the context of insurance law, “[t]he direction on an insurance policy to
pay to a designated person is not an assignment of the policy; its legal effect is that of a direction
in advance as to the mode of payment which, when made, is performance in the manner agreed
to by the insured.” 35 For example, in State Farm Fire and Cas. Co. v. Ray, 36 the court
specifically found that the insured's letter apportioning the benefits under the policy cannot be
construed as an assignment. The opinion stated, “Clearly, Ray's letter to State Farm instructing it
not to pay more than 20% of the policy's PIP benefits for medical expenses failed to create an
24
Dept. of Rev. v. Bank of America, 752 So.2d 637, 642 (Fla. 1st DCA 2000), rev. denied, 776 So.2d 274 (Table).
Price v. RLI Ins. Co., 914 So.2d 1010, 1013-14 (Fla. 5th DCA 2005) (regarding an installment sales contract);
quoting from its prior decision in Lauren Kyle Holdings, Inc. v. Heath-Peterson Const. Corp., 864 So.2d 55 (Fla. 5th
DCA 2003) (internal citations omitted).
26
Restatement (Second) Contracts §317.
27
Id., see also Calamari and Perillo §18.3; Smith and Roberson’s Business Law 289.
28
Calamari and Perillo §18.3; citing Richardson v. Mead, 27 Barb. 11 (N.Y.1858); see also Prop. Asset
Mgmt., Inc. v. Chi. Title Ins. Co., 173 F.3d 84, 87 (2d Cir.1999)
29
See, e.g., Kelly Health Care v. Prudential Ins. Co., 309 S.E.2d 305 (Va. 1983); 6 Am. Jur. 2d Assignments § 2.
30
Calamari and Perillo §18.3.
31
See U.C.C. §3-408.
32
Calamari and Perillo §18.3.
33
U.C.C. §3-408; see also Smith and Roberson’s Business Law 575.
34
It should be noted that some cases use the phrase, “authorization to pay,” rather than “direction to pay” in
distinguishing the transaction from an assignment.
35
2 Couch on Insurance 3d § 34:33 (1995) (citing, inter alia, State Farm Fire and Cas. Co. v. Ray, 556 So. 2d 811,
15 (Fla. 5th DCA 1990).
36
556 So.2d 811 (Fla. 5th DCA 1990).
25
25
V. 6, Mustang Journal of Law & Legal Studies, 2014
assignment … for the simple reason that Ray did not transfer his interest in the policy to another
party. To the contrary, he merely reapportioned his own benefits.” 37 Moreover, an authorization
given to a health care provider allowing direct collection from one’s insurer does not amount to
an assignment; rather, it is similar to an order to pay. 38 Such authorization “…is an appointment
of the provider as an agent to collect and vests no property interest in the agent.” 39 For instance,
in Kelly Health Care v. Prudential Ins. Co., the issue on appeal was, “…whether a health care
provider was an assignee of benefits payable to an insured under a health insurance policy and,
as such, entitled to recover against the insurer.” 40 Concluding that the insured had conveyed
something in the nature of a revocable power of attorney, the Virginia court stated, “[a]n
assignment is a transfer, but a transfer is not necessarily an assignment. If the transfer is less than
absolute, it is not an assignment; the obligee must have intended, at the time of the transfer, to
dispossess himself of an identified interest, or some part thereof, and to vest indefeasible title in
the transferee.” 41 According to the court, the intention of the assignor is the controlling
factor, and for a valid assignment the assignor cannot retain any control over the assigned
funds. 42
A number of appellate court cases mention the term direction to pay but do not elaborate. 43
However, there are some state trial court cases that have issued opinions on the assignment vs.
direction to pay issue. For example, the court in Drew Medical, Inc., as Assignee Of Barry
Wilson, v. Progressive Express Insurance Company, 44 the court stated:
11. While there are no particular magic words required for an assignment, there
has to be something indicating that the insured is assigning his or her benefits
under the contract to the assignee in order for that assignee to have standing and
bring a direct action against an insurance company. Intent of the parties to an
37
Id. at 812-13.
See, e.g., Kelly Health Care v. Prudential Ins. Co., 309 S.E.2d 305 (Va. 1983).
39
Calamari and Perillo §18.3.
40
309 S.E.2d 305, 307 (Va. 1983).
41
309 S.E.2d 305, 307 (Va. 1983); quoting Nusbaum and Co. v. Atlantic Realty, 206 Va. 673, 681, 146 S.E.2d 205,
210 (1966).
42
Id.
43
See, e.g., State v. Family Bank of Hallandale, 623 So.2d 474 (Fla. 1993) (A warrant is best characterized as a
chose in action, payable when funds are available for its purpose… a warrant is an order or direction to pay.); In re
Hawkins' Estate, 63 So.2d 313 (Fla.1953) (…the direction to pay funeral expenses must follow the well settled
rule--intent of the testator.); The U.S. Supreme Court has used the term “direction to pay” in other contexts. See,
e.g., Duncan v. United States, 368 F.2d 98 (5th. Cir. 1966): “We strongly feel that in construing one section of the
trust, we must view the trust instrument as a whole. The direction to pay premiums does not nullify those other
provisions giving the trustee sole discretion to dispose of the policies (more valuable after premiums paid) for the
present benefit of the minors. Hence the order to pay premiums is not an order to remove the trust property from the
possibility that it may be expended for the minor's present benefit, but the order is simply to substitute ...”; and Blair
v. Commissioner of Internal Revenue, 300 U.S. 5, 57 S. Ct. 330, 81 L. Ed. 465 (1937): The decision of the Circuit
Court of Appeals turned upon the effect to be ascribed to the assignments. The court held that the petitioner had no
interest in the corpus of the estate and could not dispose of the income until he received it. Hence it was said that 'the
income was his' and his assignment was merely a direction to pay over to others what was due to himself. The
question was considered to involve 'the date when the income became transferable.' 83 F. (2d) 655, 662. [Emphasis
added.]
44
11 Fla. L. Weekly Supp. 914b, Osceola County. Case No. CC-02-CL-1398. July 22, 2004 (internal citations
omitted).
38
26
V. 6, Mustang Journal of Law & Legal Studies, 2014
assignment is paramount…. The intent of the parties is determined first from the
language used in the document, second, from the apparent objects to be
accomplished, from other provisions in the document, and the surrounding
circumstances at the time of creation... Also, in the absence of ambiguity in a
document, the language itself is the best evidence of a party's intent and its plain
meaning controls….
12. The mere use of the word “assignment” in the title of the document does not
create an assignment of insurance benefits when the only thing the document does
is to allow for direct payment. 45
Accordingly, the court found that in the plain language of the document the
“Authorization and Assignment” was “…nothing more than a direction to pay.” 46 In
other words, the only thing the document did was to allow for direct payment.
Executory Promises and Conditions Precedent. An assignment is a present transfer and an
executed transaction. 47 A promise to do something in the future is not an assignment because a
promise is executory. 48 For instance, a promise to pay money when the promisor collects it from
a specified source is not an assignment because there is no present transfer. 49 The same is true of
a promise to assign at some future time a right that the promisor presently owns. 50 The case of
Belfor USA Group, Inc. v. Bray & Gillespie LLC, 51 provides an excellent illustration. The Belfor
court opined:
Because the language of the contract states that Belfor’s right to payment was
“subject to” Wachovia’s written consent, Wachovia’s written consent was a
condition precedent to Belfor’s right to receive payment from the insurance
proceeds.… A condition precedent is “[a]n act or event, other than a lapse of time,
that must exist or occur before a duty to perform something promised arises.”
….There is no duty to perform until a condition precedent is fulfilled. … The
language of the contract and direct pay authorizations specify that Belfor’s right
to payment was “subject to” Wachovia’s written consent. … Without evidence of
Wachovia’s consent, a valid legal assignment of the insurance proceeds did not
occur. 52
Equitable Assignments. It should be noted that in a situation where the promise can be
specifically enforced, the promisee may have an equitable assignment or an equitable lien. 53 The
Belfor case discusses equitable assignments, 54 citing Giles v. Sun Bank, N.A. 55 The Belfor court
45
Id.
Id. [Emphasis added.]
47
Calamari and Perillo §18.3.
48
Id.
49
Id.
50
See Belfor USA Group, Inc. v. Bray & Gillespie LLC, 2008 WL 276022 (M.D. Fla. 2008). (Only the Westlaw
citation is currently available.).
51
Id.
52
Id. at *3; (Internal citations omitted.)
53
Calamari and Perillo §18.3; See also Belfor USA Group, Inc. v. Bray & Gillespie LLC, 2008 WL 276022, *3, Fn.
2 (M.D. Fla. 2008).
54
Belfor USA Group, Inc. v. Bray & Gillespie LLC, 2008 WL 276022, *3, Fn. 2 (M.D. Fla. 2008).
46
27
V. 6, Mustang Journal of Law & Legal Studies, 2014
noted that equitable assignments may be effected in a number of ways as long as, “…there is
evidence of an intent by one side to assign, an intent by the other to receive, and
consideration.” 56 However, the court did not find a present intent to assign because the promises
to assign the proceeds to Belfor were conditioned on Wachovia's consent. Thus, the evidence did
not support an equitable basis for holding that an assignment occurred. On the other hand, in the
Giles case, the court held that an “employment agreement” was an “equitable assignment”
because the subcontractor intended to assign its rights and duties under the primary subcontract
to the assignee and the assignee intended to receive such an assignment. 57 Based on these cases,
it seems that in addition to the clear manifestation of intention needed for a valid assignment, an
equitable assignment requires some form of consideration.
CONCLUSION
It is not unusual for related legal terms to be confused. The concepts of “assignment,” and
“direction to pay” are among those that are sometimes misused. However, the law is clear with
regard to the distinctions and they are not simply a matter of semantics. Rights may be assigned
and duties may be delegated. In an assignment the assignee steps into the shoes of the assignor
and may enforce in his own name the contractual right against the original obligor. And, the
assignor retains no rights to enforce the contract right after it has been assigned. An assignment
requires an objective manifestation of intent on the part of the assignor to presently transfer a
right. A promise to do something in the future is not an assignment because a promise is
executory. Thus, a purported assignment with a condition precedent is not an assignment.
However, not every transfer of an interest is an assignment. In contrast to an assignment, a
direction to pay is essentially the appointment of an agent to carry out a task. Some cases
analogize the direction to pay as something in the nature of a power of attorney. In fact, the
mere use of the term “assignment” in the title of a document does not create an assignment of
rights when the only purpose of the document is to authorize payment. That direction does not
confer any rights to that third party. Rather, it is merely the appointment of an agent to carry out
a task. So, when one is presented with the question of whether a transfer is an “assignment” or a
“direction to pay,” clearly the answer is, “it depends.”
55
450 So.2d 258, 260 (5th DCA 1984).
Belfor USA Group, Inc. v. Bray & Gillespie LLC, 2008 WL 276022, *3, Fn. 2 (M.D. Fla. 2008).
57
Giles v. Sun Bank, N.A., 450 So.2d 258 (Fla. 5th DCA 1984).
56
28
V. 6, Mustang Journal of Law & Legal Studies, 2014
29
V. 6, Mustang Journal of Law & Legal Studies, 2014
MARIJUANA LEGALIZATION IN WASHINGTON AND COLORADO:
THE TIPPING POINT IN POLICY AND PRACTICAL IMPLICATIONS 1
Marty Ludlum2
University of Central Oklahoma
Darrell Ford 3
University of Central Oklahoma
Introduction
We are witnessing an epic showdown between state and federal government over
marijuana. 4 At the moment, marijuana is both legal and illegal, depending where you are and
who you ask. The marijuana issue follows America’s laboratory of democracy tradition. 5 This
is a unique experiment where an action (possessing marijuana) is legal at the state level but
illegal at the federal level. 6
Stephen DeAngelo, founder of Harborside dispensary in Oakland, TV personality from
the show “Weed Wars” and the face of marijuana legalization, called this election the “tipping
point” on the issue.7 He was correct. The public’s attitude toward marijuana legalization and the
War on Drugs has tipped. 8 The federal government may also be changing their emphasis, while
not actually changing the law. 9 The August 29, 2013 letter from the Obama administration may
define the future of marijuana prohibition for the next twenty years. 10
1
A previous version of this paper was presented to the Southern Academy of Legal Studies in Business, San
Antonio, Texas, March 7-8, 2013.
