BROOKLYN
LAW REVIEW
VOLUME 78
FALL 2012
NUMBER 1
TABLE OF CONTENTS
ARTICLES
Righting Others’ Wrongs: A Critical
Look at Clawbacks in Madoff-Type
Ponzi Schemes and Other Frauds
Amy J. Sepinwall
1
Rescuing Dignitary Torts from the
Constitution
Cristina Carmody Tilley
65
NOTES
Giving Battered Immigrant Fiancées a
Way Out of Abusive Relationships:
Proposed Amendments to the
Immigration and Nationality Act
Adam B. Horowitz
123
Softwood Lumber’s “Termite” Problem:
Why the Extension of the 2006
Softwood Lumber Agreement Is Right
for Softwood Lumber but Wrong for the
Multilateral Trading System
K. Craig Reilly
165
Count Your Chickens Before They
Hatch: How Multiple Pregnancies
Are Endangering the Right to
Abortion
Priyanka Shivakumar
201
“Only Dust Remains[?]”: The 9/11
Memorial Litigation and the Reach
of Quasi-Property Rights
Patrick J. Mulqueen
231
Combating Inaccuracies in Criminal
Background Checks by Giving Meaning
to the Fair Credit Reporting Act
271
Noam Weiss
ARTICLES
Righting Others’ Wrongs
A CRITICAL LOOK AT CLAWBACKS IN MADOFFTYPE PONZI SCHEMES AND OTHER FRAUDS
Amy J. Sepinwall†
INTRODUCTION
We typically expect wrongdoers to redress the victims of
their transgressions.1 But do those who innocently benefit from
wrongdoing owe restitution to the victims of the wrong? Irving
Picard, the trustee who has been charged with recovering and
distributing money to the victims of Bernie Madoff’s Ponzi
scheme, obviously thinks so.2 Picard has filed over one
†
Assistant Professor, Department of Legal Studies and Business Ethics, The
Wharton School, University of Pennsylvania. B.A., McGill University, 1997; M.A.,
McGill University, 1999; J.D., Yale Law School, 2004; Ph.D., Philosophy, Georgetown
University, 2010. For helpful comments and suggestions, I am grateful to Dan Cahoy,
David Grey, Peter Henning, Waheed Hussain, David Luban, Richard Shell, Andy
Siegel, Alan Strudler, and Bill Tyson, as well as audiences at Wharton and the 2011
Law and Society Annual Meeting. This paper was selected for the 2012 Huber Hurst
Research Seminar in Business Law, Legal Studies, and Ethics, and benefited greatly
from feedback received there. Generous support was provided by the Dean’s Research
Fund at Wharton as well as the Wharton Legal Studies Research Fund. Hilary
Greenwald and Joyce Shin provided excellent research assistance. All errors that
remain are my own.
1
See, e.g., 1 FRANCIS HILLIARD, THE LAW OF TORTS OR PRIVATE WRONGS 82
(1859) (“The liability to make reparation for an injury rests upon an original moral
duty, enjoined upon every person, so to conduct himself or exercise his own rights as
not to injure another.” (citation omitted) (emphasis omitted)); John C.P. Goldberg, The
Constitutional Status of Tort Law: Due Process and the Right to a Law for the Redress
of Wrongs, 115 YALE L.J. 524, 541-44 (2005) (describing the goal of tort law as seeking
redress for private harm). For a searching review of the ways in which federal agencies
have acted to compel disgorgement from wrongdoers and, in some cases, have then
sought to return ill-gotten gains to the wrongdoers’ victims, see generally Adam S.
Zimmerman, Distributing Justice, 86 N.Y.U. L. REV. 500 (2011).
2
See infra notes 119-20 and accompanying text. The Securities and Exchange
Commission (SEC) defines a Ponzi scheme as “an investment fraud that involves the
payment of purported returns to existing investors from funds contributed by new
1
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thousand clawback suits,3 seeking to recover any money
“winning investors” realized in excess of their investment and
to return this money to the Madoff “losers,”4—i.e., those who
lost some or all of their principal when the Ponzi scheme went
bust.5 Kenneth Feinberg, former Special Master for the
September 11 Victims Compensation Fund,6 therefore quips
that the Madoff clawback suits have Picard “taking from Peter
to pay Paul.”7 Importantly, the “Peters” in these suits include
entities or individuals who are believed to have been innocent of
any wrongdoing—there is no allegation that they knew or
should have known of the fraud.8 Thus, the Madoff case provides
investors.” SEC, Ponzi Schemes—Frequently Asked Questions, http://www.sec.gov/
answers/ponzi.htm (last visited Nov. 1, 2012).
3
Times Topics: Irving H. Picard, N.Y. TIMES, http://topics.nytimes.com/topics/
reference/timestopics/people/p/irving_h_picard/index.html (last updated June 25, 2012);
see also Lisa Sandler & Bob Van Voris, Madoff Trustee Defends “Clawbacks” in U.S.
District Court, BLOOMBERG (Aug. 23, 2011, 9:10 AM), http://www.bloomberg.com/news/
2011-08-23/madoff-trustee-defends-1-6-million-clawback-suit-in-u-s-district-court.html.
4
I follow the bankruptcy trustee in referring to those who had withdrawn
amounts equal to or greater than their principal investment as “winners,” and to those
who had not yet recovered all—or perhaps even any—of their principal when the
scheme collapsed as “losers.” Nonetheless, I note that this is a tendentious way of
describing the two categories of investors, since it implies that there is something
undeserved about the money the “winners” obtained. See Clarence L. Pozza, Jr. et al., A
Review of Recent Investor Issues in the Madoff, Stanford and Forte Ponzi Scheme Cases,
10 J. BUS. & SEC. L. 113, 117 (2010) (“Ponzi scheme investors . . . are often regrettably
characterized as ‘winners’ and ‘losers.’ This dichotomy tends to prejudge the equitable
collection of funds and distribution to Ponzi victims.” (footnote omitted)).
5
See, e.g., David Ellis, Madoff Investors May Have to Cough Up Profits,
CNNMONEY (July 26, 2010, 10:52 AM), http://money.cnn.com/2010/07/26/news/
companies/madoff_investors/index.htm; Ashby Jones, Madoff “Winners” Beware: Irv
Picard Hasn’t Gone Away, WSJ LAW BLOG (July 26, 2010, 9:14 AM), http://blogs.wsj.com/
law/2010/07/26/madoff-winners-youre-forewarned-irv-picard-hasnt-gone-away/.
6
See, e.g., Margaret L. Shaw, Madoff Victim Compensation: Interview with Ken
Feinberg, 16 DISP. RESOL. MAG., Winter 2010, at 11. Kenneth Feinberg has also overseen
compensation funds for victims of the Virginia Tech shootings, the BP oil spill, and
Holocaust reparations. See generally FEINBERG ROZEN, LLP, http://www.feinbergrozen.com/
(last visited Oct. 1, 2012).
7
See Shaw, supra note 6, at 11.
8
I rely here on a standard definition of fraud. See, e.g., BLACK’S LAW
DICTIONARY FREE ONLINE (2d ed.), http://thelawdictionary.org/fraud/ (last visited Sept.
7, 2012) (“Fraud consists of some deceitful practice or willful device, resorted to with
intent to deprive another of his right, or in some manner to do him an injury.”). While
many of those who have been targeted for clawbacks are innocent of the fraud, see, e.g.,
Richard Sandomir, Actions of Madoff Victims’ Trustee Will Be Reviewed, N.Y. TIMES,
July 28, 2011, at B15, Picard alleges that many others knew or should have known.
Most prominent among those whom the trustee accuses of having known about, or else
been willfully blind to, the scheme, are Fred Wilpon and Saul Katz, real estate moguls
and part owners of the New York Mets, who had invested their company’s revenues
with Madoff. See, e.g., Jeffrey Toobin, Madoff’s Curveball: Will Fred Wilpon Be Forced
to Sell the Mets? NEW YORKER (May 30, 2011), http://www.newyorker.com/reporting/
2011/05/30/110530fa_fact_toobin?printable=true&currentPage=all; Bob Van Voris,
Madoff Trustee May Do What Bernie Didn’t: Give Victims Profit, BLOOMBERG (Feb. 11,
2011, 12:01 AM), http:// www.bloomberg.com/news/2011-02-11/madoff-trustee-may-do-
2012]
RIGHTING OTHERS’ WRONGS
3
an opportunity to explore the grounds and bounds of restitution
as between the innocent beneficiaries and victims of a wrong.
We shall see that the questions of whether, when, and
why innocent winners in a financial fraud should be compelled
to restitute the fraud’s losers are both underserved by existing
doctrine9 and understudied by scholars.10 Perhaps nowhere is
something-bernie-never-did-give-victims-real-profit.html. The company used its Madoff
accounts as a kind of bank, depositing money until it was needed for payroll or other
expenses, withdrawing the needed funds, and then beginning the cycle anew. Toobin,
supra; see also Richard Sandomir, Trustee Says Mets Saw Madoff as House Money, N.Y.
TIMES, Feb. 21, 2012, at B11. Over the years, Wilpon’s company deposited roughly $700
million, and withdrew roughly $1 billion (the $300 million in excess of the company’s
deposits was taken to constitute profits on the investment). See, e.g., Holman W.
Jenkins, Jr., Madoff and the Mets: How the “Extremely Wealthy” Allowed the Madoff Fraud
to Endure, WALL ST. J. (BUSINESS WORLD) (Feb. 8, 2011, 9:12 PM), http://online.wsj.com/
article/SB10001424052748704364004576132201926195.html.
Picard filed a lawsuit against Wilpon and his partners, seeking to claw
back the $1 billion in withdrawals the firm had made from its Madoff accounts over the
years. See, e.g., Michael O’Keefe, Feds To Investigate Irving Picard’s “Clawback” Suits
to See if Madoff Ponzi Scheme Victims Are Hurt, N.Y. DAILY NEWS (July 28, 2011, 4:00
AM),
http://articles.nydailynews.com/2011-07-28/sports/29840581_1_madoff-trusteewilpon-and-katz-amanda-remus. The trustee maintains that the defendants did know,
or should have known, about the Ponzi scheme, while the defendants vehemently
contest these allegations, calling the claims against them “abusive, unfair[,] and
untrue.” Van Voris, supra. Madoff himself insists upon Wilpon and Katz’s innocence:
“Fred was not at all stock market savvy and Saul was not really either. They were
strictly Real Estate people. Although I explained the Strategy to them they were not
sophisticated enough to evaluate it properly.” See Toobin, supra, at 15 (internal
quotation marks omitted). In a series of rulings, Judge Jed Rakoff reduced the
maximum amount of recovery from the defendants to $384 million. See, e.g., Adam
Rubin, Mets Owners Must Pay, Go to Trial, ESPNNEWYORK.COM (Mar. 6, 2012),
http://espn.go.com/new-york/mlb/story/_/id/7647107/judge-new-york-mets-owners-paymuch-83m-trial-decide-303m. On March 16, 2012, Wilpon and partners entered into a
settlement agreement with Picard under which they agreed to pay $162 million to the
trustee. See Richard Sandomir & Ken Belson, Mets’ Owners Agree to Settle Madoff Suit
for $162 Million, N.Y. TIMES, Mar. 19, 2012, at A1, available at
http://www.nytimes.com/2012/03/20/sports/baseball/mets-owners-pay-162-million-tosettle-madoff-suit.html?_r=1&pagewanted=print.
9
General restitutionary doctrine has long been charged with inattention
and incoherence. See, e.g., Andrew Kull, Restitution in Bankruptcy: Reclamation and
Constructive Trust, 72 AM. BANKR. L.J. 265, 267 (1998) (“Most law schools gave up
teaching restitution a generation ago, and many judges and practitioners are not
familiar with its general principles. Lack of familiarity with the restitutionary
elements of the background rules results in a predictable distortion of commercial
law.”); Chaim Saiman, Restitution and the Production of Legal Doctrine, 65 WASH. &
LEE L. REV. 993, 994 (2008) (“[I]n American legal discourse restitution sits at the
backwaters of the academic and judicial consciousness . . . .”). Cf. PETER BIRKS, UNJUST
ENRICHMENT 40 (2d ed. 2005) (noting that novel fact patterns pose problems for the
doctrine of unjust enrichment, since there isn’t a general, one-size-fits-all principle for
determining when one party has innocently benefitted at the expense of another). See
generally Mallory A. Sullivan, Note, When the Bezzle Bursts: Restitutionary
Distribution of Assets After Ponzi Schemes Enter Bankruptcy, 68 WASH. & LEE L. REV.
1589, 1598-99 (2011) (describing the general confusion around restitution, especially in
the context of a bankruptcy).
10
Cf. BIRKS, supra note 9, at 3 (“Of the subjects which form the indispensable
foundation of private law, unjust enrichment is the only one to have evaded the great
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this inattention more apparent, and potentially disquieting,
than in the efforts to require innocent Ponzi scheme winners to
defray the losses of the scheme’s losers. As courts have noted,
the provisions governing the efforts to recover money for
investors in a Ponzi scheme stand “at the intersection of two
important national legislative policies on a collision course—
the policies of bankruptcy and securities law.”11 Neither of these
bodies of law was designed with the other in mind,12 and there
is much that remains unsettled in determining the appropriate
interaction between the two.13
rationalization achieved since the middle of the 19th century in both England and
America by the writers of the textbooks.”).
11
Picard v. Katz, 462 B.R. 447, 451 (S.D.N.Y. 2011) (quoting In re Enron
Creditors Recovery Corp., 651 F.3d 329, 334 (2d Cir. 2011) (citation omitted)); see also
id. at 450 (noting that the clawback lawsuit against Wilpon and his partners “raises
important and in some respects unsettled issues of the interaction of securities law
with bankruptcy law”). Cf. Hanoch Dagan, Restitution in Bankruptcy: Why All
Involuntary Creditors Should Be Preferred, 78 AM. BANKR. L.J. 247, 247-48 (2004)
(discussing the untoward interaction of restitution and bankruptcy law).
12
See, e.g., Pozza, Jr. et al., supra note 4, at 131 (“The legal principles often
utilized in the Ponzi scheme cases were not originally developed to address Ponzi
scheme victim fairness issues and create somewhat extreme arguments and results.”).
Cf. Kull, supra note 9, at 265-66 (“The contemporary treatment of restitution in
bankruptcy has become confused and haphazard because the subject is not addressed
by the Bankruptcy Code.”); Peter J. Henning, The Roller Coaster Ride Continues for
Madoff Investors, N.Y. TIMES (DEALBOOK) (Oct. 3, 2011, 3:26 PM),
http://dealbook.nytimes.com/2011/10/03/the-roller-coaster-ride-for-madoff-investorscontinues/ (“Investors in Mr. Madoff’s Ponzi scheme have been whipped back and forth
as the courts try to apply the law to a case that is unprecedented in many ways.”).
13
See, e.g., Kathy Bazoian Phelps, Partner, Danning, Gill, Diamond & Kollitz
L.L.P., Fraudulent Transfer Claims and Defenses in Ponzi Schemes, Address Before the
Southwest Bankruptcy Conference (2009), available at http://www.abiworld.org/committees/
newsletters/litigation/vol6num5/ponzi.pdf (last visited on Sept. 24, 2012) (“[C]ourts are
continuing to refine the rules which arise in unwinding these tangled financial webs.
In particular, the law regarding fraudulent transfer claims to recover funds paid by the
Ponzi debtor to investors as a return of principal or payment of fictitious profits and
defenses which can be asserted to those claims continue to evolve.”); Joshua Marcus &
Jake Greenberg, Ponzi Schemes: Washed Ashore by Recession’s Low Tide, Reveal
Controversial Issues, 29 AM. BANKR. INST. J., Oct. 2010, at 48, 107 (“Ponzi schemes—
one of the horrible byproducts unearthed by the financial crisis—have raised
noteworthy and contentious bankruptcy issues.”). Cf. Paul Sinclair, The Sad Tale of
Fraudulent Transfers: The Unscrupulous Are Rewarded and the Diligent Are Punished,
28 AM. BANKR. INST. J., Apr. 2009, at 16, 80 (“[P]ursuing investors who lacked diligence
in Madoff will unnecessarily cost hundreds of millions.”); Jeff Benjamin, Madoff Investors
May Face Clawbacks, INVESTMENT NEWS (Feb. 10, 2009), http://www.investmentnews.com/
article20090210/REG/902109979 (quoting an attorney involved in the Madoff clawback
cases, who predicts that, given the unsettled questions of law, “[t]he [civil litigation]
will spawn a whole industry for the next decade.”).
It may be worth noting that there is a prior question as to whether
bankruptcy law should apply at all in the wake of a Ponzi scheme, given that criminal
forfeiture exists as a viable alternative. Supporters of criminal forfeiture argue that it
would be less costly, thereby leaving more money to be distributed to the fraud’s
victims, and more compelling, given its retributive rationale. See generally Marcus &
Greenberg, supra. Bankruptcy looks nonetheless to remain a preferred avenue for
2012]
RIGHTING OTHERS’ WRONGS
5
Even more concerning, few commentators have given
thought to whether the recovery provisions of bankruptcy law
ought to extend to the innocent beneficiaries of a financial
fraud. This is especially troubling because no legal mechanism
exists to permit recovery from investors who innocently profited
from a financial fraud where the fraud does not result in the
entity’s bankruptcy. In this way, Ponzi scheme winners incur
harsher treatment than those who innocently profit from other
kinds of financial fraud, although case law and commentaries do
not offer a justification for this inconsistent treatment. In
particular, outside of the doctrine of unjust enrichment—which, I
argue, is inapposite here—we lack a theory that elucidates why,
and if so when, innocent beneficiaries of a transgression owe
restitution to the transgression’s victims. A central task of this
article is to provide such a theory, which can usefully be applied
not just to Ponzi scheme cases but to other cases of financial
wrongdoing as well—a prospect made all the more pressing in the
wake of the financial meltdown.
More specifically, I examine attempts to extend the
recovery provisions of bankruptcy law to the innocent
beneficiaries of a Ponzi scheme and, after an analysis of the
history and structure of the relevant statutes, I argue that
these attempts problematically deviate from the recovery
provisions’ purpose. I then seek to establish that innocent
winners in a Ponzi scheme are unlike the innocent beneficiaries
of ill-gotten gains or good faith purchasers of stolen goods, and
instead are more akin to investors who innocently profit from
corporate or financial wrongdoing. Yet, so long as the offending
corporations or brokerage firms do not end up bankrupt, the
innocent investors who earned profits as a result of the wrongful
conduct will be permitted to retain their “winnings.” I contend
that if we do not seek to claw back profits from these innocent
investors, then we should not seek to claw back profits from the
innocent Ponzi scheme winners, either.14 That contention, of
restituting the victims of a financial fraud, not least of all because it allows the estate
to recover assets beyond those of the fraud’s perpetrator—of particular relevance here,
those of innocent winning investors. Cf. Paul W. Bonapfel et al., Ponzi Schemes—
Bankruptcy Court v. Federal Equity Receivership, 26 EMORY BANKR. DEV. J. 207, 21213 (2010).
14
The migration of the noun “clawback” to the verb form “claw back,” appears
to have gained currency in the 1980s, in light of efforts to enforce anti-trust provisions
extraterritorially, and a resulting response permitting the defendant to recoup—i.e., claw
back—damages imposed on him. See, e.g., Note, Extraterritorial Application of the Export
Administration Act of 1979 Under International and American Law, 81 MICH. L. REV.
1308, 1318 n.58 (1983) (“[A] number of foreign states have enacted ‘blocking’ or ‘claw-
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course, could cut in two diametrically opposed directions—one
could argue that we should allow the losses to lie where they
fell or, by contrast, that we should implement restitution on a
far wider scale than the law currently allows. I end by seeking
to defend the latter alternative and by suggesting measures
through which it could be implemented.
It is surprising that scholars have largely overlooked
clawback suits in the context of a Ponzi scheme, given the
troubling uncertainty and evident tensions they involve,15 as well
as the dramatic rise in their use. While the first set of clawback
cases eventuating from a Ponzi scheme arose in the wake of
Charles Ponzi’s now infamous fraud16 during the 1920s,17 it was
only in the 1980s that the use of a clawback suit to recover
money from an innocent investor became widespread; in fact,
149 of the 190 published state and federal cases were decided in
or after the year 2000.18 Further, commentators predict that
these suits will become even more common in the coming years.19
To be sure, the Madoff scandal itself has garnered
significant media and scholarly attention. Much of this has
focused on the factors that facilitated the scheme—Madoff’s
exploitation of the affinity bonds he shared with many of his
back’ statutes designed to protect their citizens from assertions of extraterritorial
jurisdiction by the United States.”); Note, Predictability and Comity: Toward Common
Principles of Extraterritorial Jurisdiction, 98 HARV. L. REV. 1310, 1311 n.6 (1985)
(“Clawback statutes, such as § 6 of the British Protection of Trading Interests Act, 1980,
ch. 11, follow from the premise that certain foreign judgments will not be given
extraterritorial effect. . . . Once such a statute is invoked, the foreign defendant will be
allowed to ‘claw back’ the punitive portion of the judgment (for example, two-thirds of a
treble-damages antitrust award).” (citations omitted)).
15
Cf. Miriam A. Cherry & Jarrod Wong, Clawbacks: Prospective Contract
Measures in an Era of Excessive Executive Compensation and Ponzi Schemes, 94 MINN. L.
REV. 368, 411 (2009) (noting that the term clawback “has been subject to neither rigorous
analytical scrutiny nor definition and exposition”); Robert A. Prentice & Dain C.
Donelson, Insider Trading as a Signaling Device, 47 AM. BUS. L.J. 1, 15 (2010) (observing
that clawback provisions were “essentially unknown” before Sarbanes-Oxley).
16
Cunningham v. Brown, 265 U.S. 1, 7-9 (1924) (discussing the collapse of
Charles Ponzi’s fraudulent investment program).
17
Ponzi’s scheme gave rise to eleven published opinions, two in state courts
and the remainder in federal court, including two that went to the Supreme Court:
Ponzi v. Fessenden, 258 U.S. 254 (1922), and Cunningham, 265 U.S. 1.
18
See infra notes 86 and 87 and accompanying text (describing the evolution
of the law on this score).
19
See, e.g., Michael C. Macchiarola, In the Shadow of the Omnipresent Claw: A
Response to Professors Cherry and Wong, MINN. L. REV. HEADNOTES (2011),
http://www.minnesotalawreview.org/headnotes/in-the-shadow-of-the-omnipresent-claw-inresponse-to-professors-cherry-wong-2/#_ftn9 (“As the American economy continues to totter
against an ever-growing populist momentum, it seems likely that clawback mechanisms of
various sorts will be put to increasing use in the coming months and years.”).
2012]
RIGHTING OTHERS’ WRONGS
7
victims,20 his proclaimed split-strike strategy,21 and the SEC’s
failure to detect the fraud.22 Other work has either addressed
alternative enforcement regimes in the case of a Madoff-type
fraud23 or revisited white-collar crime sentencing policies24 in light
of Madoff’s 150-year prison sentence,25 which is likely to be the
longest sentence ever imposed for a violation of an antifraud law.26
The handful of scholars who have addressed the use of
clawback suits against innocent investors in Ponzi scheme
cases have largely agreed that the suits are permissible in
principle, and possibly even worthwhile.27 Existing critical
commentary tends to take issue only with the ways the suits
are wielded in practice. Thus, scholars have objected to judicial
interpretations of the doctrine;28 the ad hoc development of the
law, which threatens uniformity and predictability;29 the
opportunity for abuse of discretion that the suits allegedly
afford;30 or the negative consequences that the suits are
20
See, e.g., Christine Hurt, Evil Has a New Name (and a New Narrative):
Bernard Madoff, 2009 MICH. ST. L. REV. 947, 957 (2009); Paul Krugman, Madoff Explains
Everything, N.Y. TIMES (Nov. 17, 2011, 4:24 PM), http://krugman.blogs.nytimes.com/
2011/11/17/madoff-explains-everything (“The Madoff affair, as you may know, was a
classic case of ‘affinity fraud.’”).
21
See, e.g., Carole Bernard & Phelim Boyle, Mr. Madoff’s Amazing Returns:
An Analysis of the Split-Strike Conversion Strategy, 17 J. DERIVATIVES 62, 62 (2009).
22
See, e.g., Donald Langevoort, The SEC and the Madoff Scandal: Three
Narratives in Search of a Story, 2009 MICH. ST. L. REV. 899, 900 (2009).
23
See, e.g., Jennifer J. Johnson, Secondary Liability for Securities Fraud:
Gatekeepers in State Court, 36 DEL. J. CORP. L. 463, 467 (2011); Amanda M. Rose, The
Multienforcer Approach to Securities Fraud Deterrence: A Critical Analysis, 158 U. PA.
L. REV. 2173, 2176 (2010).
24
See, e.g., Daniel V. Dooley, Sr. & Mark Radke, Does Severe Punishment
Deter Financial Crimes?, 4 CHARLESTON L. REV. 619, 622 (2010); Derick R. Vollrath,
Note, Losing the Loss Calculation: Toward a More Just Sentencing Regime in WhiteCollar Criminal Cases, 59 DUKE L.J. 1001, 1004 (2010).
25
Transcript of Sentencing Hearing at 49, United States v. Madoff, 626 F.
Supp. 2d. 420 (S.D.N.Y. June 17, 2009) (No. 09 Crim. 213 (DC)).
26
Peter J. Henning, The Limits of Bigger Penalties in Fighting Financial
Crime, N.Y. TIMES (DEALBOOK) (Dec. 12, 2011, 4:03 PM), http://dealbook.nytimes.com/
2011/12/12/the-limits-of-bigger-penalties-in-fighting-financial-crime.
27
See, e.g., Cherry & Wong, supra note 15, at 397.
28
The most common line of criticism on this score takes issue with what is
taken to be an overly demanding standard of good faith, and an overly draconian set of
consequences if one is shown to have lacked good faith, including compelled return of
any money one withdrew from the scheme, whether as “profits” or principal. See, e.g.,
Sullivan, supra note 9, at 1615-23.
29
See, e.g., Pozza, Jr. et al., supra note 4, at 131 (“The current case-by-case
approach does not appear to yield fair uniform results. A new comprehensive approach
designed for overall victim fairness should be considered.”); Macchiarola, supra note 19,
Conclusion (text accompanying nn.67-68); Sullivan, supra note 9, at 1632.
30
Of particular note here is a concern that the trustee can use the threat of
protracted, costly litigation to leverage settlements from investors who may have been
wholly innocent of the fraud. See, e.g., Sullivan, supra note 9, at 1629-30. Cf. Van Voris,
supra note 8 (quoting Wilpon and Katz’s complaint that the lawsuit against them is
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believed to produce among investors.31 But there has been no
sustained inquiry into the foundational normative question—
namely, whether innocent winning investors should be required
to help defray losing investors’ losses in the first place.32 This
article addresses that question and concludes that clawback
suits targeting blameless winners lack a compelling legal or
equitable basis.
The article first proceeds, in Part I, by offering some of
the factual and legal background to the Madoff case. In Part II,
I turn to the legislative history and statutory structure of the
Bankruptcy Code’s recovery provisions, and I argue that there
is only a weak doctrinal basis for the bankruptcy trustee’s
clawback efforts. Nonetheless, analogies to widely embraced
rules surrounding unjust enrichment and stolen goods provide
considerable intuitive support for the notion that Ponzi scheme
winners should return some of their gains to the scheme’s
losers. For example, where an individual gains as a result of a
wrong perpetrated against another—at that victim’s expense—
the individual may be compelled to return these ill-gotten
gains. Similarly, where an individual purchases an item
without knowledge that it is stolen, she must return the stolen
item to its original owner, even if that means the innocent
nothing more than “an outrageous strong-arm effort to try to force a settlement by
threatening to ruin our reputations and businesses” (internal quotation marks omitted)).
31
Thus, for example, Karen Nelson argues that the clawback suits create infighting between the scheme’s investors, and encourage attorneys, in contravention of
legal ethics, to advise their Madoff-investing clients to secret away their assets. See
Karen E. Nelson, Note, Turning Winners into Losers: Ponzi Scheme Avoidance Law and
the Inequity of Clawbacks, 95 MINN. L. REV. 1456, 1473, 1457-58 (2011). Nelson also
argues that clawing back money from innocent investors “strays from America’s
fundamental tenets of capitalism.” Id. at 1458. I set this last concern aside because our
political and economic culture is replete with instances in which individuals or entities
help to defray losses that they have neither culpably caused, nor caused at all. Take,
for example, the September 11th compensation fund, or our progressive system of
taxation, for that matter. I go on to argue for a compensation program more expansive
than the one entailed by the clawback suits, on the thought that there is usually
nothing but luck that distinguishes those who profit from the stock market from those
who do not. Luck should not play so great a role in determining whether one ends up
on the losing end of a wrong. If capitalism cannot accommodate that thought, so much
the worse for capitalism.
Mallory Sullivan complains that the clawback suits are unfair because
they target investors who may have relied reasonably on the legitimacy of their
withdrawals, and so no longer have the money now sought to be clawed back. See
Sullivan, supra note 9, at 1633-34. Reasonable reliance seems to be the rationale
underlying legislative proposals to limit, if not eliminate, clawback suits against
innocent Ponzi scheme investors. See id.
32
But cf. O’Keefe, supra note 8 (describing a pending GAO investigation into
Picard’s recovery efforts, including his clawback suits, in response to a letter from several
Congresspersons expressing concern about the trustee’s “punishing the Ponzi scheme
scammer’s victims by filing ‘clawback’ lawsuits”) (quoting Rep. Scott Garret (R-N.J.)).
2012]
RIGHTING OTHERS’ WRONGS
9
purchaser will forfeit the money she paid to the seller.
Pursuant to this reasoning, the Madoff bankruptcy trustee has
sought to defend the clawback actions by analogizing them to
cases seeking the disgorgement of ill-gotten gains or the return
of stolen goods. In Part III, I argue that these analogies are
mistaken, because the Madoff winners are neither the
beneficiaries of a windfall—as is typically true in cases of unjust
enrichment—nor the recipients of a unique, non-fungible good—
as is typically true in cases of stolen goods. In Part IV, I examine
other doctrines that appear to impose pecuniary penalties on
investors who innocently profit from corporate or financial
wrongdoing, but I argue that their apparent resemblance is
deceiving. These doctrines either extend only to investors who
are not wholly innocent of the wrongdoing, or they do not in fact
require the innocent investor to return money as a means of
offering restitution. Together, Parts II, III, and IV seek to
establish that we cannot find support for the Ponzi scheme
clawback actions in the bankruptcy code, or within other
equitable or legal doctrines. Nevertheless, rather than
abandoning the prospect of restitution altogether, I seek, in Part
V, to defend a restitutionary scheme that would have all those
who profit in the market defray the losses that fraudulent
schemes produce. In other words, I argue that “winning”
investors bear restitutionary obligations whether their profits
derive from a legitimate or fraudulent investment vehicle. I
thus end by urging a far more expansive restitutionary
program than clawback suits currently afford.
I.
FACTUAL AND LEGAL BACKGROUND
The Madoff scandal is a good place to begin an
investigation into Ponzi scheme clawback cases—not only
because it is the largest fraud in recorded history, but also
because it provides an entrée to the legal framework governing
clawback suits and the murky, ad hoc, and oftentimes flawed
judicial reasoning that these suits invite. In Part I.A, I provide
a brief overview of the relevant facts leading up to Madoff’s
arrest and the commencement of the recovery actions. Part I.B
engages critically with the Second Circuit opinion that set the
stage for the clawback suits by denying the Madoff winners’
claims to recover what they believed they were owed based on
their last investment account statements.
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History and Revelation of a Fraud
Madoff created Bernard L. Madoff Investment
Securities (BLMIS) in the early 1960s,33 originally functioning
as a market-maker and broker-dealer.34 Later, Madoff added an
investment advisory arm to the business, which Madoff used to
recruit investors for his eventual Ponzi scheme.35 Although
Madoff, in the course of his confession, reported that the Ponzi
scheme began in the early 1990s,36 one of his associates has
since revealed that the scheme in fact dated back to the early
1970s.37 It is not clear how much of Madoff’s business was
fraudulent in the period between the 1970s and the 1990s. But
we do know that beginning in the 1990s, Madoff did not buy or
sell a single share on behalf of his customers, despite sending
investors regular statements that reported market transactions
and indicated an average growth of 12 percent.38 Madoff
claimed that his consistent positive returns resulted from a
unique split-strike conversion strategy that he had pioneered.39
Because Madoff made no investments, customer
redemptions were funded with money that other customers had
deposited with him. Thus, when a customer sought to withdraw
money from her account in an amount listed on her most recent
statement, Madoff made up the difference between the amount
the customer had invested and the amount she sought to
withdraw with money other customers had “invested” with him.40
Importantly, many of those who withdrew more money
from their Madoff accounts than their principal investments
were genuinely in the dark about his fraud. For one thing, we
33
Complaint at 4, SEC v. Madoff, 2009 WL 980288 (S.D.N.Y. Apr. 10, 2009)
(No. 08-CV-10791).
34
See, e.g., Martin P. Randisi & Joseph Koletar, Holtz Rubenstein Reminick
LLP, A CAT Scan of the Madoff Scandal: Diagnosing Fraud Inside the Black Box, at 4,
available at http://www.hrcpa.com/Catscan.pdf (last visited Sept. 24, 2012).
35
See, e.g., Plea Allocution of Bernard L. Madoff, at *2, *4, available at
http://online.wsj.com/public/resources/documents/20090315madoffall.pdf (last visited
Sept. 24, 2012).
36
Id. at *2.
37
See Madoff Associate Says Fraud Went Back to ‘70s, N.Y. TIMES, Nov. 21,
2011, at B4.
38
See Robert J. Rhee, The Madoff Scandal, Market Regulatory Failure and
the Business Education of Lawyers, 35 J. CORP. L. 363, 371-72 (2009). Rhee here
describes the difficulty that a typical investor would have faced in seeking to establish
that these returns were impossible.
39
“The split-strike conversion strategy supposedly involved buying a basket
of stocks listed on the Standard & Poor’s 100 Index and hedging through the use of
options.” In re Bernard L. Madoff Inv. Sec. LLC, 654 F.3d 229, 231 (2d Cir. 2011).
40
See Plea Allocution of Bernard L. Madoff, supra note 35, at *1.
2012]
RIGHTING OTHERS’ WRONGS
11
now know that Madoff was masterful when it came to hiding his
fraud. He maintained an aloof posture, often refusing a
prospective investor before “accepting” her business;41 his returns
were consistent but also relatively modest so as not to arouse
suspicion;42 and the purported split-strike conversion strategy
was a seemingly plausible vehicle for generating these steady,
yet unspectacular returns.43 Further, a securities investor has no
duty to inquire about his stockbroker, even if confronted with
suspicious circumstances.44 In any event, Madoff’s investors may
have had some cause for assurance. In particular, many of them
knew that the SEC had investigated Madoff and never
uncovered any financial wrongdoing.45 They may even have
reasonably relied on the fact that financial regulators believed
Madoff’s business to be clean.46 Indeed, if the SEC proved
incapable of detecting the fraud, it is not reasonable to suppose
that the average investor should have done so. Thus, we may
41
See, e.g., DAVID E.Y. SARNA, HISTORY OF GREED: FINANCIAL FRAUD FROM
TULIP MANIA TO BERNIE MADOFF, ch. 21 (2010); Robert Chew, A Madoff Whistle-Blower
Tells His Story, TIME (Feb. 4, 2009), http://www.time.com/time/business/article/
0,8599,1877181,00.html (“Madoff’s greatest talent, the witness indicated, was his use of
a ‘hook’ or lure to play ‘hard to get’ and the false security of exclusivity, a hallmark of a
Ponzi scheme.”).
42
See, e.g., Sullivan, supra note 9, at 1622-23.
43
See Assessing the Madoff Ponzi Scheme and Regulatory Failures: Hearing
Before the Subcomm. on Capital Mkts., Ins., and Gov’t Sponsored Enters. of the H.
Comm. on Fin. Servs., 111th Cong. 31 (2009) (testimony of Harry Markopolos,
Chartered Financial Analyst, Certified Fraud Examiner) [hereinafter Hearings],
available
at
http://www.gpo.gov/fdsys/pkg/CHRG-111hhrg48673/pdf/CHRG111hhrg48673.pdf (last visited Nov. 5, 2012). See generally Richard Posner, Bernard
Madoff and Ponzi Schemes—Posner’s Comment, BECKER-POSNER BLOG (Dec. 21, 2008,
3:45
PM),
http://www.becker-posner-blog.com/2008/12/bernard-madoff-and-ponzischemes--posners-comment.html (“The strategy . . . attributed to Madoff is the opposite
of that of the typical Ponzi schemer: it [wa]s to obtain investments from well-off people
far more financially sophisticated than the average Ponzi victim, including genuine
financial experts such as hedge fund managers and bank officials. And therefore it
require[d] different tactics from that of the ordinary Ponzi scheme, such as offering
returns only moderately above average, satisfying redemption requests promptly,
turning down some would-be investors . . . , and trading on a reputation earned in a
legitimate business (Madoff’s business of market making).”).
44
See, e.g., Picard v. Katz, 462 B.R. 447, 455 (S.D.N.Y. 2011) (citing In re
New Times Sec. Servs., 371 F.3d 68, 87 (2d Cir. 2004)). On the other hand, an investor
will undercut his claim to have proceeded in good faith if he has willfully blinded
himself to red flags. See id.
45
See, e.g., Zachary A. Goldfarb, SEC Lawyer Raised Madoff Concerns but
Was Rebuffed, L.A. TIMES, July 2, 2009, at B3, available at http://articles.latimes.com/
2009/jul/02/business/fi-sec-madoff2.
46
See, e.g., Herve Stolowy et al., Information, Trust and the Limits of
“Intelligent Accountability” in Investment Decision Making: Insights from the Madoff Case
15-17 (Sept. 17, 2011) (unpublished manuscript), available at http://papers.ssrn.com/sol3/
papers.cfm?abstract_id=1930128 (collecting quotes from Madoff investors who stated
that they were reassured that the investment scheme was legitimate as a result of the
SEC’s failure to uncover any fraud).