2
Associate Professor of Legal Studies at the University of Central Oklahoma. Professor Ludlum teaches
International Trade Law and the Legal Environment of Business. He can be reached at mludlum@uco.edu.
3
Professor of Legal Studies at the University of Central Oklahoma. Professor Ford teaches Legal Studies at
undergraduate and graduate levels. He can be reached at dford@uco.edu.
4
Winnipeg Free Press, Their futures are smokin’, Nov. 10, 2012, A23.
5
Julie Delcour, Recreational marijuana up for vote in 3 states, Tulsa World, Oct. 14, 2012.
6
Maia Szalavitz, Viewpoint: How marijuana decision could signal a turning point in the U.S. War on Drugs, Time,
Oct. 16, 2013, 1.
7
Kevin Fagan, Legalization votes stir hopes in state, San Francisco Chronicle, Nov. 8, 2012, C1. This is ironic, since
his Harborside clinic has been raided and subjected to a long series of legal battles since 2011. See Larry Smith,
The Toke of the Town, Of Counsel 33.1, (January) 12-14.
8
Brad Knickerbocker, Washington State issues how-to regs on growing, selling marijuana, Christian Science
Monitor, Sept. 6, 2013, 10 (the Pew Research Group found 52% in favor of legalization, and improvement of 11% in
just two years). See also Nick Gillespie, What Pot Legalization Could Teach Obamacare, Time.com (Jan. 2014) 1
(reports a poll showing 58% approval for marijuana legalization).
9
Michael Kinsley, Joint Committee, The New Republic, Aug. 19, 2013, 9-11 (indicating that while the Obama
Administration has promised to allow the state programs to continue, the promise not a guarantee).
10
Jacob Sullum, Tolerating pot with a frown, 45.7 Reason (2013), 16 (noting that the letter was more
accommodation rather than confrontation, since the federal government had no viable way to stop the state
30
V. 6, Mustang Journal of Law & Legal Studies, 2014
This paper will explore the recent and dramatic changes in the legal status of marijuana.
To that end, we will first discuss the history of marijuana regulation. Next, we will explore the
medical marijuana policies, both state and federal. Following that, we will discuss the specifics
of the Washington and Colorado state law changes regarding recreational marijuana use. We
will conclude with predictions for the future, including the conflicts with the medical marijuana
laws, conflicts with illegal markets, marijuana tourism, federal and state reactions, and business
implications.
Marijuana is not new, despite most media accounts which would leave one to believe it
was discovered at Woodstock. The earliest accounts of marijuana are from China from 3000
B.C. to treat malaria and pain. 11 Jumping ahead five thousand years, pot was included in the
United States Pharmacopoeia in 1850 as a treatment for many ailments 12 where it remained until
1941. 13
American attempts to prohibit marijuana have a racially charged history, often because
the drug was associated with African-Americans and Mexican-Americans. 14 The racial fears and
some politically charged fears led to prohibition in 1937. 15 However, even when marijuana was
prohibited, we still knew very little about it. The psychoactive component of pot,
tetrahydrocannabinol (THC) was not identified until 1965. 16
The Nixon administration pushed for the Controlled Substances Act in 1970. 17
Marijuana put into Schedule 1, claiming it had no accepted use and high potential for abuse. 18
We are currently in the fourth decade in our War on Drugs. America is feeling the heavy weight
of Nixon’s War, in both financial and social costs. Drug arrests for marijuana have not
decreased despite forty years of effort. In 2010, more than 45% of drug arrests were for
marijuana. 19 Currently, America has over 45,000 marijuana prisoners at a cost of $1 billion a
year. 20 America arrests someone for marijuana possession every 42 seconds. 21 Marijuana is
judged more harshly than other criminal actions. By comparison, in Louisiana you can get twice
as much time in prison for marijuana possession as for sexual battery. 22
marijuana programs, and if state regulations were stopped, the solution would be an unregulated illegal market).
See also Brad Knickerbocker, supra note 8 (the letter also indicated that strong regulation and enforcement is
required to avoid federal involvement).
11
Richard Glen Boire & Kevin Feeney, Medical Marijuana Law 13-14 (2006). See also Oakley Ray and Charles Ksir,
th
Drugs, Society, and Human Behavior 266 (8 ed. 1999).
12
Id.
13
Id at 19.
14
Sam Kamin and Eli Wald, Marijuana lawyers: Outlaws or crusaders? 91 Or. L. Rev. 869, 872 (2013). See also
Martin Booth, Cannabis: A History 77 (2003).
15
Julie Delcour, supra note 5.
16
Mohamed Ben Amar, Cannabinoids in Medicine: A Review of Their Therapeutic Potential, 105 U.
Ethnopharmacology 1, 2 (2006).
17
21 U.S.C. §§ 801-848.
18
21 U.S.C. § 812(b)(1).
19
Sam Kamin and Eli Wald, Marijuana lawyers: Outlaws or crusaders? 91 Or. L. Rev. 869, 875 (2013). See also Maia
Szalavitz, supra note 6 (noting that of the arrests, 82% are for simple possession).
20
Sam Kamin and Eli Wald, supra note 14 at 869.
21
Bruce Barcott, A Tale of Two Drug Wars, Rolling Stone 1200 (2014) 35-39.
22
Id.
31
V. 6, Mustang Journal of Law & Legal Studies, 2014
The public attitudes on marijuana have reached the tipping point. One-third of the U.S.
population reports to having used marijuana at least once. 23 Gallup polls in 2011 found that 50%
favored marijuana legalization. 24 A Pew Center survey in 2013 indicated 52% favor marijuana
legalization. 25 The future supports legalization, as the young (aged 18-32) support legalization at
65%. Even the baby boomer generation has increased to 32% supporting legalization. 26
Rasmussen Reports from May, 2012 indicated 56% favored legalization. 27 Recently,
Public Policy Polling found that 58% of registered voters favored legalization of pot. 28 Public
opinion has changed, and those supporting legalization have the majority. Whether the change is
from an informed view of marijuana or outrage at the social costs of imprisoning marijuana users
or a combination of the both, the future favors legalization.
The first step towards legalization was medical marijuana. Despite many media reports
to the contrary, medical marijuana is actually not new. It did not start in the 1990s in California.
Medical marijuana started as a federal program called the Compassionate Investigative New
Drug (CIND) program from the 1970s. 29 The program was very small. It allowed selected
patients to receive free federally grown marijuana after a lengthy approval process. 30
The marijuana for the CIND program was grown at the only federally approved
marijuana farm located at the University of Mississippi. 31 In 1989, with the growth of AIDS and
surging numbers of applications, the federal government ended new registrations for the
program. 32 Currently, fewer than ten patients are still on the program. 33 Despite the federal War
on Drugs, the federal government has sent medical marijuana to a group of selected patients for
decades, and continues to do so.
23
Substance Abuse and Mental Health Servs. Admin., Results from the 2005 National Survey on Drug Use and
Health: National Findings 13 (2006), http://oas.samhsa.gov/nsduh/2k5nsduh/2k5results.htm. For a discussion of
the health costs and benefits, see Itai Donvitch, Sorting Through the Science on Marijuana: Facts, Fallacies, and
Implications for Legalization, 43 McGeorge L. Rev. 91 (2012).
24
Suzanne Weiss, Legally Green, State Legislatures (Feb. 2013), 14, 16.
25
Linda Feldmann, Support for legal marijuana may have reached tipping point, poll finds, Christian Science
Monitor, April 4, 2013, http://www.csmonitor.com/USA/DC-Decoder/2013/0404/Support-for-legal-marijuanamay-have-reached-tipping-point-poll-finds.
26
Id.
27
Kevin Fagan, supra note 7.
28
Suzanne Weiss, supra note 24 at 16.
29
See 21 U.S.C. § 355(i).
30
Nicole Dogwill, Comment: The Burning Question: How will the United States deal with the Medical-Marijuana
Debate? 1998 Det. C.L. Rev. 247 (1998).
31
See Ethan Russo, Mary Lynn Mathre, Al Byrne, Robert Velin, Paul J. Bach, Juan Sanchez-Ramos, & Kristin A. Kirlin,
Chronic Cannabis Use in the Compassionate Investigational New Drug Program: An Examination of Benefits and
Adverse Effects of Legal Clinical Cannabis, 2.1 J. of Cannabis Therapeutics 3-4 (2002) (noting that the five acre plot
is grown mainly from Mexican marijuana seeds). See Jane B. Marmor, Commentary, Medical Marijuana, 168 W.J.
Med. 540, 541 (1998).
32
See Lester Greenspoon M.D. & James B. Bakalar, Marijuana as Medicine, A Plea for Reconsideration, 273 Am.
Med. Ass’n 1875 (1995).
33
See Ethan Russo, et al., supra note 31 (noting that as of 2002, there were only eight survivors of the program,
while there were 34 in the program in 1991). See also Lester Greenspoon M.D. & James B. Bakalar, id.
32
V. 6, Mustang Journal of Law & Legal Studies, 2014
Following the federal program lead, several states researched and tried to implement
medical marijuana laws including Alabama, 34 Arizona, 35 Connecticut, 36 Georgia, 37 Illinois, 38
Iowa, 39 Louisiana, 40 Massachusetts, 41 Minnesota, 42 New Hampshire, 43 New Jersey, 44 New
Mexico, 45 New York, 46 Rhode Island, 47 South Carolina, 48 Tennessee, 49 Texas, 50 Vermont, 51
Virginia, 52 Washington, 53 Wisconsin, 54 and the District of Columbia. 55
Medical marijuana programs are unusual in medical terms. Since marijuana is a
Schedule 1 drug, no doctor can write a prescription for it. As a result, a doctor can only give a
recommendation for marijuana. 56
The early state programs were very limited in scope, often only treating glaucoma or
chemotherapy. 57 Most were disbanded after the FDA approved a synthetic form of marijuana,
Marinol, in 1986. 58 Marinol, a pill marketed under the name Dronabinol was categorized as a
Schedule II substance. 59 While Marinol held promise, it has not lived up to the expectations.
Being in pill form, it could not be tolerated by those in chemotherapy. Also the pill form of
marijuana takes days or weeks to have any positive effect while the traditional use has an impact
in minutes. 60
34
Ala. Code § 20-2-111 to -120 (1979).
Ariz. Rev. Stat. Ann. § 13-3412.01 (West Supp. 1997).
36
Conn. Gen. Stat. § 21a-246 (1994).
37
Ga. Code Ann. § 43-34-120 to -126 (1980).
38
720 Ill. Comp. Stat. Ann. 550/11 (West 1993).
39
Iowa Code § 124.204 (1993).
40
La. Rev. Stat. Ann. § 40:1021 (West 1992).
41
Mass. Gen. Laws Ann. Ch. 94D § § 1-4 (West 1996).
42
Minn. Stat. § 152.21.
43
N.H. Rev. Stat. Ann. § 318-B:10(VI) (Michie 1995).
44
N.J. Stat. Ann. § 26:2L-1 (West 1981).
45
N.M. Stat. Ann. § 26-2A-1-7 (Michie 1978).
46
N.Y. Pub. Health Law § 3397-a to –g (McKinney 1993).
47
R.I. Gen. Laws § 21-28.4-1 to -11 (1989).
48
S.C. Code Ann. § 44-53-610 to -660 (Law Co-op 1980).
49
Tenn. Code Ann. § 39-17-408(b)(6)(A) (1989).
50
Texas Health & Safety Code Ann. § 481.201-.205 (West 1992).
51
Vt. Stat. Ann. Tit. 18, § 4471 (1981).
52
Va. Code Ann. § 18.2-251.1 (Michie 1979).
53
Wash. Rev. Code Ann. § 69.51.010-080 (West 1985).
54
Wis. Stat. § 961.34 (1981).
55
D.C. Code Ann. § 33-522(2) (1981).
56
Sam Kamin and Eli Wald, supra note 14 at 875 (2013).
57
Nicole Dogwill, supra note 30.
58
Id.
59
See 21 U.S.C. § 823 (1994).
60
See Ethan Russo, et al., supra note 31 at 51 (finding the pill form of marijuana to be a very poor substitute for the
smoked version).
35
33
V. 6, Mustang Journal of Law & Legal Studies, 2014
In the current round of medical marijuana programs, the first was California, which
passed Proposition 215 in 1996. 61 Issues of compassion for those terminally ill has led to the
reemergence of medical marijuana interests. 62 However, the law was written with such vague
standards that virtually anyone can purchase marijuana. California’s medical program has
largely become a sham, allowing marijuana for nearly any adult at any time. Even California
Governor Arnold Schwarzenegger commented on the number of people openly smoking
marijuana in public in some places. 63
Following the successful passage in California, many states have followed with their own
programs, including Alaska, 64 Hawaii, 65 Maine, 66 Michigan, 67 Montana, 68 Nevada, 69 New
Jersey, 70 New Mexico, 71 Oregon, 72 Rhode Island, 73 Vermont, 74 and Washington. 75
In the fall of 2012, two states passed measures for the recreational use of marijuana, 76
Washington and Colorado. 77 A similar bill in Oregon was not successful. 78 Both states were
mavericks at least when it came to cannabis. Both states quickly approved medical marijuana
programs (following California’s example). 79 In 2005, Denver became the first major city to
legalize adult possession of marijuana. 80 The marijuana business in Denver has exploded with
204 stores, triple the number of Starbucks and McDonalds combined. 81 The marijuana system in
82
Washington is difficult to assess since it is the only state without a registry of valid users.
61
Hannah Rosin, The Return of Pot, The New Republic, Feb. 17, 1997, at 18 (the Proposition passed 56% to 44%).
See also Marty Ludlum & Darrell Ford, Three Lessons from California's Compassionate Use Act, 6.1 Academy of
Health Care Management Journal 69 (2010).
62
Daniel J. Pfiefer, Social Perspectives: Smoking Gun: The Moral and Legal Struggle for Medical Marijuana, 27
Touro L. Rev. 339 (2011).
63
Adam Nagourney, Marijuana, not yet legal for Californians, might as well be, New York Times, Dec. 21, 2012, A1.
64
Alaska Stat. § 17.37.010. See also Jason Brandeis, The Continuing Vitality of Ravin v. State: Alaskans still have a
Constitutional Right to Possess Marijuana in the Privacy of their Homes, 29 Alaska L. Rev. 175 (2012) (noting that
Alaska’s Constitution gives greater protection than federal law esp. as it relates to the use of marijuana).
65
Haw. Rev. Stat. § 329-123(b).
66
Me. Rev. Stat. tit. 22 § 2425.
67
Mich. Comp. Laws § 333.26424.
68
Mont. Code Ann. § 50-46-103.
69
Nev. Rev. Stat. § 453A.050.
70
N.J. Stat. Ann. § 24-I-4.
71
N.M. Stat. Ann. § 26-2B-4(D).
72
Ore. Rev. Stat. § 475.309(2)(a).
73
R.I. Gen. Laws § 21-28.6-4.
74
Vt. Stat. Ann. tit. 18, § 4473.
75
Wash. Rev. Code § 69.51A.005.
76
Jacob Sullum, The cannabis is out of the bag, 45.4 Reason (2013) 12.
77
Sam Kamin and Eli Wald, supra note 14. See also John R. Magnuson, Inside Washington, NCADD Washington
Report 16.6 (2013) 2-3.
78
Id at 879.
79
Suzanne Weiss, supra note 24 at 15. See also Marty Ludlum & Darrell Ford, supra note 24 at 69.
80
Id.
81
Suzanne Weiss, supra note 24 at 18.
82
Bob Young, Medical, recreational pot at odds; Washington state’s new recreational marijuana market is highly
regulated in contrast to the medical pot market, Los Angeles Times, April 14, 2013, A11.
34
V. 6, Mustang Journal of Law & Legal Studies, 2014
However, the road to legalized marijuana has not been easy. In 2006, Colorado voters
rejected a measure to allow possession of one ounce of pot. 83 Additionally, 86 Colorado
communities have voted to prohibit medical marijuana within their city limits. 84 In 2011,
Washington had a failed initiative to remove criminal penalties for possessing marijuana. 85
Washington’s Initiative 502
Washington State’s marijuana election results demonstrated the tipping point, as
legalization proponents won 55%-45%. 86 Fundraising heavily favored legalization, and the
proponents raised millions. 87 Opponents raised only $16,000. 88 Proponents outspent the
opponents by a ratio of 400 to 1. 89 Initiative 502 was even endorsed by a group of over 100
college professors who advocated a program similar to Washington’s proposal. 90
Under Washington law, only those over 21 can buy, possess, or grow marijuana, or own a
marijuana business. 91 Only those over 21 can work in or occupy a marijuana business. 92
Regulations are controlled by the state’s Liquor Control Board. 93
Marijuana businesses must receive an Annual License. 94 The Washington program
should raise a great deal of funds. There are three levels of the marijuana business, each one
being regulated. One set of businesses produce (grow) the product. One set of businesses
process the product (turn into various products, including food items). The last set of businesses
are retail sellers. Each marijuana business who intended to produce, process, or conduct retail
sales must pay $250 to apply and pay $1000 annually to maintain a license. 95
The marijuana license has some strings attached. Licenses can be summarily suspended
for 180 days if the regulators cite a public health emergency. 96 Also a marijuana business can
lose their license if the owner is behind on child support. 97
Producers and processors are prohibited from owning a retail establishment. 98
Washington does not allow for vertical integration in the marijuana industry except between
83
Suzanne Weiss, supra note 24.
Id at 18.
85
Id at 14.
86
Daily Telegraph (Sydney), States legalize marijuana, Nov. 9, 2012, 43.
87
For example, Peter Lewis of Ohio (chairman of Progressive Insurance) gave $2 million for the campaign. See
Daily Telegraph (Sydney), States legalize marijuana, Nov. 9, 2012, 43.
88
Suzanne Weiss, supra note 24 at 16.
89
Jacob Sullum, Pot goes legit, 45.6 Reason (2013) 21-35.
90
MX Sydney, Academics in pot shot, legalize dope, Aug. 30, 2012, 10.
91
Wash. Rev. Code Ann. §69.50.331(6).
92
Wash. Rev. Code Ann. §69.50.357.
93
Wash. Rev. Code Ann. §69.50.342. See also Jeremy Lott, Pot Shots! Part Deux, The American Spectator
(Jan./Feb., 2014) 24-27.
94
Wash. Rev. Code Ann. §69.50.325.
95
Id.
96
Wash. Rev. Code Ann. §69.50.334(4).
97
Wash. Rev. Code Ann. §69.50.331(2)(b).
98
Wash. Rev. Code Ann. §69.50.328.
84
35
V. 6, Mustang Journal of Law & Legal Studies, 2014
producers and processors. 99 Since producers 100 and processors 101 are not entitled to sell to the
public, any sale to the public is not exempt from criminal prosecution. Also Washington’s law
does not allow for home cultivation. 102
Who can own a marijuana business? All owners must be over 21, 103 pass a background
check, and have lived in Washington state for at least three months. 105 If the owner is a
business entity, all owners and officers must be individually able to pass the application
process. 106
104
The application process has many stakeholders, including the city, which must be notified
of any application for a new business 107 and notified if any application is approved. 108 The city’s
objections must be given “substantial weight” in the decision process to grant a license. 109
Business cannot be within 1000 feet of any elementary or secondary school, mass transit,
playground, recreation center, child care center, library, park, kids arcade area, etc. 110 Also,
marijuana businesses cannot advertise within 1000 feet of any of the restricted areas. 111
Advertisements on the business (where allowed) are restricted to 1600 square inches (40 inches
by 40 inches, maximum).112
In case of an owner’s death, surviving spouses and domestic partners can keep the
license. 113 Washington’s Liquor Board must approve any sale of greater than 10% of stock or a
change in officers. 114 The Board can draw up policies for equipment, packaging, security,
screening, etc. 115
Initiative 502 required independent third party testing of marijuana for THC levels. 116
The law also required labeling about safety risks of smoking marijuana. 117 Consuming
marijuana at retail stores is prohibited. 118 Retail stores cannot sell anything other than marijuana
products, paraphernalia, and storage items. 119 In this way, the marijuana retailers resemble
99
Id.
Wash. Rev. Code Ann. §69.50.366.
101
Wash. Rev. Code Ann. §69.50.363.
102
Jacob Sullum, supra note 76 at 12.
103
Wash. Rev. Code Ann. §69.50.331(1)(a).
104
Wash. Rev. Code Ann. §69.50.331(1).
105
Wash. Rev. Code Ann. §69.50.331(1)(b).
106
Wash. Rev. Code Ann. §69.50.331(1)(c).
107
Wash. Rev. Code Ann. §69.50.331(7).
108
Wash. Rev. Code Ann. §69.50.331(7)(d).
109
Wash. Rev. Code Ann. §69.50.331(9).
110
Wash. Rev. Code Ann. §69.50.331(8). See also Michael Kinsley, supra note 9 at 11(indicating it might be difficult
to find many locations in Seattle that are not within 1000 feet of all of these landmarks).
111
Wash. Rev. Code Ann. §69.50.369.
112
Wash. Rev. Code Ann. §69.50.357(3).
113
Wash. Rev. Code Ann. §69.50.339(1).
114
Wash. Rev. Code Ann. §69.50.339(2).
115
Wash. Rev. Code Ann. §69.50.342.
116
Wash. Rev. Code Ann. §69.50.348.
117
Wash. Rev. Code Ann. §69.50.345(7)(d).
118
Wash. Rev. Code Ann. §69.50.357(5).
119
Wash. Rev. Code Ann. §69.50.357(1).
100
36
V. 6, Mustang Journal of Law & Legal Studies, 2014
liquor stores. The items for sale must be tested, everyone involved must be 21, and only the
regulated items can be sold in the liquor store. The Board can set maximum number of
marijuana businesses in a specific area. 120 This would be done at a later date, and there are not
clear guidelines in the law about how the maximum number would be determined. 121 The
Washington law also allows for cities to ban the sales within their jurisdiction, and 60 cities have
already enacted bans on pot sales. 122
Unlike liquor stores, marijuana retail stores have purchase limits. A buyer can purchase a
maximum of one ounce of marijuana, 123 16 ounces of infused product, 124 or 72 ounces of infused
liquid 125 at a time. It is unclear if the Board will keep track of purchasers in a database.