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assume that many investors in Madoff’s scheme were blamelessly
ignorant of his wrongdoing.47 Many investors profited from the
fraud, but they did so innocently; they did not know, and had no
reason to know, that Madoff was operating a Ponzi scheme.48
With markets crashing in the fall of 2008, an
unexpected number of Madoff customers sought to liquidate
their accounts. Because Madoff could not possibly satisfy all of
the claims, the scheme went bust.49 After Madoff confessed to
his family on December 10, 2008, his sons consulted with their
lawyer and tipped the police off to the fraud. Madoff was
arrested the next day.50 At the time, Madoff had 4800
customers with open accounts, who had invested a total of $20
billion in principal and accumulated an aggregate (fictitious)
sum of $65 billion, according to their last statements on
November 30, 2008.51 It was clear that Madoff did not have $20
billion in assets to return to his customers, let alone the $65
billion they thought they were owed.52 The company officially
went into bankruptcy on the day of Madoff’s arrest.53
47
See generally Felicia Smith, Madoff Ponzi Scheme Exposes “The Myth of the
Sophisticated Investor,” 40 U. BALT. L. REV. 215, 273 & n.305 (2010) (citing arguments
that regulations concerning who counts as a sophisticated investor are too broad as, for
example, where a high net wealth is sufficient to qualify the investor as “sophisticated”).
48
Picard acknowledges this when he states, on the webpage summarizing his
efforts, that “[s]ome BLMIS customers unwittingly withdrew funds that were, in
reality, money stolen by Madoff from other BLMIS customers.” A Message from SIPA
Trustee Irving H. Picard, MADOFF RECOVERY INITIATIVE, http://madoff.com/trusteemessage-24.html (last visited Mar. 6, 2012) (emphasis added).
49
See, e.g., David A. Gradwohl & Karin Corbett, Equity Receiverships for
Ponzi Schemes, 34 SETON HALL LEGIS. J. 181, 189 (2010) (“With Madoff, the engine of
fraud churned on until the collapse of the securities markets caused new investors to
stop feeding the scheme and made it impossible for Madoff to continue.”).
50
See, e.g., The Madoff Case: A Timeline, WALL ST. J. (Mar. 12, 2009),
http://online.wsj.com/article/SB112966954231272304.html?mod=googlenews_wsj; Diana
B. Henriques, New Description of Timing on Madoff’s Confession, N.Y. TIMES, Jan. 9, 2009,
at B1, available at http://www.nytimes.com/2009/01/10/business/10madoff.html?_r=1;
Ellen S. Podgor, Madoff, WHITE COLLAR CRIME PROF. BLOG (Dec. 16, 2008),
http://lawprofessors.typepad.com/whitecollarcrime_blog/2008/12/the-madoff-case.html
(listing a variety of media reports on the Madoff Ponzi scheme).
51
See, e.g., Allison Hoffman, Prosecutors Submit Scam E-mail with Madoff
Victim Letters, JERUSALEM POST, Mar. 24, 2009, available at http://www.jpost.com/
International/Article.aspx?id=136942.
52
See, e.g., Linda Sandler, Madoff Brokerage, Homes, Boats Valued at $1
Billion (Update2), BLOOMBERG (Jan. 9, 2009, 11:43 AM), http://www.bloomberg.com/
apps/news?pid=newsarchive&sid=aZP0jyjuTdTI.
53
See Sec. Investor Prot. Corp. v. Bernard L. Madoff Inv. Sec. LLC (In re
Bernard L. Madoff Inv. Sec. LLC) (In re Madoff II), 429 B.R. 423 (Bankr. S.D.N.Y.
2010), aff’d, 848 F. Supp. 2d 469 (S.D.N.Y. 2012); Sec. Investor Prot. Corp. v. Bernard
L. Madoff Inv. Sec. LLC (In re Bernard L. Madoff Inv. Sec. LLC) (In re Madoff I), 424
B.R. 122, 124 & n.3 (Bankr. S.D.N.Y. 2010), aff’d, 654 F.3d 229 (2d Cir. 2011).
2012]
RIGHTING OTHERS’ WRONGS
13
Pursuant to the Securities Investor Protection Act
(SIPA), Irving Picard was appointed as a trustee to recover
money and redistribute it to creditors of the estate.54 SIPA
instructs the trustee “to distribute customer property
and . . . otherwise satisfy net equity claims,”55 and “to liquidate
the business of the debtor.”56 For the latter, the trustee must
proceed in accordance with the bankruptcy code under Title 11.57
In structuring his recovery efforts, the trustee has been
required to address two broad questions: first, who is entitled to
restitution, and second, who should provide restitution to those
entitled to it? The clawback suits against innocent investors
provide a partial response to the second question, and their
justifiability is the major focus of this article. Nonetheless, an
examination of the trustee’s response to the first question is also
useful, since it demonstrates the legal uncertainty in this area
and sets the stage for the clawback suits.
B.
Defining “Net Equity”
The Securities Investor Protection Act (SIPA) provides
that, in the event a broker-dealer fails and is unable to cover its
obligations, the trustee shall “distribute customer property and
otherwise satisfy net equity claims of customers.”58 Among the
first questions for Picard to resolve were who would count as a
customer entitled to “customer property,” and what net equity
these customers were due. In Madoff’s case, delineating the set
of customers was rather complicated. While some of those who
lost money as a result of Madoff’s fraud had invested directly
with Madoff, others had invested in Madoff “feeder funds.”
Sixteen feeder funds brought suit, seeking to have their status
as SIPA investors recognized. Judge Burton Lifland, the
bankruptcy judge handling the Madoff SIPA liquidation,
denied them relief and held that they do not count as
54
See, e.g., A Message from SIPA Trustee, Irving H. Picard, MADOFF
RECOVERY INITIATIVE, http://www.madoff.com/trustee-message-02.html (last visited
Mar. 6, 2012). This is the trustee home page for the website the Madoff SIPA trustee
has established to report on the progress of the case and provide interested parties
with relevant information. On this page, Picard explains that “On the day the news [of
Madoff’s fraud] broke, I received a call from the Securities Investor Protection
Corporation (‘SIPC’) and was asked to serve as SIPA Trustee for the liquidation of
Bernard L. Madoff Investment Securities LLC (‘BLMIS’) under the Securities Investor
Protection Act (‘SIPA’).”
55
Securities Investor Protection Act of 1970, 15 U.S.C. § 78fff(a)(1)(B) (2006).
56
Id. § 78fff(a)(4).
57
Id. § 78fff-4(e).
58
Id. § 78fff(a)(1)(B).
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“customers” under the SIPA statute.59 The feeder funds appealed,
but Judge Lifland’s decision was affirmed by the District Court
for the Southern District of New York in an opinion issued in
January of this year.60
When it came to determining the customers’ “net
equity”—i.e., the money they were entitled to recover—there
arose a “controversy of staggering proportions involving
statutory interpretation, statutory purpose, the relationship of
multiple SIPA and bankruptcy law provisions, and fundamental
bankruptcy law philosophy.”61 Using the “Last Statement”
method of calculating net equity, investors in Madoff’s scheme
asserted claims in the amounts listed on the last statements
they had received before the fund’s collapse.62 On the other hand,
relying on the “Net Investment” or “Cash-In-Cash-Out” method,
Picard, along with the SEC and SIPC, believed that the Madoff
investors should be entitled only to the amounts they had
deposited, minus any money withdrawn.63
In a March 1, 2010 opinion, Judge Lifland adopted the
“Net Investment” method: customers would be entitled to
recover only their principal, minus any withdrawals they had
59
See Sec. Investor Prot. Corp. v. Bernard L. Madoff Inv. Sec. (In re Bernard
L. Madoff) (In re Madoff III), 454 B.R. 285 (Bankr. S.D.N.Y. 2011), aff’d sub nom.
Aozora Bank Ltd. v. Sec. Investor Prot. Corp., No. 1:11-CV-05683-DLC, 2012 BL 54585
(S.D.N.Y. Jan. 4, 2012).
60
See generally Aozora Bank, 2012 BL 54585.
61
Paul Sinclair & Brendan McPherson, The Sad Tale of Multiple Overlapping
Fraudulent Transfers: Part IV, 29 AM. BANKR. INST. J., May 2010, at 18.
62
See, e.g., In re Bernard L. Madoff Inv. Sec. LLC, 654 F.3d 229, 233 (2d Cir.
2011); Peter J. Henning, The Next Test for the Madoff Trustee, N.Y. TIMES (DEALBOOK)
(Mar. 2, 2011, 8:50 AM), http://dealbook.nytimes.com/2011/03/02/the-next-test-for-themadoff-trustee/.
63
See In re Bernard L. Madoff Inv. Sec., 654 F.3d at 233; Henning, supra
note 62. It may be worth noting in this context that SIPC pays Picard’s salary for the
Madoff litigation (though SIPC will recover the payments it makes to Picard through
whatever funds he is able to recoup). See, e.g., Gretchen Morgenson, Many Holes
Weaken Safety Net for Victims of Failed Brokerages, N.Y. TIMES, Sept. 25, 2000, at A1,
A24. This arrangement can prompt the trustee in a SIPA proceeding, who likely wants
to become or remain a repeat player in this game, to be chary with claims and
aggressive with recovery efforts. Id. An uncharitable take on Picard would find
evidence for this motivation in his narrow reading of “net equity.” Cf. Paul Sinclair &
Brendan McPherson, Does SIPC Protect Customers in Ponzi Scheme Cases? Sad Tales
of Multiple Overlapping Fraudulent Transfers IV, 7 AM. BANKR. INST.: COMMERCIAL FRAUD
COMM. NEWS, Sept. 2010, at 267-68, available at http://www.abiworld.org/committees/
newsletters/CFTF/vol7num3/sipc.pdf (commenting on the “net equity” decision in the
Madoff case, and contending that “[t]his SIPC controversy . . . is further infected by the
SIPC’s position as an industry body, rather than a governmental agency charged to
protect investors, and thus its alleged effort to simply reduce its losses to the most
limited amounts”).
2012]
RIGHTING OTHERS’ WRONGS
15
made over the life of their investments.64 The Second Circuit
affirmed this decision in an opinion issued on August 16,
2011,65 adducing three grounds in support of its decision.
Specifically, the court argued that allowing the net winners to
recover any of the money they believed resided in their
accounts would (1) place the trustee in the impossible position
of having to invent recovery entitlements, given that Madoff’s
records were completely fictitious and could not provide any
basis for ascertaining how much “profit” any investor was due;
(2) unjustly enrich the winners at the expense of the losers; and
(3) problematically legitimate Madoff’s fraud by recognizing
and upholding the fiction he had perpetrated. I address each of
these in turn, and I argue that none is convincing on its own or
in combination with the others.
1. Unascertainable Holdings
The court’s first set of arguments relates to
administrative convenience. The SIPA statute requires the
trustee “to make payments to customers based on ‘net equity’
insofar as the amount owed to the customer is ‘ascertainable
from the books and records of the debtor or [is] otherwise
established to the satisfaction of the trustee.’”66 Because
Madoff’s books and records were “after-the-fact constructs that
were based on stock movements that had already taken place,”
the Second Circuit found that net equity could not be
ascertained by reference to them.67 However, it is worth noting
that the plain text of the SIPA statute does not restrict net
equity calculations to those ascertainable from the debtors’
books and records, but instead explicitly allows alternative
methods that are “to the satisfaction of the trustee.”68
Elsewhere, the court acknowledged the considerable discretion
a SIPA trustee possesses in determining net equity,69 thereby
64
See In re Madoff I, 424 B.R. 122 (Bankr. S.D.N.Y. 2010), aff’d, 654 F.3d 229
(2d Cir. 2011).
65
See generally In re Bernard L. Madoff Inv. Sec., 654 F.3d 229. A group of
investors who would be ineligible for net equity under the decision filed an appeal with
the Supreme Court, which denied certiorari on June 25, 2012. See Velvel v. Picard, No.
11-986, 2012 WL 435188, at *1 (U.S. June 25, 2012); Ryan v. Picard, No. 11-969, 2012
WL 396489, at *1 (U.S. June 25, 2012).
66
In re Bernard L. Madoff Inv. Sec., 654 F.3d at 237 (quoting 15 U.S.C.
§ 78fff-2(b) (2006)) (alteration in original).
67
Id. at 238.
68
15 U.S.C. § 78fff-2(b)(2).
69
“[I]n many circumstances a SIPA trustee may, and should, exercise some
discretion in determining what method, or combination of methods, will best measure
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refusing to endorse the Cash-In-Cash-Out method as the
strategy to be pursued in each and every case.70 Thus, it is
possible that an alternative to both the Last Statement and Net
Investment methods exists, that this alternative is preferable as
a matter of fairness to either of these methods, and that the
trustee would be acting within his authority were he to pursue
it.71 As the court itself acknowledged, it would be compelled to
“accord a degree of deference to [the trustee’s] exercise of
discretion so long as the method chosen by the trustee allocates
‘net equity’ among the competing claimants in a manner that is
not clearly inferior to other methods under consideration.”72
With that said, since the pool of accumulated funds
would be divided among a greater number of claimants, an
alternative definition of net equity that enlarges the set of
investors entitled to recovery would entail, all else being equal, a
smaller recovery for each. This would mean that investors who
had not recovered their principal at the time of the scheme’s
collapse would be made less whole under this alternative than
under the Cash-In-Cash-Out method—a problematic outcome if
one believes that all of the investors should be restored to their
pre-Madoff positions before any of them is entitled to profit from
the scheme. Indeed, this concern appears to animate the court’s
second and third lines of argument.
‘net equity.’” In re Bernard L. Madoff Inv. Sec., 654 F.3d at 238 n.7. Cf. Sullivan, supra
note 9, at 1600 (noting, in the context of a bankruptcy trustee’s efforts to recover money
for defrauded investors in a Ponzi scheme that “the court is given broad powers to rule on a
plan of distribution, subject only to the requirement that the court use its discretion in a
logical way to divide the money.” (citations omitted)); Spencer C. Barasch & Sara J.
Chesnut, Controversial Uses of the “Clawback” Remedy in the Current Financial Crisis, 72
TEX. B.J. 922, 926 (2009) (“The trustee or receiver in a Ponzi scheme has a fair amount of
discretion in whether to pursue claims against investors and other transferees.”).
70
Thus the court made clear that its approach here was determined by the
unique circumstances of the case:
In holding that it was proper for Mr. Picard to reject the Last Statement Method,
we expressly do not hold that such a method of calculating “net equity” is
inherently impermissible. To the contrary, a customer’s last account statement
will likely be the most appropriate means of calculating “net equity” in more
conventional cases . . . . The extraordinary facts of this case make the Net
Investment Method appropriate, whereas in many instances, it would not be.
In re Bernard L. Madoff Inv. Sec., 654 F.3d at 238.
71
For example, the trustee might have determined what each Madoff
investor would have been owed had Madoff invested all of the money he received in an
S&P 500 index for the duration of the investment; the trustee could then have taken
this sum as the basis for determining each investor’s pro rata share, with deductions
for money already withdrawn.
72
Id. at 238 n.7.
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RIGHTING OTHERS’ WRONGS
17
2. Unjust Enrichment
In a second set of arguments, the court expressed
concern that crediting investors with any amount of “interest”
would leave less money in the pot with which to make losing
investors whole.73 As an initial matter, it is certainly true that
permitting principal plus some post hoc assignment of profits
as the basis of recovery—rather than principal alone—would
create a larger outstanding sum owed to investors, such that
each losing investor would receive less than under the Net
Investment method. But this outcome represents an
“inequitable consequence” only if we have reason to privilege
lost principal over lost (purported) earnings.
Under a legitimate investment, winning customers who
had not yet cashed out would be owed the amounts on their last
statements, even though they had already recovered the
amounts of their deposits and even if, because of the estate’s
insolvency, seeking to pay the winners their outstanding profits
would entail that losing customers would receive less than the
full amount of their deposits in return. In other words, where
there has been legitimate investment activity, bankruptcy law
does not require that each investor receive his out-of-pocket
investment amount before any investor can receive earnings on
top of that investment. Yet, in such a case, winning investors do
receive an “additional benefit at the expense of” losing
investors.74 The question then arises: If the disparity isn’t unfair
in the case of genuine investments, why does the fictitious
nature of the investments render it unfair? The court, in its
third argument, offers what appears to be a response.
3. Legitimating Fraud
In endorsing the trustee’s interpretation of net equity,
the court stated that the “[t]rustee properly declined to
calculate ‘net equity’ by reference to impossible transactions.
Indeed, if the [t]rustee had done otherwise, the whim of the
73
“The inequitable consequence of such a scheme would be that those who
had already withdrawn cash deriving from imaginary profits in excess of their initial
investment would derive additional benefit at the expense of those customers who had
not withdrawn funds before the fraud was exposed.” Id. at 238; see also id. at 235
(quoting approvingly from the bankruptcy court’s underlying opinion, in which Judge
Lifland argued that “[a]ny dollar paid to reimburse a fictitious profit is a dollar no
longer available to pay claims for money actually invested.” In re Madoff I, 424 B.R.
122, 141 (Bankr. S.D.N.Y. 2010)).
74
In re Bernard L. Madoff Inv. Sec., 654 F.3d at 238.
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defrauder would have controlled the process that is supposed to
unwind the fraud.”75 Part of the court’s concern arose from the
fact that the “profits” Madoff recorded “were arbitrarily and
unequally distributed among customers.”76 For instance, Madoff
accorded significantly higher returns to his preferred clientele;
the disparity in return rates had nothing to do with market
performance and everything to do with Madoff’s whims.
The court correctly agreed with the trustee in declining
to countenance this aspect of the fraud. As the bankruptcy
judge had stated—and the Second Circuit quoted approvingly—
the trustee rightly “refuse[d] to permit Madoff to arbitrarily
decide who wins and who loses.”77 This refusal correctly
impugns the Last Statement method, at least as it applies to
those whose account statements were whimsically inflated by
Madoff. But again, it does not compel the Net Investment
method. The trustee might instead have found an objective
measure to project the amount investors would have been owed
had Madoff invested their money in a legitimate vehicle. In this
way, he would not have had to rely on, let alone credit, the
disparate ways in which Madoff treated his investors.
Further, contrary to the suggestion of the bankruptcy
court and Second Circuit, there is no basis for the notion that
recognizing a recovery amount that allows interest on
investors’ deposits involves a kind of complicity in, or
affirmation of, the fraud.78 Indeed, one might wonder how
seeking to make all investors whole, or fulfilling their
“legitimate expectations,” legitimizes Madoff’s fraud, rather
than undercuts it. After all, in a Ponzi scheme, it is presumed
that the scheme’s operator intends to defraud or otherwise
hinder his investors’ ability to recover their investment.79 A
recovery program more expansive than Picard’s would then
thwart, rather than serve, this presumed intention.
In sum, the Last Statement method may well be flawed.
But it is not at all clear that the Net Investment method is more
justifiable, either as a matter of law or fairness. Indeed, the Net
75
76
77
Id. at 241.
Id. at 238.
Id. (quoting In re Madoff I, 424 B.R. at 140) (internal quotation marks
omitted).
78
See In re Bernard L. Madoff Inv. Sec., 654 F.3d at 238; In re Madoff I, 424
B.R. at 136 (stating that the Net Investment method allowed Picard to “unwind[],
rather than legitimiz[e], the fraudulent scheme”).
79
See infra note 90 and accompanying text (describing the Ponzi scheme
presumption).
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RIGHTING OTHERS’ WRONGS
19
Investment method generates fairness concerns that extend well
beyond the denial of the winners’ claims to any recovery.80
C.
Setting the Stage for the Clawback Actions
To grasp the implications of the net equity decision for
the clawback actions, it will be helpful to consider a hypothetical
Madoff investor. Suppose, for example, that investor Smith
opened an account with Madoff in 1980 with a one-time deposit
of $1 million, and that he withdrew money from his account only
once, in 2004, when he retrieved $2 million; then, on November
30, 2008, Smith received a statement from BLMIS indicating
that he had $8 million left in his Madoff account. How would
Smith fare in light of the net equity decision?
First, that decision allowed Madoff’s customers to be
divided into two groups—“winners” and “losers.” “Winners”
were those investors who had withdrawn more money from
their accounts than they had deposited. “Losers,” on the other
hand, still had some or all of their principal invested with
Madoff at the time of the fund’s collapse, and they would
sustain a net loss if that money were not returned to them.
Because the amount of Smith’s 2004 withdrawal ($2 million)
was greater than the amount of his total deposit ($1 million),
he would be counted among the Madoff “winners.”
Second, the decision entailed that only the Madoff “losers”
would count as “customers” for purposes of recovering net equity.
Net “winners,” on the other hand, would join the ranks of other
creditors of the estate, recovering the fictitious amounts they
thought they were owed only if the “losers” were first made
whole.81 Thus, even though Smith reasonably relied upon the
veracity of his BLMIS statements, including the last statement
indicating an $8 million balance in his Madoff account, he would
not be entitled to recover any more than $1 million under the
Bankruptcy Court’s interpretation of net equity.
Third, the problem is not simply that “winners” with
open accounts would be barred from recovering any money as
customers of the estate. They might also be required to return
their “winnings”—i.e., all money withdrawn in excess of that
80
See supra notes 61-74 and accompanying text (discussing the fairness
implications of the Net Investment method).
81
See, e.g., What Is the Difference Between the Customer Fund and the
General Estate?, MADOFF RECOVERY INITIATIVE, http://www.madoff.com/facts-08.html
(last visited Aug. 15, 2012).
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which they had invested. Thus, Smith could be subject to a
clawback action for the $1 million he withdrew in excess of his
$1 million investment. Indeed, we now know that many reallife “winners” in Madoff’s Ponzi scheme, including some whom
Picard believes to have been innocently ignorant of the fraud,
have been named as defendants in his clawback suits.
Finally, if the bankruptcy trustee could establish that
Smith evinced a lack of good faith at the time that he received
the $2 million, matters would be even worse for Smith in light
of the bankruptcy code provision described below, which allows
the trustee to void a transfer if the transferee knew or had
reason to know of the fraud at the time of the transfer. In that
case, the trustee could seek return of not just the $1 million in
“profits” that Smith withdrew, but also the $1 million that
represented Smith’s principal. In other words, if it were shown
that Smith knew or had reason to know of the fraud, the entire
$2 million transfer could be voided, leaving Smith with a net
loss of one million real dollars.82 Here, too, there are real-world
examples, including the clawback suit Picard filed against the
owners of the New York Mets, whom he has accused of willful
ignorance, and against whom he sought return of both
principal and “profits.”83
Critically, the net equity decision did not, as a matter of
law or logic, compel the trustee’s clawback suits. One could
consistently hold both that Madoff investors with outstanding
account balances were not eligible to recover more money than
they had deposited and that those investors who had already
withdrawn more than they had deposited would nonetheless get
to keep the withdrawn “profits.” Put another way, the fact that
“winners” would not be entitled to recovery in the bankruptcy
proceedings need not have entailed that they would have an
additional obligation to return the “winnings” they received
before the bankruptcy. Thus, to return to our hypothetical
example, Smith could have been foreclosed from seeking to
82
In Picard v. HSBC Bank PLC, Judge Jed Rakoff dismissed the bankruptcy
trustee’s common law aiding and abetting claims against HSBC, which is accused of
having funneled investors to Madoff, in part on the basis of the doctrine of in pari
delicto, or “unclean hands.” 454 B.R. 25, 37 (S.D.N.Y. 2011). That doctrine prevents one
wrongdoer from suing one of her fellow wrongdoers for damages arising from their shared
wrongdoing. Id. With the HSBC decision as support, it may be that investors accused of
bad faith will raise an in pari delicto defense. See Peter J. Henning, Madoff Trustee’s Job
Just Became Much Tougher, N.Y. TIMES (DEALBOOK) (July 29, 2011),
http://dealbook.nytimes.com/2011/07/29/madoff-trustees-job-just-became-much-tougher/.
83
See, e.g., Toobin, supra note 8.
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RIGHTING OTHERS’ WRONGS
21
recover the $8 million he thought he had in his Madoff account
but permitted to keep the $2 million he had withdrawn.84
Nonetheless, as of December 10, 2010, Picard had filed
complaints against over one thousand investors seeking return
of their “fictitious profits,” and in some cases their withdrawn
principal,85 for a total possible recovery of more than $100
billion.86 I turn now to an analysis of the doctrinal foundations
for these suits.
II.
THE DOCTRINE OF FRAUDULENT CONVEYANCE
The term “Ponzi scheme” dates back to the infamous
scheme perpetrated by Charles Ponzi in the early 1920s.87 Yet it
was only in the mid-1980s that bankruptcy trustees in Ponzi
scheme cases began to pursue clawback actions against
innocent investors who withdrew more than they had invested
in the scheme.88 The clawback suits rely upon a provision of the
84
One might worry that, given that the estate was bankrupt, there would
have been no money with which to make the losers whole unless Picard pursued
clawbacks against innocent winners. But as I describe infra, Picard ended up filing
clawback suits seeking a total of more than $100 billion, even though the outstanding
principle did not amount to more than $20 billion. See infra note 85 and accompanying
text. The $100 billion figure stemmed from claims of punitive damages in those cases
where the trustee alleged that the transferee had known of, or been willfully blind to,
the fraud, and so would not be permitted to keep either the principal or profits. See,
e.g., Complaint at ¶ 8, Picard v. JPMorgan Chase & Co., 460 B.R. 84 (S.D.N.Y. 2010)
(seeking $19 billion, comprised of money the bank earned from Madoff’s account as well
as punitive damages). In short, there might well have been enough money to fund the
recovery even if the innocent winners were not made to contribute to the customer
fund. And, even if there wouldn’t have been enough money, it is not at all clear that
that outcome would be unfair to the losers—indeed, that is just the issue I seek to
settle here.
85
See, e.g., Joe Palazzolo, Picard Dealt Another Blow, WALL ST. J.L. BLOG
(Nov. 2, 2011, 11:34 AM), http://blogs.wsj.com/law/2011/11/02/picard-dealt-anotherblow-by-sdny/.
86
See, e.g., id.
87
See Cunningham v. Brown, 265 U.S. 1, 7-9 (1924) (discussing the collapse
of Charles Ponzi’s fraudulent investment program); Mark A. McDermott, Ponzi
Schemes and the Law of Fraudulent and Preferential Transfers, 72 AM. BANKR. L.J.
157, 158 (1998). Ponzi was not the first to perpetrate the kind of fraud that now bears
his name. In 1880, for example, Ferdinand Ward orchestrated just this kind of fraud,
ensnaring, among others, Ulysses S. Grant. See generally GEOFFREY C. WARD, A
DISPOSITION TO BE RICH (2012) (a recounting of Ferdinand Ward’s fraud written by a
renowned historical writer, who happens to be the fraudster’s great-grandson).
88
A Westlaw search for all federal and state cases containing the terms
“Ponzi” and “fraudulent conveyance” or “fraudulent transfer” turns up 190 cases. Only
four of these arose before 1984. The first three stem from Charles Ponzi’s scheme itself,
and only one of these was successful. More specifically, in Engstrom v. Lowell, the
trustee lost because the law in question required the trustee to establish that the
defendant—i.e., the target of the clawback suit—had actual knowledge of the fraud,
and this the trustee failed to do. 281 F. 973, 976 (1st Cir. 1922). The trustee lost a
second case arising from Ponzi’s fraud on similar grounds. See Cunningham v. Merchs.’
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bankruptcy code that SIPA borrows from,89 allowing a SIPA
trustee to void (or, to use the technical term, “avoid”) any
transfer from the debtor’s estate that was conveyed
fraudulently.90 More specifically, 11 U.S.C. § 548 provides that
a bankruptcy trustee:
may avoid any transfer . . . if the debtor voluntarily or involuntarily
(A) made such transfer with actual intent to hinder, delay, or
defraud any entity to which the debtor was or became, on or after
the date that such transfer was made . . . , indebted; or (B)(i)
received less than a reasonably equivalent value in exchange for
such transfer . . . ; and (ii) [the debtor was insolvent,
undercapitalized, or overextended at the time of the transfer, or he
became so as a result of the transfer].91
Subsection (A) of the provision pertains to cases of actual fraud,92
while subsection (B) pertains to cases of constructive fraud.93
Nat’l Bank of Manchester, N.H., 4 F.2d 25 (1st Cir. 1925). In a 1924 opinion, the
Supreme Court did approve the trustee’s efforts to void the withdrawals investors in
Ponzi’s fraud made after the Boston Post exposed the fraud, Cunningham, 265 U.S. at
9-14, but the clawbacks in that case derived not from the Bankruptcy Code’s fraudulent
transfer provision—as Picard’s clawback suits do—but instead from its preference
avoidance provision. I elaborate on the distinction between these two provisions below.
See infra notes 107-09 and accompanying text. The next published opinion involving
clawbacks from investors in a Ponzi scheme was issued in a 1966 case where the Sixth
Circuit affirmed the District Court’s decision allowing the bankruptcy trustee to
reclaim money received by an associate of the Ponzi schemer who was held to have had
reason to know, if not actual knowledge of the fraud. See Conroy v. Shott (In re Cohen),
363 F.2d 90, 92-93 (6th Cir. 1966). That case, thus, did not involve an innocent
investor. The first published case involving a successful avoidance action against an
innocent investor on fraudulent conveyance grounds was decided in 1989. See Wootton
v. Barge, 875 F.2d 508, 510-11 (5th Cir. 1989). Federal bankruptcy law was overhauled
in 1979, with the Bankruptcy Reform Act of 1979 replacing the Bankruptcy Act of
1898. See, e.g., Robert J. White, Leveraged Buyouts and Fraudulent Conveyance Laws
Under the Bankruptcy Code—Like Oil and Water, They Just Don’t Mix, 1991 ANN.
SURV. AM. L. 357, 358 (1991). Nonetheless, fraudulent conveyances provisions can be
found in both Acts, see id., and Ponzi scheme cases date back to the 1920s, so the
upswing in Ponzi scheme clawback cases cannot be attributed to the statutory change.
89
See 15 U.S.C. § 78fff-4(e) (2006).
90
Excellent overviews of the doctrine governing clawbacks in the wake of a
Ponzi scheme can be found in Mark A. McDermott, Ponzi Schemes and the Law of
Fraudulent and Preferential Transfers, 72 AM. BANKR. L.J. 157, 223-25 (1998); see also
Tally M. Wiener, On the Clawbacks in the Madoff Liquidation Proceeding, 15 FORDHAM
J. CORP. & FIN. L. 221, 223 n.7 (2009).
91
11 U.S.C. § 548(a)(1)(A)-(B) (2006).
92
Courts proceed as if there is a presumption of actual fraud in every Ponzi
scheme case, since there will never be enough money in the scheme to provide all
investors with a return of their principal along with the promised returns, and “since a
failure to redeem in accordance with the investor’s expectation based on inflated
account statements would . . . result[] in the investigation and discovery of the fraud.”
Barasch & Chesnut, supra note 69, at 926 (citing In re Bayou Grp., 396 B.R. 810, 843
(S.D.N.Y. 2008)). See, e.g., SEC v. Res. Dev. Int’l, 487 F.3d 295, 301 (5th Cir. 2007) (“In
this circuit, proving that IERC (International Education Research Corporation)
operated as a Ponzi scheme establishes the fraudulent intent behind the transfers it
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RIGHTING OTHERS’ WRONGS
23
On its face, the text of this provision permits two
different interpretations of the provision’s rationale. According
to the first, the purpose of the fraudulent transfer provision is
to prevent the debtor from secreting away his assets, typically
for his own benefit, such that they are beyond the reach of his
creditors. I refer to this as the anti-fraud reading (AF) of § 548.
According to the second, the even distribution reading (ED), the
purpose of the fraudulent transfer provision is to ensure the
most even distribution of assets as possible by conferring upon
each creditor his pro-rata share of the recovered resources.94
made.” (citation omitted)); In re Manhattan Inv. Fund Ltd., 397 B.R. 1, 8 (S.D.N.Y.
2007) (“There is a general rule—known as the ‘Ponzi scheme presumption’—that such
a scheme demonstrates ‘actual intent’ as matter of law because ‘transfers made in the
course of a Ponzi scheme could have been made for no purpose other than to hinder,
delay or defraud creditors.’” (citation omitted)). See generally McDermott, supra note
87, at 173-74 & n.66 (collecting cases). Nonetheless, a lawyer representing a defendant
in a clawback suit might want to argue that the presumption is unwarranted. The
actual fraud provision refers not to the Ponzi scheme operator’s global or over-arching
intention with respect to the scheme, but rather to the operator’s intentions relative to
the transfers that are the subject of the clawback suit. It may be that the operator had
no intention to defraud anyone when he made those transfers. Indeed, this would seem
to be especially true for those transfers made early in the scheme, when the operator
might well have believed that the scheme was a temporary measure, and that
subsequent legitimate investments would allow him to recover the money that he had
diverted from one investor to another, thereby restoring the investor whose investment
had been diverted.
93
It is worth noting that there is a disagreement among courts as to whether
the investor’s deposits constitute “reasonably equivalent value” for any profits she
receives over and above the amount deposited. See, e.g., McDermott, supra note 90, at
164-65 & n.36 (collecting cases). Judge Posner has argued that the fictitious profits
should be subject to clawback even if one grants that the investor’s principal
constituted fair consideration:
We said that [the clawback target’s] profit was supported by consideration. But
what was the source of the profit? A theft by [the Ponzi scheme operator] from
other investors. What then is [the clawback target’s] moral claim to keep his
profit? None, even if the intent in paying him his profit was not fraudulent.
Scholes v. Lehmann, 56 F.3d 750, 757 (7th Cir. 1995). Posner’s argument begs the
question insofar as it privileges the “theft” that the scheme perpetrates against the
losing investor over the fraud that the scheme perpetrates against the winning
investor: Suppose that the debtor genuinely owed W money, and that the debtor could
obtain the money owed only by stealing from L, and so the debtor proceeded to steal from
L. We would think that W was required to return the money to L only if we discounted
W’s claim to the money. But why should the debtor’s obligation to give money to W count
for less than L’s entitlement to the stolen money? To be sure, the situation looks like the
classic case of stolen goods, where the bona fide recipient must return the stolen good
even if she had no reason to know it was stolen when she acquired it; Posner’s rhetoric—
referring to the Ponzi scheme as a theft—certainly underscores the force of the analogy.
Nonetheless, I go on to discuss both the ways in which the law of stolen goods is both
inapposite and inadequately justified. See infra Part III.B.
94
Robert Clark uses the term “evenhandedness” to refer to one of the
objectives of the avoidance provisions in bankruptcy law. Robert Charles Clark, The
Duties of the Corporate Debtor to Its Creditors, 90 HARV. L. REV. 505, 511-12 (1977). As
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Put differently, AF attends to the value of the estate, while ED
attends to its distribution among creditors. In this Part, I argue
that Picard’s clawback actions find support only in the ED
reading of § 548, but that the history and text of § 548 strongly
favor the AF reading.
A.
The Even Distribution (ED) Reading
One could argue that the letter of the law is compatible
with the ED reading and therefore supports the clawback
actions. For example, subsection (B) under § 548, which is
intended to cover instances of constructive fraud, allows for
avoidance of a transfer “if the debtor voluntarily or
involuntarily . . . (i) received less than a reasonably equivalent
value in exchange for such transfer,” and (ii) the debtor was
insolvent, undercapitalized, or overextended at the time of the
transfer, or he became so as a result of the transfer.95 In
defending the propriety of the Madoff clawback suits against
this provision, one could contend that any “profits” that a
Madoff customer withdrew were profits for which the fund
received less than a “reasonably equivalent value.” This money
exceeds the amount the customer had invested. Further, since
Madoff had promised customers returns that he could not
possibly produce—again, he hadn’t invested their deposits at
all, so there was no way for the deposits to appreciate in
value—he was necessarily insolvent at the time of any
customer’s withdrawal. Thus, the winners’ “winnings” appear
to satisfy § 548’s criteria for a constructively fraudulent
transfer and accordingly appear subject to avoidance.
The problem with this reasoning is that the clawback
actions deviate from the spirit of the fraudulent transfer
provision. More specifically, if we look at the history of the
fraudulent transfer provision, as well as other elements of the
statutory scheme, it becomes clear that the intent of the
fraudulent transfer provision is not to recoup money from
transferees like the Madoff “winners.”
he explains, “the ideal of Evenhandedness toward creditors . . . connot[es] . . . equality
of treatment of legal obligations in connection with liquidation proceedings.” Id.
95
11 U.S.C. § 548(a)(1)(B).
2012]
B.
RIGHTING OTHERS’ WRONGS
25
The Anti-Fraud (AF) Reading
The bankruptcy code’s fraudulent transfer provision has
its genesis in the 1571 Statute of Elizabeth,96 which is virtually
identical in its language to subsection (A) of the current
fraudulent transfer provision. That 1571 law provided that
creditors may avoid “fraudulent . . . Conveyaunces,” which were
made with the “Intent to delaye[,] hynder[,] or defraude
Creditors . . . .”97 By comparison, 11 U.S.C. § 548(a)(1) provides:
“The trustee may avoid any transfer . . . if the debtor voluntarily
or involuntarily—(A) made such transfer . . . with actual intent
to hinder, delay, or defraud any entity to which the debtor was
or became, on or after the date that such transfer was made or
such obligation was incurred, indebted . . . .”98
The basic idea behind the Statute of Elizabeth was to
counteract certain kinds of mischief. For example, at the time,
there were certain sanctuaries into which the king’s writ could
not enter. As a result, debtors would take refuge in these
sanctuaries, but before doing so, they would sell their assets to
friends and family members for a nominal sum in order to
prevent creditors from reaching them. Then, when their
creditors finally gave up or the statute of limitations expired,
the debtor would buy back the assets from his friends and
family and, presumably, live happily ever after.99 To prevent
this practice, the Statute of Elizabeth was passed. For example,
under the statute, if the debtor sold his flock of sheep for a
pittance, creditors could avoid the transfer and undo it, thereby
returning the sheep to the estate so that creditors could access
their value.100
The untoward act that the Statute of Elizabeth
contemplated was not one where the debtor gives money to
creditor A and thereby leaves less in the pot for creditor B. It
was instead the situation in which the debtor seeks to frustrate
recovery on the part of all of his creditors, by transferring title
of his assets to another with the express purpose of reclaiming
them once the debtor was beyond the reach of his creditors. In
other words, the Statute of Elizabeth did not seek an even
96
See Douglas G. Baird & Thomas H. Jackson, Fraudulent Conveyance Law
and its Proper Domain, 38 VAND. L. REV. 829, 829-30 (1985).
97
13 Eliz. I, ch. 5 (1571) (Eng.), DURHAM UNIV. (UK), available at
http://familyrecords.dur.ac.uk/nei/NEI_13Elizabeth1c5.htm (last visited Nov. 5, 2012).
98
11 U.S.C. § 548(a)(1)(A).
99
See Baird & Jackson, supra note 96, at 829.
100
The example is Baird and Jackson’s. See id. at 852.
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distribution among all creditors. It merely sought to prevent
situations where the debtor attempted to safeguard assets for
his own enjoyment of them.
The rationale behind the Statute of Elizabeth is
enshrined in current law, as can be gleaned from various
elements in today’s bankruptcy code. Consider, for example,
the provision permitting avoidance of a transfer just so long as
it was made with fraudulent intent.101 If the objective of the
fraudulent transfer provision were to ensure an even
distribution among creditors, it would make no sense to permit
avoidance only where the debtor transferred assets with an
actual or constructive fraudulent intent. For example, suppose
that the year before our “Elizabethan deadbeat”102 became
insolvent,103 he gave his flock of sheep to his doctor in exchange
for medical services rendered, with no expectation of having
the sheep returned. The transfer would not be fraudulent, and
yet the value of the estate would be diminished to the same
extent as in the case where the debtor has given his brother the
flock of sheep for the sake of putting them out of his creditors’
reach. If we really were concerned about ensuring that all
creditors share equally in the losses, we would require the
doctor to return the sheep and line up with the other creditors
for his pro rata share of the estate. Allowing the doctor to
retain the sheep simply because they were not conveyed with a
fraudulent intent suggests that we are not concerned with
ensuring an even distribution.104
A second piece of evidence supporting the AF reading
over the ED reading emerges from a provision in the
bankruptcy code that allows the target of a clawback action to
marshal a good faith defense. In particular, 11 U.S.C. § 548(c)
provides that “a transferee . . . that takes for value and in good
101
11 U.S.C. § 548(a).
Baird & Jackson, supra note 96, at 852.
103
The hypothetical has the transfer occur a year before insolvency so that the
transfer of the sheep cannot be avoided as a form of preference avoidance, the reach
back period for which is less than one year.
104
One might argue that the doctor is entitled to keep his sheep not because
they were conveyed without fraudulent intent but because he qualifies for the
“ordinary course of business” defense, as captured in contemporary law by 11 U.S.C.
§ 547. But this is just to beg the question, for why should paying for medical services
count as part of the fraudster’s “ordinary” business while returning money to investors
does not? A purported distinction between the two seems to rest on the intuition that
the doctor has provided a legitimate service to the fraudster; but the investors had no
less reason than the doctor to believe that the transaction in which they engaged with
the fraudster was legitimate. So, again, the question of the grounds for the disparity in
treatment arises.
102
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RIGHTING OTHERS’ WRONGS
27
faith has a lien on or may retain any interest transferred . . . to
the extent that such transferee . . . gave value to the debtor in
exchange for such transfer . . . .”105 Thus, for example, consider a
Ponzi scheme with two customers—Smith and Jones. Smith
and Jones both invest the same amount of money at the same
time. Neither has any idea that they are investing in a Ponzi
scheme, nor are there any red flags that should have put them
on notice. Six months before the Ponzi scheme is exposed,
Smith withdraws an amount equal to his principal. Because
Smith will have taken “for value and in good faith,” he will get
to keep 100 percent of the money he has withdrawn. If the
Ponzi scheme operator is completely insolvent at the time the
scheme collapses, Jones will end up with nothing. Again, in the
case between Smith and Jones, if the purpose of § 548 were to
ensure an even distribution between creditors, the fact that
Smith had taken in good faith would be irrelevant. Smith
would instead be required to give back 50 percent of the money
he had withdrawn in order to offset Jones’s losses. The law,
instead, provides that Smith gets to keep the full amount of his
withdrawal, and Jones gets nothing.106
Moreover, the distinction between “net winners” and
“net losers” lends further support to the AF reading. Where an
investor has received no more than the amount she deposited, a
court could consider her withdrawals to represent (fictitious)
interest payments, rather than return of principal, in which
case the money withdrawn would not have been offset by the
“reasonably equivalent value” that § 548(a)(1)(B) requires. This
would be an especially plausible way to proceed where the
Ponzi scheme operator specifically designated the withdrawals
105
11 U.S.C. § 548(c) (emphasis added).
In recent years, courts have narrowed the scope of the good faith defense,
adopting a demanding objective standard. See, e.g., In re Bayou Grp., 439 B.R. 284, 31012 (S.D.N.Y. 2010) (describing the relevant test thusly: “The first question . . . is whether
the transferee had information that put it on inquiry notice that the transferor was
insolvent or that the transfer might be made with a fraudulent purpose . . . these two
elements are consistently identified as the triggers for inquiry notice . . . . Once a
transferee has been put on inquiry notice of either the transferor’s possible insolvency or
of the possibly fraudulent purpose of the transfer, the transferee must satisfy a ‘diligent
investigation’ requirement . . . . The test is most commonly phrased . . . as whether
‘diligent inquiry would have discovered the fraudulent purpose’ of the transfer.”).
106
Some commentators suggest that the narrow reading of the good faith defense is
an intentional effort by courts to reach all payments, not just profits, so that
early and late investors are at parity. This view is also shared by some judges,
who view the narrow reading as judicial activism . . . .
Sullivan, supra note 9, at 1618 (citations omitted).
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as payments of interest, rather than return of principal.
Nevertheless, courts tend to credit payments first toward
principal and then, only after the amount deposited has been
fully withdrawn, toward interest. Thus one court stated that
“[i]f a given defendant received less than his [investment], the
amounts received should be considered return of principal,
regardless of how the parties may have designated them.”107 It
is this treatment that allows us to consider the person who
withdrew some money from her account—but less than she had
invested—to be a net loser, rather than an investor who earned
some profits from the Ponzi scheme. Yet again, if courts sought
to achieve an even distribution among customers, it would
make little sense to credit all payments up to the amount of the
deposit as principal. This approach puts those payments
beyond the bankruptcy trustee’s reach—because the investor
has given reasonably equivalent value for these withdrawals
under § 548(B)(i)—thereby leaving less money in the pot for
redistribution. The fact that the doctrinal understanding of
constructive fraud allows an innocent investor to keep the full
amount of her principal again suggests that it does not seek an
even distribution in the first instance.
A final argument against the ED reading is evident
from the fact that the bankruptcy code contains a separate
provision that straightforwardly seeks to accomplish the goal of
even distribution among creditors. The preference avoidance
provisions of 11 U.S.C. § 547 state that “the trustee may avoid
any transfer of an interest of the debtor in property” made “on
or within 90 days before the date of the filing of the petition.”
The underlying idea is that a debtor should not be permitted to
play favorites in determining which creditors should have their
debts repaid.108 Instead, all creditors of the same class should
receive a distribution of the estate proportionate to what they
are owed. Section 547 thus negates preferences among
creditors and, in so doing, ensures an equitable distribution
among them. Indeed, as one of the foremost treatises on
107
Merrill v. Abbott (In re Indep. Clearing House Co.), 77 B.R. 843, 852 n.14
(D. Utah 1987).
108
For a classic case that seems to involve a transfer that was both fraudulent
and preferential, see Twyne’s Case, 76 Eng. Rep. 809, 810-13 (Star Chamber 1601).
There, the debtor owed debts to both Twyne and C. but did not have sufficient assets to
cover both debts. He secretly gifted the assets he possessed to Twyne, who allowed the
debtor to continue using the assets in question. This transaction reflected both an
unfair preference for Twyne and a fraudulent conveyance, insofar as it was conducted
in secret with the intention of hindering C.’s recovery.
2012]
RIGHTING OTHERS’ WRONGS
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bankruptcy law explains, “preference law . . . restructures
transactions so as to level out the overall treatment received by
similar creditors.”109 If the purpose of § 547 is to ensure an even
distribution, it could not be the purpose of § 548, the fraudulent
transfer provision, to do so as well.110 Leveraging the fraudulent
transfer provision for purposes of seeking equity among
109
4 WILLIAM L. NORTON, JR. & WILLIAM L. NORTON, III, NORTON
BANKRUPTCY LAW AND PRACTICE § 66:1 (3d ed. 2009) (emphasis added).
110
But see In re Bayou Grp., 396 B.R. 810, 827 (Bankr. S.D.N.Y. 2008), aff’d in
part, rev’d in part, 439 B.R. 284, 303, 338-39 (S.D.N.Y. 2010) (“Section 548 serves the
same policy function as Section 547, which allows the trustee to avoid preferential
payments made within ninety days of the bankruptcy to perfectly innocent creditors
who were legally entitled to be paid. Both sections represent an equitable
determination by Congress that under limited circumstances creditors must share
equally in the insolvency, or, in the case of Section 548, the fraud. Section 548 is not a
punitive provision designed to punish the transferee, but is instead an equitable
provision that places the transferee in the same position as other similarly situated
creditors who did not receive fraudulent conveyances.”). Commentators have decried
the Bayou decision, because it articulates an overly demanding test for establishing
good faith. See, e.g., Sullivan, supra note 9, at 1623 (“[Bayou’s] objective good faith
standard contravenes congressional intent, confuses the goals of fraudulent and
preferential transfer law, unfairly penalizes savvier investors with actual good faith
based on their status alone, demands investors to be more diligent than the SEC itself,
and assumes (with the benefit of hindsight) that investors saw the ‘red flags.’”). Thus,
two other opinions from the Southern District of New York—Picard v. Katz, 462 B.R.
447, 453-57 (S.D.N.Y. 2011) (Rakoff, J.), the Madoff trustee’s billion-dollar fraudulenttransfer suit against the Mets’ owners, and Gowan v. The Patriot Grp. (In re Dreier
LLP), 452 B.R. 391 (Bankr. S.D.N.Y. 2011) (Glenn, J.)—have explicitly disagreed with,
and so declined to follow, Bayou’s determination of the meaning of “good faith.” See
generally Paul D. Sinclair & Monika Machen, Katz, Dreier Cut into Aggressive
Trustees’ Positions, 31 AM. BANKR. INST. J., Feb. 2012, at 48.
More relevant here, the Bayou court’s assertion that both § 547 and § 548
have equity as their rationale is problematic for two reasons. First, if it were true, it
would render mysterious the different reach-back periods in §§ 547 (ninety days) and
548 (two years); surely the fact of the bankrupt’s wrong cannot justify exposing his
transferees to a longer reach-back period, which is to say exposing them to an
obligation to share more in the losses. Second, if the court is correct as to the rationale
for § 548, then its application to Ponzi scheme winners would undercut the reading of
“net equity” advanced by the SEC, adopted by Judge Lifland and affirmed by the
Second Circuit, see supra Part I.B. The Bayou court intends that “the transferee [be
placed] in the same position as other similarly situated creditors who did not receive
fraudulent conveyances.” In re Bayou Grp., 396 B.R. at 827. As applied to the Madoff
winners and losers, then, the winners should have no more entitlement, but also no
less, to Madoff’s estate. This would be the result if, say, all Madoff investors returned
all of the money they had withdrawn from their Madoff accounts, and it was then
divided among them in proportion to the amount of their investment. But the effect of
the net equity decision is to deny winners the status of customers with valid net equity
claims; at the same time, winners who can establish their good faith will have only
their withdrawn profits clawed back. So, winners who cannot establish their good faith
will come out behind the Madoff losers, while winners who proceeded in good faith will
come out ahead. And, there is no mechanism for excluding from recovery those losers
who did know of the fraud and, perhaps out of an excess of greed, chose to continue
riding the Ponzi scheme wave thinking that they could get out before the scheme
collapsed. In short, if the avoidance provisions really do seek an equitable distribution
of the bankrupt’s assets, then the law in this area is in even more disarray than the
text accompanying this note suggests.
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Madoff’s customers, then, renders the preference avoidance
provisions superfluous.111 Or, put less charitably, it is possible
to see Picard’s efforts to use the fraudulent transfer provision
to pursue clawbacks as an end-run around the shorter reachback period of a mere ninety days in the preference avoidance
provision,112 in favor of the longer reach-back period of up to six
years in the fraudulent transfer provision.113
111
But cf. Clark, supra note 94, at 510-13. Clark describes the general
rationale for both fraudulent conveyance and preference avoidance as “that of
Nonhindrance of the enforcement of valid legal obligations against oneself, in
connection with transfers of one’s property. In summary, then, fraudulent conveyance
law embodies a general ideal, in connection with a debtor’s transfers of property rights
and incurrences of new obligations, of Nonhindrance of creditors.” In this way, Clark
would seem to interpret both §§ 547 and 548 along the lines of what I have called the
AF reading. Nonetheless, Clark subsequently acknowledges that the ideal of
Evenhandedness, which underpins preference avoidance, is indeed distinct from the
other specifications of the general commitment to Nonhindrance:
It is also possible, however, to view Evenhandedness as a policy independent of,
and on a par with, a general ideal of Nonhindrance, and this aspect of the policy
has led to its development as a separate topic. While like the other two ideals
Evenhandedness specifies the moral duties of a debtor to his creditor,
Evenhandedness is also the ideal behind what is referred to as the law of
voidable preferences and many cases assume or state explicitly that a preference
is not a fraudulent conveyance.
Id. at 513.
112
11 U.S.C. § 547(b)(4)(A). At least one court has decried § 547’s short statute
of limitations when it comes to Ponzi schemes:
For a Ponzi scheme that lasts more than three months, the statute[] . . . does not
go far enough. By definition, an enterprise engaged in a Ponzi scheme is
insolvent from day one. Thus, all transfers to investors in a Ponzi scheme are
preferential, not just those made within the three months before bankruptcy.
Every transfer prefers the transferee to those investors at the end of the line.
The evil of a preferential transfer is that it “unfairly permit[s] a particular
creditor to be treated more favorably than other creditors of the same class.” All
investors in a Ponzi scheme are creditors of the same class, so in theory all
should be treated equally. In effect, though, applying section 547 to a Ponzi
scheme . . . favors some creditors over others. Under section 547 the creditors
who are most preferred are allowed to keep their preferential payments because
the transfers were made outside the statutory period . . . . The statute simply
does not reach the early investors. Thus, applying the statute as written, the
court is “compelled to take part in a farce whose result is . . . to take away from
those who have little, the little that they have.” The equitable solution would be
either to apply the statute to all transfers to investors in a Ponzi scheme—
without regard to when the transfers were made—or to apply the statute to none
of the transfers.
In re Indep. Clearing House Co., 77 B.R. 843, 871 (D. Utah 1987) (citations omitted).
Other commentators have noted that the short reach-back period of the
preference avoidance provision might have impelled courts to adopt expansive
understandings of the circumstances under which a fraudulent transfer has arisen.
See, e.g., Cherry & Wong, supra note 15, at 404 (“[B]ecause the typical losing investor
nonetheless remains at an unfair disadvantage, courts have sought to rectify the
balance . . . . [C]ourts have begun to adopt a narrower reading of the good faith defense
so as to potentially reach all payments received by an investor from the scheme . . . not
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RIGHTING OTHERS’ WRONGS
31
All of this shows that the AF reading is on far firmer
ground than is the ED reading. Treatise writers and
distinguished jurists seem to agree. Thus, one of the classic
bankruptcy law treatises states that “the intent of [fraudulent
conveyance statutes] . . . is not to provide equal distribution of
the estates of debtors among their creditors; there are other
statutes [in bankruptcy] which have that effect.”114 A leading
bankruptcy law casebook states that the “purpose of fraudulent
conveyance law, whatever its form, is simple: it protects a
debtor’s unsecured creditors from reductions in the debtor’s
just . . . fictitious profits.” (citation omitted)). At least some of these commentators
welcome this expansive reading. See id. Those who have decried the expansion do so on
separation of powers grounds, and not on the fairness-based grounds I adduce here. See,
e.g., Lustig v. Weisz (In re Unified Commercial Capital, Inc.), 260 B.R. 343, 349-50
(Bankr. W.D.N.Y. 2001) aff’d sub nom. In re Unified Commercial Capital, No. 01-MBK6004L, 2002 WL 32500567 (W.D.N.Y. June 21, 2002); Sullivan, supra note 9, at 1634-35.
[Some c]ourts . . . appear to believe that a “just” solution to the losses suffered by
the innocent investors in a “Ponzi” scheme requires some reallocation of the risks
and redistribution of the losses beyond that provided for by Congress in Section
547(b) . . . . [T]he fraudulent conveyance statutes cannot and should not be
utilized by courts as a super preference statute to effect a further reallocation
and redistribution that should be specifically provided for in a statute enacted by
Congress. The Section 548(a) and state law fraudulent conveyance statutes
implement a policy of preventing the diminution of a debtor’s estate. The Section
547(b) preference statute implements a principal policy of equality of
distribution. By forcing the square peg facts of a “Ponzi” scheme into the round
holes of the fraudulent conveyance statutes in order to accomplish a further
reallocation and redistribution to implement a policy of equality of distribution
in the name of equity, I believe that many courts have done a substantial
injustice to those statutes and have made policy decisions that should be made
by Congress.
In re Unified Commercial Capital, Inc., 260 B.R. at 349-50.
113
Section 548 authorizes avoidance of transfers made only in the two years
prior to the declaration of bankruptcy. See 11 U.S.C. § 548. However, § 544(b) of the Code
allows the trustee to avoid fraudulent conveyances based on state law, id. § 544(b), and
the New York fraudulent transfer provision allows for a six year reach-back period, N.Y.
C.P.L.R. § 213 (McKinney 2012). In the case against the Mets owners, Judge Rakoff held
that the bankruptcy trustee could proceed against the defendants only upon a theory of
actual fraud, as articulated in 11 U.S.C. § 548(a)(1)(A), which limited the reach back
period to two years (and the recovery amount to $384 million, rather than the $1 billion
the trustee had sought). See Katz, 462 B.R. at 451. It is not yet clear what effect, if any,
this ruling will have on the other Madoff claw back suits and, in particular, on the
allowable reach-back period.
114
1 GARRARD GLENN, FRAUDULENT CONVEYANCES AND PREFERENCES § 289
(rev. ed. 1940) (quoting In re Johnson, 20 Del. Ch. 389 (1881)) (internal quotation
marks omitted); see also Peter L. Borowitz & Richard F. Hahn, The Troubled Leveraged
Buyout: Risks (and Opportunities) Under Fraudulent Conveyance and Other Creditors’
Rights Laws, in 694 PRACTISING LAW INSTITUTE: CORPORATE LAW AND PRACTICE
COURSE HANDBOOK SERIES 51, 53-54 (“In its original form fraudulent conveyance law
focused exclusively on transfers of a debtor’s property where there was actual evidence
of the debtor’s intent to harm its creditors by hiding assets from imminent levy.”).
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estate to which they look, generally, for their security.”115 In a
First Circuit Court of Appeals decision, then-Judge Stephen
Breyer stated that one of the “basic functions” of fraudulent
conveyance law is “to see that an insolvent debtor’s limited
funds are used to pay some worthy creditor,” and not to
“determin[e] which creditor is the more worthy.”116 Breyer’s
conception has subsequently been endorsed by the Second
Circuit Court of Appeals,117 as well as numerous federal district
and bankruptcy courts.118 In short, according to all of these
sources, contemporary law allows fraudulent conveyances to be
avoided because they are fraudulent, not because they risk
creating a disparity between creditors of the same class.
But even if the bankruptcy code was not intended to be
used to take money from some innocent Ponzi scheme investors
and provide it to others, perhaps we should nonetheless refrain
from opposing the clawback actions. After all, any money that a
Madoff customer withdrew over and above that which she
invested was money that another Madoff customer had
deposited. In many cases, sheer luck will have allowed some
Madoff investors to come out ahead, while others come out with
little or nothing. Why should luck be so decisive, especially if the
winners’ “winnings” come directly from the losers’ pockets?
Indeed, Picard has relied on precisely this logic in defending the
clawback suits to the general public. Yet despite its intuitive
appeal, this rationale turns out to be quite problematic.
III.
UNJUST ENRICHMENT AND STOLEN GOODS
In seeking to justify avoidance actions filed against
innocent and (allegedly) knowing investors alike, Picard has
been quite savvy in his choice of language. In a quote to the
Wall Street Journal, Picard exclaimed that “the people who
made money, who got more, have made money at the expense
115
MARK S. SCARBERRY ET AL., BUSINESS REORGANIZATION IN BANKRUPTCY:
CASES AND MATERIALS 387 (3d ed. 2006).
116
Boston Trading Grp. v. Burnazos, 835 F.2d 1504, 1511 (1st Cir. 1987); see
also id. at 1509 (“[T]he basic object of fraudulent conveyance law is to see that the
debtor uses his limited assets to satisfy some of his creditors; it normally does not try to
choose among them.”).
117
See, e.g., Sharp Int’l Corp. v. State St. Bank & Trust Co. (In re Sharp Int’l
Corp.), 403 F.3d 43, 54 (2d Cir. 2005); HBE Leasing Corp. v. Frank, 48 F.3d 623, 634
(2d Cir. 1995).
118
See, e.g., In re Jeffrey Bigelow Design Grp., 956 F.2d 479, 484 (4th Cir.
1992); Kapila v. TD Bank, N.A. (In re Pearlman), 460 B.R. 306, 312, (Bankr. M.D. Fla.
2011); Walker v. Pasteur (In re Aphton Corp.), 423 B.R. 76, 93 (Bankr. D. Del. 2010).
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RIGHTING OTHERS’ WRONGS
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of the people who didn’t.”119 Putting the point even more starkly,
he subsequently described the disparity between winners and
losers by stating that, “for more than 20 years, Bernard Madoff
stole money from some people and gave it to others.”120 Echoing
this rhetoric, Picard’s lieutenant, David Sheehan, stated that
“[t]hose who didn’t get their money back are entitled to get it
from those who have it.”121
These statements have great intuitive appeal, as they
rely upon an implicit analogy to two well-established doctrines—
namely, the law of unjust enrichment and the law of stolen
goods. For both of these doctrines, one party may be compelled to
return money or goods illicitly taken from their original owner,
even if the former is completely innocent of the illicit taking.
Picard and Sheehan’s rhetoric implies that we should conceive of
the winners as the innocent recipients of ill-gotten gains or
stolen goods, in which case compelling the winners to return
their “winnings” to the losers would be consistent with the
doctrines governing unjust enrichment and stolen goods.
Picard is not alone in seeking to leverage this rhetoric.
Both the Securities Investor Protection Corporation and the
trustees charged with recovering assets in the wake of other
Ponzi schemes have also sought to support clawback suits by
analogizing the transfers they seek to avoid to instances of
unjust enrichment or stolen goods.122 It behooves us, then, to
119
Michael Rothfeld, Madoff Investors Brace for Lawsuits, WALL ST. J., July
26,
2010,
at
C1,
available
at
http://online.wsj.com/article/
SB10001424052748704719104575389141620473502.html (internal quotation marks omitted).
120
THE MADOFF RECOVERY EFFORT: AN UPDATE CALL WITH THE TRUSTEE AND
HIS COUNSEL FROM BAKER HOSTETLER, at 1, (Mar. 8, 2011, 3:00 PM), available at
http://207.58.180.20/document/news/000018-2011-march-8-picard-sheehan-openingstatements-for-march-8-press-call.pdf; see also Alan Rappeport, 123 Claims Filed over
Madoff Payouts, FIN. TIMES, Dec. 1, 2010, at 25, available at http://www.ft.com/cms/s/0/
0aa84be4-fcdf-11df-ae2d-00144feab49a.html#axzz1os4RzPPa (quoting from the complaint
for the clawback suit filed against a hedge fund operator in which Picard alleges that
“[t]he transfers received by the defendant constitute non-existent profits supposedly
earned in the account, but, in reality, they were other people’s money . . . .” (internal
quotation marks omitted)).
121
Madoff Recovery, supra note 120, at 6. Joe Nocera, the New York Times
columnist, echoes these words in his arguments supporting the clawback suits: “[T]he
net winners’ gains came from the pockets of the net losers. That’s how a Ponzi scheme
works. If you buy a stolen watch, and its real owner wants it back, don’t you have an
obligation to return it?” Joe Nocera, Suspense Is Over in Madoff Case, N.Y. TIMES, June
26, 2012, at A23.
122
Thus, the receiver appointed by the SEC in the Stanford International
Bank fraud has sought to recover money from innocent beneficiaries of the Ponzi
scheme by advancing, inter alia, a claim that they were unjustly enriched. Receiver’s
First Amended Complaint Against Certain Stanford Investors ¶¶ 39-42, Janvey v.
Alguire, 846 F. Supp. 2d 662 (N.D. Tex. 2011) (No. 03:09-CV-0724-N), available at
http://www.stanfordfinancialreceivership.com/documents/Receivers_First_Amended_
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consider the force of the analogies. In this Part, I address each
of the purportedly analogous doctrines in turn.
A.
The Law of Unjust Enrichment
The law of unjust enrichment holds that “[a] person has
a right to have restored to him a benefit gained at his expense
by another, if the retention of the benefit by the other would be
unjust.”123 An unjust enrichment analysis includes the following
inquiries: “(i) Was the defendant enriched? (ii) Was it at the
expense of [the] claimant? (iii) Was it unjust?”124 An affirmative
answer to each of these questions entails that a defendant has
been unjustly enriched. Such a defendant will be required to
restitute the plaintiff, unless the defendant can marshal an
established defense.125
A recitation of the bare elements of the doctrine of
unjust enrichment cannot tell us whether the Madoff winners
were in fact unjustly enriched. For one thing, whether the
winners’ profits were accrued at the expense of the losers turns
on whether the losers maintain a claim to the money that the
winners received. This is precisely the question under debate.
Suppose that the winners and losers invested in Schmadoff’s
legitimate investment scheme instead of Madoff’s fraud.
Suppose further that the investment scheme, while profitable
for many years, suddenly goes bust as a result of an
extraordinary event that no one could have predicted and that
was no one’s fault. For example, imagine that a meteor strikes
the building where Schmadoff had his offices, destroying the
Complaint_Against_Certain_Stanford_Investors.pdf. And, the SIPC,
supporting the trustee’s interpretation of net equity, argued that:
in
a
brief
Unless the fictitious trades in BLMIS are avoided, claimants who were
advantaged by the broker’s fraud, that is, investors who received withdrawals
from BLMIS that actually consisted of other investors’ money under the guise of
investment profits . . . will be allowed to benefit at the expense of other equally
innocent investors.
Memorandum of Law of the Securities Investor Protection Corporation in Support of
Trustee’s Motion for an Order Upholding Trustee’s Determination Denying “Customer”
Claims for Amounts Listed on Last Statement, Affirming Trustee’s Determination of Net
Equity, and Expunging Those Objections with Respect to the Determinations Relating to
Net Equity at 36, Sec. Inv. Prot. Corp. v. Bernard L. Madoff Inv. Sec. LLC (In re Bernard
L. Madoff), No. 08-01789 (BRL) (Bankr. S.D.N.Y. Oct. 16, 2009), available at
http://www.madofftrustee.com/document/dockets/000450-519-memorandum-of-law.pdf.
123
Warren Seavey & Austin Scott, Restitution, 54 LAW Q. REV. 29, 32 (1938).
See generally id. at 36-37 (collecting paradigmatic statements of the doctrine).
124
BIRKS, supra note 9, at 39.
125
Id.
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RIGHTING OTHERS’ WRONGS
35
vault where he had stored half of the investors’ money in
anticipation of a large stock purchase, while the other half was
already invested in the market. Although Schmadoff’s firm was
appropriately insured, insurance does not cover this
contingency, and so half of the money investors thought they
had is now gone. Over the years, some investors withdrew more
money than they had deposited, while other investors had not
recouped all, or even any, of their principal at the time of the
vault’s destruction. The former set of investors would have
been enriched, but it seems a stretch to say that they were
enriched at the expense of the latter, even though their
withdrawals have left fewer resources to be distributed among
the latter. Similarly, the Madoff winners’ withdrawals have
also left fewer resources to be distributed among the losers. But
why should we think that their “winnings” come at the expense
of the losers if we do not think that the Schmadoff winners gain
at the expense of the Schmadoff losers?
Even if the Madoff winners (and perhaps the Schmadoff
winners, too) have gained at the expense of the losers, it is not
at all clear that they have gained unjustly. The paradigmatic
case of unjust enrichment involves the mistaken payment of a
non-existent debt,126 such as when A forgets that she has already
discharged her debt to B and pays B twice. Clearly, the Madoff
case is distinct from this paradigmatic case. Other cases involve
“failures of consideration, shades of fraud and pressure, and
taking advantage of vulnerable people.”127 The second of these
factors is most apt here, and it might ground the losers’ right to
recovery under the following established principle: “If X takes
C’s money without C’s consent and gives it to D, then D becomes
indebted to C in the sum received.”128 Here, X would be Madoff, D
a winner, and C a loser, and the principle would apply so long as
we were licensed in construing the case as one in which Madoff
took the losers’ money without their consent.
In response, one might point to an exception to the
principle and contend that D need not return the money to C if
126
Id. at 5, 73 (referring to this case as “the core of the core” of unjust enrichment
doctrine); Dennis Klimchuk, The Normative Foundations of Unjust Enrichment, in THE
LAW OF UNJUST ENRICHMENT 81, 82 (Robert Chambers et al., eds., 2009).
127
BIRKS, supra note 9, at 41-42 (citing these, along with cases of mistake, as
an exclusive list of unjust factors).
128
Id. at 86 (distilling the principle behind the House of Lords’ decision in
Lipkin Gorman v. Karpnale Ltd., [1991] 2 A.C. 548 (H.L.) (Eng.)). Cf. Zoe Sinel, Through
Thick and Thin: The Place of Corrective Justice in Unjust Enrichment, 31 OXFORD J.
LEGAL STUD. 551, 551 (2011) (“Clearly, one should return what one was not meant to
receive and for which one gave nothing in return.”).
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D received it in exchange for a bona fide purchase. Thus, if an
attorney embezzles money from his law firm and uses it to buy
himself a lavish dinner at the Ritz, the Ritz need not return
any of the proceeds of the meal to the law firm, because it
supplied the food and drink in exchange for the money paid.129
Moreover, this result holds even if the Ritz marks up its prices
exorbitantly to ensure that its profit margin is, for example,
ninety percent of the purchase price.130
Leveraging this exception, one might argue that the
Madoff winners are like suppliers of goods who receive illgotten gains in a genuine, legitimate exchange. This will not
do, however. If Madoff’s fraud vitiates the claimant’s consent
and thereby renders the transfer between a losing investor and
Madoff illicit, then so too it vitiates the legitimacy of the
exchange between Madoff and the winning investor.
As such, this appears to be a case where the law of
unjust enrichment would compel the Madoff winners to return
their winnings to the Madoff losers.131 But it is just at this point
that the law of unjust enrichment is on its weakest footing. To
be sure, courts have found that defendants must return funds
that have been “misdirected from the plaintiff’s bank account
or trust fund by a fraudulent . . . third party,”132 even though
the defendant bears no responsibility for the fraud. The
rationale in these cases emphasizes the plaintiff’s lack of
responsibility for the transfer; the defendant’s lack of
responsibility is taken to be irrelevant.133 But why should this
be? As Kit Barker asks, “Why is the defendant, who is no more
causally implicated in events than anyone else, obliged to
remedy the plaintiff’s bad luck? Is there not an equally strong
case, for example, for compensating the plaintiff . . . from a
public fund, rather than looking to private law for a
restitutionary remedy?”134 Indeed, one might make the point
129
The example is Birk’s variation on the Lipkin Gorman case. See BIRKS,
supra note 9, at 86.
130
See id.
131
Assuming, as I am in this Section, that the Madoff winners in question
were blamelessly ignorant of the fraud, they would have rights of rescission that
protected money withdrawn equal to the principle they had invested. See, e.g., Katz,
supra note 11, at 453-54 (describing the transferee’s right of rescission as an
antecedent debt of the estate, owed in exchange for the value the transferee had
invested with the debtor).
132
Kit Barker, The Nature of Responsibility for Gain: Gain, Harm and Keeping
the Lid on Pandora’s Box, in THE LAW OF UNJUST ENRICHMENT, supra note 126, at 162
(citations omitted) (citing relevant case law).
133
Id. at 165-66.
134
Id. at 166.
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RIGHTING OTHERS’ WRONGS
37
more forcefully by arguing that imposing the remedy
exclusively on the defendant treats him as a mere means. It
“uses the defendant as an instrument in the service of the
plaintiff’s interests.”135
One can find two responses to these queries in the
scholarly literature on unjust enrichment, but neither is
ultimately convincing. First, some have suggested that liability
here vindicates not the plaintiff’s particular interest but
instead “the value of autonomy more generally, a value in
which the defendant can be understood to have an interest, no
less than the plaintiff. So liability does not treat the defendant
as a mere means.”136 The argument seems to be that both the
plaintiff and the defendant gain from the imposition of liability
insofar as liability vindicates the autonomy of each. But a
problem remains. The prospect, or even reality, of gain does not
undercut the concern that the defendant is being used as a
mere means. Analogously, we might say that, in cases of false
conviction, the innocent individual who is punished shares in a
benefit that her punishment produces—namely, the general
deterrence that will make others less likely to commit a similar
crime and that will make the defendant less likely to be
victimized by such a crime. Still, the defendant is being treated
as a mere means because she is singled out for punishment
without cause, even if she, along with others, enjoys the benefit
her punishment generates. The defendant serves as an
instrument for the gain, even if the gain is one in which she
can partake.
A second line of response acknowledges that “there is
nothing uniquely, morally significant” about the defendant who
is innocent of the fraud from which he gains.137 Nonetheless, it
makes sense to have him “insure” the plaintiff against her loss
“because he happens to have an obvious surplus fund” (i.e., the
proceeds deriving from the plaintiff’s loss).138 Along these lines,
some allege that a “localised” or “internal” distributive norm
operates between the plaintiff and defendant such that
fairness, rather than corrective justice, compels return of the
135
Klimchuk, supra note 126, at 97. Klimchuk is trying to rescue Hanoch
Dagan’s account of unjust enrichment, according to which the doctrine is intended to
vindicate the value of autonomy generally. See, e.g., HANOCH DAGAN, THE LAW AND
ETHICS OF RESTITUTION (2004).
136
Klimchuk, supra note 126, at 97.
137
Barker, supra note 132, at 168 (emphasis omitted).
138
Id.
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money.139 Regardless of the justificatory force of this reasoning
in the standard case of unjust enrichment from a fraud
involving a passive defendant, it is not at all clear that it
applies convincingly to the Madoff clawback suits. The Madoff
winner had a legitimate expectation that his investment would
yield returns; therefore his withdrawals might not constitute
“an obvious surplus fund.” Even those who believe that fairness
normally dictates return of the transferred funds recognize an
exception where returning the transferred funds would cause
the defendant to suffer harm himself.140 In the Madoff case, the
winners relied on the legitimacy of their “winnings”; many of
them spent that money thinking that it had been honestly
invested and earned.141 Because the money that winners would
be forced to give up is not a surplus, they would be worse off at
the end of the day.142 Put differently, fairness does not
necessarily compel the result that arises in the standard case of
unjust enrichment, and that the Madoff trustee demands.143
In sum, one can say that the winners in the Madoff case
have been unjustly enriched only if (i) they have been enriched
at the expense of the losers, and (ii) the circumstances of their
enrichment involve an injustice. But whether or not these
conditions apply depends on our understanding of the
entitlements of winners and losers alike. The law of unjust
enrichment does not illuminate, let alone determine, those
139
See id. at 167 (discussing Dennis Klimchuk, Unjust Enrichment and
Corrective Justice, in UNDERSTANDING UNJUST ENRICHMENT 111 (J. Neyers et al. eds.,
2004) and PETER CANE, RESPONSIBILITY IN LAW AND MORALITY 208 (2002)).
140
See, e.g., HANOCH DAGAN, UNJUST ENRICHMENT 40 (2004); Barker, supra
note 132, at 168.
141
See, e.g., Madoff’s Victims, MADOFFSCANDAL.COM: THE LARGEST FRAUD
THAT THE WORLD HAS EVER SEEN, http://www.madoffscandal.com/madoffs-victims/
(last visited Mar. 12, 2012) (describing Ira Roth, whose withdrawals from his Madoff
account were used to pay for his college tuition and his grandmother’s living expenses).
142
See Barker, supra note 132, at 168.
143
Picard has instituted a hardship program, such that winners who can
demonstrate hardship will be excused from having to return their “winnings.” See The
Hardship Program, MADOFF RECOVERY INITIATIVE, http://www.madoff.com/hardshipprogram-17.html (last visited Feb. 24, 2012). The hardship standard that Picard has
set is an onerous one. Among the factors Picard lists in order to qualify for the
hardship program are the following: “[i]nability to pay for necessary living expenses,
such as housing (including loss of home due to foreclosure), food, utilities and
transportation”; “[i]nability to pay for necessary medical expenses”; “[i]nability to pay
for the care of dependents”; and having “[d]eclar[ed] personal bankruptcy.” Id. Yet even
a more liberal standard would not vitiate the concern raised in the text accompanying
this note. Again, the concern is that the defendant may have reasonably relied on the
legitimacy of his earnings and so reasonably spent the money that the trustee now
claims belongs to the plaintiff. Requiring the defendant to repay that money leaves him
worse off even if he is not otherwise financially strapped.
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RIGHTING OTHERS’ WRONGS
39
entitlements. Only a prior inquiry into the relationship that
ought to exist between winners and losers can do so, and I
undertake that inquiry in Part V. It will be useful to turn to the
law of stolen goods first, however, to see whether it can provide
useful insights.
B.
The Law of Stolen Goods
The rule requiring a person who unwittingly purchases a
stolen item to return that item is a fixture of Anglo-American
law and is among the legal rules widely known by the layperson
and legal sophisticate alike. The “He who hath not cannot give”
rule dates back to Roman times,144 and today it can be found in
the UCC,145 as well as in the UCC’s English counterpart.146 Yet,
notwithstanding the entrenched nature of the rule governing
stolen goods, it turns out that there is little to support it, and it
is largely irrelevant to the Madoff case in any event.
Why does the law favor the original owner over the good
faith purchaser of a stolen item? There are two kinds of
rationales adduced in support of the rule—those grounded in
considerations of efficiency, and those grounded in considerations
of fairness. Under the former, it has been argued that resting
priority with the original owner encourages vigilance on the part
of would-be purchasers to ensure proper title in the item they are
thinking about purchasing.147 Prioritizing the original owner also
deters theft, by making it more difficult for the thief to off-load
the fruits of his crime. Yet considerations of efficiency might
weigh just as strongly on the other side. We might instead want
to encourage vigilance on the part of owners to ensure that they
protect their possessions or purchase insurance to cover their
losses. And we might want to ensure the fluidity of the market
for goods by conferring upon the good faith purchaser a sense of
repose.148 So long as he had no reason to know that his purchase
had been stolen from someone else, he may rest easy in the
belief that it will not be repossessed should its origins be
144
See, e.g., BLACK’S LAW DICTIONARY 813 (2d ed. 1910).
“A purchaser of goods acquires all title which his transferor had or had
power to transfer.” U.C.C. § 2-403 (1989).
146
“[W]here goods are sold by a person who is not their owner, and who does not
sell them under the authority or with the consent of the owner, the buyer acquires no
better title to the goods than the seller had.” The Sale of Goods Act, 1979, § 21(1) (U.K.).
147
See, e.g., Derek Fincham, Towards a Rigorous Standard for the Good Faith
Acquisition of Antiquities, 37 SYRACUSE J. INT’L L. & COM. 145, 162 (2010).