Otherwise, a buyer could buy one ounce of marijuana at store one, then walk across the street to
store two and make another purchase, etc. In fact, it would be possible for a single purchaser to
buy the maximum, place the purchase in his/her car, return to the same store and buy the
maximum again. The Board has put a maximum annual harvest of a mere 40 metric tons of
marijuana, amounting to 8 grams per adult per year. 126
Washington’s Initiative 502 put a great deal of work and thought into the financial
aspects of the new system. The law creates a new dedicated marijuana fund 127 which is expected
to make $1.9 billion over five years. 128 Each stage of the marijuana business is taxed. There is a
25% tax at from producer to processor, 129 a 25% tax from processor to retailer, 130 and a 25% tax
from retailer to consumer. 131
Washington also prepared detailed ways to spend the funds generated by the marijuana
policy. Each year, Washington will allocate $500,000 for a healthy youth survey, 132 five million
dollars for administration, 133 and $200,000 for cost benefit study. 134 The study is due in 2015,
then 2017, then 2022, then 2032. 135 The Initiative also allocates $20,000 annually for web based
materials at the University of Washington. 136
120
Wash. Rev. Code Ann. §69.50.354.
Brad Knickerbocker, supra note 8 at 10 (the 334 licenses will be apportioned by population. See also Noah
Rayman, Washington State approves new rules for marijuana industry, Time (Oct. 21, 2013) 1 (noting that the
board has approved a maximum of 334 licenses, including 21 in the city of Seattle).
122
Jeremy Lott, Pot Shots! Part Deux, The American Spectator (Jan./Feb., 2014) 24-27.
123
Wash. Rev. Code Ann. §69.50.360(3)(a).
124
Wash. Rev. Code Ann. §69.50.360(3)(b).
125
Wash. Rev. Code Ann. §69.50.360(3)(c).
126
Brad Knickerbocker, supra note 8 at 10.
127
Wash. Rev. Code Ann. §69.50.530.
128
Daily Telegraph (Sydney), States legalize marijuana, Nov. 9, 2012, 43. See also Michael Kinsley, supra note 9
(indicating that newer estimates are close to $2 billion over five years).
129
Wash. Rev. Code Ann. §69.50.535(1).
130
Wash. Rev. Code Ann. §69.50.535(2).
131
Wash. Rev. Code Ann. §69.50.353(3).
132
Wash. Rev. Code Ann. §69.50.540(1).
133
Wash. Rev. Code Ann. §69.50.540(4).
134
Wash. Rev. Code Ann. §69.50.540(2).
135
Wash. Rev. Code Ann. §69.50.550.
136
Wash. Rev. Code Ann. §69.50.540(3).
121
37
V. 6, Mustang Journal of Law & Legal Studies, 2014
Once the previously mentioned projects are funded, the remaining tax revenues from
marijuana are to be divided among specified programs. Half (50%) is set aside for the state’s
basic health plan. 137 Smaller amounts are also reserved, including 15% for substance abuse, 138
10% for marijuana education, 139 5% for community health, 140 1% to the University of
Washington and Washington State University for research, 141 and 0.3% for education
infrastructure. 142 The remainder of the funds (18.7%) goes for state’s general fund 143
Washington will also implement a novel approach to driving under the influence. 144 In
states where marijuana is illegal, any amount of the substance is considered intoxicating.
However, where marijuana is legal, a new standard must be developed and implemented. If the
driver is over age 21, greater than 5nmb is considered driving while intoxicated. 145 NMB means
nanograms of THC per millimeter of blood. 146 The only method to measure THC requires a
blood test, at least with current technology. 147 Necessity might push an innovator to find a
method which can measure THC in a driver’s system without making a trip to the hospital. Time
will tell. One problem with this measurement is that frequent marijuana users have levels above
5nmb as much as 24 hours after their last use. 148
Having a card to purchase marijuana is not a defense to DUI. 149 Since only persons over
age 21 can purchase marijuana, if under age 21, any amount (NMB) is considered driving while
intoxicated. 150 For a first offense, a driver would lose his/her license for 90 days. 151 Since the
law was modeled after the alcohol-type of driving while intoxicated, there are references in the
Washington law to an interlock device. 152 An interlock devise is put on convicted drivers to
measure blood/alcohol levels by testing your breath in order to start your car’s ignition. It is
unclear is this was simply an oversight, or if Washington has a system in mind which will test a
driver’s THC content prior to starting the car’s ignition.
Washington is not likely to have any amendments to the marijuana laws in the near
future. Washington State Senator Mark Schoesler explained “amending the provisions of an
initiative approved by the voters requires a two-thirds vote of both chambers. That’s a huge
threshold, and I just don’t see it happening.” 153
137
Wash. Rev. Code Ann. §69.50.540(5)(d).
Wash. Rev. Code Ann. §69.50.540(5)(a).
139
Wash. Rev. Code Ann. §69.50.540(5)(b).
140
Wash. Rev. Code Ann. §69.50.540(5)(e).
141
Wash. Rev. Code Ann. §69.50.540(5)(c).
142
Wash. Rev. Code Ann. §69.50.540(5)(f).
143
Wash. Rev. Code Ann. §69.50.540(5)(g).
144
Wash. Rev. Code Ann. §46.20.308.
145
Wash. Rev. Code Ann. §46.20.308(2)(c)(i).
146
Wash. Rev. Code Ann. §46.04.586. See also Winston Ross, The High Road, Newsweek Global 162.1, 80-86.
147
Id.
148
Id.
149
Wash. Rev. Code Ann. §46.61.502.
150
Wash. Rev. Code Ann. §46.20.308(2)(c)(ii).
151
Wash. Rev. Code Ann. §46.20.308(2)(c).
152
Wash. Rev. Code Ann. §46.20.308(2)(d).
153
Suzanne Weiss, supra note 24.
138
38
V. 6, Mustang Journal of Law & Legal Studies, 2014
The only realistic changes to be expected are for local areas (cities or counties) to opt out
of allowing retail marijuana sales. Yakima County and Pierce County (south of Seattle) have
barred recreational sales of marijuana. 154
Colorado’s Amendment 64
The fight over Colorado’s marijuana law was hotly contested. Big support for
legalization came from travel guru Rick Steves among many others. 155 Financial support
totaling over $8.5 million came from many sources, including activist George Soros and Peter
Lewis, founder of Progressive Insurance, who used marijuana after having part of his leg
amputated in 1998. 156
Proponents of legalized marijuana won the day, 55%-45%. 157 Amendment 64 was just
two pages, leaving a great deal of work for Colorado to work out the details. 158 The first version
of the rules was due July 1, 2013. The preliminary rules were a result of a lot of lobbying by the
new industry. 159 There were many skeptics, since the 1440 retail outlets of the medical marijuana
program were supposed to be regulated from seed to sale, but the enforcement has never been
fully implemented. 160
Public use of marijuana is still prohibited. 161 Consumer must be over age 21. Sellers of
marijuana must have a license. There is a competitive application process for a limited number
of marijuana retail stores, but the details will be worked out in the first years of the program.
Taxes on marijuana are not to exceed 15% of the retail price. 162
Cities can prohibit sales, but must be accomplished by popular vote during a regular
election, as Colorado Springs has already done. 163 This may backfire, as 86 other cities have
already voted to prohibit medical marijuana in their locales. 164
Colorado was supposed to be ready to take applications by October 1, 2013 or cities
could have implemented their own policies. The state issued licenses in time for the January 1,
154
Kirk Johnson, Cannabis Legal, Localities Begin to Just Say No, New York Times (Jan. 27) A1-A13
Suzanne Weiss, supra note 24.
156
Id at 16.
157
Advertiser (Adelaide), Marijuana legalized, Nov. 9, 2012, 1.
158
A list of current topics being discussed in the 2013 legislature are expanded definitions of sale/transfer,
workplace drug policies, labeling, security for retail stores, and marijuana impairment while driving, to name just a
few. See Suzanne Weiss, supra note 24 at 14.
159
Jacob Sullum, supra note 89 (The current businesses in medical marijuana are attempting to influence the
regulations to favor themselves).
160
Id. (The failure is primarily due to inadequate manpower and funding shortages for the enforcement division).
161
Suzanne Weiss, supra note 24.
162
There is a current attempt to add a wholesale tax in addition to the retail sales tax of 15%. The additional tax
must have the approval of the voters. See Suzanne Weiss, supra note 24 at 14.
163
Kirk Johnson, supra note 154 at A13.
164
Suzanne Weiss, supra note 24 at 18.
155
39
V. 6, Mustang Journal of Law & Legal Studies, 2014
2014 deadline. 165 Surprising everyone a makeshift set of rules was enacted just in time to allow
legal marijuana sales on January 1, 2014. Legal sales exceeded $1 million on the first day. 166
Colorado’s medical marijuana program has not changed. Currently 100,000 Colorado
residents are on the medical marijuana program. 167 There are still over 500 medical marijuana
dispensaries in Colorado. 168 Recent 2010 amendments to Colorado’s medical marijuana
program attempted to remedy some of the abuses of the program. 169
Colorado’s Governor has adopted the 70/30 rule also used in medical marijuana
businesses (meaning that sellers must grow at least 70% of what they sell). 170
What does the future hold for Colorado? Perhaps we should wait for the smoke to clear.
With so many legal sales, there must be some damage done to the illegal markets for
marijuana. 171 The desire to eliminate the illegal markets is natural but causes a conflict. 172
Putting high taxes on marijuana has strong public support, 173 but taxes increase the retail
price, providing more opportunity for the illegal markets to survive. Beau Kilmer of Rand Drug
Policy Research Center explained: “If the taxes are set too high, you will have to worry about the
black market.” 174
Medical marijuana programs are usually poorly regulated and not taxed, resulting in low
prices.
For example, the medical marijuana prices are about $10 a gram, which might be
impossible in the highly taxed recreational programs. 176 Medical programs also have much
higher allowances for purchases, over ten times the amount a recreational user can purchase,
easily leading to abuse. 177 However, this is difficult to regulate, since many states including
Washington State has no patient registry of valid users or amounts purchased. 178
175
State Representative Christopher Hurst argued that the majority of those claiming
medical need for marijuana are actually recreational users, perhaps 90%. 179 The Seattle Times
165
Suzanne Weiss, supra note 24 at 15.
Alex Altman, Why Legal Weed is Working in Colorado, Time.com (Jan. 2014) 1.
167
Suzanne Weiss, supra note 24 at 18.
168
Id.
169
Marty Ludlum & Darrell Ford, Colorado's 2010 Update to the Medical Marijuana Law: Three Problems, Three
Solutions, 2 Mustang J. of Law and Legal Studies (2011), 73-81.
170
Jacob Sullum, supra note 89 (the 70/30 rule stays in effect for 2014, after which the Governor’s advisory board
will make further recommendations).
171
David Michael Jaros, Perfecting Criminal Markets, 112 Colum. L. Rev. 1947 (2012) (noting that criminal law has
an unintended purpose of creating illegal markets).
172
Brian Bremner & Vincent Del Guidice, The mind-expanding economics of pot, Business Week (January 13, 2014)
11-12 (noting that production costs for legalized pot could drop 90%, leading to very low market prices).
173
Dan Frosch, States push to get the most out of marijuana taxes, New York Times, April 25, 2013, A14.
174
Suzanne Weiss, supra note 24 at 17.
175
Bob Young, supra note 82 at A11.
176
Id.
177
Id.
178
Id.
179
Id.
166
40
V. 6, Mustang Journal of Law & Legal Studies, 2014
wrote a series about a reporter who got medical marijuana approval after an eleven minute
consultation with no medical records of any kind. 180
Marijuana tourism is also a concern. For Washington, this is not much of an issue, as it
only borders two states, and one neighbor, Oregon, has already allowed for medical marijuana
and decriminalized possession. 181 For Colorado, marijuana tourism could become a real
problem. Colorado has 60 million tourists a year, and if just 5% purchase marijuana, that is 3
million sales a year. 182 Colorado’s number two industry is tourism. 183 Aspen approved the
legalization measure 3 to 1. 184 Vail, Colorado’s largest ski resort area approved it by 66%. 185
Home of Telluride resort approved it by 80%. 186
None of Colorado’s neighbors have decriminalized marijuana. 187 In fact, Wyoming
Highway Patrol has initiated a warning program for marijuana tourists. 188 Only two nearby
states (New Mexico and Arizona) have approved medical marijuana. 189 The Office of National
Drug Control Policy reported that drug busts in 22 states have found marijuana traced back to
medical purchases from Colorado. 190 Colorado does make a distinction between tourists and
locals. A state resident can purchase up to an ounce of marijuana at a time, while tourists can
only purchase one-fourth as much. 191
Colorado will have many details to work out during the first year of their program. Thre
is still an unsettled issue of role of marijuana in the workplace. 192 Colorado also will need to
decide if they will follow Washington’s example of a DUI standard for marijuana.
The federal reactions to the marijuana experiment have been mixed. In 2005, the
Supreme Court in Gonzales v. Raich held that the Controlled Substances Act applies even to
intrastate growers of marijuana and users for medical purposes. 193 This is an interesting time for
federal marijuana policy. Obama while as a candidate became famous for his memoirs which
180
Id.
Chuck Raasch, On the lookout for pot incursion, USA Today, Jan. 15, 2013, 3A.
182
Bruce Barcott, supra note 21 at 39.
183
Winnipeg Free Press, supra note 4 at A23.
184
Id.
185
Id.
186
Id.
187
Chuck Raasch, supra note 181.
188
Megan Schrader, Colorado pot stores struggle to meet customers’ demand, The Oklahoman, Jan. 3, 2014, 11a
(the signs on the Colorado-Wyoming border say “Don’t bring your Colorado-purchased marijuana into Wyoming”).
189
Chuck Raasch, supra note 181.
190
Id.
191
Jacob Sullum, supra note 89.
192
See Stacy A. Hickox, Drug Testing of Medical Marijuana Users in the Workplace: An Inaccurate Measure of
Impairment, 29.2 Hofstra L. & Emp. L. J. 273 (2012) (detailing the difficulty of defining impairment as related to
marijuana and the myriad of state proposals to combat the problem). See also Russell Rendall, Medical Marijuana
and the ADA: Removing Barriers to Employment for Disabled Individuals, 22 Health Matrix: J. of Law Med. 315,
(2012); and Marty Ludlum & Darrell Ford, Medical Marijuana and Employment Discrimination, 23.2 Southern Law
Journal, (2013), 289-310 (describing the difficulties of screening for medical marijuana and the conflict with the
Americans with Disabilities Act).
193
545 U.S. 1 (2005).
181
41
V. 6, Mustang Journal of Law & Legal Studies, 2014
portrayed his as a regular pot smoker in his youth. 194 But it is too early to break out the party
bongs yet. 195 The now infamous Ogden memo, which indicated that President Obama put
prosecution of federal drug laws as a low priority in states which had legalized medical
marijuana. 196
Almost immediately, other prosecutors indicated a desire to go after commercial medical
marijuana enterprises. 197 Recent crackdowns against marijuana businesses have occurred in
Washington, Colorado, and Montana. 198
Of course, Washington State and Colorado do not exist in isolation. Other states getting
into the action. Maine will likely pass a legalization bill soon. 199 The effort is being pushed by
Representative Diane Russell who plans to have the issue on the ballot soon. 200 Massachusetts is
also a supporter of marijuana, having recently enacted a medical marijuana program with 63%
voter support. 201 Arkansas narrowly lost a statewide initiative to allow medical marijuana (51%49%). 202
Oregon has already decriminalized marijuana, and may be ready to legalize recreational
use, 203 despite the loss on their current decriminalization law. 204 Montana is the only state to
lose ground on marijuana laws. 205 But supporters want to put decriminalization on the 2014
ballot. 206 Ohio recently decriminalized possession of paraphernalia with Senate Bill 337. 207
About 75% of Ohioans support medical cannabis. 208 Every state which borders Ohio already has
medical cannabis or is considering it. 209 New York is going to allow medical marijuana
program. 210 Alaska will have recreational marijuana on the ballot. 211
194
Tim Mullaney, These guys are high on pot, USA Today, April 8, 2013, 1A.
Kevin Fagan, supra note 6 at C1.
196
Memorandum from David W. Ogden, Deputy Att’y Gen., U.S. Dep’t of Justice to Selected U.S. Att’ys, et al.,
Investigations and Prosecutions in States Authorizing the Medical Use of Marijuana 1 (Oct. 19, 2009),
http://www.justice.gov/opa/documents/medical-marijuana.pdf.
197
Jennifer Medina, U.S. Attorneys in California set Crackdown on Marijuana, N.Y. Times (Oct. 7, 2011)
http://www.nytimes.com/2011/10/08/us/california-to-crack-down-on-medical-marijuana.html.
198
Sam Kamin and Eli Wald, supra note 14 at 883.
199
Alexandra White and Carolyn Witkus, How legal marijuana will affect troubled families, Christian Science
Monitor, March 4, 2013, http://www.csmonitor.com/Commentary/Opinion/2013/0304/How-legal-marijuana-willaffect-troubled-families.
200
Suzanne Weiss, supra note 24 at 17.
201
Id.
202
Id at 18.
203
Alexandra White and Carolyn Witkus, supra note 199.
204
Kevin Fagan, supra note 7.
205
Jessica Mayrer, Pipe dream? Missoula Independent, Nov. 22-29, 2012, 8.
206
Id.
207
David DeWitt, Local police not high on proposals to legalize weed, Athens News, Nov. 15, 2012 at 15.
208
Id.
209
Id.
210
Brian Bremner & Vincent Del Guidice, supra note 172 at 12 (Governor Andrew Cuomo announced the project
on January 8). See also Jeremy Lott, supra note 122 at 26 (limited use would be allowed, much less than the
California program).
211
Associated Press, The new normal, The Oklahoman, Jan. 3, 2014, 11a.
195
42
V. 6, Mustang Journal of Law & Legal Studies, 2014
California might legalize recreational use, even though Proposition 19 failed with 46% of
the vote just a few years ago. 212 California’s legalization is not really needed, since it is de
facto legalized now. 213 The lax standards for screening medical need for marijuana have been a
joke, at least in California’s case. However, in the 2012 election, four California towns voted to
prohibit medical marijuana dispensaries. 214
Big business is getting involved, as equity funds are getting involved in owning the 2000
outlets in the marijuana retail business. 215 Industry analysts expect the $1.5 billion legal
marijuana business to quadruple in five years. 216 One interesting development (not in progress,
but a pipe dream), would be for a major cigarette company to manufacture and market marijuana
products. Reynolds America has indicated it has no plans to enter the marijuana market. 217
Philip Morris was vague, but certainly indicated no intention of entering the market currently. 218
Conclusion
Policy implications are difficult to predict with certainty under any circumstance. As this
policy seems to be re-invented every few months, it is even more problematic. One lesson to
take from this experiment is the reality. Marijuana was legalized, and the sky did not fall. The
drastic warnings of ill consequences and society crumbling did not happen. This made the
opponents of legalization look silly and reactionary.
Colorado’s experience of Legal Day One (January 1, 2014) pointed out the reality of
marijuana. Sales exceeded $1 million dollars in the first 24 hours. For example, the 3D
Cannabis Center in Denver has averaged 25 customers a day for 3 years but on January 1 had
450 customers and turned away 60 more. 219 Similar results occurred in Denver’s other 17
stores. 220 Some purchases were pent up demand, and some were just those who wanted to make
history, purchasing recreational marijuana legally for the first time. 221 Sales were so high, some
store ran out of merchandise. 222 Demand so strong, prices doubled in the opening days. 223
Not everyone is cheering. Colorado Springs has opted out of recreational marijuana
sales, perhaps because of the 80 medical marijuana dispensaries already in their city. 224 The
number of cities opting out of marijuana sales keeps increasing. 225
Perhaps the second lesson from this experiment is that beauty lies in the beholder.
Proponents see Denver as a success. Opponents want nothing to do with marijuana sales. Both
212
Kevin Fagan, supra note 6.
Marty Ludlum & Darrell Ford, supra note 61.
214
Kevin Fagan, supra note 7.
215
Tim Mullaney, supra note 194.
216
Id.
217
Nicholas Geranios, US states to work on marijuana market, (Adelaide) Advertiser, Dec. 22, 2012, 76.
218
Id.
219
Megan Schrader, supra note 188.
220
Id.
221
Id.
222
Nick Gillespie, What Pot Legalization Could Teach Obamacare, Time.com (Jan. 2014) 1.
223
Id.
224
Megan Schrader, supra note 188.
225
Kirk Johnson, supra note 154.
213
43
V. 6, Mustang Journal of Law & Legal Studies, 2014
see the result in the window, but draw opposite conclusions on the desirability of what they see.
Colorado and Washington’s experiment with recreational marijuana sales shows that the balance
has tipped in favor of legalization. Time will tell if society embraces this change in treatment of
marijuana but the current political climate shows that the public supports legalization, and the
claims of impending doom from marijuana seem cartoonish and short-sighted. This is clearly
not the last word on marijuana in the United States.
44
V. 6, Mustang Journal of Law & Legal Studies, 2014
45
V. 6, Mustang Journal of Law & Legal Studies, 2014
A CRITICAL ANALYSIS OF THE JURISDICTION OF NIGERIA’S
INVESTMENT AND SECURITIES TRIBUNAL
Dr. Eric A. Okojie
Head of Department of Business Law
Faculty of Law
University of Benin, Benin City
L. E. Enakemere Esq
Benin City based Legal Practitioner
Abstract
The adjudication of matters within the capital market by the Investment and Securities
Tribunal as a court of first instance to the exclusion of regular courts has raised rumblings
within the legal community because of Nigerian’s chequered history with ouster clauses.
This is more so when the independence of the tribunal is questionable due to the power of
the Minister of finance to appoint the chairman of tribunal, criterion for membership of
the tribunal for legal practitioners is ones’ experience in capital market matter rather than
active legal practice so as to ensure strict compliance with the twin pillars of justice.
Adjudication by the tribunal is preferred by some because unlike the regular courts it is
not burdened with technicalities, arbitration is swift and like the regular courts, an
aggrieved party has a right to appeal. Despite these niceties, the agitation for the removal
of the exclusive jurisdiction has continued to heighten.
Unless there is a review of the provisions of the enabling Act on membership of the
tribunal; particularly for legal practitioners to the effect that such a member must be in
active legal practice prior to his appointment as a means of checkmating the frequent
complaints of lack of fair hearing at the sitting of the tribunal, the appellate courts will
continue to be burdened by such trivial but very important issues. Finally, there is also
the need to carryout public enlightenment campaigns to educate the public who form the
bulk of key investors in the capital market about the activities of the tribunal as an
alternative means of seeking relief.
Keywords: Investment and Security Tribunal, Security and Exchange Commission,
Exclusive Jurisdiction, Appeal, Capital market, Legal practitioners.