148
See Emily A. Graefe, Note, The Conflicting Obligations of Museums
Possessing Nazi-Looted Art, 51 B.C. L. REV. 473, 481 (2010).
145
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uncovered. For precisely these reasons, the rule operates the
opposite way in civil law countries, where good faith
purchasers typically enjoy priority and original owners are
denied recovery. In sum, the efficiency-based considerations for
the rule of stolen goods are hardly decisive in establishing the
original owner’s priority. But nor are the fairness-based
considerations, as we shall now see.
Fairness seeks to favor the original owner on the
presupposition that the original owner will have imbued the
item with more personal meaning than the good faith
purchaser. Where the property in question is “personal” under
Margaret Jane Radin’s conception of that term—being bound
up with its original owner’s conception of herself—it makes
sense to return the item to the original owner.149 Thus, for
example, we can imagine a wedding ring that had been in the
original owner’s family over multiple generations, and for that
reason carries a personal dimension that the good faith
purchaser could not appreciate. Fairness would dictate that we
privilege the property rights of the original owner, who values
the ring for both pecuniary and sentimental reasons, over those
of the good faith purchaser, who has only a pecuniary
attachment to the ring.
A second fairness-based consideration goes not to the
enhanced value the item might hold for the original owner, but
instead to the circumstances of its theft. In these instances, the
original owner has had the item taken from her against her
will.150 As in cases of Nazi-looted art, for example, where the
item was stolen as part of a genocidal campaign,151 we might
say that the original owner has sustained not only a material
loss but also an expressive injury, given the ethnic animus
motivating the crime. In this kind of case, the original owner
has borne the greater loss and, in recognition of that fact,
fairness would again dictate return of the stolen good.
Both of these rationales strike me as no more than
presumptively compelling. In many cases, the more personal
attachment or the more injurious loss may reside on the side of
the original owner. But there will surely be exceptions. For
example, if the good faith purchaser had sold his kidney in
149
See Margaret J. Radin, Property and Personhood, 34 STAN. L. REV. 957 (1982).
Menachem Mautner, “The Eternal Triangles of the Law”: Toward a Theory
of Priorities in Conflicts Involving Remote Parties, 90 MICH. L. REV. 95, 151-52 (1991).
151
See, e.g., Austria v. Altmann, 541 U.S. 677 (2004) (affirming a judgment in
favor of the plaintiff, who sued the Austrian government for the return of six Gustav
Klimt paintings that had belonged to her family prior to the Holocaust).
150
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RIGHTING OTHERS’ WRONGS
41
order to acquire the funds to buy the wedding ring that had
been an heirloom in the original owner’s family, we might
imagine that his fiancée attaches special significance to the
ring in light of the sacrifice made to get it for her. This
significance might be no less compelling than the significance
that the ring holds for its original owner. Similarly, the original
owner might have sustained a garden-variety theft, while the
good faith purchaser was duped into buying the stolen good as
part of a scam that exploits a special vulnerability, causing the
good faith purchaser and members of her group to suffer. This
is the case in instances of affinity fraud, in which the fraudster
preys upon others with whom he shares ethnic or religious
ties.152 In these cases, the good faith purchaser will have been
subject to an expressive injury (such as one motivated by ethnic
or racial animus) while the original owner was not. In sum, the
fairness rationales appear to provide merely presumptive
reasons for privileging the original owner, not absolute grounds
for doing so.
In any event, it is difficult to see why these rationales
should be relevant when we are dealing with a fungible good,
such as money. The family ring or Nazi-looted Gustav Klimt
painting cannot be shared by two owners, but money can easily
be divided between them. So we need not think about
privileging the winner or the loser of an investment fraud in
the same way that we need to contemplate privileging the
original owner or the good faith purchaser for a theft of a
unique object.
Moreover, there is a further distinction between a case
of stolen goods and financial fraud that is worth underscoring.
In the case of a financial fraud like Madoff’s, each investor was
a potential victim of theft. To return to our two-person Ponzi
scheme involving Smith and Jones, consider the following:
Although Smith cashed out early and Jones was left exposed,
the situation could have proceeded precisely the opposite way,
with Jones cashing out early and Smith bearing the loss.
Further, it is not simply that either of them could have been the
victim of fraud. Each was the victim of fraud. This is true not
152
The SEC defines an affinity fraud as fraud that “prey[s] upon members of
identifiable groups, such as religious or ethnic communities, the elderly, or professional
groups. The fraudsters who promote affinity scams frequently are . . . members of the
group . . . . These scams exploit the trust and friendship that exist in groups of people
who have something in common.” Affinity Fraud: How to Avoid Investment Scams that
Target Groups, SEC.GOV, http://www.sec.gov/investor/pubs/affinity.htm (last modified
Sept. 6, 2006).
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only in those cases where winning investors believed they had
money left in their Madoff accounts but later learned that they
would not recover it based on the bankruptcy court’s definition
of net equity. Even the investor who had liquidated her account
and received exactly the amount she believed she was owed can
be said to have been a victim of fraud insofar as she invested her
money under false pretenses. Both were the intended “dupees” of
a fraudster; that only one of them suffered the pecuniary
consequences of having been duped is merely a matter of luck,
for which neither bears responsibility. There is, accordingly, a
moral equivalence between Smith and Jones, and between any
innocent winner and innocent loser in a Ponzi scheme. By
contrast, there need not be a moral equivalence between the
good faith purchaser of a stolen good and the individual from
whom it was stolen; this will especially be the case where the
good has changed hands more than once, and where the last
seller was innocently ignorant of the good’s illicit provenance.
In sum, the law of stolen goods derives its rationale from
a set of potentially dubious presumptions, and these have little
relevance to the relationship between Ponzi scheme winners and
losers in any case. Further, even if one were to remain convinced
that fairness demands loss sharing among Ponzi scheme
winners and losers, it would nevertheless be unfair to proceed
with the clawback suits, given that we do not require innocent
beneficiaries of other kinds of wrongs to share in the losses that
the victims of those wrongs sustain, as we shall now see.
IV.
OTHER ANALOGOUS DOCTRINES?
The legal response to the Madoff case cannot be
assessed in isolation. The Madoff Ponzi scheme collapsed at the
same time as—and as a result of—the 2008 financial
meltdown. With stock values plummeting, Madoff’s customers
sought to withdraw their money en masse, but Madoff was
unable to satisfy all of their claims at once. We know now that
the financial crisis was precipitated in no small part by acts of
wrongdoing. Fraud itself increased in the years preceding the
meltdown.153 Moreover, among the acts and events identified to
153
See Page Perry, LLC, Financial Scams Are Becoming More Common as the
Economy Deteriorates, INVESTMENT FRAUD LAW. BLOG (Apr. 13, 2009),
http://www.investmentfraudlawyerblog.com/2009/04/financial_scams_are_becoming_m.html
(“The Federal Bureau of Investigation reported that corporate fraud more than doubled
from 279 cases in 2003 to 529 in 2007 . . . . The financial frauds include various forms
of theft, such as Ponzi Schemes and embezzlement.”).
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RIGHTING OTHERS’ WRONGS
43
have caused the crisis, instances of recklessness, willful
blindness, and exploitation figure prominently.154 Yet the
response to the financial crisis has all but eschewed any grandscale attempt to compensate those who lost money through no
fault of their own. This Part seeks to distinguish the clawback
suits against innocent winners in a Ponzi scheme from other
restitutionary measures that adversely affect innocent
beneficiaries of a corporate or financial wrong. In Part IV.A, I
focus on executive compensation, while in Part IV.B I address
shareholder losses resulting from corporate or financial wrongs.
A.
Executive Compensation Clawbacks
Outside of the avoidance provisions of bankruptcy laws,
the only individuals who are eligible targets for clawback
actions are corporate executives, and only when their
companies issue earnings restatements to correct for earlier
mistaken earnings reports.155 More specifically, each of the
three federal statutes that permit executive compensation
clawbacks developed in response to cases of dramatic financial
wrongdoing. In particular, the Sarbanes-Oxley Act of 2002
154
See, e.g., THE FIN. CRISIS INQUIRY COMM’N, THE FINANCIAL CRISIS INQUIRY
REPORT XV-XX (2011), available at http://www.gpo.gov/fdsys/pkg/GPO-FCIC/pdf/GPOFCIC.pdf.
155
The focus here is on clawback actions that arise independent of the
clawback target’s participation in the underlying wrong. Since 1971, the SEC has
enjoyed power to seek restitution from corporate executives or corporations that have
engaged in financial fraud, with the inaugural case involving insider trading. SEC v.
Tex. Gulf Sulphur Co., 446 F.2d 1301, 1307-08 (2d Cir. 1971). Yet, until the 1990s, the
rationale for these SEC clawback suits was to deter wrongdoing, and not to distribute
the returned money to those whom the insider trading had injured. See SEC v.
Fischbach Corp., 133 F.3d 170, 175 (2d Cir. 1997) (“Although disgorged funds may
often go to compensate securities fraud victims for their losses, such compensation is a
distinctly secondary goal.”); Zimmerman, supra note 1, at 527-28. Compensation
became a primary goal of SEC disgorgement actions “in 1990, when Congress passed
the Securities Enforcement Remedies and Penny Stock Reform Act. The Penny Stock
Reform Act . . . expressly authorized the SEC to design rules for the distribution of
such awards.” Zimmerman, supra note 1, at 528 (citations omitted). Further, Section
308 of Sarbanes-Oxley, the “Fair Funds” provision, grants the SEC authority to seek
“any equitable relief that may be appropriate or necessary for the benefit of investors.”
Sarbanes-Oxley Act of 2002, Pub. L. No. 107-204, §§ 305(b), 308, 116 Stat. 745, 779
(codified at 15 U.S.C. § 78u(d)(5) (2006)). As Aaron Zimmerman describes,
In the six complete fiscal years since Congress passed the Fair Funds Act, the
SEC has brought between 218 and 335 judicial enforcement actions per year. In
the 2009 calendar year alone, the SEC distributed over $2.1 billion to
investors—more than twice as much as the amount the SEC collected between
1984 and 1992.
See Zimmerman, supra note 1, at 529-30 (citations omitted).
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(SOX)156 was passed in the wake of the Enron and Worldcom
scandals;157 the Dodd-Frank Act of 2010 (Dodd-Frank)158 was
passed in the wake of the subprime mortgage crisis and
ensuing financial meltdown in 2007 and 2008;159 and the
Emergency Economic Stabilization Act of 2008 (EESA)160 was
passed in conjunction with the bailout program that the
financial meltdown necessitated.161 Under each statute, the
triggering event is a finding that the corporation in question
issued a materially inaccurate earnings statement.162 A further
triggering event occurs under Dodd-Frank upon a finding that
the corporation otherwise materially failed to comply with a
federal securities reporting regulation.163
The scope of each clawback provision varies: SOX
restricts its clawback provisions to the corporation’s CEO and
CFO.164 EESA permits clawing back compensation from the
CEO and the next twenty highest-paid executives.165 And DoddFrank, the most expansive of the three, subjects any executive
of the corporation to a clawback action.166 On the other hand,
Dodd-Frank contemplates a less severe clawback than does
either SOX or EESA. Dodd-Frank restricts the clawback
amount to that in excess of what the executive would have
earned under the correct earnings statement,167 while both SOX
156
Sarbanes-Oxley Act of 2002, Pub. L. Nos. 107-204, 116 Stat. 745.
See Larry E. Ribstein, Market vs. Regulatory Responses to Corporate
Fraud: A Critique of the Sarbanes-Oxley Act of 2002, 28 J. CORP. L. 1, 3 (2003).
158
Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. No.
111-203, 124 Stat. 1376 (2010).
159
See William E. Cohen, Foreword to DAVID SKEEL, THE NEW FINANCIAL DEAL:
UNDERSTANDING THE DODD-FRANK ACT AND ITS (UNINTENDED) CONSEQUENCES ix (2010).
160
Emergency Economic Stabilization Act of 2008, div. A, Pub. L. No. 110-343,
122 Stat. 3765.
161
See, e.g., Sandra Seitman, Note, Uncle Sam’s New Piggy Bank: Confronting
Crisis Through TARP and Federal Oversight, BUS. L. BRIEF, Fall/Winter 2009-2010, at 53.
162
Sarbanes-Oxley Act of 2002, § 304(a); Dodd-Frank Wall Street Reform and
Consumer Protection Act, § 954; Emergency Economic Stabilization Act of 2008, § 11(b)(3)(B).
163
Dodd-Frank Wall Street Reform and Consumer Protection Act, § 954.
164
See, e.g., Joseph E. Bachelder III, Clawbacks Under Dodd-Frank and Other
Federal Statutes, HARV. L. SCH. F. ON CORP. GOVERNANCE & FIN. REG. (June 9, 2011,
9:14
AM),
http://blogs.law.harvard.edu/corpgov/2011/06/09/clawbacks-under-doddfrank-and-other-federal-statutes/.
165
See id.
166
See id.
167
See id. A separate provision of Dodd-Frank applies to failed financial
companies and targets “any current or former senior executive or director substantially
responsible for the failed condition of the covered financial company” for a clawback of
“any compensation received during the 2-year period preceding the date on which the
Corporation was appointed as the receiver of the covered financial company, except
that, in the case of fraud, no time limit shall apply.” Dodd-Frank Wall Street Reform
and Consumer Protection Act, H.R. 4173, 111th Cong. § 210(S) (2010). Since this
157
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RIGHTING OTHERS’ WRONGS
45
and EESA permit recovery of all of the incentive-based
compensation belonging to the targeted executive.168 The reachback period under Dodd-Frank is the three years preceding the
reporting error or failure, while it is twelve months under SOX
and there is no specified reach-back period under EESA.169
Importantly,
these
statutes
permit
clawbacks
independently of whether the targeted individual bears a
culpable connection to the triggering event.170 Each inflicts its
clawback measures on both “innocent” and culpable executives
alike.171 One might then think that these statutes, similar to the
Ponzi scheme clawback actions, stand for the proposition that an
individual ought not profit from another’s wrongdoing, whether
or not that individual is culpable of the wrongdoing. Nonetheless,
there are significant differences between the executive clawback
statutes and the Ponzi scheme clawback cases.
As compared with the Ponzi scheme clawbacks,
executive clawbacks are at once more compelling and less
harsh. Even in cases where the executive did not participate in
the false or fraudulent financial accounting, one could argue
that restitution of the excess compensation—i.e., the incentivebased pay that used the falsely inflated figures as the basis for
calculating the executive’s bonuses, etc.—is nonetheless
warranted. Under Dodd-Frank, for example, the executive
clawback only rectifies an over-payment and returns the
executive to the position she would have occupied had the
provision contemplates only those officers or directors who bear a culpable connection
to the company’s failure, I do not consider it further.
168
For the relevant provision, see Jesse Fried & Nitzan Shilon, Excess-Pay
Clawbacks, 36 J. CORP. L. 721, 730 (2011).
169
See generally Bachelder, supra note 164.
170
See, e.g., SEC v. Jenkins, No. 09-CV-0510-PHX-RJB, slip op. (D. Ariz. Nov.
16, 2011), available at http://www.wlrk.com/docs/SECVJenkins09-cv-1510-136.pdf
(holding that the SEC may claw back executive compensation even when the executive
in question was not guilty of the misconduct that necessitated the restatement); ROPES
& GRAY, COURT SAYS SARBANES-OXLEY ALLOWS “CLAWBACKS” OF EXECUTIVE’S
BONUSES, available at http://www.ropesgray.com/files/Publication/09095ca9-bef7-49e2aa9d-45eab883df2f/Presentation/PublicationAttachment/6fc9ecd8-5f53-45bc-89dc48b37b701ba7/06142010TaxBenefitsAlert.pdf (last visited Mar. 12, 2012); Bachelder,
supra note 164 (“EESA § 111(b)(3)(B) contains no provision limiting it to cases of
misconduct.”); Liz Skola, The Dodd-Frank Act Requires Publicly-Traded Companies to
Adopt Compensation Clawback Policies, SEC. LITIG. BLOG (Aug. 5, 2010, 9:05 AM),
http://securities.litigation.alston.com/blog.aspx?entry=3869 (“The recent no-fault
interpretation of the Sarbanes-Oxley clawback is codified in the Dodd-Frank Act
clawback statute.”).
171
For the view that an executive might not be innocent of a corporate wrong
even if she neither participated in, knew about, or was obligated to know about, the
wrong, see Amy J. Sepinwall, Guilty by Proxy: Expanding the Boundaries of
Responsibility in the Face of Corporate Crime, 63 HASTINGS L.J. 411, 435-45 (2012).
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corporation’s accounting been accurate from the start.172 Thus,
she retains whatever financial rewards are owed to her by
virtue of what the company did in fact earn—unlike the
winning Ponzi scheme investor, who is forced to return all of
her profits.
Further, even the more severe clawbacks that SOX and
EESA permit—where the executive may be compelled to return
all of her incentive-based pay—appear more justifiable than do
the Ponzi scheme clawbacks. For one thing, the executive faces
a shorter reach-back period than does the Ponzi scheme
investor.173 Moreover, the executive may not feel the sting of
any clawback she faces, since corporations are permitted to
insure their officers and directors against clawbacks at the
shareholders’ expense, such that the insurance policy would
cover the executive’s obligations to return money pursuant to a
successful clawback action.174 By contrast, Ponzi scheme
investors cannot insure their investments against fraud.
In any event, even while financial regulators are
permitted to pursue executive clawbacks, this is a remedy that
172
Usha Rodrigues puts the point nicely: “If you get a bonus because you meet
a goal, and it later turns out that the goal wasn’t really met because someone messed
with the numbers, then you need to give the money back. Even if you didn’t do anything
wrong, you didn’t really earn that money.” Usha Rodrigues, Clawbacks, Outrage, and
Interpretation, CONGLOMERATE (Aug. 10, 2009), http://www.theconglomerate.org/2009/
08/clawbacks-outrage-and-interpretation.html (internal quotation marks omitted).
173
More specifically, the reach back period is no more than three years under
any of the federal statutes for the executive, while state law permits avoidance of a
fraudulent transfer up to six years prior to the scheme’s collapse. See supra notes 16869 and accompanying text. State law follows one of two forms—the Uniform
Fraudulent Conveyances Act (UFCA) or Uniform Fraudulent Transfers Act (UFTA).
There is no uniform reach-back period among UFCA states, though the range is
between two and six years; the UFTA provides a four-year reach-back period. See
White, supra note 88, at 358-59.
174
Reynolds Holding & Una Galani, Pushing Back on Clawbacks, N.Y. TIMES,
Dec. 19, 2011, at B2, available at http://www.nytimes.com/2011/12/20/business/
pushing-back-on-clawbacks.html. For example, the FDIC sued three executives at
Washington Mutual, the failed bank, seeking to recover $900 million from them on the
allegation that they took excessive risks in order to reap short-term profits. See, e.g.,
Louise Story, Ex-Bank Executives Settle F.D.I.C. Lawsuit, N.Y. TIMES, Dec. 13, 2011, at
B5, available at http://www.nytimes.com/2011/12/14/business/ex-bank-executivessettle-fdic-suit.html. The executives ended up settling for $64 million, but they paid
only $400,000 of that out of pocket; the remainder was covered by their clawback
insurance. See id. Corporations and insurance companies seek to justify the insurance
coverage by arguing that the clawback provisions are intended for restitutionary, and
not punitive, purposes, and so it doesn’t matter whether the returned money comes
from the executive’s pocket or instead that of the insurance company. See id. Their
position would seem to overlook the deterrent aspect of clawbacks, which can succeed
only if the executive personally suffers a pecuniary consequence as a result of her
company’s mistaken statements.
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47
commentators revile175 and that even the SEC regulators seem
to shun.176 Although companies issued 4609 earnings
restatements between 2006 and 2009, the SEC exercised its
Sarbanes-Oxley authority to seek executive clawbacks in only
eleven instances.177 While Dodd-Frank’s clawback provisions
were meant to increase the number of such actions by allowing
both shareholders and the SEC to litigate them, this aspect of
Dodd-Frank has met substantial criticism178 and has not been
175
See, e.g., Larry Ribstein, Punishing Innocent Executives: SOX’s Litigation
Time Bomb Goes Off, IDEOBLOG (July 22, 2009, 11:53 AM), http://busmovie.typepad.com/
ideoblog/2009/07/punishing-innocent-executives-soxs-litigation-time-bomb-goes-off.html;
Russell G. Ryan, The SEC vs. CEO Pay, WALL ST. J., Aug. 4, 2009, at A.11, available at
http://www.chline.wsj.com/article/SB10001424052970204619004574324511579902986.html.
176
Cf. Manning G. Warren III, Equitable Clawback: An Essay on Restoration
of Executive Compensation, 12 U. PA. J. BUS. L. 1135 (bemoaning the under-utilization
of a common law doctrine that would allow private individuals seeking forfeiture of
compensation as a remedy to sue executives who had breached their fiduciary duties).
177
See, e.g., Fried & Shilon, supra note 168, at 731. The SEC took action
against transgressing corporations in a number of notable cases of corporate
wrongdoing. In these cases, the SEC filed complaints against executives implicated in
the wrongdoing but declined to pursue clawbacks. See, e.g., Complaint at 1-2, SEC v.
Dell Inc., No. 1:10-cv-01245 (D.D.C. July 22, 2010), available at http://www.sec.gov/
litigation/complaints/2010/comp21599.pdf (SEC’s action against Dell Computers, its
CEO, and its CFO for overstating earnings between 2002 and 2006); see also Taking
Away Dell’s Cookie Jar, ECONOMIST ONLINE (July 23, 2010, 5:58 PM)
http://www.economist.com/blogs/newsbook/2010/07/dells_sec_settlement. Dell agreed to
pay a penalty of $100 million to settle SEC charges that it “manipulated its accounting
over an extended period to project financial results that the company wished it had
achieved.” Press Release, U.S. Sec. & Exch. Comm’n, SEC Charges Dell and Senior
Executives with Disclosure and Accounting Fraud (July 22, 2010) (citation omitted)
(internal
quotation
marks
omitted),
available
at
http://www.sec.gov/
news/press/2010/2010-131.htm. The CEO and CFO each “agreed to pay a $4 million
penalty to settle the case without admitting or denying wrongdoing, but didn’t return
any pay,” which implies that this was not a true “clawback.” Kara Scannell, Clawbacks
Divide SEC, WALL ST. J., Aug. 7, 2010, at B3, available at http://online.wsj.com/article/
SB10001424052748703988304575413671786664134.html.
Similarly, in a case brought by the SEC against Hank Greenberg, former
CEO of AIG, the SEC alleged that under Greenberg’s leadership AIG “faced a number
of financial challenges that, had they been properly reported or accounted for, would
have exposed significant missteps in AIG’s operations and caused the company to miss
certain key earnings and growth targets.” Complaint at 46, SEC v. Greenberg, No. 09
Civ. 6939 (S.D.N.Y. 2009), available at http://online.wsj.com/public/resources/
documents/SECcomplaintgreenberg806.pdf. The SEC complaint sought disgorgement
of ill-gotten gains and civil penalties pursuant to Section 21(d)(3) of the Exchange Act
(15 U.S.C. § 78u(d)(3) (2010)) but, of particular relevance here, did not seek to clawback
any incentive-based compensation, even though the SEC had the authority to do so
under Section 304 of Sarbanes-Oxley. Id.; see also Stephen Bainbridge, “Unlike French
wine, fraud cases don’t get better with age,” PROFESSORBAINBRIDGE.COM (Aug. 11, 2009,
12:19
PM),
http://www.professorbainbridge.com/professorbainbridgecom/2009/08/
unlike-french-wine-fraud-cases-dont-get-better-with-age.html.
178
See, e.g., Donald Delves, Clawback Requirement Removes Board Discretion,
FORBES (July 14, 2009, 10:09 AM), available at http://www.forbes.com/sites/donalddelves/
2011/07/14/clawback-requirement-removes-board-discretion/. Delves argues that
clawbacks are ill-advised because they may make accounting departments less likely to
uncover errors as employees within these departments will fear retaliation from the
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invoked even in cases involving the financial institutions whose
failures brought the global markets to the brink of collapse.179
Finally, even if executive clawback actions were to
become commonplace, they would still be a far cry from
investor clawback actions, the tool of choice in the recovery
efforts of the Madoff trustee.180 The difference arises, at least in
part, because unlike the innocent Ponzi scheme investor, the
executive cannot plausibly contend that she reasonably relied
on the veracity of the earnings statement and, in turn, the
legitimacy of her bonus payment for the year in question. The
executive is not a disinterested party without access to the
relevant financial records, who simply takes the statements
and the money that they engender at face value.181 This is not to
CEO who is forced to return incentive-based pay. Id. Alternatively, Delves argues that
clawbacks may just encourage boards to structure executive pay in a way that does not
key it to the company’s performance. Id. Such board action would run counter to DoddFrank’s goal of aligning the interests of the executive and her corporation. Greg
Michaels, G20 Leaders Have the Right Idea, DEALBREAKER (Sept. 16, 2009, 10:17 AM),
http://dealbreaker.com/2009/09/g20-leaders-have-the-right-idea/ (offering the tongue-incheek suggestion that politicians zealous about clawbacks should consider passing
legislation that would allow for recoupment of a politician’s salary in the event that her
successor inherits problems for which she bears responsibility).
179
Thus,
James E. Cayne, the former chief executive of Bear Stearns, still lives in his
$28.24 million apartment at the Plaza Hotel; Joseph J. Cassano the former chief
executive of A.I.G. Financial Products, kept more than $100 million in
compensation; and E. Stanley O’Neal, who was the chief executive of Merrill
Lynch, retired with a pay package valued at more [than] $300 million.
Steven M. Davidoff, In F.D.I.C.’s Proposal, Incentive for Excessive Risk Remains, N.Y.
TIMES (DEALBOOK) (Apr. 12, 2011, 6:00 PM), http://dealbook.nytimes.com/2011/04/12/
in-f-d-i-c-s-proposal-incentive-for-excessive-risk-remains/.
180
The law does prohibit a corporation from issuing dividends if it is
insolvent, or if the distribution would make it so. See Clark, supra note 94, at 554-60.
So, shareholders are prospectively barred from receiving funds that would hinder
repayment of the corporation’s creditors. But a prospective bar on receiving a profit to
which one is not affirmatively entitled is a far cry from a claim that one must return a
received profit to which one legitimately believed oneself entitled. In any event, there are a
number of ways in which the corporation can circumvent the bar, as Clark details. Id. at
556-58. Shareholders might well receive profits that would diminish the assets available
for distribution to the corporation’s creditors. Further, the circumstances under which
these profits would be subject to clawback are far more constrained than the general
clawback provisions. See id. at 558-59 n.154 (There are “provisions in corporate laws
specifically stating the conditions under which stockholders may be liable to corporate
creditors for improper dividends received . . . . Some of these provisions are clearly more
lenient than those applicable to the ordinary fraudulent transferee or grantor, e.g.,
provisions immunizing from any duty to disgorge dividends those stockholders who were
ignorant of the impropriety of the dividends, even when the dividends were paid while the
corporation was insolvent.” (citation omitted)).
181
One way to put the difference between the executive’s relationship to her
company’s financial performance and the winning Ponzi scheme investor’s relationship
to the actual finances of the scheme would be to note that the latter is an “arm’s length
bargain,” while the former is not. See, e.g., Merrill v. Abbott (In re Universal Clearing
2012]
RIGHTING OTHERS’ WRONGS
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suggest that there is an implicit kind of culpability that the
executive bears—i.e., negligence or a failure of due diligence—
which justifies the clawback. The executive may be genuinely
and permissibly ignorant of the financial errors. Still, it is her
corporation, and if its earnings statements contain errors, she
should be denied the benefits of the mistake.182
Instead, a more promising parallel to the Ponzi scheme
clawback case is the circumstance in which an innocent
shareholder suffers pecuniary consequences as a result of a
wrong committed by the corporation.
B.
Shareholder-Funded Restitution
Two general kinds of cases occur where shareholders
appear to suffer pecuniary consequences as a result of
corporate conduct of which they are innocent. The first is the
garden-variety case where the corporation faces a fine or
damages award and paying it will lower share value. Though
the shareholder thereby incurs a potential loss, this is not a
true clawback because the shareholder is not being asked to
return money that she had already received. Nonetheless, it is
worth examining this case because one might think it
represents a strand of doctrine where innocent investors suffer
in order to defray the losses of the victims of another’s wrong—
in this case, the corporation’s. Accordingly, it is possible that
this example could provide support for clawbacks targeting
innocent Ponzi scheme investors. The second kind of case
involves straightforward shareholder clawbacks and arises
when an insolvent corporation has undergone a leveraged
buyout. Here, the creditors can seek to reclaim money that the
corporation’s former shareholders received in selling their
shares to the corporation’s management-cum-owners in the
leveraged buy-out (LBO) process.
House Co.), 77 B.R. 843, 862 (D. Utah 1987) (stating that the test for good faith “is
whether the transaction in question bears the earmarks of an arm’s length bargain”)
(citation omitted). Madoff himself insisted that his investors lacked both the financial
wherewithal and the means to have uncovered the fraud: “Although I explained the
Strategy to them they were not sophisticated enough to evaluate it properly . . . . They
were not in a position to perform the necessary due diligence and did not have access to
necessary financial info or records.” See Toobin, supra note 8, at 15 (internal quotation
marks omitted); see also id. at 19.
182
Cf. Sepinwall, supra note 171, at 434 (providing an account that would
hold executives responsible for corporate wrongs independent of whether the executives
satisfy the traditional hallmarks of individual culpability).
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1. Consequences to Shareholders of Corporate
Wrongdoing
When a corporation finds itself faced with a financial
penalty or significant damages judgment, shareholders might
see the value of their shares drop.183 This might seem unfair in
light of the traditional separation between ownership and
control, which entails that shareholders have no say over the
corporation’s day-to-day activities184 and therefore no available
means to prevent the wrongful conduct that precipitates a
penalty or judgment. Moreover, the unfairness would be even
more apparent in cases where those who hold shares at the
time of redress purchased their shares after the wrongdoing
had occurred but at a price that did not reflect the possibility
that the corporation might face the specific penalty or
judgment in question—for example, because the corporate
wrong had not been disclosed or even discovered at the time
the investor purchased her shares.
To make matters more concrete, consider fraud-on-themarket cases, where the corporation misstates its financial
situation and paints a rosier picture than is warranted. In light
of the fraudulent statement, share prices rise. To take
advantage of the rise in share price, some investors holding
shares in the corporation choose to sell, and those who buy the
shares then pay an artificially inflated price. When the fraud
comes to light, those who bought the shares at an inflated price
will sue the corporation for damages, rather than the exshareholders who profited from the corporation’s fraud. If the
buying shareholders prevail in their suit, it is the corporation’s
current shareholders—who might well include the plaintiffs in
the suit!—who will suffer, at least if the corporation’s share
price drops as a result.185
183
See, e.g., V.S. Khanna, Corporate Criminal Liability: What Purpose Does It
Serve?, 109 HARV. L. REV. 1477, 1495 (1996) (“Imposing sanctions on a corporation for
the acts of its managers or employees presumably decreases the corporation’s net
worth. Shareholders [. . .] bear the brunt of such a decrease . . . .” (citation omitted)).
Cf. Daniel R. Fischel & Alan O. Sykes, Corporate Crime, 25 J. LEGAL STUD. 319, 349
(1996) (addressing criminal fines, and arguing that “in the case of a corporation, the
burden of a punitive award will fall primarily on the shareholders, most of whom
usually have no connection to the wrongdoing in question.”).
184
The classic text articulating this conception of the corporation is ADOLF
BERLE & GARDINER MEANS, THE MODERN CORPORATION AND PRIVATE PROPERTY (1932).
185
See, e.g., William W. Bratton & Michael L. Wachter, The Political Economy
of Fraud on the Market, 160 U. PA. L. REV. 69, 73 (2011).
2012]
RIGHTING OTHERS’ WRONGS
51
One might then be inclined to say that the SEC’s actions
here require innocent parties to contribute to defraying the
losses of the victims of a wrong, in much the same way that
innocent Ponzi scheme “winners” are made to contribute to
defraying the losses of the “losers” of the Ponzi scheme. But
there are important distinctions. For one thing, it is not clear
that those who own shares at the time the corporation is
subject to the penalty or judgment do in fact sustain a loss. The
company’s share price might take a dip, but unless the
shareholder is compelled to sell in the immediate aftermath of
the penalty’s imposition, this may represent only a paper loss.
Second, shareholders enjoy limited liability; the most any
shareholder can lose is the amount of her investment. By
contrast, a Ponzi scheme winner who no longer has the money
subject to the clawback can, in principle, have her wages
garnished or assets seized in order to satisfy the trustee’s
claims against her. Third, if the company is forced to disgorge
only the funds corresponding to the total amount by which the
share value was artificially inflated, and without incurring an
additional financial penalty, then the current shareholders
come to occupy a position no worse than the one they would
have occupied had the fraud never occurred. Finally, it is not
the loss in share value that compensates the corporation’s
victims. The money shareholders lose is not the same money
that helps to make the victims whole. Indeed, the drop in share
price may correspond only very loosely to the fine or damages
award that has been imposed on the corporation.186 For all of
these reasons, cases where innocent shareholders sustain a loss
in share value as a result of the corporation’s restitutionary or
compensatory obligations are vastly different from those faced
by innocent investors in the Madoff clawback actions, who may
be compelled to return money that they legitimately thought
was theirs in order to compensate the Madoff losers. As such,
innocent shareholders in these cases do not face the unfairness
that the innocent targets of a Ponzi scheme clawback suit face.
In fact, it is not clear that the former face any unfairness at all.
186
This would be the case if, for example, analysts project that the corporation
stands to earn significant profits in the coming quarters and these projections offset
the reduction in share price caused by the penalty.
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2. Shareholder Clawbacks in the Wake of a Leveraged
Buyout
There is, however, one type of case where a shareholder
can be required to return money she made in the market—
namely, where she has sold her shares as part of an LBO and
the target corporation goes bankrupt shortly thereafter. In a
typical LBO, management privatizes a publicly traded
corporation by buying back all of the outstanding shares and
delisting the corporation. In order to purchase the outstanding
shares, management often borrows money from a third-party—
e.g., a bank—and secures its loan with the target corporation’s
assets, thereby increasing the target corporation’s liabilities to the
potential detriment of the corporation’s existing creditors.187 As
one commentator explains, the corporation’s “new debt is likely to
be senior secured debt. Thus, by definition, LBOs adversely affect
existing creditors of the company by reducing the assets available
for the satisfaction of obligations owed to them.”188
In the event that the acquired corporation becomes
insolvent shortly after the buyout, the question arises as to
whether the share purchases constituted fraudulent transfers,
such that a bankruptcy trustee would be permitted to seek to
claw back the money that the former shareholders received
when they sold their shares to management.189 Some
commentators and courts have argued that the fraudulent
transfer provisions should not extend to the LBO context.190
Nonetheless, the vast majority of courts have approved the use
of clawback suits against former shareholders in this context.191
Requiring former shareholders to return money in the
wake of the insolvency of a corporation in which they no longer
187
See, e.g., Borowitz & Hahn, supra note 114, at 67, 70-71; Robert J. White,
Leveraged Buyouts and Fraudulent Conveyance Laws Under the Bankruptcy Code—Like
Oil and Water, They Just Don’t Mix, 1991 ANN. SURV. AM. L. 357, 359, 362 & n.29 (1992).
188
Kathryn V. Smyser, Going Private and Going Under, 63 IND. L.J. 781, 786
(1987–1988).
189
In addition to pursuing clawbacks against the former shareholders, the
bankruptcy trustee could also target the lending bank, which has been “arguably
enriched at [the] creditors’ expense,” Franci J. Blassberg & John M. Vasily, The
Lender’s Perspective on Leveraged Acquisitions, 676 PLI/Corp 69, 127 (1990).
190
See, e.g., Kupetz v. Wolf, 845 F.2d 842, 848 (9th Cir. 1988); Baird &
Jackson, supra note 96, at 834.
191
See generally Borowitz & Hahn, supra note 114, at 78 (noting that “the
applicability of fraudulent conveyance law, as currently enacted, to leveraged buyouts
is clear, and the vast majority of courts to have considered the issue have so held” and
collecting representative cases). For a scholarly defense of this doctrinal development
that seeks to counter Baird and Jackson’s arguments (see supra note 94), see generally
Smyser, supra note 188.
2012]
RIGHTING OTHERS’ WRONGS
53
hold shares might seem like the height of unfairness—both
because the shareholders had presumably given “fair value” in
the form of their ownership shares and because the shareholders
appear to be innocent of the conduct leading to the acquired
corporation’s bankruptcy. As such, we might think that there
are relevant similarities between this set of clawbacks and the
clawbacks that innocent investors in a Ponzi scheme face. A
closer look, however, reveals important differences.
First, there need be no relationship between the price at
which the shareholders sell their shares and the fair market
value of the shares. In a barely solvent corporation, for
example, the price that management is willing to pay may be
keyed to the amount of the loan it can secure, rather than the
value of the equity interest in the company. The bank might
determine the loan amount without regard to the corporation’s
already existing debt. After all, the bank will enjoy priority over
existing creditors; as long as the target corporation can secure
the bank’s loan, the bank has no reason to concern itself with the
corporation’s existing obligations.192 Thus, in a world without
shareholder clawbacks, an LBO would be attractive to a “buyer,
seller and third party lender precisely because it [would] allow[]
all parties to the buyout to shift some portion of the risk of loss
associated with their investment in the company to the
‘investors’ in the company who are not involved in the buyout—
the other creditors.”193 This is especially true in the case where
the target corporation is already financially troubled, since the
shareholders couldn’t readily sell their shares on the secondary
market. An LBO thereby provides them with a way both to
obtain more money for their shares than they otherwise could,
and to “withdraw[] their capital from exposure to total loss in
the event the company [were to go] bankrupt.”194 Moreover,
unlike the case in which the corporation incurs more debt to
fund an entrepreneurial activity that might eventually be
profitable, “a leveraged buyout involves a transaction in which
the corporate debtor pledges valuable assets ‘without getting
anything in return’ because the loan proceeds are used to pay
the selling shareholders.”195
Further, the existing shareholders are not without the
power to promote, or even mandate, the LBO. In the process,
192
193
194
195
See Smyser, supra note 188, at 798.
Id. at 799.
Id. at 798.
Id. at 803.
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the existing shareholders effectively jump the queue that would
exist in the event of a bankruptcy, given that the shareholders’
equity interest in the company is subordinate to the claims of
the company’s creditors. Had the public corporation gone
bankrupt, the shareholders would have been able to claim only
the value remaining after creditors had been paid; by forcing
the corporation to buy back the shareholders’ stock before the
company declares bankruptcy, the shareholders enjoy a priority
over the company’s creditors that they are not entitled to.