Introduction
In every country including Nigeria, there exist a financial system that is responsible for
regulating the financial environment of the economy, determining the types and amounts
of funds to be issued, cost of funds and the uses to which these funds are to be put. The
financial system is made up of two majors markets namely; the money market and the
capital market. The money market is the market for short-term funds and securities
including treasury bills, one-year treasury certificates, Central Bank notes, negotiable
46
V. 6, Mustang Journal of Law & Legal Studies, 2014
certificates, commercial papers, commercial and merchant bank savings and other funds
of less than one year duration. 1
The capital market on the other hand is the market for longer-term funds and securities
that tenor exceeds beyond one year. These include long-term loans, mortgage bonds
preference stocks, ordinary shares, Federal Government bonds (also called eligible
development stocks) and industrial loans and debentures. The capital market can be
defined as the section of the financial system that is responsible for channeling efficiently
funds from the surplus to the deficit economic units on a long-term basis. This market is
the source from which companies and industries obtain capital for expansion and
modernization and also from which government borrows on a long-term basis for
development purposes. 2
The capital market can also been seen as a network of institutions and individuals made
up of regulators and operators who together bring suppliers and users of capital and
facilitate the smooth operation of the market. These institutions that form the capital
market network includes investment banks, stockbrokers, issuing houses, underwriters,
venture capital companies, professional consultants, fund managers, development finance
companies, collective investments firms, and insurance companies. The statutory
regulator is the Securities and Exchange Commission while the self-regulatory agency is
the Stock Exchange. In Nigeria, there is the Nigerian Stock Exchange and the Abuja
Commodity Exchange. 3
Historical background of the Nigerian Capital Market.
The Capital Market is a network of institutions and mechanism through which medium
and long time funds are made available to businesses and instruments outstanding are
transferred among investors. It also establishes rules for fair trading practices and
regulates the trading activities of its members according to those rules. With the
diversification of the capital market by the introduction of different kinds of fund raising
and dividend yield instruments and the steady involvement of Nigerian companies in the
global capital market coupled with the entry of Pension Fund Managers, there is a felt
need to have a well balanced and properly constituted tribunal whose roles as an
adjudicatory body will at all times retain the investing public and industry players
confidence. 4
What can also be said of the regulatory agencies with the exception of the Investment and
Securities Tribunal is that they exercise disciplinary actions against practitioners in the
industry but in an administrative capacity or under an administrative proceeding.
However, it is now realized that a proper quasi judicial body is needed as an integral
mechanism of the capital market in order for such confidence to be retained at all times,
hence the establishment of the Investment and Securities Tribunal. 5
1
Ifuero O. O, PhD, “Capital Market imperfection and Community economic development in Nigeria”
being a paper presented at the Academy of Management, Nigeria on the 23rd of November 2005 at Abuja.
p3
2
Ibid, 3 - 4
3
Ibid.
4
This was despite the presence of other regulatory institutions of the Capital Market such as the Securities
and Exchange Commission, the Central Bank of Nigeria, Nigerian Stock Exchange, the Ministry of Finance
and the Chartered Institute of Stockbrokers.
5
In the United States, the Financial Industry Regulatory Authority performs a similar role. It was created
from the merger of the National Association of Security Dealers and the New York Stock Exchange’
47
V. 6, Mustang Journal of Law & Legal Studies, 2014
The history of the Nigerian Capital Market is not certain as there are various versions as
to when it all started for instance; one version states that it can be traced back to 1946,
with the floatation of 300,000 pounds bond by the then colonial Government to
implement its 10 year development plan. In 1959, the Lagos Stock Exchange was
established as a private company limited by guarantee and commenced operations in
1961. A year later, the Capital Issues Committee; 6 an ad-hoc non-statutory committee,
charged with the primary responsibility of regulating the timing of public issues was set
up. The C.I.C transformed into the Capital Issues Commission, following the
promulgation of the Capital Issues Commission Decree 1973.
In 1976, the Federal Government set up the financial systems review committee headed
by Dr. Pius Okigbo, to study the structure and operations of the financial system and
make recommendations to improve the capital market. A major recommendation by the
panel was the establishment of the Securities and Exchange Commission 7 to replace the
Capital Issues Commission. Consequently SEC was established in 1979 by the SEC Act
1979 which was later repealed and replaced by the SEC Decree 1988. Similarly the
Dennis Odife Panel was set up in 1996 and its recommendation resulted to the
promulgation of the Investments and Securities Act 8 which repealed the SEC Decree
1988. The Act expanded the regulatory and developmental responsibilities of the SEC to
include oversight on venture capital activities, commodity and futures exchanges as well
as collective investment schemes. The Act also provided for the establishment of the IST
charged with the responsibility of settling disputes arising from capital market
transactions. 9
Merits in resorting to Tribunals for settlement of disputes instead of the regular
Courts
One may question the rationale for the preference in the first instance the tribunal instead
of proceeding to a regular court in the knowledge that if either party is not satisfied with
the tribunal’s findings, that party will definitely rush to the Appeal Court, the answer may
not be farfetched from the advantages derivable from instituting proceedings before a
tribunal. Some of the advantages may include:
Informality in proceedings:
Being an administrative body and considering its composition, the tribunal has the
advantage of being informal in its proceedings as parties can successfully avoid the
unnecessary technical/legal pitfalls associated with the regular courts before proceeding
with their matter and represent themselves without recourse to legal practitioners
although it is advisable to secure the services of one. Over the last few years, however,
formality has crept into its proceedings. Also the tribunal like other self-regulatory
organizations has developed detailed rules and handbooks to regulate the arbitration
Regulatory Committee. It is now responsible for the NASDAQ Stock market and over the counter markets
and also administers investment professional exams such as the series 7 exams. By this consolidation, it
aims to eliminate regulatory overlap and cost ineffectiveness.
6
Hereinafter referred to as C.I.C
7
Hereinafter referred to as SEC
8
No.45, 1999
9
“Financial System Strategy, 2000” Lecture paper delivered at the Financial System Strategy 2020
International Conference. 4 – 6.
48
V. 6, Mustang Journal of Law & Legal Studies, 2014
proceedings. 10 In contrast, the procedures of the High Court is formal in nature and
involves a series of filing of processes by parties before the matter is finally set down for
hearing.
Swift resolution of disputes
Although there are no timeline within which the tribunal may dispose of a dispute, the
disputes before the tribunal are usually dispensed with expeditiously as soon as soon as
all relevant documents are before the tribunal. This is in contrast to the inordinate delays
in Court proceedings, although some progress is being made to speed up the duration of
dispensing with disputes in these Courts.
Lower cost of resolving disputes:
Considering its informal nature and swift resolution of disputes, the tribunal proceedings
has the advantage of cost effectiveness in dispute resolution when compared with the
High Courts. This is because, fewer papers are filed with a minimal filing fee, in some
cases there may be no legal representation and the award of the tribunal is swift.
Availability of an Appeal Process:
The Act creating the tribunal also provided an aggrieved party an outlet to seek redress to
the Court of Appeal if he/she is not satisfied with the tribunal’s decision. This is quite
commendable because in advanced jurisdictions like the United States of America,
without fear of reversal on appeal, securities arbitrators have been accused of deciding
cases without referring to precedent. Also, these securities arbitrators have been often
criticized for not having the requisite knowledge of the industry, the securities laws, and
the applicable basis of liability and there are no formal rules to follow, in deciding
claims. 11
The Investments and Securities Tribunal
The principal legislation establishing the Investment and Securities Tribunal is the
Investment and Securities Act 2007, 12 the tribunal further derives its powers from the
rules of procedures 2003 made in pursuant to Section 290 of the Act and Section 93(1)
and (2) of the Pension Reform Act, 2004 13 which in our humble view makes the tribunal
an option opened to aggrieved parties to seek redress. 14
10
For instance the Investment and Securities Procedure Rules (2003). See also Constantine N. K., “The
First Twenty Years” Fordham Urb. L.J. 1996, 483 – 490.
11
See Shelly R. J., “Arbitration in the Securities Field: Does the Present system of arbitration between
small Investors and Brokerage Firms really protect anyone” 21 J. Corp. L. (1996), 363 – 385.
12
Hereinafter referred to as the ISA Act. Section 274 provides for the establishment of the tribunal, while
Sections 276 – 297 of the Act which provides for the composition of the tribunal, term of office,
disqualification of members of the tribunal, resignation and removal, salaries, allowances and other
conditions of service of members of the tribunal, filling up of vacancies, chief registrar to the tribunal, other
staff of the tribunal, jurisdiction of the tribunal, funds of the tribunal, power to accept gifts, account and
audit, application of the funds of the tribunal, appeals from decisions of the Commission, powers and
procedures of the tribunal, right to legal representation, onus of proof, judgment of the tribunal, exclusion
of proceedings, appeal to the Court of Appeal, cost and further appeal.
13
Section 93(1) provides that “where either party is dissatisfied with the decision of the Commission or on
any matter referred to it under section 92 of the Pension Reform Act, such party may refer the matter to
arbitration in accordance with the Arbitration and Conciliation Act or to the Investment and Securities
Tribunal established under the Investment and Securities Act 1999” (now 2007). Section 93(2) further
provides that “where any person or body corporate is aggrieved or dissatisfied with any action or decision
49
V. 6, Mustang Journal of Law & Legal Studies, 2014
Composition:
The Tribunal is constituted by virtue of section 275 of the Act which provides for a full
time Chairman and nine members; 15 four of whom shall be full time members 16 and five
part time members. 17 The Chairman is the Chief executive and accounting officer and
shall be responsible for the overall control, supervision and administration of the
tribunal 18 and shall be a legal practitioner of not less than 15 years with cognate
experience in the operation of the Capital Market. 19 Appointment of the Chairman and
members is done by the Minister for Finance. 20 It is our humble view that this provision
does not guarantee the independence of the tribunal because appointment as a member of
the tribunal may be based on loyalty to the Minister and not on competence.
A quorum of three members is required for the tribunal to be properly constituted for the
purpose of exercising any jurisdiction conferred on it. 21 The Chairman is also empowered
under the Act to constitute a panel of three members from its membership whenever he
deems it necessary for the purpose of exercising its jurisdiction under the Act with a
member presiding as chairman of the panel a legal practitioner. 22 We humbly submit that
Section 276(2) confers too much powers on the chairman because he has the sole
prerogative to determine; without any guiding principles or reference to other members of
the tribunal on when it is deemed necessary to constitute a panel for the purpose of
exercising its jurisdiction.
The Chairman’s term of office shall be for five years and renewable for another term of
five years only while the members’ term of office shall be for four years and renewable
for another four years term only. 23 In order to ensure the credibility of membership of the
tribunal, the Act provides the grounds upon which a member of the tribunal may be
disqualified namely; if he becomes of unsound mind, if he becomes bankrupt or makes a
compromise with his creditors, or he is a convicted felon or any offences involving
dishonesty, or he is guilty of misconduct in relation to his duties and in the case of a
person who has a professional qualification; he is disqualified or suspended (other than
of the Commission under the Pension Reform Act, the aggrieved person or body may refer the matter to
arbitration under the Arbitration and Conciliation Act or to the Investment and Securities Tribunal
established under the Investment and Securities Act 1999”(now 2007).
14
Our opinion is based on the wordings “may” in both subsections which convey the meaning that
reference to the tribunal is optional and not mandatory.
15
See Section 275(1)(a) of the Act
16
See Section 275(1)(b) of the Act which further provides that of the four full time members, three must be
legal practitioners of not less than 10 years with cognate experience and the fourth member shall be a
person knowledgeable in capital market matters and shall devote themselves to issues relating to
adjudication and shall not exercise any administrative functions.
17
Section 275(1)(c) provides that the five other part members of the tribunal shall be persons of proven
ability and expertise in corporate and capital market matters
18
275(2)
19
275(1)(q)
20
275(1)
21
See Section 276.