The role shareholders play in an LBO, then, is not like
the role innocent winners play in a Ponzi scheme. Instead, the
shareholders’ role more closely resembles the role played by a
group of Ponzi scheme investors who, knowing of the fraud and
seeing the scheme approach the brink of collapse, encourage its
operator to find new investors or seek to recruit new investors
themselves.196 These investors participate in the scheme in a
way that makes them complicit in it;197 they hardly count as
innocent winners.198 It does not seem at all unfair to require
such accomplices to return any money they have withdrawn.
Doing so is consistent with the classic dictate that an
individual may not profit from her own wrongdoing199 but
instead must redress her victims.200 In a similar vein, it is not
untoward to ask the former shareholders of an LBO to return
the money they received from selling their shares where they
encouraged, or perhaps even directed, the sale. Again, all of
196
This is the role that Sonja Kohn, an Austrian banker, is alleged to have
played in the Madoff Ponzi scheme. See, e.g., Diana B. Henriques & Peter Lattman,
Madoff Trustee Seeks $19.6 Billion from Austrian Banker, N.Y. TIMES (DEALBOOK)
(Dec. 10, 2010, 12:22 PM), http://dealbook.nytimes.com/2010/12/10/madoff-trusteeseeks-19-6-billion-from-austrian-banker (“[A]ccording to the complaint [Picard filed
against Kohn], she knowingly raised billions of dollars in cash to sustain Mr. Madoff’s
fraud in exchange for at least $62 million in secret kickbacks . . . .”).
197
See, e.g., Model Penal Code § 2.06(3) (1985) (stating that a person is
criminally liable as an accomplice if “(a) with the purpose of promoting or facilitating
the commission of the offense, he, (i) solicits [the] other person to commit it, or (ii) aids
or agrees or attempts to aid such other person in planning or committing it, or (iii)
having a legal duty to prevent the commission of the offense, fails to make proper effort
[to prevent it]”).
198
But cf. Sharp Int’l Corp. v. State St. Bank & Trust Co. (In re Sharp Int’l
Corp.), 403 F.3d 43 (2d Cir. 2005) (finding no lack of good faith where bank knew that
Ponzi scheme operator was recruiting new investors to raise funds to repay bank,
because bank did not encourage the conduct and bank had no duty to notify the
recruited investors that they were going to be duped).
199
See, e.g., Riggs v. Palmer, 115 N.Y. 506, 506 (1889) (denying grandson his
inheritance because he killed his grandfather precisely in order to benefit from the
provisions of the deceased’s will). For an extended discussion of the case, see RONALD
DWORKIN, LAW’S EMPIRE 15-20, 130-31 (1986).
200
See 1 HILLIARD, supra note 1, at 83.
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this suggests that the typical shareholders in an LBO are
situated differently from the innocent investors in a Ponzi
scheme.201 From the now well-established practice of clawing
back money from the investors in the LBO context, then, we
cannot infer anything about the justifiability of clawbacks
against innocent Ponzi scheme winners.
V.
EXPANDING RESTITUTION
In Part II, I argued that only a very strained reading of
the fraudulent transfer provisions would support clawing back
money from innocent Ponzi scheme investors, and in Parts III
and IV, I sought to establish that no other doctrine permits
reclaiming money from the innocent beneficiaries of a wrong who
reasonably relied on the authenticity of their earnings and whose
profits cannot be construed as a windfall. Therefore, the clawback
suits against innocent winners in a Ponzi scheme are anomalous.
These winners incur restitutionary obligations that the law does
not impose on other innocent beneficiaries of a wrong.
At this point, one could seek to repudiate clawback suits
altogether, arguing that if we are not prepared to have the
innocent beneficiaries of wrongdoing restitute the wrongdoing’s
victims across the board, we should not do so in the Ponzi
scheme context alone. Instead, this Part adopts the opposite
approach, arguing that we should recruit all innocent investors
in our attempts to make the victims of financial fraud whole in
201
But what about the former shareholder who did nothing to encourage, let
alone direct, the leveraged buyout, and who did not know and had no reason to know
that the company would be over-leveraged if the LBO were to occur? Is she not in a
position that is the moral equivalent of the innocent Ponzi scheme winner? It strikes
me that even here there is firmer justification for a clawback against the shareholder
than against the winner, for as a result of the LBO the shareholder succeeds in enjoying a
higher priority than the company’s creditors, even while the creditors would have had a
higher priority than the shareholder had both still had an interest in the company at the
time of its bankruptcy. By contrast, the winner has a priority equal to that of the loser, and
so at least cannot be accused of having jumped the queue, as it were. Nevertheless, even if
the shareholder in question has played no role in encouraging the LBO, and even if we set
aside the concern about her enjoying undue priority over the corporation’s creditors, it is
not clear that a clawback action against her serves to undermine the objections to a
clawback action against the innocent Ponzi scheme winner. Instead, we might well want to
object to clawback actions against both. Cf. In re Estate of Wolf & Vine, Inc., 77 B.R. 754,
760 (C.D. Cal. 1987) (objecting to a clawback suit in the wake of an LBO against innocent
former shareholders, on the ground that the share purchase “was an entirely fair
transaction from the seller’s perspective. In the Court’s view, it is an unwarranted
extension of the fraudulent conveyance laws, or any laws, to attempt to deprive [the former
shareholders] of the value they received in exchange for their business.”), aff’d sub nom.
Kupetz v. Wolf, 845 F.2d 842 (9th Cir. 1988). Both cases, that is, might well involve an
indefensible effort to recoup money in order to defray another’s losses.
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Part V.A, and beginning to develop a proposal for how this
might be done in Part V.B.
A.
The Winners Reasonably Believed in the Authenticity of
Their Winnings
While the innocent Ponzi scheme winners are no less
entitled to the “profits” they withdrew than are its losers, nor
are they more entitled to them. However, the same can be said
of any investor who profits from an arms-length investment.
The innocent winners in a Ponzi scheme are no less entitled to
their earnings than the winners in a legitimate investment
scheme are entitled to the money they earn on their
investment. That is the central insight motivating the
arguments set forth here.
Where some investors come out ahead and others come
out behind, and where luck is the only feature that separates
the two, we might well want to counteract its effects. It is
better to reclaim some money from the winners and transfer it
to the losers, so that all share in the losses equitably. This is
not to say that all cases in which fortune chooses the winner
entail an obligation, or even a reason, for the winner to share
her winnings among all of the game’s participants. For
example, we would not think that the person holding a winning
lottery ticket has any reason, let alone an obligation, to share
the jackpot with all of the other lottery ticketholders.
One clear way to draw a line between the lottery case
and the Ponzi scheme case is to look to the participants’
reasonable expectations. The lottery ticketholders know that
only one of them will win, that the others will have supplied
the money the winner wins, and that luck alone will determine
the winner. The Ponzi scheme investors, on the other hand,
reasonably conceive of themselves as sitting in the same boat:
All who invest at the same time would win or lose together, and
whether they were to win or lose would turn, they believe, on
the scheme operator’s investment savvy, not the point in time
at which they were to choose to withdraw their funds (which
cannot be said to enhance or diminish the putative investors’
level of desert, given their presumed ignorance of the
fraudulent nature of the scheme).202 At least in cases of financial
202
See supra notes 41-48 and accompanying text (presenting reasons to think
the Madoff Ponzi scheme winners were blamelessly ignorant of his fraud). A real-life
case bears out the claim that those Ponzi scheme winners who cashed out early are no
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RIGHTING OTHERS’ WRONGS
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wrongdoing, where all investors are innocent and yet some
profit from the wrongdoing while others lose out, we might
want those who have come out ahead to help defray the losses
of those who would have otherwise come out behind.203
Two questions present themselves at this point. First,
why should we conceive of the scope of restitution as specific to
a particular fraud, such that there is a special restitutionary
relationship between the winners and losers of that fraud,
rather than a general relationship that operates between
winners and losers in the market as a whole? Second, why
think that only those who benefit from a fraud may be made to
offer restitution, rather than thinking that anyone who wins in
the market—whether through a fraudulent or legitimate
investment vehicle—ought to contribute? I address these
questions in turn.
Suppose that we were to decide that the “winners” in
some financial frauds should have to give up their winnings
and that the “losers” should receive compensation. Why require
that restitution operate strictly between winners and losers of
more or less deserving than those who had open accounts at the time of the scheme’s
collapse and lost money they had invested or at least profits they thought they had
earned: Steve Simkin and Laura Blank divorced in 2006, split the $5.4 M in their
Madoff account equally between them. Ms. Blank cashed out shortly thereafter,
receiving 50% of the then-stated value of the money in their Madoff account. Mr.
Simkin did not seek to withdraw most of his share of the money in the Madoff account
and, when the scheme went bust, he lost the money he believed the account had held. He
sought to sue Ms. Blank for a rescission of this part of their divorce agreement, arguing
that, unbeknownst to them at the time, the Madoff account never existed, and so should
not have been counted among the couple’s joint assets. Mr. Simkin lost at the trial level,
but won on appeal. New York’s highest state court then reversed, on the ground that the
Madoff account did exist—at least until December 2008, any time before which Mr.
Simkin could have sought to cash out for the full amount he believed the account
contained. See, e.g., Peter Lattman, Court Says Madoff Victim Can’t Redo Terms of His
Divorce, N.Y. TIMES (DEALBOOK) (Apr. 3, 2012, 7:51 PM), http://dealbook.nytimes.com/
2012/04/03/court-says-madoff-victim-can’t-redo-terms-of-his-divorce/.
The Simkin-Blank dispute, then, presents us with a case in which a court
effectively refuses to compel a particular winner to restitute a particular loser even
though the court had no reason to think that the winner deserved her winnings any
more than the loser deserved his losses.
Other cases in which one set of participants in a game or scheme fares far
better than another solely as a matter of luck may be more complicated. (Consider, for
example, the fortunes of the shareholders of a non-mining corporation at the time that
it unexpectedly strikes gold relative to those of the prior shareholders who had cashed
out before the gold strike.) I leave these more complicated cases to one side.
203
The notion that the winners and losers sit in the same boat appears to
have escaped the notice of some members of both parties, as they proceed on an “every
man for himself,” basis, to use the words of one Madoff investor, and engage in a
“reality-show kind of fighting.” Eric Konigsberg, Investors in a Competition for a Piece of the
Madoff Pie, N.Y. TIMES, June 29, 2009, at B1 (quoting one of the Madoff claimants) (internal
quotation marks omitted), available at http://www.nytimes.com/2009/06/29/29madoff.html.
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the same fraud? That is, why should the Madoff winners
restitute the Madoff losers, rather than investors who were
defrauded by Countrywide, for example? We now know that
Countrywide overcharged customers who were desperately
hanging onto their home loans—a federal offense for which it
paid $108 million in fines204—and discriminated against Black
and Hispanic borrowers, for which it paid an additional $335
million fine.205 These fines presumably diminished the share
value of those who held shares in Bank of America, which
acquired Countrywide in 2008, at the time the fines were paid.
Those who sold shares in Countrywide or Bank of America
before the offenses were uncovered presumably received more
money for their shares than they were worth, since
Countrywide’s offenses inflated the share value at the time of
sale.206 It might then be reasonable to think that the investors
who innocently profited by selling Countrywide’s fraudulently
inflated shares owe some or all of the profits they earned to
those who bought the shares at an artificially inflated price, or
to those whose shares diminished in value as a result of
Countrywide’s fines. But again, why think that restitution
should operate just between the Countrywide investors?
To take an example that hits even closer to the Madoff
scandal, consider that shareholders in “J.P. Morgan Chase
[collectively] earned after-tax profits totaling $435 million
between 1993 and 2008 as a result of the billions of dollars
Madoff deposited in the bank using his investors’ money.”207 Yet
no clawbacks are being pursued against these shareholders.
Why shouldn’t the Madoff winners help defray the
losses of the Countrywide losers, and why shouldn’t the
Countrywide or J.P. Morgan Chase winners help make the
204
Fed. Trade Comm’n, Press Release: Countrywide Will Pay $108 Million for
Overcharging Struggling Homeowners; Loan Servicer Inflated Fees, Mishandled Loans
of Borrowers in Bankruptcy (June 7, 2010), available at http://www.ftc.gov/opa/2010/06/
countrywide.shtm.
205
See, e.g., Charlie Savage, Countrywide Will Settle a Bias Suit, N.Y. TIMES,
Dec. 21, 2011, at B1, available at http://www.nytimes.com/2011/12/22/business/ussettlement-reported-on-countrywide-lending.html.
206
See, e.g., Ben Protess, Bank of America Profit Drops 37%, N.Y. TIMES
(DEALBOOK) (Apr. 15, 2011, 7:27 AM), http://dealbook.nytimes.com/2011/04/15/bank-ofamerica-profit-drops-nearly-36/?smid=pl-sare (“Bank of America reported a 37 percent
drop in first-quarter earnings on Friday, as the nation’s biggest bank continued to
battle the legacy of the mortgage crisis and legal problems linked to the ill-fated
acquisition of Countrywide Financial.”).
207
Louis R. Davis & Linus Wilson, Estimating JP Morgan Chase’s Profits
from the Madoff Deposits, 14 RISK MGMT. & INS. REV. 1, 107-19 (2011).
2012]
RIGHTING OTHERS’ WRONGS
59
Madoff losers whole?208 The answer is surely related in part to
administrative convenience; the trustee in the Madoff case does
not have authority to claw back money from individuals who
did not have accounts with Madoff. However, administrative
convenience is relevant only if we have already determined
that there is an obligation on the part of those who win in a
fraudulent scheme of which they were ignorant to defray the
losses of those who lose, whether from that same fraudulent
scheme or from another. The innocent winners in a Ponzi
scheme are not more responsible for the losers’ losses than is
anyone else who is innocent of the fraud. So, we must turn to
the second question—why think that those who innocently
profit from a fraud bear obligations of restitution that those
who profit from a legitimate investment lack?
This question lacks a good answer. The innocent
winners in a Ponzi scheme are innocent not just in the sense
that they did not know—and had no reason to know—of the
fraud, but also in the sense that, from their perspective, their
withdrawals represented earnings as legitimate as the
earnings they would have reaped from a genuine investment
vehicle. It is on this ground that Judge Rakoff held that
innocent investors in Madoff’s scheme may avail themselves of
the Bankruptcy Code’s safe harbor provision,209 which
“precludes the Trustee from bringing any action to recover from
any of Madoff’s customers any of the monies paid by Madoff
Securities to those customers except in the case of actual
fraud.”210 Importantly, Judge Rakoff readily acknowledged that
no securities were bought or sold, and that Madoff himself
would not have been permitted to avail himself of the safe
harbor provision.211 Nonetheless, “[f]rom the standpoint of
Madoff Securities’ customers (except for any who were actual
participants in the fraud), the settlement payments made to
them by Madoff Securities were entirely bona fide, and they
208
Alan Strudler has intriguingly pursued questions of this kind in the
context of large-scale accidents. Alan Strudler, Mass Torts and Moral Principles, 11 L.
& PHIL. 297, 323-25 (1992). Strudler argues that even if one is merely causally
responsible, and not morally responsible for accidental harm, one nonetheless bears an
obligation to repair the harm that innocent bystanders lack. Whatever the merits of
Strudler’s account for cases of mere causal responsibility, it is inapposite where, as
here, one cannot even say that the innocent beneficiaries of the fraud caused the injury
that the losers sustained.
209
Picard v. Katz, 462 B.R. 447, 451 (S.D.N.Y. 2011). The safe harbor
provision is contained in 11 U.S.C. § 546(e) (2006).
210
Katz, 462 B.R. at 451-52.
211
See Picard v. Katz, 466 B.R. 208, 212 (S.D.N.Y. 2012).
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therefore are fully entitled to invoke the protections of section
546(e) [i.e., the safe harbor provision].”212 Judge Rakoff also
implied elsewhere that what matters is the investors’
reasonable belief and, so long as that belief is reasonable, the
court must treat the investors as if the belief were true,213 at
least for purposes of the avoidance actions.214
Judge Rakoff’s position supports the idea that the
innocent investors reasonably relied on the authenticity of
their withdrawals. Where a Madoff winner spent the money
she withdrew—whether on grandchildren’s college tuition,
living expenses, or even extravagant travel215—it might be
unfair to pursue a clawback action against her, even if she is
not so destitute as to be able to meet the trustee’s hardship
standard.216 More to the point, since the latter set of investors
has no more ground for relying on the legitimacy of their
withdrawals than the winning Ponzi scheme investors have, it
is unfair to treat Ponzi scheme winners differently from
investors who withdraw money from a legitimate investment
vehicle. As one commentator notes, “by what grace of God were
many of us fortunate enough not to have relied on a
212
Katz, 462 B.R. at 452 n.3.
See, e.g., Katz, 466 B.R. at 211 (“[If] Madoff Securities was fairly viewed by
the defendants and other customers as engaged in the business of effecting
transactions in securities . . . [then] the Trustee . . . may well be barred from [pursuing
avoidance actions except in cases of actual fraud due] to the application of § 546(e).”
(emphasis added)).
214
Peter Henning has noted that Rakoff’s position conflicts with the Second
Circuit’s net equity position, which declines to use as the basis of recovery the amounts
investors believed they had in their Madoff accounts. See Henning, supra note 12. Still,
Rakoff did not have before him the question of what investors were owed; he was
addressing the different question of what they could, or could not, be made to return. It
is possible that there is a principled basis upon which one could credit the investors’
reasonable beliefs for purposes of the clawback suits but not for purposes of
determining their net equity.
215
See, e.g., Madoff’s Victims, MADOFFSCANDAL.COM: THE LARGEST FRAUD THAT
THE WORLD HAS EVER SEEN, http://www.madoffscandal.com/madoffs-victims/ (last visited
Mar. 12, 2012) (describing Ira Roth, whose withdrawals from his Madoff account were
used to pay for his college tuition and his grandmother’s living expenses); U.S. Attorney’s
Letter and Attached Victim Impact Statements (Mar. 13, 2009), United States v. Madoff,
No. 09 Crim. 213 (DC) (S.D.N.Y. June 15, 2009), available at http://www.cbsnews.com/
htdocs/pdf/Madoff--Victim_Impact_Statements.pdf (quoting from Letter from Ted and
Sue Rehage to Senators Baucus, Grassley, and United States Senate Finance Committee
members, which stated: “As a result [of our Madoff losses], our traveling will be curtailed
with no more 9 or 10 weeks with the grandkids which is disappointing for all of us. Now it
will be a week or two in state at best.”).
216
For Picard’s list of the indicators he believes relevant to determining
hardship, see Hardship Program, THE MADOFF RECOVERY INITIATIVE,
http://www.madoff.com/hardship-program-17.html (last visited Mar. 12, 2012).
213
2012]
RIGHTING OTHERS’ WRONGS
61
Madoff . . . or somebody like [him]?”217 It may be no more than
“dumb luck” that separates Ponzi scheme winners from those
who win in a legitimate investment.218 And why should luck play
such a decisive role in how one fares?219 In particular, why should
we expect more from the innocent beneficiaries of a fraud than
we expect from the innocent beneficiaries of a legitimate
investment? The simple answer is that we should not.
If this correct, one of two implications follows—either
we should permit losses to remain where they fall, or we should
enlist the Ponzi scheme winners along with all other
investment winners to provide restitution. If the foregoing
comments about luck have any intuitive appeal, they militate
strongly in favor of the latter alternative. To allow losses to
remain where they fall is to allow luck to govern how the
winning and losing investors fare. But we can do better than
that; we need not bow to luck’s whims. A form of restitution
that gathers resources from all investment winners provides a
more appropriate solution.
B.
Market-Wide Restitution
A handful of commentators have championed the idea
that winners and losers in a Ponzi scheme should together
share in the losses the fraud has caused. Yet these
commentators contemplate only intra-scheme restitution; they
presume but do not defend the existence of a special connection
binding the winners of a particular fraud to the losers of that
fraud.220 By contrast, Part V.A demonstrated that all of those
217
Jeffrey M. Lipshaw, Disclosure and Judgment: “We Have Met Madoff and
He Is Ours,” 35 U. DAYTON L. REV. 139, 139 n.1 (2009).
218
Id. at 139.
219
Indeed, many Madoff winners maintain that they were actually less greedy
than were other winning investors in the market, having forsaken higher returns for
Madoff’s steady but comparatively modest returns. So, if one did want to invoke the
notion of desert, the Madoff winners would, at least on this basis, fare better than the
investors in legitimate but aggressive and higher-performing schemes. See, e.g., Jon
Healy, Are Bernard Madoff’s Victims Greedy?, L.A. TIMES (Aug. 19, 2011, 2:58 PM),
http://opinion.latimes.com/opinionla/2011/08/are-bernard-madoffs-victims-greedy.html.
Cf. Complaint at *2 ¶ 3, Haines v. Mass. Mut. Life Ins., 2009 WL 958069 (D. Mass.
2009) (No. 1:09cv10182), available at http://clients.oakbridgeins.com/clients/blog/
haines.pdf (seeking class action relief against Madoff feeder funds and alleging that
“[p]laintiffs and the other investors in these funds were not wild speculators rolling the
dice for high returns, but rather safe-conservative investors looking to protect and grow
their retirement funds.”).
220
See Cherry & Wong, supra note 15, at 408-10 (arguing for the desirability
of ex ante clawbacks—i.e., provisions in the contract that a prospective investor signs
that requires the investor to share in the losses should fraud emerge); Pozza, Jr. et al.,
supra note 4, at 131 (“[A] fundamental principle should be that all victims share the
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who innocently win in the market are similarly situated,
whether their winnings arise from legitimate or fraudulent
investment vehicles. All of them share responsibility for
restituting fraud’s victims. Implementing this insight need not
involve a novel crafting of policy. Instead, one or both of two
currently debated tax initiatives would do the trick, by
effectively raising the money needed to sustain a fraud
compensation fund.
The first is a variant on the financial transactions tax
(FTT), also called a Tobin Tax.221 While the idea for such a tax
emerged in the 1970s and was originally conceived as a
restraint on currency speculation, there has been a renewed
vigor in calls for adoption of a more encompassing FTT after
the 2008 financial meltdown.222 In particular, as its supporters
now envision it, the FTT would be assessed on most financial
transactions and would affect most asset classes.223 The recent
enthusiasm for an FTT stems from two policy goals that
supporters believe it will serve. First, it will curb “socially
useless” short-term equity transactions,224 and second, it will
impose some of the costs of risky bank activity on the banks
that contribute to systemic risk.225 But there is an additional
benefit, especially relevant here. An FTT would raise money
that could be used to compensate the victims of fraud. In
particular, investment winners would contribute money to the
compensation fund in proportion to the amount of their
winnings, and the FTT rate could vary depending on whether
the seller stood to reap a net gain from the transaction. A base
tax would apply in all cases and its revenues could serve both
policy goals described above. An additional tax could be levied
against investment gains, with the money raised financing a
pain on an equal basis. Simply because someone has cashed out before discovery or
received proceeds for years, which are traceable to other Ponzi victim investments,
should not allow them to have less pain than those who have received back little or
nothing from the Ponzi schemer.”).
221
See, e.g., Edmund Conway, Joseph Stiglitz Calls for Tobin Tax on All
Financial Trading Transactions, TELEGRAPH (Oct. 5, 2009), http://www.telegraph.co.uk/
finance/financialcrisis/6262242/Joseph-Stiglitz-calls-for-Tobin-tax-on-all-financial-tradingtransactions.html; Carsten Volkery, Euro Zone Split over Financial Transaction Tax,
DER
SPIEGEL
(Mar.
13,
2012),
http://www.spiegel.de/international/europe/
0,1518,820965,00.html.
222
See, e.g., Volkery, supra note 221. The G20 had debated, but failed to agree
upon, an FTT at its September 2009 meeting.
223
Id.
224
See, e.g., Paul Krugman, Taxing the Speculators, N.Y. TIMES, Nov. 27,
2009, at A39.
225
Thus, a bill was introduced in the House entitled, “H.R. 4191: Let Wall Street
Pay for the Restoration of Main Street Act of 2009.” H.R. 4191, 111th Cong. § 1 (2009).
2012]
RIGHTING OTHERS’ WRONGS
63
fraud victim compensation fund. In this way, the added tax
would affirm the moral equivalence between the innocent
winners and losers in financial transactions, as well as the
moral equivalence between the innocent winners of a fraudulent
scheme and the innocent winners of a legitimate one.
A second option, which could be implemented in
addition to, or instead of, the varying rate FTT, would be to
answer the calls to raise the capital gains tax226 and to devote
some of the revenue garnered from the tax increase to a fraud
compensation fund. Here, too, the measure would recognize
that, from the perspective of the innocent investor, it may be
purely a matter of luck whether her investment dollars landed
in a legitimate investment vehicle or a fraudulent one.
The money set aside for fraud compensation—whether
funded through an FTT, an increase in the capital gains tax, or
both—would operate as a second tier of relief, after money
garnered from the fraudster and her associates had been
exhausted. Thus, trustees would still be needed in the wake of
a fraud in order to identify those with a culpable connection to
the fraud, to pursue clawbacks and punitive damages against
them, and to ferret out claimants who knew or should have
known about the fraud. Yet since either scheme would remove
the need to seek clawbacks from innocent investors, the fund’s
administration would be far more streamlined, and innocent
winners would save a significant amount of money that they
currently devote to defending themselves in clawback suits.
While the foregoing proposal paints in broad strokes
and many of the details remain to be worked out, it does
suggest that ready solutions exist for ensuring that victims of
fraud receive redress. More to the point, the proposed
initiatives would appropriately distribute the burdens of
restitution to all of those who profit from their investments.
CONCLUSION
Clawback suits against innocent beneficiaries of a fraud
can be sustained neither by statute nor by other doctrines.
Indeed, these suits are exceptional insofar as they demand that
innocent individuals or entities return money they reasonably
226
See, e.g., Eliot Spitzer, The “Romney Rule”: Why Raising Capital Gains Taxes
is Morally Right and Economically Wise, SLATE (Feb. 6, 2012, 12:32 PM),
http://www.slate.com/articles/news_and_politics/the_best_policy/2012/02/the_romney_rule
_raising_capital_gains_taxes_is_both_morally_right_and_good_for_the_economy_.html.
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believed was theirs in order to redress another’s wrongdoing.
Yet the innocent winners of a fraud are no more responsible for
the losers’ losses than is anyone else. Although we should not
require that the victims of fraud bear their losses alone, we
need not require that restitution derive solely from those who
also had the misfortune of choosing the same, fraudulent
investment vehicle. The market is a place where fraud may
well be ineradicable.227 All those who subject their fates to its
whims and who come out ahead as a result should share
responsibility to redress the wreckage that fraud inflicts.
227
See, e.g., Elizabeth Warren, Reforming a Corrupt Club, WASH. POST, July
20, 2012, at A19, available at http://www.washingtonpost.com/opinions/elizabethwarren-libor-fraud-exposes-a-rotten-financial-system/2012/07/19/gJQAvDnDwW_
story.html; Felix Salmon, Why Finance Can’t Be Fixed with Better Regulation,
REUTERS BLOG (July 23, 2012), available at 2012 WLNR 15675134.
Rescuing Dignitary Torts from the
Constitution
Cristina Carmody Tilley†
INTRODUCTION
Modern First Amendment doctrine is often celebrated
for its unflinching protection of speakers—both institutional
and individual—who are sued for injuries their words inflict.
But the past fifty years of robust Speech and Press Clause
jurisprudence threatens to eliminate the rights of individuals
seeking recourse for dignitary injuries imposed by speakers.
That result is normatively inconsistent with social values in
even the earliest legal systems. It dismantles a socially agreed
convention for peaceful resolution of interpersonal disputes,
which is crucial to the prevention of violent self-help in
American society and one of the key functions of intentional
tort law. Most important, it is not mandated by the text of the
Constitution itself.
This article begins by orienting the besieged dignitary
torts—defamation, invasion of privacy, and intentional
infliction of emotional distress (IIED)—within a theory of tort
law that justifies the provision of a state-sanctioned forum for
adjudication of private disputes. While loss-shifting and
accident regulation theories have little to offer when evaluating
the dignitary torts, which are by definition intentional and not
mere accidents, a recent version of the corrective justice theory
of torts—civil recourse—suggests that a tort forum is crucial
for injuries to personality in a way that might not be true for
injuries to property or body. The article then documents the
threat to this forum posed by the Supreme Court’s imposition
of a tort-diminishing theory of the First Amendment from 1964
to the present. The article suggests that if the Court’s free
†
Visiting Assistant Professor of Law, Northwestern University School of
Law; J.D., Northwestern University School of Law, 1999. Thanks to Andrew
Koppelman, Martin Redish, and Marshall Shapo for helpful comments on early drafts
of this piece.
65
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speech doctrine continues on its current trajectory, it will force
the abolition of these torts, in practice if not in theory.
However, interposition of the Ninth Amendment, which
prohibits construction of the First Amendment to disparage
rights “retained by the people,” gives the dignitary torts a
foothold within the structure of the Constitution. If the dignitary
torts have arguable parity with the First Amendment, then
courts are not bound by the Constitutional text to vault speech
rights over the right to sue for dignitary injuries and therefore
must account for those dignitary rights when analyzing the
scope of any First Amendment immunity from common-law
liability. Various Ninth Amendment theories suggest that the
set of rights “retained” by the people can be filled with natural
rights, with rights that are a part of Western law “history and
tradition,” with state rights recognized at the time of the
American founding, or with state rights developed consistent
with constitutional jurisprudence after the founding.
This article documents the historical development of the
dignitary torts in order to evaluate whether they fit within any
of the theories of “retained rights” under the Ninth Amendment.
Defamation, invasion of privacy, and intentional infliction of
emotional distress were recognized obliquely in Greek law and
were recognized explicitly as a monolithic cause of action in
Roman law. Indeed, the provision of a state-sponsored forum for
vindicating the dignitary interests invaded by these wrongs
coincided with the decline in violence in these societies. Even
after the fall of Rome, independent sovereign states in Europe
and their colonies in North America continued to recognize the
dignitary torts, albeit more distinctly in some legal systems than
in others. By the time of the American founding, defamation was
explicitly embraced by the common law of the states. Moreover,
protection of privacy and emotional tranquility interests were
often smuggled into the pre-ratification common law in the guise
of defamation actions. In addition, after ratification, these
dignitary torts developed more fully into freestanding causes of
action. At the turn of the century, invasion of privacy had begun
to evolve into an acknowledged tort, and by the mid-twentieth
century, courts began to embrace IIED. This created a fullbodied common law of dignitary torts well before the Court’s
expansion of the First Amendment into the dignitary torts
arena, starting in 1964. Thus, the article argues that
defamation, invasion of privacy, and intentional infliction are
entitled to constitutional respect and are protected by the
Ninth Amendment from intraconstitutional diminishment. A
2012]
RESCUING DIGNITARY TORTS
67
failure to reassert the dignitary torts within the constitutional
framework, the article concludes, undervalues the prudential
benefits derived from giving victims of dignitary injury a
peaceful forum for seeking recourse. A return to self-help—
whether in the form of extrinsic violence or suicide—is a distinct
possibility if the dignitary torts continue to languish within the
constitutional scheme. Placing these torts on firm constitutional
footing is necessary to protecting “the whole man.”1
After discussing the significance of the dignitary torts in
Part I and summarizing the history of the Court’s increasingly
dismissive treatment of these causes of action in Part II, the
article suggests in Part III that the torts can be rescued from
irrelevance by applying the Ninth Amendment as a rule of
construction that governs conflicts between enumerated rights
and unenumerated but retained rights. This rule would only
apply to the rights protected by the dignitary torts if they are
reasonably described as “rights retained” whose constitutional
status is provided for by the Ninth Amendment. The article
outlines four Ninth Amendment theories for filling the “rights
retained”—natural-law rights, rights enshrined in Western
legal tradition, state-law rights existing at the time of
ratification, and state-law rights developed post-ratification.
What follows in Part IV is a brief history of the torts within
Western law, from Rome through England and the colonial and
modern American periods. This timeline serves as the basis for
determining whether reputation, privacy, and emotional
tranquility are properly described as rights retained. The article
concludes that these rights were retained under any of the four
theories and consequently do not automatically lose out to the
enumerated free speech right when the two clash. Finally, Part
V of the article proposes a test—borrowed from choice of law
theory—that could guide courts when deciding which of the two
conflicting rights, enumerated or unenumerated-but-retained,
should take priority in a given circumstance. The “comparative
impairment” test would examine the internal and external
effects of the competing legal regimes—here, speech protection
and dignity protection—and select the one whose external
application would least impair the internal effect of its
competitor. This test guarantees that the interests served by
each law would be methodically evaluated within a given set of
1
Robert C. Post, The Social Foundations of Defamation Law: Reputation
and the Constitution, 74 CALIF. L. REV. 691, 700 (1986) [hereinafter Post, Defamation]
(quoting anthropologist John Davis).
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facts, and that neither would be gratuitously disparaged in
contravention of the Ninth Amendment’s rule of construction.
I.
THE SIGNIFICANCE OF THE DIGNITARY TORTS
Though a mainstay of American law, scholars cannot
seem to agree why we have torts.2 Three theories of the purpose
of tort are in the fore today: first, the theory that tort exists to
provide compensation for accidental injuries; second, that it
exists to manage and shift risk; and third, that it provides
individual corrective justice. Without delving too deeply into
any of these theories, it is easy to conclude that while the first
two may be legitimate descriptions of the rationale for
negligence law, which by definition involves inadequate care in
response to risk, they do not explain why we allow victims of
intentional torts to recover. As some torts experts have
observed, intentional torts such as defamation and invasion of
privacy have “nothing to do with” negligence law.3 This article’s
concern is limited to the dignitary torts which are a subset of
intentional torts. The only one of the current theories that
takes adequate account of intentional torts is the corrective
justice model. This may explain why the Supreme Court has
undervalued the dignitary torts when weighed against speech.
Throughout the 1900s, scholars grew disenchanted with the
theory that tort was designed to dole out individual justice—a
theory based on the view that the state had to monopolize
violence in order to prevent private attacks when individuals
felt their rights had been violated.4
The corrective justice theory of torts has experienced a
renaissance in the past decade, with one gloss on the concept—
civil recourse theory—taking a leading role. But whether the
idea of corrective justice is in vogue or not, it is worth
examining why scholars are so willing to discard as a rationale
for torts, or at least for the intentional dignitary torts, an idea
that they substitute for private vengeance. That theory seems
uniquely suited, and indeed crucial, for the dignitary torts.
The modern disdain among some scholars for the
“vengeance prevention” function of tort law seems to reflect
2
See John C.P. Goldberg & Benjamin C. Zipursky, Torts as Wrongs, 88 TEX.
L. REV. 917, 923-28 (2010); Jason M. Solomon, Equal Accountability Through Tort Law,
103 NW. U. L. REV. 1765, 1772 (2009).
3
Goldberg & Zipursky, supra note 2, at 977.
4
See Solomon, supra note 2, at 1772.
2012]
RESCUING DIGNITARY TORTS
69
contempt for the feudal societies that responded to private
warfare with a state-sponsored alternative.5 That function, they
suggest, has little purchase in a contemporary society more
concerned with allocating the cost of accidents than with
preventing already diminishing interpersonal violence.6
This skepticism does not extend as obviously, however, to
the intentional dignitary torts of defamation, invasion of privacy,
and intentional infliction of emotional distress. The behavior
underlying these torts does more than inflict property damage or
even physical injury that the modern man is expected to
rationally commodify. Instead, it invades an individual’s sense of
worth and dignity, important values in a relational society.7 As
one sociologist has said, each “individual must rely on others to
complete the picture of him of which he himself is allowed to
paint only certain parts.”8 Thus, violations of the dignitary
interest are the least susceptible to rational response and the
most ripe for a state-sponsored diversion of vengeful impulses.
Scholars have taken up two camps in treating the
relationship between defamation, invasion of privacy, and
intentional infliction. Some insist that each of the torts serves
different interests that dictate different substantive
requirements and distinct legal treatment.9 Others suggest that
5
See id. at 1781.
See id.
7
“[I]ndividual personality [is] constituted in significant aspects by the
observance of rules of deference and demeanor . . . . Violation of these rules can thus
damage a person by discrediting his identity and injuring his personality. Breaking the
‘chain of ceremony’ can deny an individual the capacity to become ‘a complete
man . . . .’” Robert C. Post, The Social Foundations of Privacy: Community and Self in
the Common Law Tort, 77 CALIF. L. REV. 957, 963 (1989) [hereinafter Post, Privacy]
(quoting Erving Goffman, The Nature of Deference and Demeanor, in INTERACTION
RITUAL: ESSAYS ON FACE-TO-FACE BEHAVIOR 47, 51 (1967) [hereinafter Goffman,
Deference]). Post has observed that despite efforts to distinguish the elements of
privacy and IIED torts, “the boundary between the two . . . is obscured . . . [because]
the common law . . . is primarily interested in maintaining the forms of respect deemed
essential for social life” regardless of what they are called. Id. at 971.
8
Id. at 962-63 (citing Goffman, supra note 7, at 47).
9
The “separatists” identify wholly distinct interests underlying the torts.
For instance, Robert Post explains that the interest underlying defamation is
protection of “reputation,” whereas the interest underlying invasion of privacy is
protection of “emotions.” Post, Privacy, supra note 7, at 958; Post, Defamation, supra
note 1, at 691-92. Meanwhile, another scholar defines the right underlying IIED as
“the individual’s interest in emotional tranquility,” Daniel Givelber, The Right to
Minimum Social Decency and the Limits of Evenhandedness: Intentional Infliction of
Emotional Distress by Outrageous Conduct, 82 COLUM. L. REV. 42, 43 (1982), which
sounds identical to the interest Post claims to be protected by the privacy tort. Further
complicating this effort to neatly cleave the policy goals of the three torts is Post’s view
that “reputation” can be conceived of as “property,” “honor,” and “dignity,” at least the
latter two of which seem to occupy the same ground as “emotional tranquility.” Post,
Defamation, supra note 1, at 693.
6
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all three stem from essentially the same social concerns and
acknowledge substantial overlap among them.10 Historically, the
dignitary torts were treated as a unitary cause of action,
protecting a key component of personal security—namely,
interests in individual personality.11 The fracturing of this
interest into distinct torts has marginalized the underlying
interest they protect. Further, it has incented plaintiffs to
migrate strategically among the torts depending on which is
most hospitable to a particular claim in light of increasing
constitutional constraints. Tracing these branches of dignitary
tort back to the single trunk they evolved from forces analysts
to confront the broad scope and historical pedigree of the
interest involved and the extent to which modern law
diminishes it.
In short, defamation, invasion of privacy, and IIED are
treated in American law as separate torts, and courts strive to
treat them as doctrinally autonomous. But at the same time,
they stem from the same basic underlying basket of social
interests, best summarized as “personality” interests, but taking
account of reputation, honor, dignity, and emotional tranquility.12
Encroachment on these personal interests continues as
a major cause of violence in contemporary America. According
to psychologist Steven Pinker, “most of what we call crime is,
from the point of view of the perpetrator, the pursuit of
justice.”13 According to one well-known statistic, only about onetenth of homicides in the United States are committed to
10
These scholars see the torts as more similar than distinct. As one has
summarized, “[T]he torts of libel, invasion of privacy and intentional infliction of
emotional distress overlap to a certain degree because all three are aimed either
exclusively or in part at redressing mental suffering.” Robert E. Drechsel, Intentional
Infliction of Emotional Distress: New Tort Liability for Mass Media, 89 DICK. L. REV. 339,
350 (1985). Early in the development of privacy and IIED law, one early scholar went so
far as to suggest that the three should all be melded into a single tort “to constitute a
single, integrated system of protecting plaintiff’s peace of mind against acts of the
defendant intended to disturb it.” John W. Wade, Defamation and the Right of Privacy, 15
VAND. L. REV. 1093, 1125 (1962). This result would have replicated the approach of the
Roman law from centuries ago, where all three torts—defamation, IIED, and invasion of
privacy—were recognized and developed under the single heading of iniuria. See infra
Part IV.A.2 for a discussion of Roman law and iniurial liability.
11
See infra Part IV.A.
12
Notably, Congress appeared to reach the conclusion that the three torts
can in effect be interchangeable, defining “defamation” in its recently passed libel
tourism bill to include “forms of speech [that] are false, have caused damage to
reputation or emotional distress, have presented any person in a false light, or have
resulted in criticism, dishonor or condemnation of any person.” Securing the Protection
of Our Enduring and Established Constitutional Heritage (SPEECH) Act, 28 U.S.C.A.
§ 4101(1) (West 2011).
13
STEVEN PINKER, THE BETTER ANGELS OF OUR NATURE 83 (2011).
2012]
RESCUING DIGNITARY TORTS
71
achieve a premeditated goal—such as killing a burglary victim
or police officer in order to complete or hide a crime.14 “The most
common motives for homicide are moralistic: retaliation after
an insult, escalation of a domestic quarrel, punishing an
unfaithful or deserting romantic partner, and other acts of
jealousy, revenge, and self-defense.”15 Local cultures that draw
a wider boundary around personal dignity also see more
violence in response to affronts. For instance, according to
Pinker, “the American South is marked by . . . a culture of
honor[,] . . . [which only sanctions violence as] retaliation after
an insult or other mistreatment.”16
Thus, torts whose essence is the affront to personal
honor are more likely to incite vengeance. If so, the provision of
a state-sponsored forum for resolution as a substitute for that
violent self-help remains a legitimate purpose for tort law.17
The dignitary torts, then, are not just or even primarily
a means to a money judgment. The availability of a forum for
community adjudication of local norms of interpersonal
14
Id.
Id.
16
Id. at 99; see also William L. Prosser, Insult and Outrage, 44 CALIF. L. REV.
40, 46 (1956) [hereinafter Prosser, Insult and Outrage] (noting that Mississippi,
Virginia, and West Virginia had historically sanctioned “antidueling codes” in an effort
to tamp violence that arose from insult).
17
To be sure, failure to provide a state-sponsored forum for vindicating
dignitary interests may have other negative consequences, such as a reluctance to run
for public office because of the constitutionally mandated forfeiture of self-protective
legal recourse by candidates and public officials. On a smaller, but equally antidemocratic, scale, shrinking the dignitary torts may lead even private individuals to
opt out of public or private speech that could result in incompensable injuries. For
instance, a class of plaintiffs recently challenged Facebook’s practice of transforming
pictures and comments of users who “liked” sponsored stories on specific products into
“endorsement” ads for the products. Somini Sengupta, So Much for Sharing His “Like,”
N.Y. TIMES, June 1, 2012, at A1. To avoid being featured in a potentially embarrassing
endorsement, users had to refrain from “liking” a product. Notably, in response to the
suit, Facebook initially argued that all such users were “public figures” to their friends. If
so, then under the test for defamation liability set forth in New York Times v. Sullivan,
376 U.S. 254 (1964), Facebook would not have been liable for any dignitary torts under
current First Amendment law unless it acted with intent or reckless disregard—a
complex standard to apply to ads generated by algorithm. Facebook has since settled and
is modifying its endorsement practices. Somini Sengupta, To Settle Lawsuit, Facebook
Alters Policy for Its Like Button, N.Y. TIMES, June 22, 2012, at B2, available at
http://www.nytimes.com/2012/06/22/technology/to-settle-suit-facebook-alters-policies-forlike-button.html. The pre-modification result—discouraging Facebook users from
speaking out in favor of a product or issue in order to avoid a dignitary invasion—is a net
reduction in speech brought about by precisely the standards in current First
Amendment law meant to increase speech. Justice White predicted just this turn of
events in his dissent from the majority opinion in Gertz v. Robert Welch, Inc., 418 U.S.
323, 400 (1974) (White, J., dissenting) (“It is not at all inconceivable that virtually
unrestrained defamatory remarks about private citizens will discourage them from
speaking out and concerning themselves with social problems.”).
15
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behavior, and the possibility of public opprobrium against the
defendant who invaded the dignity of the plaintiff, is a
substantial portion of the recourse provided by this area of law.
This is true whether or not money is ultimately awarded.
Indeed, one study revealed that many defamation plaintiffs
would have accepted an apology from the defendants they
eventually sued, and they would have sought money damages
only when the defendants refused to express remorse for their
actions.18 The Court’s erosion of these torts’ potency, described
below, therefore has a significant impact on both the legal
treatment of individuals and community control of local norms
in American law.
II.
DIGNITARY TORTS AND THE COURT
The past half century of First Amendment development
is poised to vitiate the role of the dignitary torts in vindicating
personality interests. In the latter half of the twentieth century,
the Court handed down a series of opinions that essentially
constricted the state common law of defamation in order to
accommodate First Amendment speech goals. The first and most
celebrated of these cases, New York Times Co. v. Sullivan,19
devised a test to identify the common-law claims that fell under
the canopy of First Amendment protection. According to the
Court, if the plaintiff was a public official and the speaker
published with less than “‘actual malice’ . . . knowledge . . . or
reckless disregard” of the likelihood the speech was false,
defendant liability is unconstitutional.20 Notably, in Sullivan and
subsequent cases, the Court departed from its usual practice of
simply invalidating a common-law precept or jury verdict and
remanding for further development at the state court level.
18
THE COST OF LIBEL: ECONOMIC AND POLICY IMPLICATIONS 25 (Everette E.
Dennis & Eli M. Noam eds., 1989).
19
N.Y. Times Co. v. Sullivan, 376 U.S. 254 (1964). Sullivan on its own did
not necessarily spell the trivialization of dignitary interests or the proportionally
greater likelihood of resort to self-help developed later in the article, as its scope was
limited to suits by public officials. Public officials are among those least likely to batter
their attackers. But Justice Scalia’s arguably obscene gesture to a reporter in 2006 and
the attack of Rep. Robert Etheridge (D-N.C.) on a camera-wielding protester in 2010
suggest that no class of would-be plaintiff is immune from vengeful impulses. See
Justice
Scalia’s
Under-the-Chin
Gesture,
NPR.ORG
(Mar.
30,
2006),
http://www.npr.org/templates/story/story.php?storyId=5312065; Jeff Zeleny, Etheridge,
Caught on Video, Apologizes, N.Y. TIMES CAUCUS BLOG (June 14, 2010, 2:20 PM),
http://thecaucus.blogs.nytimes.com/2010/06/14/etheridge-caught-on-video-apologizes.
Still, Sullivan was the beachhead that led to the current situation.
20
Sullivan, 376 U.S. at 279-88.
2012]
RESCUING DIGNITARY TORTS
73
Instead, it repeatedly crafted tort rules of decision to be applied
as a matter of constitutional law.21 Thus, “after twenty-five years
and twenty-seven [cases] . . . defamation law was effectively
disabled, at least in the sphere of public affairs . . . .”22
Specifically, from 1964 until 1991, the Court replaced a system
wherein each of the fifty states was free to allow recovery for
defamation under its own common law—allocating its own
burdens of proof, standards of review, and the like—with a
system in which the Constitution ostensibly requires that:
To recover for libel or slander, a public official must prove that the
defendant acted with actual malice. Elected officials, candidates for
public office, and appointed officials who have or appear to the public
to have substantial responsibility for or control over governmental
affairs must be treated as public officials. The same rules apply to
public figures, and anyone who is involved in the resolution of
important public questions, or who by reason of his or her fame
shapes events in areas of concern to society, is treated as a public
figure. To prove actual malice, the plaintiff must show that the
defendant knew the defamatory statement was false, or had serious
doubts about its truth. That must be shown by clear and convincing
proof, and each reviewing court must subject a finding of actual
malice to independent review instead of the normal clearly erroneous
standard. Private persons who are not public figures but who are
defamed in connection with matters of public concern must meet all
the preceding requirements in order to recover presumed or punitive
damages but may recover for actual injury by showing that the
defendant was negligent. All of the preceding types of plaintiffs must
bear the burden of proving that the defamatory statement is false.
States may not permit recovery for rhetorical hyperbole, statements
that cannot be reasonably interpreted as stating actual facts about
the plaintiff, or deliberate misquotation that does not materially
alter the meaning, and those determinations are to be made as a
matter of law rather than left to juries.23
As a result of this constriction, defamation plaintiffs
have migrated to other tort theories to vindicate their interests.
One 1985 study observed a spike in intentional infliction claims
against the media beginning in the 1970s, just as the Court’s
drive to “disable” defamation law gained momentum.24 Evidence
suggests that, after Sullivan, claims for invasion of privacy also
jumped.25 The full-scale diversion of defamation to privacy torts
21
David A. Anderson, First Amendment Limitations on Tort Law, 69 BROOK.
L. REV. 755, 784-87 (2004).
22
Id. at 776.
23
Id. at 787-88 (footnotes omitted).
24
Drechsel, supra note 10, at 346.
25
Anderson, supra note 21, at 776-77 (“[A]s long as other tort theories
remain available, plaintiffs will try to shift their claims into those . . . categories . . . . A
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may have been thwarted by a 1967 holding suggesting that
Sullivan applied to privacy claims.26
The Court initiated its overhaul of the dignitary torts by
recalibrating defamation, but the movement has gained
momentum significantly in recent years as it has begun its
assault on IIED. The Court now appears poised to shrink the
refuge that IIED provides for dignitary injuries by diminishing
the intentional infliction tort, again to accommodate a generous
interpretation of First Amendment imperatives.
In Hustler v. Falwell,27 the Court determined that public
figure IIED plaintiffs cannot recover against defendants when
injury is inflicted via publication unless they meet the Sullivan
test by proving that something in the publication was false and
that the defendant knew or recklessly disregarded the
possibility of falsehood.28 The Court explained that standards
considered constitutionally uncontroversial throughout the
balance of tort law, such as liability premised on the
defendant’s bad motive, had to give way in the intentional
infliction tort in cases where the injury was inflicted against a
public person via speech.29
In 2011, the Court expanded this reasoning. In Snyder
v. Phelps,30 it held that even private figures suing non-media
speakers for IIED cannot prevail when the speaker inflicts
injury with speech on public issues. Importantly, the Court
failed to apply even the minimally tort-protective standard it
had announced in Falwell, where the actual malice test was
imported to IIED claims. Snyder appeared to snuff out any
rash of claims for intrusion and related torts in the 1980s and 1990s was widely
thought to be the result of the increasing difficulty of recovering for defamation.”); cf.
CLARENCE JONES, WINNING WITH THE NEWS MEDIA 359 (2005).
26
Time, Inc. v. Hill, 385 U.S. 374 (1967). Though the Sullivan idea of
balancing tort against speech may broadly apply to privacy claims, the use of culpable
falsehood as a fulcrum is not an obvious fit for the privacy torts. Although the invasion
of privacy in Hill took the form of a “false light” claim where misrepresentation was an
element of the tort, accuracy is irrelevant to the three other privacy torts—public
disclosure of private facts, right of publicity claims, and invasion of privacy. If
falsehood is not an element of a dignitary tort, the speaker’s culpability for circulating
false speech has no utility to distinguish between protected and unprotected speech.
27
Hustler Magazine, Inc. v. Falwell, 485 U.S. 46 (1988). As in Hill, using the
culpability for falsehood to distinguish between protected and unprotected speech in
the IIED context is a clumsy tool. Although the speech in Hustler was untrue satire
and thus susceptible to a Sullivan test, much IIED speech, such as creditor threats or
disrespect of the dead, will be injurious but not necessarily false. In those cases, the
test does not help distinguish between speech that merits First Amendment protection
and speech that is unprotected.
28
Falwell, 485 U.S. at 56.
29
Id. at 53.
30
Snyder v. Phelps, 131 S. Ct. 1207 (2011).
2012]
RESCUING DIGNITARY TORTS
75
tort–speech balance by neglecting the actual malice test
altogether. The speech at issue in Snyder was a funeral protest
with picket signs that arguably suggested, among other things,
that the deceased was a homosexual.31 The protestors
presumably circulated this false statement of fact knowingly or
recklessly. The Court did not apply the Sullivan actual malice
rule—which was adapted to IIED in Falwell—to permit
recovery despite the fact that the protestors’ speech arguably
contained knowing falsehoods about a private person.32
Justice Breyer, in his concurrence, described the case’s
stark conceptual choice as a clash between First Amendment
values and the state interest in protecting its citizens via
common-law tort.33 As Breyer summarized, the Court concluded
that the speech interest in the case trumped the individual
emotional interest without using the actual malice test.34 The
Court’s silence on actual malice in the Snyder case amounted to
a facial decision that speech trumps tort regardless of the
precise speech or activity involved—a decision that takes the
Court even further down the anti-tort path it staked out in 1964.
Writing several years before Snyder, David Anderson
predicted that if the First Amendment were interpreted to
require that tort law impose absolutely no burdens on truthful
speech touching a matter of public concern, the eventual result
31
Id. at 1225 (Alito, J., dissenting). Some of the other signs, held aloft near
the church funeral for deceased soldier Matthew Snyder, read “God Hates You,” “You’re
Going to Hell,” and “Thank God for Dead Soldiers.” Snyder’s father, the plaintiff,
claimed that the signs and the consequent news coverage resulted in his depression
and physical illness, and prevented him from recalling his son without thinking of the
picketers. Id. at 1213-14 (majority opinion).
32
To be sure, application of the actual malice rule in Snyder might have
resulted in a finding that the speech interest was weightier than the dignitary interest
represented by the tort. In fact, the outcome of the case is consistent with this
reasoning. What is notable, however, is the Court’s neglect of the standard and its
automatic assumption that speech trumped tort without any analytical consideration of
the competing interests. See Snyder, 131 S. Ct. at 1219-20 (“What Westboro said, in the
whole context of how and where it chose to say it, is entitled to ‘special protection’
under the First Amendment, and that protection cannot be overcome by a jury finding
that the [speech] was outrageous. . . . As a Nation we have chosen . . . to protect even
hurtful speech on public issues . . . .”).
33
Id. at 1221-22 (Breyer, J., concurring).
34
Id. at 1221; see also Benjamin C. Zipursky, Snyder v. Phelps,
Outrageousness, and the Open Texture of Tort Law, 60 DEPAUL L. REV. 473, 490 (2011)
(discussing the benefits of applying the actual malice test to both public and private
figures suing for IIED inflicted via speech on matters of public concern, citing Eugene
Volokh’s argument along these lines found, inter alia, at Eugene Volokh, Freedom of
Speech and the Intentional Infliction of Emotional Distress Tort, 2010 CARDOZO L. REV.
DE NOVO 300, 304 (2010)).
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would be abolition of “tort liability . . . arising from that category
of speech.”35 Snyder seems to make good on that prediction.
Comparing the status of state common-law torts prior to
Sullivan and post-Snyder leads to one conclusion: the Court is
steadily shrinking the province of tort law that protects
dignitary interests and inversely expanding the reach of First
Amendment speech protections.
III.
THE CONSTITUTIONAL BASIS FOR HONORING DIGNITARY
TORTS
The First Amendment’s encroachment upon the
dignitary torts is often justified by observing that, although the
basket of dignitary interests is valuable as a matter of social
policy, the Framers drafted a Constitution that vaults speech
above those interests.36
The resolution of the dignity-versus-speech question
may, however, require more than facile recourse to the First
Amendment. The Framers constructed a preemptive textual
counterweight to the First Amendment in the Ninth
Amendment, which prohibits the denial or disparagement of
“rights retained by the people” in favor of rights enumerated in
the Constitution.37 Several theories of the Ninth Amendment
35
Anderson, supra note 21, at 777.
See, e.g., Snyder, 131 S. Ct. at 1220 (“[W]e cannot . . . punish[] . . . the
speaker. As a Nation we have chosen . . . to protect even hurtful speech on public issues
to ensure that we do not stifle public debate.” (emphasis added)).
37
U.S. CONST. amend. IX. The Ninth is the only explicit repository for these
rights. But the document as a whole reinforces the view that the dignitary torts are not
shut out of its scope. First, as many have observed, the Ninth and Tenth Amendments
can be said to work in tandem, with the Ninth specifying that the people retained the
set of unenumerated rights and the Tenth giving them the right to “confer powers upon
their state governmental agents” in furtherance of those rights, among other ends.
CALVIN MASSEY, SILENT RIGHTS: THE NINTH AMENDMENT AND THE CONSTITUTION’S
UNENUMERATED RIGHTS 107 (1995); see also Rosenblatt v. Baer, 383 U.S. 75, 92 (1966)
(Stewart, J., concurring) (observing that the Ninth and Tenth Amendments together
recognize the value of individual dignity and the role of the states in providing a forum
for its vindication).
Second, both the original public understanding of the First Amendment
and several normative theories of free expression suggest that the First Amendment,
on its own terms, accounts for dignitary interests. For instance, many
contemporaneous accounts of the adoption of the First Amendment suggest that its
primary goal was to thwart central government efforts to restrain speech via criminal
libel statutes or licensing schemes, see, e.g., Mark P. Denbeaux, The First Word of the
First Amendment, 80 NW. U. L. REV. 1156, 1176 (1986), not to thwart individual
citizens seeking recourse from other individuals whose words injured them, with a
community cross-section of jurors setting intracommunity norms as to the
reasonableness of particular types of speech. The existence of defamation actions at the
time the First Amendment was adopted is often seen as “freezing” the balance between
36
2012]
RESCUING DIGNITARY TORTS
77
suggest that the rights protected by the dignitary torts may be
among those “retained by the people” and thus shielded from
disparagement relative to those enumerated in the Constitution.
The Ninth Amendment is often derided as no more than
a “punchline”38 or an “inkblot,”39 and the Supreme Court has not
relied on it as the basis for any line of decisions.40 Still,
constitutional scholars seem convinced that it must stand for
something, and they have focused for the past two decades on
various theories that would give it meaning.41 Most of these
theories suggest that “rights retained” have status as
independent constitutional rights, thus playing the same
judicially enforceable “oversight” role with regard to state or
federal law as do the enumerated constitutional rights.42 If these
theories are correct, the composition of “rights retained” is
crucial and politically charged, since these rights could serve as
the basis for striking down legislation. Perhaps because the
stakes under these theories are so high, and because scholars of
different political camps are wary of ceding policy ground, there
speech and reputation as it stood at the time of ratification. See id. Moreover, even
modern First Amendment theory suggests a place for the dignitary rights as a subset of
expressive rights. For example, to the extent that the purpose of the First Amendment
is to foster “self-realization,” via “individual choice and intellectual development,” that
purpose is served by allowing individuals to vindicate privacy rights absent which they
might not engage in particular intellectual endeavors. See, e.g., MARTIN H. REDISH,
FREEDOM OF EXPRESSION: A CRITICAL ANALYSIS 5 (1984). The same protection for
privacy can be derived from, among others, a “liberty model” of free speech, where
expression is protected if it “defines, develops, or expresses the self.” See id. at 49
(internal quotation marks omitted) (discussing the work of Edwin Baker). As one
writer has summarized, “the same principles that underlie freedom of expression also
give rise to other rights, such as personal security, privacy [and] reputation.” Steven J.
Heyman, Righting the Balance: An Inquiry into the Foundations and Limits of Freedom
of Expression, 78 B.U. L. REV. 1275, 1280 (1998). In short, the Ninth Amendment
argument for acknowledging the rights represented by the dignitary torts is not a
constitutional outlier, but in fact is consistent with the document read as a whole.
38
Jeffrey Jackson, The Modalities of the Ninth Amendment: Ways of
Thinking about Unenumerated Rights Inspired by Philip Bobbitt’s Constitutional Fate,
75 MISS. L.J. 495, 496 n.1 (2006) [hereinafter Jackson, Modalities].
39
Ryan C. Williams, The Ninth Amendment as a Rule of Construction, 111
COLUM. L. REV. 498, 500 & n.1 (2011).
40
Jackson, Modalities, supra note 38, at 496.
41
See KURT LASH, THE LOST HISTORY OF THE NINTH AMENDMENT 304-05
(2009) (explaining that Justice Reed suggested in United Public Workers of America
(CIO) v. Mitchell, 330 U.S. 75 (1947), that the amendment merely reinforced the idea
that the states retained all powers not enumerated in the Constitution, not that it
identified independent rights that could be asserted to contest the exercise of a federal
power). More recently, leading theorists have taken different views, such as Randy
Barnett’s position that the amendment is a freestanding source of individual rights,
and Kurt Lash’s contention that it is a limitation on federal government power to
override “the people’s” right to local self-government. Williams, supra note 39, at 50608 & n.41 (outlining these and other well-known theories).
42
Williams, supra note 39, at 505-06.
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has been little agreement as to the content of the “rights
retained.”43
In recent years, a more modest theory of the Ninth
Amendment has emerged. That theory holds that the provision is
not an independent source of constitutional rights but rather a
rule of construction that governs when unenumerated-butretained rights clash with enumerated rights.44 The retained rights
are not judicially enforceable in the sense that they can be used to
strike down popular legislation. Instead, the Ninth Amendment
directs that retained rights cannot be assigned categorical secondclass status when they conflict with enumerated rights. Courts
need not “enforce” retained rights as they would enumerated
rights, but their interpretation of enumerated rights must not
automatically crowd out the rights retained.45
Although this theory does not create a new class of
judicially enforceable constitutional rights, it still requires
identification of the rights “retained” under the Amendment.
The underlying proposals for filling out the set of “rights
retained” are identical regardless of the structural role
assigned to them under the different Ninth Amendment
theories. Four such theories have been identified in Ninth
Amendment literature: “natural-law” rights as originally
publicly understood by the Framers; rights deemed “natural”
by virtue of their deep roots in Western and American legal
43
Id. This development is not surprising, given that the revival in Ninth
Amendment interest followed Justice Goldberg’s concurrence in Griswold v.
Connecticut, 381 U.S. 479, 486 (1965) (Justice Goldberg pointed to the Ninth
Amendment as a source of judicial authority to enforce “fundamental” individual rights
infringed by state laws, such as Connecticut’s ban on birth control.). Not only did
Goldberg propose a potent role for the Ninth Amendment, but he did it in a case
fraught with controversial policy implications. Among the general structural theories of
the Ninth Amendment are those suggesting that it merely reaffirms the limitations on
federal government powers by barring the implication that carving out individual
rights in the Bill of Rights allowed expansion of federal power anywhere beyond the
carve-out, see, e.g., Laurence Claus, Protecting Rights from Rights: Enumeration,
Disparagement, and the Ninth Amendment, 79 NOTRE DAME L. REV. 585, 587-88
(2004), and those reaching the opposite conclusion that the language reserves space for
the expansion of individual constitutional rights protected from federal government
reach, see Williams, supra note 39, at 505-06.
44
Claus, supra note 43, at 592. Other rules of construction have also been
suggested, including a rule that non-enumeration does not foreclose the position that a
right may be within an enumerated right, see, e.g., MASSEY, supra note 37, at 11
(summarizing the view of Laurence Tribe), or that retained rights are not elevated to a
constitutional level, but keep the same status they had historically regardless of the
fact that some other rights were enumerated within the Constitution, see, e.g.,
Williams, supra note 39, at 530.
45
Claus, supra note 43, at 617-18.
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tradition; state-law rights at the time of ratification; and statelaw rights post-ratification.
A.
Natural-Law Rights as Originally Publicly Understood
by the Framers
The “natural-law rights” theory of the Ninth
Amendment suggests that any right understood at the time of
ratification to belong to individuals, as distinct from rights
derived from membership in a centrally governed society, was
among those “‘rights retained’ by the people.”46 The Ninth
Amendment’s use of the phrase “rights retained” is “the
language of Lockean social compact theory.”47 Under Lockean
theory, all human beings have rights in the state of nature,
including the right to “ownership of one’s own body and the
product of one’s labors, [as well as] . . . the right to use
violence . . . [in retaliation when] others” violate those natural
rights.48 The delegates to the Constitutional Convention, in
drawing a constitution, decided which “natural rights” to
relinquish to a central government to achieve a “common good,”
and which to retain.49 Examples of such retained rights might
be the right to travel, the right to pursue a job, the right to selfdefense, or even, as some of the Framers joked during debates
over ratifying the Bill of Rights, “the right to wear a hat, and to
go to bed when one pleases.”50 Notably, the founding generation
viewed individual rights and government powers as mutually
exclusive; that is, “rights began where powers ended, and
46
Jeffrey Jackson, Blackstone’s Ninth Amendment: A Historical Common
Law Baseline for the Interpretation of Unenumerated Rights, 62 OKLA. L. REV. 167,
170-71 (2010) [hereinafter Jackson, Blackstone].
47
Michael W. McConnell, The Ninth Amendment in Light of Text and
History, 2009-2010 CATO SUP. CT. REV. 13, 15 (2010).
48
Id. at 16.
49
Id. at 15-16 (quoting Brutus, On the Lack of a Bill of Rights, in THE
COMPLETE FEDERALIST AND ANTI-FEDERALIST PAPERS 749, 750 (2009), and explaining
that some natural rights were relinquished to the central government, while others
were retained by individuals).
50
Id. at 17-18. Notably, some have suggested that the Ninth Amendment
also protects the right of citizens to collectively adopt state and local policies. Id. at 17
n.17 (citing Kurt Lash, A Textual-Historical Theory of the Ninth Amendment, 60 STAN.
L. REV. 895 (2008)). This view of the Ninth Amendment is one reason it is often paired
with the Tenth, which seems to protect the rights of “the people” as a collective entity.
LASH, supra note 41, at 90. To the extent that dignitary torts are creatures of state
statute or common law, they may also be considered within the protections offered by
the Tenth Amendment as well as the Ninth. See, e.g., MASSEY, supra note 37, at 75
(explaining that both amendments stemmed from a single original proposal, which
simultaneously shielded rights and limited federal government powers).
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powers began where rights ended.”51 The failure to grant
government a power necessarily implied that the inverse
individual right was retained, so that rights need not be
explicitly enumerated in the constitutional text. But once
enumeration of rights within the Bill of Rights became
inevitable, it became obvious that the Framers could not
enumerate every right they might wish individuals to retain.
The Ninth Amendment is viewed by some as a solution to the
necessarily incomplete enumeration given in the Bill of Rights,
serving as a general placeholder for natural-law rights that the
Framers did not intend to relinquish but had not thought
specifically to enumerate.52 Thus, if dignitary rights were among
the natural-law rights designed to be “retained” by the Framers,
they fit within the Ninth Amendment rule of construction and
need not take a back seat to enumerated rights. The Framers
looked to two primary sources to determine the scope of naturallaw rights: the theories of John Locke and the English
constitutional and common law as found within Blackstone’s
Commentaries.53 Those theories are discussed in the historical
review of the dignitary torts given in Part IV.
B.
Rights Embedded in Western Legal Tradition
A broader and less well-developed version of the
“natural-law” theory of rights retained contends that they are
those within the “history and traditions of our national
51
MASSEY, supra note 37, at 67. This perspective is vastly different from the
modern view, which tends to view rights as “trumping governmental powers.” Id. One
reason that the values underlying dignitary torts have so withered may be that tort
law evolved from a system designed to vindicate “rights” to one designed to manipulate
“interests” to achieve efficient policy ends. Thus, tort law values were “rights” at the
time of the founding, capable of exerting equal and opposite pressure on the
enumerated “right” of free speech. By the time of Sullivan, however, tort law values were
mere “interests” to be achieved by the use of state government power, which would be
trumped by the free speech “right” inherent in the First Amendment. See, e.g., Kenneth J.
Vandevelde, A History of Prima Facie Tort: The Origins of a General Theory of Intentional
Tort, 19 HOFSTRA L. REV. 447, 456-62 (1990) (summarizing the struggle between two
leading American torts scholars, Thomas Cooley and Oliver Wendell Holmes, where
Cooley aligned with Blackstone in advocating that tort law was “a series of remedies for
invasions of . . . rights,” while Holmes argued that tort liability is a function of “public
policy, rather than subjective moral fault.”). Steven Heyman has observed that when the
First Amendment was adopted, free speech rights were part of a natural-law fabric, and
thus were considered “bounded by the rights of others,” so that government was obliged
not just to protect speech but to “ensure that this liberty was not used to violate other
fundamental rights.” Heyman, supra note 37, at 1279.
52
MASSEY, supra note 37, at 70-74.
53
Jackson, Blackstone, supra note 46, at 171.
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RESCUING DIGNITARY TORTS
81
experience.”54 A “historical” view of retained rights does not
depend on “the absence []or presence of positive law bearing
upon a particular claimed right,” but instead requires a
longitudinal examination of the “traditions from which
[American law] developed as well as the traditions from which
it broke,” and their ongoing evolution.55 Part IV provides a
detailed historical examination of the Western legal traditions
from which American law developed, documenting their deepseated roots and historical status, from Greek and Roman law
through Anglo-Saxon and English common law.
C.
State Rights—at Ratification and After Ratification
The “state rights” theory of the Ninth Amendment
suggests that the “rights retained” for Ninth Amendment
purposes are the rights “derived from state law,” including
state constitutions, statutes, and common law.56 Some versions
of the “state rights” view suggest that the relevant rights are
those that were in existence at the time of ratification.57 Others,
in contrast, suggest that rights recognized or created by the
states after ratification come within the “rights retained”
umbrella so long as they were not unconstitutional when
adopted.58 As one article has summarized, under the “state
rights” theory, “the ninth amendment . . . preserves rights
existing under state laws already ‘on the books’ in 1791 plus
those rights which the states would thereafter see fit to
enact.”59 The development of the American law of dignitary
torts within state constitutions, statutes, and common law is
traced in Part IV below.60
Under any of these plausible theories of the Ninth
Amendment,61 the evisceration of the dignitary torts becomes a
54
Calvin R. Massey, The Natural Law Component of the Ninth Amendment,
61 U. CIN. L. REV. 49, 100 (1992).
55
Id. at 100-01.
56
Russell L. Caplan, The History and Meaning of the Ninth Amendment, 69
VA. L. REV. 223, 259 (1983).
57
Id. at 248; Claus, supra note 43, at 595, 620-21.
58
Claus, supra note 43, at 595, 620-21.
59
Caplan, supra note 56, at 248, 263.
60
See infra Part IV.B.
61
These models by no means exhaust the various approaches taken to define
the “rights retained” by the people in the Ninth Amendment. Others include the
residual rights theory, the collective rights model, and the federalism model. See, e.g.,
Randy Barnett, The Ninth Amendment: It Means What It Says, 85 TEX. L. REV. 1, 11-21
(2006) (summarizing theories). It is beyond the scope of this article to test the dignitary
torts within each of these models; the point of the article is that recourse to the First
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more complicated constitutional matter than mere application
of the First Amendment. It requires an assessment of whether
the rights protected by the dignitary torts—reputation, dignity,
privacy, and emotional tranquility—can be identified as
natural-law rights, as rights deeply rooted within Western
legal history and tradition, or as state-created rights either in
1791 or at any time between the ratification and the Court’s
first assault on the dignitary torts in 1964.62 If so, they must at
least be accounted for in the constitutional calculus, even if the
ultimate decision is to accord them less weight through a test
that “optimal[ly] accommodat[es]” between dignitary and
speech interests.63 But if the dignitary interests are accounted
for and then balanced, their normative appeal need not be
discounted as constitutionally insignificant, which is a
tendency that appears throughout the First Amendment cases
involving speech torts.64
IV.
THE HISTORIC PEDIGREE OF THE DIGNITARY TORTS—
ANCIENT AND MODERN
Evaluating the status of the personality interests as
“rights retained” under any of the foregoing theories requires
placing them on a timeline. Only then can one determine
whether they are natural rights as understood by the Founders
at the time of ratification, rights developed through a
longstanding tradition of Western legal culture from which
American law developed, rights created by state law at the
time of ratification, or rights created by state law postratification. This section briefly recounts the ancestry of each
tort within the Western legal tradition underlying American
Amendment is not sufficient to justify speech preference every time a speech right
clashes with a dignitary right. That the dignitary rights have some constitutional heft
within at least some theories of the Ninth Amendment undermines the mechanistic
response of those who consistently choose speech by arguing that they have no other
constitutional choice.
62
Attempting to draw inviolate lines between these theories is futile, as even
scholars in different camps often seem to acknowledge that the ideas overlap and have
been used interchangeably. See, e.g., Suzannah Sherry, Natural Law in the States, 61 U.
CIN. L. REV. 171, 216 (1992-93) (stating that Eighteenth and early Nineteenth Century
American lawyers thought that state constitutions “merely reflect[ed] natural law”).
63
Claus, supra note 43, at 618; see infra notes 193-97, 224 and accompanying text.
64
See, e.g., Snyder v. Phelps, 131 S. Ct. 1207, 1220 (2011); see also Gertz v.
Robert Welch, Inc., 418 U.S. 323, 369-72 (1974) (White, J., dissenting at length based
on the view that the ongoing constitutionalization of defamation had wiped out the
states’ ability to protect reputational interests). For a discussion of Snyder v. Phelps,
see Part II, supra notes 30-35 and accompanying text.
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RESCUING DIGNITARY TORTS
83
law. The canvass moves from Greek and Roman law, where the
torts were originally viewed as a broad unitary cause of action;
to Anglo-Saxon law, which also recognized personality interests
generally; and finally to the Elizabethan and modern English
systems, where more differential treatment was given to these
interests, but where courts over time seemed willing to
compensate for an infringement on each dignitary interest.
A.
Ancient Law
Western tort law is a direct descendant of the law of
delict conceived in ancient Greece and Rome.65 The law of early
Greece began to mature before the law of Rome, and the
writing of Greek poets and philosophers summarizing Greek
legal theory was well known in the Roman world, which
developed a sophisticated legal system over several centuries.66
The ancient Greek culture had a significant, if indirect, impact
on the development of Western law.
1. Greece
Prior to the written codification of law in Greece—
commonly registered at 621 BC with the first Greek written
legal code, the Code of Draco—evidence of the development of
Greek law can be found in works of literature and philosophy,
and later in unwritten customary law.67 Even the earliest of
these sources reveal that dignitary slights accomplished by
speech and conduct were considered ripe for private civil
adjudication in large part because they were likely to provoke
violence. For instance, the poet Hesiod, who described the
norms in existence in the seventh and sixth centuries BC,
wrote that slander and libel were considered delicts: “A man
owns no better treasure than a prudent tongue; . . . Bad words
flung at others bounce back with double strength.”68 Moreover,
65
M. Stuart Madden, The Graeco-Roman Antecedents of Modern Tort Law, 44
BRANDEIS L.J. 865, 909 (2006).
66
Id. at 865. “[A]lthough laws and legal procedures were known in various
forms in other parts of the world, the Greeks created something different. For the first
time the law was made available to and was intended to be used by the entire
citizenry.” MICHAEL GARAGIN, EARLY GREEK LAW 146 (1986).
67
See RUSS VERSTEEG, LAW IN THE ANCIENT WORLD 189, 190 (2002);
Madden, supra note 65, at 868-85.
68
Madden, supra note 65, at 871 (quoting HESIOD, Works and Days, in
THEOGONY, WORKS AND DAYS, SHIELD, II 370-72, at 74 (Apostolos N. Athanassakis
trans., 2d ed. 2004)).
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Hesiod’s writing suggests that the Greek notion of slander and
libel was not restricted to speech that diminished reputation
but also covered speech that inflicted emotional injury, such as
gossip: “[I]t is easy to get a bad reputation but hard to live with
it and harder to shed it. What is said of you does not vanish, if
many say it; such talk is a kind of god.”69
Writing at about 350 BC, Aristotle specified certain
wrongs that required an act of court to restore the status quo ante
of equality between the injurer and the injured, and among these
“violent” wrongs requiring correction were “abuse, [and] insult.”70
The Code of Draco was the first written law
promulgated in Athens, but there is little evidence today of its
specific provisions.71 What is known is that Draco’s sometimes
harsh penalties for prohibited conduct were designed “as a
substitute for unrestrained self-help . . . to curb violent
conduct, particularly revenge.”72
The later and better-respected Code of Solon, which
ameliorated much of the harshness associated with the
Draconian code, reflected the value Greek law placed on
dignitary interests. First, Solon’s code set a specific penalty for
libel, a portion of which went to the victim of the speech and a
portion of which was paid to the state.73 It barred “speaking ill
of anyone while in a temple, in court at trial, in public offices,
or while at festival contests.”74 Moreover, that code did not stop
at protecting the reputations of citizens in the community. It
also barred libeling the dead, “not on account of injury to the
dead, but in respect to the quiet of families” and “the peace and
honor of Athens.”75 This text suggests that Greek law did not
set up artificial distinctions between the interrelated dignitary
interests of reputation, privacy, and emotional tranquility.
Instead, it recognized that speech could intrude on more than
one of these interests simultaneously because the interests are
virtually unitary.76
69
Id. at 871 n.19 (quoting HESIOD, supra note 68, II 760-64, at 83).
Id. at 883 (quoting ARISTOTLE, NICOMACHEAN ETHICS, in INTRODUCTION TO
ARISTOTLE, bk. V, ch. 2, at 402).
71
VERSTEEG, supra note 67, at 194.
72
Id. at 195.
73
GARAGIN, supra note 66, at 65; VERSTEEG, supra note 67, at 254.
74
VERSTEEG, supra note 67, at 254.
75
Gregory C. Lisby, No Place in the Law: The Ignominy of Criminal Libel in
American Jurisprudence, 9 COMM. L. & POL’Y 433, 442-43 (2004) (quoting MARTIN L.
NEWELL, THE LAW OF SLANDER AND LIBEL IN CIVIL AND CRIMINAL CASES 5-6 (1914)).