22
See section 276 (2)(a)
23
See Section 277(1) and (2)
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V. 6, Mustang Journal of Law & Legal Studies, 2014
his own request) from practicing his profession in any part of Nigeria by the order of any
competent authority made in respect of him personally. 24
Jurisdiction of the tribunal
Section 284 of the Act provides that the Tribunal shall to the exclusion of any court of
law or body in Nigeria exercise jurisdiction to hear and determine any question of law or
disputes: a decision or determination of the Commission in the operation and application
of this Act, and in particular, relating to any dispute, between capital market operators;
between capital market operators and their clients; between an investor and a securities
exchange or capital trade point or clearing and settlement agency; between capital market
operators and self regulatory organisation; the Commission and self regulatory
organisation; a capital market operator and the Commission; an investor and the
Commission; an issuer of securities and the Commission; and disputes arising from the
administration, management and operation of collective investment schemes. he Tribunal
shall also exercise jurisdiction in any other matter as may be prescribed by an Act of the
National Assembly. In the exercise of its jurisdiction the Tribunal shall have the power to
interpret any law, rules or regulation as may be applicable. 25
The matters enumerated under section 284 is civil in nature as the Act mandates the
commission if in the course of its investigations discovers the evidence of criminality to
inform the appropriate prosecuting authority. 26 It is therefore evident from a combined
reading of Sections 284 and 304 that it is not stipulated that the tribunal shall assume
jurisdiction over criminal matters but only in respect of civil jurisdiction. In Okeke v.
SEC, 27 the appellant was appointed in June 2003 as a non executive director of Cadbury
Nigeria Plc. In June 2006, the annual account report of the company was sent to the first
respondent and on reviewing the report expressed some concerns regarding declining
profitability, worsening leverage ratio misstatement in the account, et al. consequent upon
the Chairman of the company appointed an independent firm, Pricewaterhousecoopers ltd
to investigate the said allegations. The report of Pricewaterhousecoopers was later sent to
the 1st respondent who constituted an in-house committee and administrative proceedings
committee (2nd respondent) to investigate the allege misstatement the company’s account.
However, the company, its auditors and directors challenged the competence of the 2nd
respondent to conduct the investigation by instituting an action at the Federal High Court,
Abuja. The 2nd respondent proceeded with its investigation and delivered its findings to
the 1st respondent on April 28th 2008. Consequent upon the appellant applied to the
Federal High Court for a judicial review of the decision of the 2nd respondent on grounds
of jurisdiction among others. The suit was dismissed by the Federal High Court for lack
of jurisdiction. On appeal the Court of appeal, the court while dismissing the appeal and
24
See Section 278 (1) (a) to (e). Section 279 in addition provides that a member shall also be removed on
the order made by the Minister on the ground of proven charge of misbehavior or incapacity after due
inquiry has been made and the member concerned has been duly informed of the charge against him and
given an opportunity of being heard in respect of the charge.
25
See Section 284 (1) (a) – (f), (2) and (3).
26
See Section 304 of the Act
27
(2003) LPELR 20355 (CA)
51
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affirming the ruling of the lower court in part held that the 2nd respondent cannot
adjudicate over any matter with criminal flavour. 28
Does the tribunal have exclusive civil jurisdiction?
It is our humble submission that from the provision of Section 294 of the Act, the tribunal
is conferred with exclusive jurisdiction in respect of the matters stated in the Act which
are civil in nature 29 and the tribunal therefore lacks the competence to try criminal
matters, in fact in Baba v. NCATC,30 the apex court made it clear that “when a person is
accused of a crime, once the hearing body is anything less than jurisdiction body vested
with criminal jurisdiction , an administrative body lacks the jurisdiction and competence
to try the issue. For such a body is not a court, much less a criminal court, only a court
vested with criminal jurisdiction is competent to hear and determine such an issue…” 31
Controversy may arise when that provision is read in conjunction with Section 251(1) (p)
and (r) of the Constitution, which grants exclusive jurisdiction to the Federal High Court
on matters of administration or the management and control of the Federal Government
or any of its agencies 32 and in matters of any action or proceedings for a declaration or
injunction affecting the validity of any executive or administrative action or decision by
the Federal Government or any of its agencies.
It can be seen from the provisions of Section 251 (1) (d) that the paragraph also speaks of
parties when it said “banks, other financial institutions…” without enumerating the
subject matter. The question that may be asked here is whether the Federal High Court
can assume jurisdiction over a subject matter that relates to a capital market transaction
where the parties or one of them is a bank or any other financial institution? The answer
appears to be in the affirmative if the ejusdem generis rule of interpretation is adopted to
interpret Section 251(1) (d) as were in the cases of Jammal Steel Structures Ltd .v. ACB 33
and Bronik Motors Ltd .v. Wema Bank Ltd. 34
In Associated Discount House Ltd .v. Almagated Trustees Ltd, 35 the Supreme Court
while setting aside the decision of the Appeal Court adopted its earlier definition of a
bank in Federal Mortgage Bank v. NDIC 36 as follows,
"The word bank is not defined in the Constitution as
in the interpretation Act. However in the ordinary
grammatical meaning, it means an organization
that provides financial services".
In that case, an appeal arose from an action filed by the Appellant against the
Respondent. The parties had entered into an agreement whereby the Appellant advanced
by way a commercial paper facility the sum of N120 m to the Respondent's company for
90 days only subject to an interest payable on the commercial paper. The facility was
completely drawn. The security for the facility was a house, property of the Respondent
28
Per Amina Adamu Augie JCA.
The exclusion jurisdiction relates to matters listed in Section 284 (1) - (3).
30
(1991) 5NWLR pt.192 @ 388
31
Ibid, per Nnaemeka Agu, JSC
32
In this case, the Securities and Exchange Commission
33
(1973) NSCC 619
34
(1983) NSCC 226
35
SC 289/2002
36
(1999) 2 NWLR pt. 591 @ 333.
29
52
V. 6, Mustang Journal of Law & Legal Studies, 2014
situate at 24A Campbell Street, Lagos, and the parties covenanted that the documents
shall be deposited with the Appellant. At the expiration of 90 days, the money so invested
was not paid back and worse still; the Respondent caused the sum to be rolled over
without the express consent or permission of the Appellant.
When the Appellant made several demands for the repayment of the facility and the
interest due, and the Respondent refused or failed to pay, the Appellant was forced to
institute an action in the Federal High Court. The Respondent raised a preliminary
objection on the ground that the Federal High Court has no jurisdiction to entertain the
case. The objection succeeded and the Federal High Court transferred the case to the
Lagos High Court pursuant to section 22(2) of the Federal High Court Act which now
became seised of the case. When the Lagos State High Court now seised of the matter
proceeded with the case the Respondent once again raised a preliminary objection on the
ground that the Lagos High Court cannot entertain the action as it lacks the requisite
jurisdiction. This objection was refused, and dismissed. Piqued by the ruling of the High
Court, the Respondent filed a notice of appeal. The Court of appeal allowed the appeal
and held that the Lagos High Court lacked the jurisdiction to adjudicate on the matter.
Concerning the interpretation that will be given to Section 251(1)(r), it can be said that
the Commission is an agency of the Federal Government of Nigeria which is amenable to
the jurisdiction of the Federal High Court especially where a declaration or injunction is
sought against it in any action or proceedings. This view is further entrenched by virtue
of the supervisory powers the Minister of Finance over the affairs of the Commission and
the appointment of its members. 37
A party may be tempted to argue that the provision of the Act granting exclusive
jurisdiction to the tribunal is void to the extent that it attempts to restrict the jurisdiction
of the Federal High Court in certain subject matters taking into consideration that Section
251(1) began with the phrase:
“Notwithstanding anything to the contrary
contained in this Constitution and in addition to
such other jurisdiction as may be conferred
upon it by an Act of the National Assembly…”
It can be said of that the proviso speaks of addition of jurisdiction by way of subject
matters or parties that may be made amenable to the exclusive jurisdiction of the Federal
High Court and does not speak of subtraction of subject matter or parties or restriction of
jurisdiction.
Subject matter jurisdiction under the Act
Because in-depth knowledge of the disputes that are frequently encountered in the capital
market sector is required in resolving same, it has made it more apparent that the tribunal
is always called upon to determine the following types of cases to the exclusion of any
other Courts except in the case of appeal; a decision or determination of the Commission
in the operation and application of this Act, and in particular, relating to any disputebetween capital market operators; between capital market operators and their clients;
between an investor and a securities exchange or capital trade point or clearing and
settlement agency; between capital market operators and self regulatory organization; the
37
See in particular; Sections 5 and 8 of the Act which provides for the requisite recommendation of the
Minister for the appointment and removal of the chairman and members of the board of the Commission.
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V. 6, Mustang Journal of Law & Legal Studies, 2014
Commission and self regulatory organization; a capital market operator and the
Commission; an investor and the Commission; an issuer of securities and the
Commission; and disputes arising from the administration, management and operation of
collective investment schemes and The Tribunal shall also exercise jurisdiction in any
other matter as may be prescribed by an Act of the National Assembly. 38 We humbly
submit that the provision of Section 284(1) is mandatory because the word “shall” which
renders the right of a litigant to seek redress before a different court non existent except
on appeal. In Bamaiyi .v. A.G. Federation, 39 the Supreme Court held that:
“it is true that the word “shall” in the ordinary
meaning of the word, connotes a command, and that
a peremptory meaning, which is generally
imperative and mandatory. It has the significance of
excluding the idea of discretion to impose a duty.
Where a provision provides that a thing shall be
done, the natural meaning is that a peremptory
mandate is enjoined” 40
Subject matter jurisdiction under the Pensions Reform Act
Under the Pensions Reform Act 41 dissatisfied and aggrieved parties or body corporate
are at liberty to refer the decisions of the National Pension Commission or any matter
referred to in Section 92 of the Reform Act to arbitration in accordance with Arbitration
and Conciliation Act or Securities and Investment Tribunal. 42 The classes of dispute that
may be referred to the Tribunal from the National Pension Commission include:
misappropriation of client's money by a pension funds administrator or a pension funds
custodian; non-payment of pension as at when due by a pension funds administrator; noncrediting or wrong crediting of a beneficiary's contributions or benefits arising from the
investments of his fund by a pension funds administrator or pension funds custodian;
disputes over pensions payments arising between the pensioners or the beneficiaries and
the pension funds administrator or pension funds custodian and the pension commission;
disputes arising between a pension funds administrator and pension funds custodian;
disputes arising from the interpretation of the rules, regulations and other guidelines
made by the pension commission; disputes arising from any decision made or notice
issued by the pension commission; appeals against any disciplinary measure taken by the
pension commission against any practitioner; appeals against any decision to delicense
any pension funds administrator or pension funds custodian by the pension commission;
and disputes or claims arising from misrepresentation or false statements in any pension
funds administrator's reports, prospectus and other pension investments documents. 43 The
Act however confers jurisdiction of criminal matters on the Federal High Court. 44
38
See Section 284(1) (a) – (f) and (2) of the Act. These are matters of a civil nature but when it has
criminal flavour, then it has no jurisdiction in such a matter because it is only an administrative body. See
Ajayi v. SEC. Appeal No:CA/L/200/M/2005 and Okeke v. SEC (2003) LPELR 20355 (CA)
39
(2001) 90 LRCN 2738.
40
Ratio 8. See also Achineku .v. Ishagba (1988) 4 NWLR pt.89@ 411.
41
2004
42
See Section 93 of the Act.
43
We humbly submit that although these classes of dispute are not expressly provided for under the Act,
they are however covered by the provision of Section 92(1) of the Act.
44
See Section 91 of the Act.