76
Notably, Greek and Roman law were unique at the time in that they set a
monetary value for incursions on dignitary interests in order to allow intra-community
70
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RESCUING DIGNITARY TORTS
85
Ultimately, Greek law is recognized for developing
rigorous systems of thought about the relative rights of
individuals and the state, and for establishing the
philosophical underpinnings of tort law. But, despite the
Solonian codification and the “Reinscription” of the laws of
Solon and the homicide law of Draco at the close of the fifth
century BC, ancient Greece is not celebrated for an elaboration
of these analyses into a practical code applicable to a wide
variety of disputes. This milestone was supplied by Rome.
2. Rome
Some say that Rome’s greatest legal legacy was the
development of private law, a substantial portion of which
dealt with delicts.77 One of the three major delicts was iniuria,
variously translated as insult or outrage.78 The scope of iniurial
liability is sometimes said to capture “injuries less than death
to humans.”79 Generally agreed to be found within Table VII of
resolution without recourse to violence, rather than characterizing the behavior
exclusively as a crime leading to state punishment. Greece did recognize the speech
crime “hubris,” which included “abusive and humiliating public assaults.” This was
considered difficult to prove because it required proving an “arrogant, self-righteous,
irresponsible” state of mind. Lisby, supra note 75, at 441. In essence, Greek law served
as a “bridge” between societies that treated similar offenses as crimes subject to statesponsored punishment and the later law of Rome and its Western descendants, which
largely treated dignitary affronts as private law matters. Id. For instance, the Babylonian
Code of Hammurabi of 1770 BC barred insults to women and false accusations of capital
crimes, but punished them by branding and death, respectively. Id. Unlike that system,
Greece moved towards the private-law treatment of such offenses, and Rome conclusively
treated intra-community injuries inflicted via speech as private law matters, while
retaining a criminal response to public speech against civic leaders. Cristina Carmody
Tilley, Reviving Slander, 2011 UTAH L. REV. 1025, 1032-40.
77
KATHERINE FISCHER DREW, THE LAWS OF THE SALIAN FRANKS 12 (1991). It
is no surprise that tectonic shifts in Roman society led to the creation of the first formal
system of private law in Rome. Although kings held power at one time in ancient
Rome, the aristocracy was dissatisfied with their rule and deposed them. In their
stead, two offices of Consul were established to oversee administrative matters of the
state. Plebians, who had been protected from the caprice of the patricians by the
monarchy, now found themselves subject to application of the law as devised by those
patricians without notice to the lower classes. In response to plebian demands, a
committee was appointed to set out all the laws in writing. The result was the Twelve
Tables. The tables were “a comprehensive collection or code of rules . . . consist[ing] for
the most part of ancient Latin custom, but . . . [incorporating some] rules of Greek
Law.” W.W. BUCKLAND, A TEXT-BOOK OF ROMAN LAW FROM AUGUSTUS TO JUSTINIAN 2
(1921). But see ANDREW BORKOWSKI, TEXTBOOK ON ROMAN LAW 26 (1994) (questioning
Greek connection).
78
BORKOWSKI, supra note 77, at 303; W.W. BUCKLAND & ARNOLD MCNAIR,
ROMAN LAW AND COMMON LAW 295 (1936); BRUCE W. FRIER, A CASEBOOK ON THE
ROMAN LAW OF DELICT 177 (1989).
79
ALAN WATSON, STUDIES IN ROMAN PRIVATE LAW 253 (1991).
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the Twelve Tables, the provision for iniuria may be translated
as follows:
If a person has maimed another’s limb, let there be retaliation in
kind unless he makes agreement for composition with him. If he has
broken or bruised freeman’s bone with hand or club, he shall
undergo penalty of 300 pieces; if slave’s, 250. If he has done simple
harm [to another], penalties shall be 25 pieces.80
Most scholars agree that when the Twelve Tables were
adopted in the fifth century BC, the “simple harm” provision
was aimed primarily at minor physical injuries. Rapidly,
however, this “catch-all” provision of the iniuria delict was
interpreted to include a raft of non-physical injuries to
interests described in the literature as “dignity and personal
well-being”81 or freedom from “contempt of the personality.”82 As
one scholar has summarized, “Iniuria . . . serves to protect the
individual by creating a legally defensible perimeter for his or
her personal life.”83
Thus, one thousand years later, by the time the Emperor
Justinian codified Roman law in the Corpus Juris Civilis, the
delict of iniuria as expanded by juristic interpretations and
various amendatory edicts was described as:
[I]nflicted not only by striking with the fist, a stick, or a whip, but
also by vituperation for the purpose of collecting a crowd, or by
taking possession of a man’s effects on the ground that he was in
one’s debt; or by writing, composing, or publishing defamatory prose
or verse, or contriving the doing of any of these things by some one
else; or by constantly following a matron, or a young boy or girl
below the age of puberty, or attempting anybody’s chastity; and, in a
word, by innumerable other acts.84
Examining the fact patterns that led to non-physical
iniurial liability, one sees that the category dealt neatly with
the behavior underlying the IIED tort of the American system.
Iniuria protected corpus, dignitas, and fama, roughly translated
as body, dignity, and reputation. The following behavior was all
considered iniuria because it violated the dignity interest: (1)
behavior defiling dead bodies or estates, such as defacing
80
Id.
FRIER, supra note 78, at 177.
82
BUCKLAND, supra note 77, at 585; H.F. JOLOWICZ & BARRY NICHOLAS,
HISTORICAL INTRODUCTION TO THE STUDY OF ROMAN LAW 171 (3d ed. 1972).
83
FRIER, supra note 78, at 177.
84
Francis L. Coolidge, Jr., Note, Iniuria in the Corpus Juris Civilis, 50 B.U.
L. REV. 271, 272 (1970).
81
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87
graves;85 (2) harassment relating to one’s financial affairs, such
as restricting a person’s access to his property or publicly calling
him a debtor;86 (3) overtures upon the chastity of a modest
person, such as a public proposition;87 (4) insulting or hurtful
speech, including the use of epithets or the incitement of a mob;
(5) invasion of privacy, such as interference with a person’s
domus, which, roughly translated, means the place where a
person’s daily affairs take place;88 and, (6) defamation, which
included publishing defamatory prose or verse.89
A short comparison with American tort law shows a
remarkably similar cluster of behaviors leading to liability.
Early surveys of cases coming under the heading of the “new
tort” of intentional infliction of emotional distress in the United
States identify the following as classic fact patterns: (1) “the
mishandling of dead bodies, whether by mutilation,
disinterment, interference with burial, or other forms of
intentional disturbance;”90 (2) the tactics of “collecting
creditors,”91 which include “violent cursing, abuse and
accusations of dishonesty,”92 threatening a lawsuit or arrest, and
advertising the debt to family, neighbors, and employers; (3)
85
“[H]itting with stones the statue on the tomb of another’s father, digging
up and removing bones or a body buried by someone else not a relative, on one’s land,
burying a wealthy dead man without the appropriate expense, . . . [and] injury done to
a corpse” were all considered iniuria. CHITTHARANJAN FELIX AMERASINGHE,
DEFAMATION AND OTHER ASPECTS OF THE ACTIO INIURIARUM IN ROMAN-DUTCH LAW
330 (1968) (footnotes omitted).
86
For instance, behavior casting doubt on a person’s right to possess property,
such as “prevent[ing] the removal of . . . property” or “sealing up the house of an absent
debtor” as recourse for implied default, was considered an affront to dignity—an insult
that amounted to iniuria. Id. at 327. So were “objecting to a judgment debtor’s retaining
any provisions or his bed,” or “addressing a person as one’s debtor when he was not.”
Finally, abuse of legal process was considered iniuria. Id. at 327-30.
87
“[D]ebauching [or abducting] a boy under seventeen, . . . soliciting a woman
or a girl . . . [for the purpose of sex], indecently accosting or following [a woman or a
girl],” attempting to induce adultery, adultery itself and exposing of the genitals to a
woman or a girl were all considered iniuria. Id. at 329 (footnotes omitted).
88
Thus, a person need not possess his domus to have a cause of action for
iniuria, and even if he did possess a large estate, interference with zones that include
outbuildings or stables was not iniuria. Moreover, interference with business premises,
if access to those premises was meant to be limited, could be iniuria. Domus-related
iniuria seems to have as its “common factor . . . not . . . possession but some form of
right to privacy understood in a rather elementary sense.” Id. at 326-27.
89
For instance, shouts, whether alone or in a group, directed at an
individual, were considered iniuria. So was the deployment of “foul or obscene”
language against an individual. Id. at 330.
90
William L. Prosser, Intentional Infliction of Mental Suffering: A New Tort,
37 MICH. L. REV. 874, 885-86 (1939) (hereinafter Prosser, Intentional Infliction).
91
Id. at 884.
92
Prosser, Insult and Outrage, supra note 16, at 48.
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public accusations of unchastity against teenage girls;93 (4) the
convening of crowds to raise a disturbance against an
individual;94 (5) actions of “[e]victing landlords” who “tear[] up the
premises, smok[e] out the tenants, or throw[] the furniture
about;” and (6) “oppressive and outrageous conduct, such as
verbal or written abuse, vituperation, and threats.”95 Notably, the
five classic American IIED patterns align exactly with the
Roman iniurial patterns: disrespect for the dead, harassment by
creditors, allegations of unchastity, invasions of privacy, and
abusive speech.96
The Roman law’s solicitude for these interests of
“personality” reflected the momentum away from a tribal
society and toward a more complex and civilized social order.
The ever more vigilant protection of personality interests was a
device to exchange money or public rehabilitation for violent
vengeance in order to honor an “unremitting concern with
public order.”97 One torts expert has opined that the more
sophisticated a society, the more developed will be “legal
protection to nonmaterial interests of personality like selfrespect, reputation, and privacy.”98
93
Prosser, Intentional Infliction, supra note 90, at 885.
Prosser, Insult and Outrage, supra note 16, at 47, 49.
95
Prosser, Intentional Infliction, supra note 90, at 881.
96
Notably, some behavior that was considered a violation of fama, or
reputational, interests, such as the raising of a clamor against a plaintiff or the use of
insulting or offensive language, falls within the modern tort of defamation and is similar
if not identical to the dignitas violations. Among these behaviors were: calling a person a
slave, casting doubts on someone’s modesty, imputing of debt default, and holding a
frugal funeral for a wealthy man. AMERASINGHE, supra note 85, at 332. And some speech
was considered iniuria as a reputational violation even if it was not thought to assault a
person’s dignity, placing it on all fours with the defamation tort. For instance,
“composing, publishing or procuring the publication . . . of a defamatory writing,” or any
conduct that “excit[ed] odium . . . against anyone,” was considered an incursion upon one’s
reputation and therefore iniuria. Id. at 331-32. Similarly, many of the behaviors captured
by iniuria, such as violating the domus, or physically shadowing a vulnerable person,
would be captured by one of the privacy torts today. In short, Roman iniuria was a
flexible cause of action, covering numerous overlapping “personality” interests without
attempting to extricate them for distinct legal treatment.
97
FRIER, supra note 78, at 177 (quoting J.G. FLEMING, AN INTRODUCTION TO
THE LAW OF TORTS 192 (1985)). See id. at 1 (“Delictual liability is thought to have
originated, in archaic Roman law, as a substitute for immediate personal vengeance.”);
BUCKLAND, supra note 77, at 571 (“It was in origin a legal substitute for self-help,
which in this case meant revenge.”).
98
FRIER, supra note 78, at 177; Cf. Solomon, supra note 2, at 1783-84
(observing that such a forum to avenge interpersonal wrongs may be seen as condoning
uncivilized impulses).
94
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89
Modern Law
After the fall of Rome, many of the European countries
that grew up in its stead took Roman civil law as their
foundation. “[I]t is a commonplace with legal historians that
Roman law was in course of time made, often in modified form,
the basis of large parts of what we have come to call the Civil
Law Systems,” observed one legal historian in 1969.99 England,
however, which developed a common-law system, did not
explicitly incorporate principles of Roman law. Thus, while
many civil-law systems in Europe retained the flexible
approach to incursions upon dignity, honor, feelings, and
reputation,100 England initially peeled off all of the non-
99
THE ROMAN LAW READER 170 (F.H. Lawson ed., 1969).
The fact that numerous European and civil-law countries matter-of-factly
recognized the dignitary rights in their legal systems reinforces their place as
“universal,” “civilized” rights for natural-law purposes, further supporting their Ninth
Amendment status as “rights retained.” See, e.g., Sherry, supra note 62, at 204.
The iniurial action against outrage and insult largely survived in the civillaw countries that carried forward the Roman system. “[M]any civil code jurisdictions
[including Argentina, Austria, Chile, France, Italy, Liberia, Spain, and West
Germany], drawing from the Corpus Juris Civilis, have incorporated similar provisions
concerning injury into their legal systems.” See Coolidge, supra note 84, at 284. For
instance, Roman-Dutch law applied in South Africa and Ceylon “was also concerned
with dignitas in general as an interest to be protected” even where reputation was not
assailed. AMERASINGHE, supra note 85, at 276. Specifically, the Roman-Dutch cause of
action actio iniuriarum considers breaches of contract, where humiliating, to be
actionable, as are breaches of promise to marry; public use of abusive language or
epithets, see id. at 290; interference with rights such as school access or public honors;
wrongs against chastity; unjustified denials of credit; unjustified threats of lawsuit;
and interference with tombs or burials. These causes of action correspond directly to
Roman iniuria patterns, which also targeted abusive speech, creditor conduct,
accusations of unchastity, and disrespect for the dead.
In fact, the accepted gulf between private law regulating individual
relationships and public law regulating the interaction between the state and the
individual emerged in European systems as a direct result of the Roman law example.
See Peter E. Quint, Free Speech and Private Law in German Constitutional Theory, 48
MD. L. REV. 247, 255 (1989). Much of the vacuum left by the fall of the Roman Empire
was filled by Germanic tribes. By 534, the Franks controlled most of what had been
Roman Gaul. The ruler at that time, Clovis, took a distinctly Roman approach to
governance. Predictably, within the Frankish codes, great emphasis is placed on
dignity, both in terms of reputation and emotional well-being. The Lex Salica of the
Franks contains, within the chapter “Concerning Abusive Terms,” seven distinct
sections. DREW, supra note 77, at 94. These sections assign penalties for statements
that diminish reputation, such as accusations of illicit behavior including pederasty,
prostitution, “throwing down [the] shield,” and informing. Id. But they also assign
sanctions to statements that reflect ill opinion of a would-be plaintiff and arguably
invade the emotional sphere more than the reputational interest, such as claiming that
someone “is covered in dung,” or is “a fox” or “a rabbit.” Id. Another chapter sanctions
false imputations of indebtedness and baseless repossession. Id. at 115. Finally, as in
Roman law, an entire chapter of Frankish law, with seven distinct sections, outlines
causes of action for “Despoiling Dead Bodies.” Id. at 118-19.
100
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pecuniary dignitary interests as incompensable. It interpreted
reputation as a form of property and developed a complex
system of defamation law. It ostensibly declined to recognize
suits for outrage or insult. In practice, however, it often allowed
compensation for these injuries when pleaded as defamation,
and Anglo-American courts have recently reintegrated these
interests into the common law as freestanding torts. This
development is traced below.
1. Common Law and the English Experience
The history of the dignitary torts in English common
law is far more circuitous than in neighboring civil-law
countries.101 England consciously declined to take Roman law as
the basis for its system. “We have received Roman law,”
explained one historian, “but we have received it in small
homeopathic doses, at different periods, and as and when
required. It has acted as a tonic to our native legal system, and
not as a drug or a poison. When received it has never been
continuously developed on Roman lines.”102 Roman law is
generally not a source of precedent in English courts.103
Despite this latter-day disavowal, early Anglo-Saxon
law appears to have adopted the same broad, flexible approach
found in Roman law. Arising from “customary or traditional
material” in these cultures, codes promulgated by Anglo-Saxon
Given these strong legal protections for dignitary interests encompassing
reputation, honor, and emotional well-being, it is no surprise that modern German law
is extremely protective of personality interests. Not only does the German Civil Code
allow individuals to seek a remedy from “a person who ‘intentionally causes injury to
another person in a manner contrary to good morals,’” Quint, supra, at 253, but the
country’s 1949 Constitution, known as the Basic Law, recognizes the rights of
individuals to “[h]uman dignity,” and “the free development of [their] personality,”
often thought to include a right to privacy. Id. at 257, 299. In fact, the German Federal
Constitutional Court, designed primarily to address constitutional questions, has
wrestled with “the permanent state of tension” arising from the conflict between the
cultural acceptance of the Civil Code and the occasionally conflicting dictates of the
Basic Law. Id. at 290; see also Melius de Villiers, The Roman Law of Defamation, 34
L.Q. REV. 412, 418 (1918). A similar tension has been replicated in the European
Convention on Human Rights, Article 10, which protects freedom of expression, and
Article 8, which protects individual privacy. See, e.g., Jessica Hodgson, What Articles 8
and 10 of the European Convention on Human Rights Mean, GUARDIAN (Mar. 27, 2002,
8:54 AM), http://www.guardian.co.uk/media/2002/mar/27/pressandpublishing.privacy4.
101
See supra note 100.
102
THE ROMAN LAW READER, supra note 99, at 206 (quoting W.S.
HOLDSWORTH, HISTORY OF ENGLISH LAW IV 293 (1924)).
103
Id. at 215. But see BILL GRIFFITHS, AN INTRODUCTION TO EARLY ENGLISH
LAW 31 (1995) (explaining that Anglo-Saxon law did incorporate Frankish law, which
drew on Roman law).
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91
kings set forth specific penalties for specific injuries just as in
the Roman Twelve Tables.104 One scholar has said that, in the
Anglo-Saxon system, as in Rome, the predetermined penalties
for specific wrongs were designed to minimize interpersonal
violence. “[I]t illustrates how sensitive this society was to
considerations of mere dignity, and how easily a trivial brawl
could flare up into a feud unless damped down at once by some
satisfaction . . . .”105 One of the earliest Anglo-Saxon law codes,
given by Aethelbert of Kent at the beginning of the seventh
century, recognizes dignity as a touchstone and sets forth
“seizing or pulling by the hair” as among the physical injuries
requiring compensation.106 This prohibition was not viewed as a
species of assault but rather as a blot on the victim’s feelings or
reputation. “The act is, of course, one of humiliation within a
cultural tradition . . . [that] laid special emphasis on the status
of hair length . . . .”107 The code given by the subsequent kings,
Hlothere and Eadric, broadened the prohibition and suggested
that penalties must be made for words that damage reputation
or dignity. According to the decrees, “If one man calls another a
perjurer in a third man’s house, or accosts him abusively with
insulting words, he shall pay one shilling to him who owns the
house, 6 shillings to him he has accosted, and 12 shillings to
the king.”108 That the payment is made not just to the victim but
to the property owner and to the king suggests that the violent
effects likely to be produced by the words are a substantial
portion of the rationale for the prohibition. The state has an
interest in preempting the violence and thus fixes a price for
the words, along with directing individual compensation.
The laws of King Alfred, dating from the 870s,
developed the concept of slander with more specificity.
Integrating Biblical commands, Alfred’s code advised in a
preface against “giv[ing] credence to the word of a false
104
By the time the Anglo-Saxons settled there, England
had been to a degree cut off from its Roman contacts for some time . . . and
had always been out on the fringes of Roman territory . . . . [so] there was no
need to retain Roman-law courts or Roman law in Germanic Britain and
therefore Roman legal ideas . . . seem to have had little if any influence on
Anglo-Saxon law.
DREW, supra note 77, at 25.
105
GRIFFITHS, supra note 103, at 10 (quoting K.P. WITNEY, THE KINGDOM OF
KENT 96 (1982)) (internal quotation marks omitted).
106
Id. at 36 (emphasis omitted).
107
Id. at 36 n.22 (citations omitted).
108
F.L. ATTENBOROUGH, THE LAWS OF THE EARLIEST ENGLISH KINGS 21 (1922)
(footnote omitted).
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man . . . [or] repeat[ing] any of his assertions.”109 It also advised
against spreading rumors or gossip, and set a talion for
slander—the defendant could have his tongue cut out or pay
the plaintiff and keep his tongue.110
All of these early Anglo-Saxon laws were promulgated
for use in a society comprising mainly insular local agrarian
communities, and the laws emphasized popular participation.111
This use of community assemblies to mediate community
disputes about compromised honor became less practical after
Alfred’s death, when closed agrarian communities gave way to
a more integrated society and a more centralized government.112
In addition, the movement of more individuals into the servile
class meant that fewer in the country could carry weapons, so
that insults between lower class individuals were resolved
more often by an exchange of money than by duels.113 Men of
status, in contrast, continued to defend their honor by duels.114
The early Anglo-Saxon law continued to treat all
dignitary interests as compensable in private actions until the
Norman conquest of England in 1066. Even then, however,
defamation appears to have been peeled off from the actions for
invasion of privacy and emotional injury more as a product of
jurisdictional development than as the result of a considered
analysis. Defamation came to be defined as charging another
with a violation of canon law, and it was delegated to the
ecclesiastical courts.115 In contrast, local English or Norman
assemblies retained jurisdiction over disputes involving insults
that did not explicitly sully the victim as a canon law violator.116
As the disintegration of the decentralized feudal structure
diminished the manorial courts, however, “denial of a
[common-law court] remedy at Westminster c[a]me to be denial
of a right,”117 and during the Elizabethan period, the commonlaw courts began hearing actions for defamation. Unlike their
predecessors in the manorial courts, these actions were strictly
109
GRIFFITHS, supra note 103, at 52.
Id. at 68.
111
Anthony D’Amato & Stephen B. Presser, Anglo-Saxon Law, in GUIDE TO
AMERICAN LAW: EVERYONE’S LEGAL ENCYCLOPEDIA 251, 252 (1985).
112
GRIFFITHS, supra note 103, at 15.
113
Colin Rhys Lovell, The “Reception” of Defamation by the Common Law, 15
VAND. L. REV. 1051, 1053-54 (1962).
114
Id. at 1053.
115
Id. at 1054.
116
See id. at 1054-55.
117
Van Vechten Veeder, The History and Theory of the Law of Defamation, 3
COLUM. L. REV. 546, 556 (1903).
110
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93
limited to charges affecting reputation. Just as the
ecclesiastical courts had offered a remedy only for charges of
violating canon law, the common-law courts offered a remedy
only for charges of committing a crime.118 Thus, like the canon
law, the common law “thereby exclud[ed] . . . merely violent or
offensive language from its definition of defamation.”119
Moreover, by 1593, the ecclesiastical courts ceded litigation
over words that caused special damage or temporal loss to the
common-law courts.120 As a result of these developments,
English law had serendipitously evolved so that “[t]he gist of
the action on the case for words was the [monetary] damage
caused to the plaintiff and not the insult itself.”121
In time, however, the English common law bent to
accommodate claims for words that violated mental tranquility
without diminishing reputation. This development brought
English law back into line with longstanding Western
traditions despite a departure of several hundred years. By
1897, the English common law specifically developed the tort of
intentional infliction of nervous shock in Wilkinson v.
Downton.122 The court concluded that where a practical joker
told a woman her husband had been “smashed up” just to see
her reaction, the act was calculated “to infringe her legal right
to personal safety” and thus was a good cause of action.123
Intentional infliction of nervous shock, which turns on the
foreseeability of some physical manifestation of shock, has been
applied by English courts for more than a century to the same
fact patterns seen in Roman and Anglo-Saxon law, such as
spitting on a plaintiff, cutting her hair against her will, or
“throwing a coin contemptuously on the plaintiff’s hospital
bed.”124 In all of these circumstances, the physical contact
causes negligible pain, but the non-physical dignitary
implications weigh heavily on the plaintiff’s emotional
wellness. In fact, for the past several decades, English,
Canadian, and Australian commentators have been urging the
adoption of a tort for the intentional infliction of pure
118
Lovell, supra note 113, at 1063.
Id.
120
See R.C. Donnelly, History of Defamation, 1949 WIS. L. REV. 99, 112 (1949).
121
Id. at 115.
122
2 Q.B. 57, 58 (1897).
123
Id. at 59; see also Denise G. Réaume, Indignities: Making a Place for Dignity
in Modern Legal Thought, 28 QUEEN’S L.J. 61, 66-67 (2002). The evolution of English law
to provide some protection for non-economic injuries to emotional well-being coincided
with the abolition of formalistic writs to more flexible models of pleading.
124
Réaume, supra note 123, at 74.
119
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emotional harm; some have even suggested extending the tort
to a unitary claim for assault on dignity.125
In contrast, English courts have not aligned with the
majority of Western countries in recognizing a freestanding
right to sue in tort for invasions of personal privacy. Writing in
1962, one scholar stated “with some confidence that English
law does not recognise what [American] Judge [Thomas] Cooley
called ‘the right to be left alone.’”126 But as with intentional
infliction of emotional distress, there is some evidence that
English courts occasionally tried to protect privacy interests by
stretching other causes of action to cover them. Most famously,
in Prince Albert v. Strange,127 a man was prevented from
exhibiting and selling copies of impressions he had procured of
etchings made by Queen Victoria and Prince Albert. The case
was not explicitly decided in terms of privacy, rather as a
violation of the royals’ proprietary rights in the commercial
uses of the etchings.128 The court hazarded, however, that in the
alternative, the proposed exhibition could have been enjoined
on the basis of “breach of trust, confidence[,] or contract.”129
That suggestion was the springboard for Warren and
Brandeis’s seminal article, The Right to Privacy, proposing the
development of an independent tort for privacy violations.130
English scholars and legislatures supported the development of
similar actions in English common law throughout the
twentieth century, but to no avail.131 Notably, at least one
suggested that in the absence of a discrete privacy tort, courts
could vindicate plaintiffs by invoking the intentional infliction
of nervous shock tort announced in Wilkinson.132 In sum,
English courts have long recognized a tort of defamation and
have reintegrated into their common law the idea of
125
Id. at 73 (citations omitted).
Brian Neill, The Protection of Privacy, 25 MOD. L. REV. 393, 394 (1962)
(quoting THOMAS COOLEY, TORTS 29 (2d ed. 1888)).
127
41 Eng. Rep. 1171 (1849).
128
Neill, supra note 126, at 395. (In fact, this reasoning is similar to the “right
of publicity” branch of American privacy torts.).
129
Id. at 396.
130
Samuel D. Warren & Louis D. Brandeis, The Right to Privacy, 4 HARV. L.
REV. 193, 203-05 (1890).
131
See, e.g., Neill, supra note 126, at 400-02; Percy H. Winfield, Privacy, 47 L.
Q. REV. 23 (1931).
132
Neill, supra note 126, at 402. Today, English experts have suggested that
the incorporation in the U.K. Human Rights Act of 1998 of the European Convention
on Human Rights, Article 8, which guarantees a right of privacy, is leading to English
acceptance of a common-law privacy right. Basil Markesinis et al., Concerns and Ideas
About the Developing English Law of Privacy (And How Knowledge of Foreign Law
Might Be of Help), 52 AM. J. COMP. L. 133, 133-34 (2004).
126
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95
vindicating emotional injuries, while they continue to award
damages only covertly to plaintiffs whose privacy was invaded.
2. English Theory—Natural Law
As English courts were developing common-law doctrine
on recourse for dignitary rights, English scholars were
considering the same ideas from a more abstract perspective—
one that informed the Framers’ thinking about the relationship
between individuals and the state. Although many English
philosophers and legal scholars developed theories of natural
law, the two primary guides for the Framers were John Locke
and William Blackstone.133
a. Locke
Locke and other natural-law rights theorists of the
Enlightenment developed the idea that the capacity for reason
meant that all human beings were entitled to dignity,
regardless of rank or social status.134 Locke, in particular,
contended that natural rights should be recognized with “a
place . . . in governance.”135 Among the natural rights Locke
discussed was an “ownership interest in one’s own personhood,”
a right which had “considerable reach” and was “inextricably
tied up with the inherent dignity and liberty of the
individual.”136 Specifically, Locke observed that natural law
prohibited speech that can injure a third party’s well-being:
[I]n customary intercourse among men and in communal life who is
bound to hold a conversation about his neighbour and to meddle with
other people’s affairs? No one, surely. Anyone can without harm
either talk or be silent. But if perchance one wants to talk about
another person, the law of nature undoubtedly enjoins that one’s
talk be candid and friendly and that one should say things that do
not harm that other person’s reputation and character.137
133
See, e.g., Caplan, supra note 56, at 260; Jackson, Blackstone, supra note 46,
at 171.
134
Libby Adler, The Dignity of Sex, 17 UCLA WOMEN’S L.J. 1, 9 (2008).
Id.
136
J. Harvie Wilkinson III, The Dual Lives of Rights: The Rhetoric and
Practice of Rights in America, 98 CALIF. L. REV. 277, 284 (2010).
137
JOHN LOCKE, Essay 7, Is the Binding Force of the Law of Nature Perpetual
and Universal? Yes, in ESSAYS ON THE LAW OF NATURE 195-96 (Oxford Univ. Press
1989) (1954).
135
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b. Blackstone
Blackstone’s Commentaries are also considered a
touchstone for interpreting constitutional language because
they were a virtual hornbook for colonial lawyers and
constitutional draftsman.138 Notably, the “natural law”
explicated by Blackstone had “roots running deep into the soil
of ancient Greece and Rome.”139 Blackstone identified three
“absolute rights, . . . vested in [men] by the immutable laws of
nature.”140 These three were the right of “personal security,”
which consisted of a person’s “uninterrupted enjoyment of his
life, his limbs, his body, his health, and his reputation”;
“personal liberty,” which consisted of “the power of locomotion,
of changing situation, or moving one’s person to whatsoever
place one’s own inclination may direct”; and “the right
of . . . property, [which consisted] of the free use, enjoyment,
and disposal of all [an individual’s] acquisitions, without any
control or diminution, save only by the laws of the land.”141
Blackstone also recognized among the “relative” rights
necessary to effectuating these absolute rights an entitlement
to “apply to the courts for speedy redress of injuries.”142
Reputation is recognized textually among Blackstone’s
natural-law rights, and it is beyond dispute that it was
considered one of the “Rights of Englishmen” incorporated into
colonial law.143 In addition, some adherents of Blackstone have
suggested that privacy is among his fundamental rights,
although it is not within the explicit text.144 For instance, a
138
Albert W. Alschuler, Rediscovering Blackstone, 145 U. PA. L. REV. 1, 4-7
(1996). Not all who participated in drafting the Constitution were uncritical of
Blackstone, who was not a supporter of the colonies. Id.
139
Id. at 17 (quoting LIVA BAKER, THE JUSTICE FROM BEACON HILL: THE LIFE
AND TIMES OF OLIVER WENDELL HOLMES 249 (1991)). Blackstone’s underlying Roman
law orientation is not surprising, given that he sought and was denied an appointment
to teach Roman law at Oxford. Rebuffed, he developed a specialty in English law. One
wonders whether the received wisdom that English law took no notice of Roman law
results from the fact that the leading mouthpiece for English law was denied
recognition as a Roman law scholar. See id. at 4-5.
140
1 WILLIAM BLACKSTONE, COMMENTARIES *124.
141
Michael B. Kent, Jr., Pavesich, Property and Privacy: The Common Origins
of Property Rights and Privacy Rights in Georgia, 2 J. MARSHALL L.J. 1, 11-12 (2009)
(quoting 1 BLACKSTONE, supra note 140, at *138) (internal quotation marks omitted).
142
Jackson, Blackstone, supra note 46, at 208.
143
Id. at 207 (citing 1 BLACKSTONE, supra note 140, at *129).
144
To be clear, the concept of privacy relevant to this article is a tort concept,
enforceable by one private individual by post-invasion suit against another private
individual. The concept of a constitutional right to privacy from government intrusion,
originally recognized in Griswold v. Connecticut, 381 U.S. 479 (1965), is not the subject
of this article. The distinction between privacy as tort and privacy as individual right
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Georgia court that was among the first to embrace a tort right
to privacy “cited Blackstone as additional support for [the
recognition of a privacy tort], explicitly rooting the right of
privacy in Blackstone’s conceptions of personal security and
personal liberty.”145 Privacy can also be found as a component of
Blackstonian property rights, the court reasoned, because the
property right of “quiet enjoyment” is violated when “the
common scold” tramples on the individual’s right “to use,
occupy, and enjoy the general functioning of . . . society in a
quiet and peaceable manner.”146 This right is protected by
punishing “the scold” in tort.147 Similarly, Blackstone’s reference
to “health” as a component of personal security suggests that
mental health (today recognized as a medical dimension of the
emotional tranquility protected by IIED) is arguably among
Blackstone’s natural rights. English scholars, this survey
suggests, recognized all three interests—privacy, reputation,
and emotional security—as natural-law rights, which in turn,
influenced the American experience.
3. The American Experience
American law, in the form of state constitutions and state
common law, strongly endorsed the right of individuals to protect
their reputations via common-law tort suits at the time of
ratification. Further, the evolution of the common law over the
next 150 years shows that American courts gradually moved from
informally recognizing privacy and emotional security rights to
explicit adoption of tort causes of action for their invasion.
a. State Constitutions
A survey of state constitutions in effect at the time of
ratification illustrates that the freedoms of speech and of the
press were not contemporaneously considered to foreclose the
private right to sue for defamation. Americans of the period
tended to “assume[] that certain types of speech or press—
including blasphemous, obscene, fraudulent, or defamatory
against the government was noted by Justice Black in Griswold. See id. at 510 n.1
(Black, J., dissenting).
145
Kent, supra note 141, at 12 (citing Pavesich v. New Eng. Life Ins. Co., 50
S.E. 68, 70 (Ga. 1905)).
146
Id. at 18-19.
147
Id. at 18, 19 n.88.
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words—lacked or should lack constitutional protection.”148 In
fact, a number of state constitutions specifically wrote in
protection for the right to sue for defamatory statements.
Pennsylvania’s 1790 constitution, for instance, “said that every
citizen may freely speak, write, and print on any subject, being
responsible for the abuse of that liberty.”149 The Delaware,
Massachusetts, and Kentucky Constitutions, which were also
in effect during the ratification periods, followed suit.150 The
original public understanding of the internal limits on freedom
of speech and press was not limited to defamatory statements
alone. During the debate over the 1780 Massachusetts
Constitution, one proposed speech and press clause barred
restrictions on speech freedoms “unless in Cases where it is
extended to the abuse, or injury of Private Characters.”151 This
trend towards state constitutional protection of the right to sue
for libel152 had expanded, not contracted, by the time the
148
Philip A. Hamburger, Natural Rights, Natural Law, and American
Constitutions, 102 YALE L.J. 907, 935 (1993). As recently as 2012, the Supreme Court
reiterated that several categories of speech, including “advocacy intended, and likely, to
incite imminent lawless action, . . . obscenity, . . . defamation, . . . speech integral to
criminal conduct, . . . ‘fighting words,’ . . . child pornography, . . . fraud, . . . true
threats, . . . and speech presenting some grave and imminent threat the government
has the power to prevent” are not presumptively protected speech. United States v.
Alvarez, 132 S. Ct. 2537, 2544 (2012) (plurality opinion) (citations omitted). The
consistency of these categories, many of which involve personality interests longprotected in Western law, corroborates this initial view that the First Amendment can
be applied with reference to other considerations.
149
Hamburger, supra note 148, at 936 n.83 (citing PA. CONST. of 1790, art. IX,
§ 7) (emphasis added). Notably, this understanding has also informed First
Amendment scrutiny of speech-restrictive statutes and regulations addressing
obscenity, volume, and likelihood of inciting violence. See, e.g., Heyman, supra note 37,
at 1279 (noting that government restrictions on obscenity, perjury and the like are
widely considered uncontroversial).
150
Hamburger, supra note 148, at 936 n.83.
151
Id. (emphasis added).
152
To be clear, this article is concerned solely with the ability of private
individuals to sue in tort for speech-inflicted injuries. The latitude of the states to
provide for criminal prosecution of libel is an entirely different issue, although
historically many states provided for both civil and criminal remedies for speech
injuries. See, e.g., Lisby, supra note 75, at 456-57. The criminal and the civil causes of
action share one justification; both were initially designed to prevent violence.
However, today, criminal libel actions are viewed more as a species of seditious libel,
generally brought not because the words at issue are likely to cause violence requiring
state oversight, but because the words criticize government or government officers. See
id. at 473-74 (discussing the relationship between purely civil libel, criminal libel based
on apolitical but incendiary speech, and criminal libel arising from criticism of
government). Although the Court has long held that the provision of a state forum for
resolution of private conflicts is a form of state action triggering the Fourteenth, and
consequently the First, Amendments, the action of the state in passing a law ex ante
prohibiting entire categories of anti-government speech is qualitatively different than
the action of the state in establishing a mechanism whereby private individuals can
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99
Fourteenth Amendment was ratified, which ultimately resulted
in application of the First Amendment against not just the
federal government, but state governments as well. In 1868,
twenty-seven of the thirty-seven states’ constitutions featured
language “explicitly contemplat[ing] the bringing of at least
some libel suits.”153
b. State Common Law
At the founding, and for almost two centuries after,
states offered their courts as a forum for the resolution of
private disputes between individuals arising from incursions
on dignity. Until the early 1900s, the only common-law cause of
action permitting redress for dignitary harms was defamation
(strictly cabined between slander and libel, at the time), so
most dignitary harms were pleaded as defamation. However,
some of the “defamation” cases appear to involve slights to
interests other than reputation. The “defamation” category was
used to smuggle in litigation over the broader basket of
dignitary interests.154 Eventually, in part because of the
changing nature of newspapers and in part because of
expansion of the common law to include actions for invasion of
privacy and intentional infliction, some dignitary lawsuits that
might have been awkwardly slotted as “defamation” entered
into the privacy and intentional infliction channels of tort.
i. Slander and Libel
Coming as they did from England and its legal
structure, the colonies’ recognition of a common-law cause of
action for defamation is not surprising. The use of libel and
slander lawsuits was apparently seen as a safety valve to
prevent the eruption of violence and conflict within what was
peacefully settle dignitary conflicts ex post with the aid of juries that will determine
and apply local community norms.
153
Steven G. Calabresi & Sarah E. Agudo, Individual Rights Under State
Constitutions When the Fourteenth Amendment Was Ratified in 1868: What Rights Are
Deeply Rooted in American History and Tradition?, 87 TEX. L. REV. 7, 45-46 (2008).
154
Of course, because these interests were not connected to any explicit cause
of action, fewer of them were likely pleaded than might have been warranted. The
point is that plaintiffs did successfully sue for injuries on the outer edge of the
“reputation” interest that would have been more accurately described as dignitary
interests in privacy or emotional tranquility had those causes of action been articulated
at the time. See, e.g., infra notes 193-94, 203 and accompanying text.