54
V. 6, Mustang Journal of Law & Legal Studies, 2014
Appellate Jurisdiction of the Tribunal
The tribunal also exercises appellate jurisdiction and further lays down the procedures for
the appeal process It provides that a person aggrieved by any action or decision of the
Commission under this Act, may institute an action in the Tribunal or appeal against such
decision within the period stipulated under this Act with a proviso that the aggrieved
person shall give to the Commission fourteen days notice in writing of his intention to
institute an action or appeal against its decision. 45 The Act further provide that such
appeal under the Act shall be filed within a period of thirty days from the date on which a
copy of the order which is being appealed against is made, or deemed to have been made
by the Commission and it shall be in such form and be accompanied by such fees as may
be prescribed, provided that the Tribunal may entertain an appeal after the expiry of the
said period of thirty days if it is satisfied that there was sufficient cause for the delay. 46
On receipt of an appeal the Tribunal may, after giving the parties an opportunity of being
heard, make such orders thereon as it deems fit, confirming, modifying or setting aside
the order appealed against. 47 The Tribunal shall cause a copy of every order so made to
be forwarded to the parties to the appeal and to the Commission. The Tribunal, shall in
the exercise of its powers under this Act, conduct its proceedings in such manners as to
avoid undue delays and shall dispose of any matter before it finally within three months
from the date of the commencement of the hearing of the substantive action. 48
Aggrieved persons who are dissatisfied with a decision of the tribunal may further appeal
against such decision to the Court of Appeal if; the decision was taken in the exercise of
its appellate jurisdiction, on points of law only; 49 or on points of mixed law and facts if it
is a final decision taken in the exercise of its original jurisdiction, 50 or on point of law
only; if it is an interlocutory decision of the tribunal. 51
The Act finally provides that without prejudice to the power of the Tribunal to review its
own decision, only persons who participated in the proceedings of the Tribunal may
appeal against the decision of the Tribunal. 52 We humbly submit that this subsection is
may prove to be too narrow in interpretation as it may appear that the same persons
before the tribunal are the only persons with a right to appeal to the Court of Appeal. This
is because for instance, problems may arise when ownership of stock or bond (which is
affected by the decision of the tribunal) has changed. What now happens to the new
owners who may want to challenge the tribunal’s decision at the Court of Appeal? Or
when one of the parties dies before the decision is appealed against, can’t such a person
be substituted by the person upon whom the propriety right devolves? Section 295(2)
therefore seems to act as a legal disability against such persons because although they
now have an interest in the dispute, but because they were not involved at the
proceedings of the tribunal they can not appeal against same at the Court of Appeal. We
45
Section 289 (1) of the Act.
Section 289 (2) of the Act.
47
Section 289 (3) of the Act.
48
Section 289 (4) of the Act.
49
Section 295(1)(a) of the Act
50
Section 295 (1)(b) of the Act
51
Section 295 (1)(c) of the Act
52
Section 295(2) of the Act.
46
55
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therefore recommend that the word “persons” be amended to “parties” in order to avoid
unnecessary confusion.
Proceedings before the Tribunal:
The proceedings of the tribunal are provided for by the Investments and Securities
Tribunal (Procedure) Rules 2003. The overriding objective of the Rules is to enable it
with the assistance of parties to deal fairly and justly with any case brought before it by
providing a reliable, informed, expedient, flexible and affordable dispute resolution
mechanism that will be acceptable to all stakeholders and industry players and sufficient
enough to retain public confidence in it especially in ensuring that equality of parties are
maintained and undue delay avoided. 53 The proceedings of the tribunal are expected to be
similar to that of a regular court considering that the proceedings of the tribunal are
deemed to be a civil court for all purpose. 54
Judgment and Enforcement of Award of the Tribunal
The Tribunal on hearing the parties may confirm, modify or set aside an order of the
Commission. Section 293 (1) of the Act also provides that the Tribunal’s judgment shall
be in a written form and may impose sanctions such as fines, suspensions, withdrawal of
license, order specific performance or restitution.
The award or judgment of the Tribunal is not self executing but becomes effective upon
its enrolment or registration at the registry of the Federal High Court by the successful
party. This goes further to confirm that the Tribunal is not a superior court of record
although an appeal against its decision does not lie on the Federal High Court or the High
Court of a State but to the Court of Appeal. On the contrary, registration and enforcement
of its award by the Federal High Court confirms and puts the Tribunal on the same
pedestrian as the Federal High Court. 55 A dissatisfied party may bring an application
before the Federal High Court to refuse the enrolment or registration on the ground that
the trial was vitiated by one form of irregularity or the other. This may be a regular
objection when one bears in mind that some of the members of the Tribunal are not legal
practitioners. A judge versed in the ways of civil procedure may likely accept such
argument and hold that it will amount to abuse of judicial process if he has to give
validity to such award or judgment.
The United States Securities and Exchange Commission
The Securities and Exchange Commission is the Federal agency primarily responsible for
administering and enforcing federal securities laws. The SEC strives to protect investors
by ensuring that the securities markets are honest and fair. When necessary, the SEC
enforces securities laws through a variety of means, including fines, referral for criminal
prosecution; revocation or suspension of licenses and injunctions. The commission is
comprised of five members appointed by the president; one position expires each year.
No more than three members may be from one political party.
Applicable Securities laws
53
See Rule 2(1) – (4) of Investments and Securities Tribunal (Procedure) Rules 2003.
See Section 290(3) of the Act.
55
See Section 293(3) of the Act.
54
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Before the October 29, 1929, stock market crash on Wall Street, a company could issue
stock without disclosing its financial status. Many bogus corporations sold stocks,
eventually leading to the disastrous plunge in the market and an ensuring panic.
Securities Act of 1933 56
From the havoc wrecked by the crash came the first piece of Federal legislation, The
Securities Act which regulates the public offering of new issues. All public offerings of
securities in inter-state commerce or through the mails must be registered with the SEC
before they can be offered and sold, subject to exemptions for specifically enumerated
types of securities, such as government securities, non public offerings, offerings below a
certain amount and intrastate offerings. The registration provisions apply to issuers of
securities or others acting on their behalf. Issuers must file a registration statement with
the SEC containing financial and other pertinent data about the issuer and the securities
that are being offered. The act also prohibits fraudulent or deceptive practices in the offer
or sale of securities, whether or not the securities are required to be registered.
Securities Exchange Act of 1934
The Act transferred responsibility for administration of the 1934 from the Federal Trade
Commission to the newly created SEC. The 1934 Act also provided for federal regulation
of trading in already issued and outstanding securities. Other provisions include
disclosure requirements for publicly held corporations; prohibitions on various
manipulative or deceptive devices or contrivances; SEC registration and regulation of
brokers and dealers; and registration; oversight and registration of national securities
exchanges, associations, clearing agencies, transfer agents, and securities information
processors. The SEC also has the power to impose sanctions pursuant to administrative
proceedings for violation of the Act and may institute legal proceedings to enjoin the acts
of management officials involving breaches of fiduciary duties or personal misconduct
and may bar such officials from office. These two laws i.e the Securities Act 1933 and
the Securities Exchange Act 1934 along with the Trust Indenture Act of 1939, the
Investment Company Act of 1940, the Investment Advisers Act of 1940 and the public
utility holding company act of 1935 make up the bulk of federal securities laws under the
jurisdiction of the SEC.
SEC Enforcement Authority
The Commission enforces the myriad laws and regulations under its jurisdiction in a
number of ways. The SEC may seek a court injunction against acts and practices that
deceives investors or otherwise violate securities laws; suspend or revoke the registration
of brokers, dealers, investment companies, and advisers who have violated securities
laws, refer persons to the Justice Department for Criminal Prosecution in situations
involving criminal fraud or other willful violation of securities laws; and bar attorneys,
accountants and other professionals from practicing before the commission. The SEC
may conduct investigations to determine whether a violation of federal securities laws has
occurred. The SEC has the power to subpoena witnesses, administer oaths, and compel
the production of records anywhere in the United States. Generally, the SEC initially
conducts an informal inquiry, including interviewing witnesses. This stage does not
56
(as amended through P.L. 112 – 106, Approved April 5, 2012)
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usually involve sworn statements or compulsory testimony. If it appears that a violation
has occurred, SEC staff members request an order delineating the scope of inquiry.
Witnesses may be subpoenaed in a formal investigation. A witness compelled to testify or
produce evidence is entitled to see a copy of the order of investigation and be
accompanied, represented and advised by counsel. A witness also has the absolute right
to inspect the transcript of his or her testimony. Typically the same privileges one could
assert in a judicial proceeding such as the constitutions fourth Amendment prohibition
against unreasonable searches and seizures and the Fifth Amendment’s privilege against
self incrimination apply in an SEC investigation. Proceedings are usually conducted
privately to protect all parties involved, but the commission may publish information
regarding violations uncovered in the investigation. In a private investigation, a targeted
person has no right to appear to rebut charges. In a public investigation, however; a
person must be afforded a reasonable opportunity to cross-examine witnesses and to
produce rebuttal testimony or evidence, if the record contains implications of wrong
doing. When an SEC investigation unearths evidence of wrong doing the commission
may order an administrative hearing to determine responsibility for the violation and
impose sanctions. Administrative proceedings are only brought against a person or firm
registered with the SEC, or with respect to a security registered with the commission.
Offers of settlement are common. In these cases the commission often insists upon
publishing its findings regarding violations. An administrative hearing is held before an
administrative law judge, who is actually and independent SEC employee. The hearing is
similar to that of a non jury trial and may be either public or private. After the hearing,
the judge makes an initial written decision containing findings of fact and conclusions of
law. It either party requests, or if the commission itself chooses, the commission may
review the decision. 57
The SEC must review cases involving a suspension, denial, or revocation of registration
and may request oral argument will study briefs and may modify the decision including
increasing the sanctions imposed. Possible sanctions in administrative proceedings
include censure, limitations on the registrant’s activities, or revocation of registration. In
1990 SEC powers were expanded to include the authority to impose civil penalties of up
to five hundred thousand dollars to order disgorgement of profits and to issue cease and
desist orders against persons violating or about to violate securities laws, whether or not
the persons are registered with the SEC. 58
The United States Court of Appeals for the District of Columbia or another applicable
Circuit Court of Appeals has jurisdiction to review most final orders from an SEC
administrative proceeding. Certain actions by the commission are not reviewable. The
SEC may request an injunction from a Federal District Court if future securities law
violations are likely or if a person poses a continuing menace to public. An injunction
may include a provision that any future violation of law constitutes contempt of court.
The SEC may request further relief, such as turning over profits or making an offer to
rescind the profits gained from an insider trading transaction. In cases of pervasive
corporate mismanagement, the SEC may obtain appointment of a receiver or of
independent receiver or of independent directors and special counsel to pursue claims on
57
58
See Section 22 of the Act which provide for hearing by the Commission.
See Section 24 of the Act which provides for penalties.
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behalf of the corporation. Willful violations may be punished by fines and imprisonment.
The SEC refers such cases to the Department of Justice for criminal prosecution. 59
Conclusion:
It is our humble view that in constituting the tribunal, the framers of the investments and
securities Tribunal Act, 2007 intended that the tribunal shall have exclusive jurisdiction
in matters involving the capital and the practitioners in the capital market should be the
arbiters of their disputes with minimal interference from the regular courts. The
intendments; particularly the first has received judicial affirmation in a plethora of cases
and as things stands, the regular Courts lacks jurisdiction capital market related disputes
is a non issue except on appeal or the disputes are of a criminal nature at first instance.
This arrangement is commendable as it reduces the risk of using technical shortcomings
in an opponent’s case to prevent the tribunal from hearing the case on the merit. It can be
said that proceedings at the tribunal leans much in favour of arbitration than litigation
although; in deciding which method to adopt, the framers of the Act resorted to adhere to
court procedures. Such procedures are also consistent with arbitration as they are used
commonly in commercial matters where documentary evidence speaks more than parol
evidence. This is similar to the practice in the United States of America and international
practice.
Finally we also contend that despite the advantages in resolving disputes by the tribunal,
it does not mean that the provisions of the enabling Act is perfect on all fours; hence the
need for consequential amendments in the relevant areas like the power of the
supervisory Ministry of finance to appoint the Chairman of the tribunal inorder to ensure
its independence.
59
See Section 25 of the Act which provides for jurisdiction of other Government Agencies over securities.
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60