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still a community of pioneers.155 Thus, in the typical civil
defamation suit of the time, the plaintiff and defendant knew
each other, and both were known to the jurors. “People almost
always handled their own cases, and courts applied flexible
rules that in many ways resembled the practices of local and
church tribunals of medieval England more than the
complicated doctrines and procedures of modern defamation
law.”156 Money damages were usually small and were often
replaced or supplemented with public apologies or
acknowledgment of wrongdoing.157 The goal was “to minimize
feelings of hostility and ‘to make a balance’ between the
parties.”158 Civil libel suits that resolved “small” conflicts
between private individuals were valued by the colonists as a
means of restoring the community norm of “harmony and
cooperation,” much valued by people who had left England in
part to opt out of “wrenching economic and social change”
there.159 For instance, one Merrill sued for slander a New
Hampshire man who asked a neighbor: “What will Merrill do
next? Kimball has had his barn burnt, and Hoit will have his
burnt within a fortnight. We know persons about here bad
enough to do this[.]”160 This example shows that civil lawsuits
were considered an appropriate means for community members
to weigh in on the acceptable boundaries of gossip and
speculation over local affairs among neighbors.
By the early 1800s, politicians began bringing civil libel
161
suits. Dramatic changes in the average newspaper also
multiplied the number and types of speech injuries at issue in
defamation cases:
[The so-called popular press] added corps of ambitious reporters to
dig out stories of everyday tragedy and triumph, introduced regular
sports columns to hold the attention of male readers, and added
features on domestic life to attract a loyal corps of female customers.
Newer technologies eventually allowed for inexpensive reproduction
of photographs, an innovation that helped bring immigrants with
few or no reading skills in English into the reading public. And new
155
NORMAN L. ROSENBERG, PROTECTING THE BEST MEN: AN INTERPRETIVE
HISTORY OF THE LAW OF LIBEL 16 (1986).
156
Id.
157
Id.
158
Id.
159
Id. at 22-23.
160
Merrill v. Peaslee, 17 N.H. 540, 540 (1845); see also Chaddock v. Briggs, 13
Mass. 248, 250-51 (1816) (remarking that a local minister had engaged in a “drunken
frolic” was cause for a slander suit by the minister).
161
ROSENBERG, supra note 155, at 121.
2012]
RESCUING DIGNITARY TORTS
101
styles of story construction made newspaper reading easier for
everyone. James Scripps, for example, believed that a good paper
could be measured by the number of stories, preferably brief ones,
that it contained; the more items that could be crammed into a
single issue, the better the paper. Of course, this practice, by itself,
increased the possibility for libel suits. The colorful content of
popular journalism created more than the chance for greater
numbers of libel suits; it also produced new types of defamation
cases. By opening all kinds of areas of hitherto private life, including
family affairs and sexual morality, to constant newspaper scrutiny,
the popular press sought to expand the definition of what issues
were in the public domain. Carried to its logical conclusion, popular
journalism on the marketplace model implied that whatever
appeared in the papers—and was purchased by the sovereign
readers—was a public matter. But plaintiffs who were not public
people in the traditional sense . . . did not always accept marketplace
logic. If they . . . sued for libel, their suits could raise . . . tricky
public-private distinctions . . . .162
In fact, libel suits began to mushroom with the rise of
the popular press. The New York Herald, for instance,
completed a study in 1869, which found that the press had,
“recent[ly],” been sued more than 700 times.163 Predictably,
several of these suits eventually reached the Supreme Court.
Whether the Court ultimately ruled for or against the press,
the fact that it did not hesitate to apply the state common law
of defamation to the facts at hand implies that the common-law
adjudication of libel and slander cases was not seen as
inconsistent with the First Amendment Press Clause.164 For
instance, in Washington Post Co. v. Chaloner, the Court
reversed and remanded a libel case against the Washington
Post brought by a local socialite.165 The paper reported that the
plaintiff had a “nervous breakdown as a result of the tragedy at
his home, Merry Mills, . . . when he shot and killed John
Gillard, while the latter was abusing his wife, who had taken
refuge at . . . Chaloner’s home.”166 The Court found that the jury
instructions were erroneous because they directed the jury that
the report was libelous per se, rather than allowing the jury to
weigh the meaning of the complained-of words in context.167
Mention of any First Amendment protection from tort liability
162
Id. at 186-87.
Id. at 197.
164
See, e.g., Wash. Post Co. v. Chaloner, 250 U.S. 290 (1919); Peck v. Tribune
Co., 214 U.S. 185 (1909).
165
250 U.S. at 291, 294.
166
Id. at 291 (internal quotation marks omitted).
167
Id. at 293.
163
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for the newspaper is conspicuously absent. A similar analysis
applies to Peck v. Tribune Co., where the reversal in plaintiff’s
favor was premised on the finding that her reputation was
compromised by an advertisement falsely stating that she
endorsed whisky as a medicinal tool.168 The Court focused
entirely on the elements of the tort cause of action, without
considering any role for the First Amendment.169
ii. Invasion of Privacy
Colonial courts did not embrace a freestanding tort for
invasion of privacy. Occasionally, however, they did protect
privacy interests even without the benefit of a developed tort
cause of action. Early New England courts allowed suits
against defendants who “[bore tales] from house to house.”170 As
early as 1661, there is evidence of “antigossip” litigation in the
Connecticut colony.171 In 1668, a Plymouth litigant “succeeded
in having the court admonish three persons ‘for opening a
certaine box in his house, wherin were his writings.’”172 In dicta,
courts recognized the right to privacy as early as 1769,
observing that “[every man] has certainly a right to judge
whether he will make [his own sentiments] public.”173 And,
notably, it appears that colonists seeking to vindicate privacy
interests in the absence of explicit torts for their invasion
regularly turned to defamation as a vehicle.174
After the ratification, as the rise of the penny press led
to a new news product, replete with photographs, “sob sister”
columns, and sensational crime stories, more Americans found
themselves the subject of news coverage.175 The number of
“defamation” cases that were filed based on unwanted exposure
168
214 U.S. at 189-90.
Id.
170
DAVID H. FLAHERTY, PRIVACY IN COLONIAL NEW ENGLAND 105 (1967)
(internal quotation marks omitted).
171
Id. at 105 n.60.
172
Id. at 119.
173
Warren & Brandeis, supra note 130, at 198 n.2.
174
FLAHERTY, supra note 170, at 248. Some have ventured that “[p]rivacy as
an all-encompassing constitutional right was . . . not a part of the legal tradition
inherited from England by the colonies which would have been secured in either a state
or federal bill of rights.” Caplan, supra note 56, at 267 (footnote omitted). But, of
course, the fact that privacy may have been recognized as an individual right of lessthan-constitutional weight does not disqualify it from status as a Ninth Amendment
“right retained.”
175
See ROSENBERG, supra note 155, at 186-87; see also supra notes 162-63 and
accompanying text.
169
2012]
RESCUING DIGNITARY TORTS
103
rather than a classic diminishment of reputation rose
accordingly. Some examples of nonreputational fact patterns
that led to findings of defamation beginning before the turn of
the century include: stating that a man’s “sister had been
arrested for larceny,” running an advertisement in which a
known teetotaler was depicted as endorsing alcohol, running an
advertisement in which an athlete was depicted as endorsing
chocolate, or running a picture of a wrestler next to one “of a
gorilla in an article on evolution.”176 Plaintiff victories suggest
that in all of these cases the courts were responding to injuries
that did not exactly diminish reputation—an athlete would not
be reviled by the community for a food endorsement—but were
nevertheless real—his identity was usurped by a third party for
commercial purposes without his consent.177
An early response to the perceived overreaching of the
modern press was a renowned law review article, The Right to
Privacy, published in 1890 by Samuel Warren and Louis
Brandeis.178 On the heels of the groundbreaking proposal that
courts should recognize privacy as a freestanding right
belonging to individuals and redressable in tort, rather than as
an offshoot of property or contract law, many common-law
courts began to recognize various species of privacy torts.179
While the development of a distinct law of privacy solved
the problem of these claims masquerading as defamation, it
introduced the problem of defamation claims seeking refuge in
the privacy torts.180 That a given fact pattern may be just as
reasonably classified as defamation as invasion of privacy
follows from the fact that American law strives—likely because
of its outgrowth from English law rather than civil law—to
maintain the two torts as distinct when in fact they address
176
Wade, supra note 10, at 1094-95 n.11 (citations omitted).
See, e.g., Note, The Right to Privacy in Nineteenth Century America, 94
HARV. L. REV. 1892, 1907 (1981).
178
Warren & Brandeis, supra note 130.
179
As the law developed, a “complex of four” privacy torts emerged: “intrusion
upon . . . seclusion or . . . private affairs”; “public disclosure of embarrassing facts”;
“false light”; and “[misa]ppropriation of the plaintiff’s name or likeness.” Wade, supra
note 10, at 1095 n.13 (quoting William L. Prosser, Privacy, 48 CALIF. L. REV. 383, 389
(1960)). Misappropriation of name or image has in recent years shifted from the
common law to the statutory realm, with most statutes providing statutory damages
for unconsented use of personality elements if the plaintiff cannot prove consequential
damages. See, e.g., Aubrie Hicks, Note, The Right to Publicity After Death: Postmortem
Personality Rights in Washington in the Wake of Experience Hendrix v.
Hendrixlicensing.org, 36 SEATTLE U. L. REV. 275, 276 (2012). This evolution suggests
that one branch of privacy law, at least, has reintegrated some elements of property
and contract.
180
Wade, supra note 10, at 1095.
177
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similar defendant behavior and protect plaintiff interests that
are so infinitesimally different as to be essentially inextricable.181
Notably, the Court in Peck v. Tribune Co. did not foreclose the
possibility of permitting the plaintiff to recover for the
unconsented use of her photograph in a whisky advertisement,
known in modern parlance as the right of publicity subset of the
privacy tort.182 The plaintiff had pleaded both causes, and the
Court reversed the dismissal of her defamation count without
holding that the privacy count was untenable as a matter of law.183
iii. Intentional Infliction of Emotional Distress
Just as privacy interests evolved from covert to overt
treatment in the American common law, scholars writing early
in the twentieth century demonstrated that courts often evaded
the confines of tort law to compensate egregiously inflicted
mental anguish well before formally acknowledging these
interests in a specific tort.
There is little documentation that courts vindicated
claims of emotional distress through defamation or other
avenues at the time of the ratification. However, by 1890,
Warren and Brandeis reported matter-of-factly that “the legal
value of ‘feelings’ is now generally recognized,” whether as
damages parasitic to a physical injury, damages to a parent
stemming from tort injuries to a child, or as a subset of
defamation damages.184 Despite discernible patterns among the
cases where emotional injury was compensated, the injuries
were not yet categorized as a separate tort because they were
thought not to bear sufficiently “distinct and definite features
of [their] own.”185
In the 1936 article often credited as the springboard for
the American tort of intentional infliction of emotional distress,
181
For instance, truth is a defense to a complaint for defamation but not to
most privacy causes of action. See, e.g., Melville B. Nimmer, The Right to Speak from
Times to Time: First Amendment Theory Applied to Libel and Misapplied to Privacy, 56
CALIF. L. REV. 935, 958-59 (1968). Further, a defamatory statement must lower the
plaintiff’s reputation in the eyes of the community, whereas a privacy invasion turns on
offense reasonably felt by the plaintiff himself. See id. Historically, defamation law
treated written and spoken statements differently, see, e.g., Tilley, supra note 76,
passim, whereas privacy law generally does not distinguish between statements based
on the mechanics of communication.
182
214 U.S. 185, 190 (1909).
183
Id. at 188, 190.
184
Warren & Brandeis, supra note 130, at 197-98 n.1.
185
Prosser, Insult and Outrage, supra note 16, at 40 (arguing that the cause
had become sufficiently distinct to warrant independent treatment).
2012]
RESCUING DIGNITARY TORTS
105
Calvert Magruder demonstrated that when necessary, courts
compensated emotional injuries behind the fig leaf of other
torts.186 So, for instance, where a hospital patient had to wait
eleven hours to be discharged because of an unpaid bill, the
court called it false imprisonment and compensated him; where
a railroad conductor failed to stop a drunken passenger from
kissing a female passenger, the court found the company liable;
where speech mortified plaintiffs even though hearers did not
believe its contents, courts were known to call it defamation
and give a verdict.187
Magruder, later joined by William Prosser, argued that
courts should accord “independent legal protection” for “the
interest in mental and emotional peace” via a new tort.188
Magruder summarized the types of conduct that judges had
been compensating sub rosa or wringing their hands and
rejecting, proposing that these behavioral patterns should be
the province of this new cause of action. The patterns included:
publicly accusing a woman of unchastity;189 insulting treatment
of customers in public places of business such as shops,
telegraph offices, or railway cars;190 falsely circulating reports
that a school child was illegitimate;191 public posters identifying
debtors;192 unfounded attempts to sue and harassment in the
course of bill collection;193 and “mishandling of corpses.”194
Of course, these fact patterns are almost identical to
those found in the Roman law of iniuria summarized in Part
IV.A.2.195 By 1948, the American Law Institute announced in a
supplement to its first Restatement of Torts that an
186
See Calvert Magruder, Mental and Emotional Disturbance in the Law of
Torts, 49 HARV. L. REV. 1034 (1936).
187
Id. at 1034-35 & nn.5, 8 & 9.
188
Id. at 1035.
189
Id. at 1051.
190
Id. at 1052-53.
191
Id. at 1059.
192
Id. at 1060.
193
Id. at 1063.
194
Id. at 1064; see also Zipursky, supra note 34, at 502-03 (summarizing
classic cases via Prosser).
195
Surprisingly, though Magruder acknowledges the “deep human feelings
involved” in many of these circumstances, he did not indicate any historical basis for
the creation of the “new” tort. See Magruder, supra note 187, at 1066-67. Nor did
Prosser or any other law professors advocating for the tort credit its Roman law
forerunner. It is unclear why these scholars, steeped in tort history and theory, did not
acknowledge the debt owed to Roman law. One turn-of-the century survey of American
law schools summarized that “Roman law [has] almost disappeared from the law school
curriculum, even as an educational and academic subject,” which may explain the
silence. THE ROMAN LAW READER, supra note 99, at 222.
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independent tort of intentional infliction of emotional distress
had been fully enough developed to merit recognition.196
In sum, all the dignitary rights and the corollary rights
to sue for their invasion have a deep, nearly atavistic lineage
within Western legal culture. As one scholar has summarized
their history:
We have interests in mental tranquility, in reputation, in
privacy. . . . The recognition of all these things as interests presumably
took place over millennia. They are now part of our evolved selves. . . .
Gradually, recognized interests undergo a metamorphosis into a
recognition of rights. . . . As society evolves, it establishes various
instruments through which these rights are announced and
sometimes advertised. One of these, a constantly developing repository
of rights, is the common law.197
V.
THE STATUS OF DIGNITARY TORTS AS NINTH
AMENDMENT “RIGHTS RETAINED”
Under the modest Ninth Amendment “rule of
construction” theory, enumerated rights do not automatically
trump retained rights when the two clash merely because the
former are enumerated. Instead, courts interpreting the reach
of enumerated rights must attempt to calibrate their reading of
the enumerated right to avoid crowding out the right retained.
Applying this theory, this section considers how well each of
the dignitary torts—defamation, intentional infliction, and
invasion of privacy—fits within each of the “rights retained”
models—Framers’ original public understanding of natural-law
rights, “Western-legal-tradition” rights, 1791 state-law rights,
and post-1791 state-law rights. It concludes that defamation
indisputably fits within all four models; invasion of privacy fits
within at least the Western-legal-tradition and post-1791
models, and possibly the natural-law and 1791 models; and
intentional infliction also clearly fits within at least the
Western-legal-tradition and post-1791 models, and possibly the
natural-law model.
196
RESTATEMENT (FIRST) OF TORTS § 46 (Supp. 1948). State courts throughout
the country shifted from an implicit to an explicit recognition of the IIED tort over the
forty-year period from 1939 through 1979. See, e.g., Geoffrey Christopher Rapp, Defense
Against Outrage and the Perils of Parasitic Torts, 45 GA. L. REV. 107, 135-36 (2010)
(describing history of IIED adoption in American courts and the tort’s current status as
the “majority rule”).
197
MARSHALL SHAPO, AN INJURY LAW CONSTITUTION 37-38 (2012).
2012]
A.
RESCUING DIGNITARY TORTS
107
Dignitary Interests as “Natural-Law” Rights as
Understood by the Framers
1. Defamation
The status of a right to reputation as a natural-law
right is virtually indisputable. Even applying the most
restrictive Ninth Amendment definition of natural-law rights,
those identified by Locke and Blackstone, one sees uniform
textual agreement that men have a right to protect their
reputations against incursions by private parties. As outlined
in Part IV.B.2, Locke explicitly wrote that natural law
prohibited individuals from speech that would harm “[an]other
person’s reputation.”198 Blackstone’s Commentaries, too,
explicitly state that man’s absolute right to personal security
included an “uninterrupted enjoyment of his . . . reputation.”199
2. Privacy
There is less support within Blackstone and Locke for
the proposition that privacy is among the individual rights
retained under the Ninth Amendment, though the concepts do
appear. Locke’s view that men have an “ownership interest” in
their own “personhood”200 presages the work of Warren and
Brandeis describing longstanding judicial intuition that the
law should protect a party’s name and image from third-party
co-opting without consent, whether as an element of property
law or, eventually, as a freestanding tort. Locke’s admonition
against “meddl[ing] with other people’s affairs”201 further
reflects a recognition of an individual zone that should be free
from scrutiny. Similarly, Blackstone’s identification of
“personal security” and “personal liberty” as absolute rights
has been interpreted by some courts as approval of private tort
actions for invasions of privacy.202
198
LOCKE, supra note 137, at 196.
See 1 BLACKSTONE, supra note 140, at *138 (discussed in Kent, supra note 141).
200
Wilkinson, supra note 136, at 284.
201
See LOCKE, supra note 137, at 195-96.
202
Kent, supra note 141, at 12 (citing Pavesich v. New Eng. Life Ins. Co., 50
S.E. 68 (Ga. 1905)).
199
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3. Intentional Infliction of Emotional Distress
Although neither Blackstone nor Locke make explicit
textual reference to a private-law right of emotional
tranquility, which is today protected by the IIED tort, their
works clearly imply that this interest is a dimension of the
natural-law rights of man. First, Locke focused on the
“inherent dignity” of the individual and suggested that this
right cast a long legal shadow. Thus, it is no surprise that he
determined that natural law governed “intercourse among men
and in communal life” and barred speech that would inflict
harm not just on a person’s reputation—a version of self used
in external exchanges—but also on his “character,” a more
private version of self that encompasses emotion, self-image,
and self-worth derived not internally but from external social
assessments.203 Similarly, Blackstone’s references to “personal
security” and “personal liberty” have also been interpreted to
extend a right to enjoy “the general functioning of society in a
quiet and peaceable manner,” which arguably encompasses the
right to be free from emotional harassment inflicted via social
interactions.
B.
Dignitary Interests as Natural-Law “Western-LegalTradition” Rights
1. Defamation
The fact that Greece, Rome, and England all recognized
a right to reputation enforceable against private parties
fortifies the conclusion that reputation is among the “rights
retained” under the individual rights theory.204
2. Privacy
Privacy, too, has been protected as a private right
throughout Western legal traditions, albeit less assertively.
The most well-developed privacy tort is found in Rome, where
iniuria explicitly allowed private actions for invasions of
privacy. There is less evidence of privacy protection in the
ancient law of Greece and the early regimes in the civil-law
203
See Post, Privacy, supra note 7, at 962-63 (quoting Goffman on the theory
that violations of social deference rules can injure the personality and inhibit “the
complete man”).
204
See supra Part IV.
2012]
RESCUING DIGNITARY TORTS
109
countries. In England, privacy has not been recognized as a
right protected by a common-law cause of action. Of the three
dignitary torts, privacy has the weakest claim to natural-law
status under the historical theory of natural-law rights.
3. Intentional Infliction of Emotional Distress
The protection of emotional well-being against
onslaught from private actors is entrenched in centuries of
Western legal tradition. In ancient Greece, Aristotle wrote that
abuse and insult should be the subject of civil litigation rather
than interpersonal violence,205 and the Code of Solon barred the
use of harsh words in places of solace and the incitement of
families by speaking ill of the dead.206 Rome’s law of intentional
infliction was even more developed, allowing actions for
defiling dead bodies or graves, harassment of debtors, sexual
aggression, and the use of abusive language.207 Early AngloSaxon law was consistent with its continental counterparts,
recognizing causes of action for words and gestures that led to
“humiliation.”208 Later, emotional well-being as a private-law
right was orphaned when England transitioned from manorial
and ecclesiastical courts to a system of common-law writs. This
development does not significantly alter the place of the
interest within the Western legal scheme, however, for two
reasons. First, it was the result of historical accident209 rather
than considered analysis. Second, the tort has reemerged in
English common law this century, demonstrating that it
represents persistent and deep-seated Western legal values.
205
Madden, supra note 65, at 883 (quoting ARISTOTLE, supra note 70, at 402).
See VERSTEEG, supra note 67, at 254; Lisby, supra note 75, at 442-43.
See supra notes 85-90 and accompanying text.
208
See GRIFFITHS, supra note 103, at 36 n.22. To be sure, English law formally
departed from this tenet of Western law for a time. As the common-law courts
developed during the Elizabethan period, they took jurisdiction over defamation and
the protection of reputation, leaving “insult” cases to the local manorial courts. Those
courts fell into disuse as England evolved from an agrarian to an industrial society.
However, by 1897, the English courts began to reintegrate emotional injury into the
tort scheme. See Réaume, supra note 123, at 66-67.
209
See supra notes 118-24.
206
207
110
C.
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Dignitary Interests as State Rights in 1791
1. Defamation
Colonial courts recognized private lawsuits for slander
and libel, and colonists seeking to resolve disputes that
interfered with community harmony frequently pursued
them.210 The right to reputation was recognized in the laws of
the people of the states at the time of ratification and often was
explicitly called for in state constitutions.211 In short, “On any
plausible reading of the Ninth Amendment, the right to
reputation falls among the ‘others retained by the people’”
under 1791 state law.212
2. Privacy
Tort actions for invasion of privacy were not explicitly
found in the statutes or constitutions of the states at the time
of ratification. Nor did the common law overtly recognize
privacy causes of action. There is evidence, however, that
colonists asserted privacy causes of actions in the seventeenth
century.213 For example, some colonies entertained “antigossip”
cases, while others censured defendants who opened containers
in order to read writings not meant to be public.214 And in the
eighteenth century, courts were known to observe in dicta the
intuition that individuals were in sole control of how far they
wished to thrust themselves into the public eye.215 Further,
litigants protesting speech that unwillingly exposed them to
neighbors took refuge in the established torts of slander and
libel.216 Privacy has a strong claim of recognition under state
law of 1791.
3. Intentional Infliction of Emotional Distress
Historical evidence suggests that neither colonial courts
nor state statutory or common law at the time of the
ratification recognized a distinct tort for outrage or intentional
210
See supra notes 158-60.
See Claus, supra note 43, at 617 n.101; Tilley, supra note 76, at 1054 n.251;
see also supra notes 151-53.
212
See Claus, supra note 43, at 617.
213
See supra notes 172-75 and accompanying text.
214
See supra notes 172-73.
215
See Warren & Brandeis, supra note 130, at 198 n.2; supra note 175.
216
See supra note 176.
211
2012]
RESCUING DIGNITARY TORTS
111
infliction of emotional distress. Of course, given the
interrelationship between reputation, dignity, and emotional
tranquility, there is a possibility that courts adjudicating
common-law slander and libel claims at the time used that
vehicle to account for emotional injury. But there is little
documentation that courts were vindicating emotional distress
claims. Notably, the substantial early twentieth century
scholarship supporting the initiation of the IIED cause of action
found just this “gaming” of the available torts in its surveys of
common law.217 The earliest of those cases are traced back only to
the mid-nineteenth century, however, well after ratification.
Whether writers did not research back through the late 1700s,
or whether they did so and unearthed no examples of “hidden”
emotional distress claims is not clear. At any rate, intentional
infliction does not appear to have Ninth Amendment status as a
right protected by the common law in 1791.
D.
Dignitary Interests as State Rights Between 1791 and
1964
1. Defamation
As outlined above, tort causes of action to protect
reputation were well-recognized at the time of ratification. In the
years between ratification and the adoption of the Fourteenth
Amendment, the majority of states drafted explicit protection for
some type of libel in their constitutions. These tort causes of
action continued to thrive for the two centuries until the Court
constitutionalized the tort in New York Times Co. v. Sullivan.218
2. Privacy
Some colonies appeared to protect privacy interests
without explicitly recognizing privacy torts. By 1890, however,
the proliferation of cameras and the rise of the penny press,
with its emphasis on sensational coverage of average
individuals, led to a push for privacy torts.219 Warren and
Brandeis’s renowned article, The Right to Privacy, urged courts
to develop tort causes of action for invasion of privacy, rather
than bend the defamation tort or property-law concepts to
217
218
219
See, e.g., Magruder, supra note 187, at 1034-35.
376 U.S. 254 (1964).
See supra notes 180-81.
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protect this dignitary interest.220 By 1964, the privacy torts had
been described as having been “well established in the United
States for a number of years now.”221
3. Intentional Infliction of Emotional Distress
The development of the intentional infliction tort
followed a pattern remarkably similar to the privacy torts. In
fact, in their piece advocating privacy torts, Warren and
Brandeis noted that despite technical restrictions on tort
recovery for emotional harm, “the legal value of ‘feelings’” was
generally recognized by 1890. Just as courts wishing to protect
privacy interests before the advent of the privacy torts used
defamation as a vehicle, courts wishing to protect emotional
tranquility interests used the same tool, along with the concept
of parasitic damages and bystander damages, to allow recovery
for non-physical injuries that were linked (however tenuously)
to a physical harm.222 In 1936, the first of a series of law review
articles urged overt recognition of a tort for intentional
infliction of emotional distress, and by 1948, the American Law
Institute in a supplement to the Restatement of Torts, had
complied. A number of state courts had already recognized the
tort, and they continued to do so over the next several
decades.223 Consequently, the tort was widely, though not
uniformly, accepted throughout the states as part of the
common law prior to 1964.
E.
Summary of Dignitary Tort Status Under Ninth
Amendment Theories
Surveying the history of the dignitary torts from ancient
Western-law regimes through the colonial period, the
ratification, and up through the mid-twentieth century, it
appears that each of these torts succeeds under at least one of
the theories for filling the Ninth Amendment set of “rights
retained.” Respect for the right to reputation, limits on
exposure to the public world, and emotional tranquility are
220
Warren & Brandeis, supra note 130, at 203-05.
Wade, supra note 10, at 1094. Not surprisingly, given the unitary dignitary
interest from which the privacy and defamation torts arose, courts that had protected
privacy by application of defamation law now began to protect reputation by
application of the privacy torts when the particular requirements of defamation would
have left a plaintiff unprotected. Id. at 1095.
222
See supra notes 186-87.
223
Givelber, supra note 11, at 43 nn.8-9.
221
2012]
RESCUING DIGNITARY TORTS
113
consistent hallmarks of Western legal systems, from ancient
Roman and Greek law, through civil law in Europe and early
Anglo-Saxon law. English common law inadvertently
suppressed legal vindication of these rights in the medieval
and Elizabethan eras, but their eventual reemergence in the
modern era shows that the cultural value attached to these
rights is deep-seated within Western law. American law, too,
has long honored the reputational interest and, after
vindicating privacy and emotional tranquility rights via
defamation for decades, has returned to the system established
by Roman law to allow compensation for all three interests.
This history supports the argument that privacy and emotional
tranquility may be identified among the rights retained by the
Ninth Amendment under an individual rights theory. Under
the natural-law theory of “rights retained,” it is indisputable
that the right to vindicate reputation via defamation is a right
retained. Further, Locke’s and Blackstone’s writings suggest—
certainly less overtly—a recognition of individual rights to
emotional tranquility and some measure of control over
exposure to the outside world.
Under a 1791 state-rights theory, it is again
indisputable that the right to reputation vindicated via the
defamation torts is a right retained. Slander and libel were
well-recognized common-law causes of action at the time of
ratification and were often acknowledged in state constitutions.
Less certain, but not beyond question, is the argument that
privacy may have been among the rights recognized by the
common law in 1791. Although no explicit privacy cause of
action existed in tort until the twentieth century, there is
ample evidence that colonial courts, and those after the
ratification, strove to protect privacy through the torts
available at the time, primarily defamation. In contrast, there
is very little evidence that colonial courts or those at the time
of ratification viewed emotional tranquility as a right meriting
overt or even covert protection in tort. In fact, emotional harm
was considered too speculative to support damages in tort.
Thus, under the originalist state-rights theory of the Ninth
Amendment, it is unlikely that the right to emotional wellbeing is among the “rights retained.”224
224
The disconnect between the “natural-law” status of intentional infliction
and the 1791 status of intentional infliction can be chalked up to historical accident.
The cause of action had been recognized for centuries, was peeled off from defamation
during intramural jurisdictional battles in England as the legal system there cycled
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Under an “evolving” state-rights theory, including
among “rights retained” those adopted by state statute or
common law after the ratification, all three dignitary torts
would have constitutional status under the Ninth Amendment.
Defamation, of course, had longstanding roots within English
and American law. By the early twentieth century, state courts
had followed the lead of Warren and Brandeis and developed
extensive tort theories to protect privacy. And shortly
thereafter, courts began to embrace the tort of intentional
infliction of emotional distress to allow money damages for
purely non-physical emotional harms. These two latter-day
American torts were well-established throughout the country
by 1964, when the Court initially began to apply the First
Amendment to cabin the dignitary tort of defamation.
This article is agnostic as to which of these theories
should fill the empty set of “rights retained,” in part because
the theories seem to be different in formulation but nearly
identical in result. In fact, concepts of “natural law,” “common
law,” and “history and tradition” often seem interchangeable.
As a matter of theory, there may be principled distinctions
between the different sets of law, but for purposes of finding a
constitutional foothold for the dignitary torts, any or all of
them will suffice.
Indeed, this has been a faint but consistent suggestion
from the time of ratification through the modern era of the
First Amendment. One of the first drafts of what eventually
became the Ninth Amendment, crafted by Roger Sherman of
Connecticut, states that:
The people have certain natural rights which are retained by them
when they enter Society, Such are the rights of Conscience in
matters of religion; of acquiring property and of pursuing happiness
& Safety; of Speaking, writing and publishing their Sentiments with
decency and freedom . . . . Of these rights therefore they Shall not be
deprived by the Government of the united States.225
That one of the primary contributors of the Ninth
Amendment specifically noted—in a draft of the precise
amendment that, this article argues, governs construction of
through ecclesiastical, manorial, and common-law courts, and eventually made its way
back into both English common law and American common law. That it was “out of
vogue” in 1791 should not alter its Ninth Amendment status when it fits under the
other two theories for filling the “rights retained” set. See, e.g., supra notes 113-25 and
accompanying text.
225
THE RIGHTS RETAINED BY THE PEOPLE: THE HISTORY AND MEANING OF THE
NINTH AMENDMENT app. A, at 351 (Randy Barnett ed., 1989) (emphasis added).
2012]
RESCUING DIGNITARY TORTS
115
the speech right when it clashes with dignitary interests—an
internal limitation on the speech rights conferred by the
government suggests that the Ninth Amendment has always
provided a structural foothold for the dignitary torts within the
constitutional scheme.
This view was reasserted as recently as 1965, when the
Court was just beginning the constitutionalization of the
defamation tort. In Rosenblatt v. Baer, where the Court held
that the government-employed operator of a municipal
recreation area was subject to the scrutiny provided for public
officials in Sullivan, Justice Stewart’s concurrence pointed to
the Ninth Amendment as a structural counterweight to the
First when speech and dignitary interests clash:
It is a fallacy . . . to assume that the First Amendment is the only
guidepost in the area of state defamation laws. It is not. . . . The right of
a man to the protection of his own reputation from unjustified invasion
and wrongful hurt reflects no more than our basic concept of the
essential dignity and worth of every human being—a concept at the
root of any decent system of ordered liberty. The protection of private
personality, like the protection of life itself, is left primarily to the
individual States under the Ninth and Tenth Amendments. . . . [T]his
does not mean that the right is entitled to any less recognition by this
Court as a basic of our constitutional system.226
The dignitary torts are—under more than one theory of
Ninth Amendment rights retained—entitled to some
consideration within the constitutional scheme. In short, they
cannot mechanistically be subordinated to the First Amendment
simply because they are inflicted via speech.
VI.
A NINTH AMENDMENT “COMPARATIVE IMPAIRMENT”
TEST
A faithful application of the Ninth Amendment requires
that changes to the scope of the dignitary torts achieved via
application of the First Amendment must be the product of
constitutional balancing, and at least some consideration of the
social values they serve. Given the ambiguous scope of the
Ninth Amendment—prohibiting both “denial” of a right
retained via application of another enumerated right and
“disparagement” of a right retained—the amendment’s text
does not dictate the balancing test that should be applied to
resolve clashes of enumerated versus retained rights. Laurence
226
Rosenblatt v. Baer, 383 U.S. 75, 92 (1966) (Stewart, J., concurring).
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Claus has suggested that the text points to a “hard” version of
the Ninth Amendment that places identifiable limits on the
exercise of constitutional rights, and a “soft” version that sets
up a “balancing [i]nquiry” between the retained right and the
constitutional right.227 A “hard” Ninth Amendment, which
would prohibit the application of any constitutional right to
invalidate a contrary retained right—at least under a staterights model—essentially amounts to reverse preemption.228
This result seems impractical and inconsistent with the intent of
the Framers. A “soft” Ninth Amendment, however, is far easier
to conceive and apply. In the contest of rights versus rights,
where categorical hierarchy of enumerated rights is barred by
the Ninth Amendment, some other tumbler must be used to sort
the competing interests and determine which right prevails.
This process—comparing the contrary commands given by two
sources of law absent any textual guidance—is remarkably
similar to the exercise undertaken by courts conducting choice of
law inquiries. This article proposes that a relatively modern
choice of law analysis—comparative impairment—supplies a
neat test for prioritizing among competing enumerated and
unenumerated-but-retained rights. Not coincidentally, one
delegate suggested modifying the Ninth Amendment by
replacing the word “disparage” with the word “impair,” which he
claimed was a clearer indication of the Framers’ intent.229
Although the proposal was rejected, it provides some insight into
the underlying concerns of the Framers for purposes of devising
a Ninth Amendment balancing test.
Comparative impairment, a member of the “interest
analysis” family of choice of law systems, proposes that every
law has two effects—one internal and one external. When the
laws of two states conflict, its author suggests, a court should
identify the internal and external effects of the two laws.230
Courts adjudicating a case with multistate elements and
conflicting state laws should choose whichever one will, when
applied, least impair the internal effectiveness of the competing
law. So, for instance, in the classic example given by proponent
William Baxter, State X has a usury statute protecting a
227
Claus, supra note 43, at 618-20.
See, e.g., Calvin Massey, The Anti-Federalist Ninth Amendment and Its
Implications for State Constitutional Law, 1990 WIS. L. REV. 1229, 1232 (1990).
229
Williams, supra note 39, at 517-18.
230
William F. Baxter, Choice of Law and the Federal System, 16 STAN. L. REV.
1, 17-18 (1963).
228
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RESCUING DIGNITARY TORTS
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particular class of borrowers and State Y does not.231 In a case
where a protected X borrower gets a loan from a Y lender, X
law should apply. Why?
[Applying Y law] would give maximum scope to Y’s policies but
would seriously impair those of X. The protection X has afforded its
borrowers probably has several consequences. Local lenders may
make loans to the better risks within the class at the maximum legal
rate, a rate somewhat lower than otherwise would have been
afforded them, rather than forego entirely that segment of business.
But another part of the protected class is denied local loans and
therefore has an incentive to borrow outside the state. If [Y law is
applied], . . . the purpose of the X lawmakers will be substantially
impaired by the emergence of a flock of lenders just across the state
line. . . . [Applying X law] affords maximum implementation of the
policies of both states. . . . [T]he objectives of X, the borrower’s state,
would be shielded from wholesale evasion: the nature of the
transaction assures that prior to extending credit the lender will
discover in most cases the borrower’s residence and in many cases
other characteristics of membership in the protected class [and
would decline the loan application without incurring any injury].232
Importing this “comparative impairment” test to the
Ninth Amendment context would achieve similar results. The
objectives of neither the dignitary torts nor the Speech and Press
Clauses would be categorically wiped out if the Court were to
decide which took priority by examining the relative impairment
on the other and choose the one that worked the lesser
impairment in the particular circumstance.233
231
Id. at 14.
Id. at 14-15.
233
Granted, this approach would not give speakers bright-line guidance in
every case ex ante. However, because the dignitary interests are treated via private,
tort causes of action rather than via criminal statute, the speech at interest is not
categorically prohibited. The speakers would be free to circulate their statements, but
would be at risk of being ordered to internalize via monetary payment the externalities
imposed by their speech if it injured a third party. Absent application of the First
Amendment to this segment of tort law, the speaker and the injured would be in the
same relative position as the rancher and the farmer in Coase’s notorious The Problem
of Social Cost. R.H. Coase, The Problem of Social Cost, reprinted in LAW, ECONOMICS
AND PHILOSOPHY: A CRITICAL INTRODUCTION WITH APPLICATION FOR THE LAW OF TORTS
(Mark Kuperberg & Charles Beitz eds., 1983); see also Justin Desautels-Stein, The
Market as a Legal Concept, 60 BUFF. L. REV. 387, 450-54 (2012). Coase’s Theorem
applies just as well to the speaker-injured scenario as it does to the rancher-farmer: left
to their own devices (assuming the existence of dignitary torts to stand in for physical
vengeance but removing the constitutional insulation from liability for the speaker, a
tenable assumption given that Coase does not see the common law as state action, but
as a predicate for bargaining, whereas application of First Amendment restrictions to
the common law is more akin to state action), the two parties would bargain toward an
economically efficient outcome. In the speech scenario, the likely outcome is the
provision of insurance for speakers whose words might injure. In fact, defamation
insurance existed at the time Sullivan was decided, although the Court did not
232
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For example, in Sullivan, if the Court applied
comparative impairment, it would have found that the internal
effect of Alabama’s defamation law was to protect the
reputations of its citizens from false statements. The external
effect of the state law was to permit heavy damage awards
against publishers, including out-of-state papers such as the
Times, which was considered by many in the state an “outside
agitator.”234 The internal effect of the First Amendment is to
protect speakers from state regulation of their speech. The
external effect of the First Amendment is to permit speech even
when it could harm an individual’s reputation. Applying
Alabama’s defamation law as interpreted by the state court,
rather than applying the First Amendment in the case, would
have achieved the law’s internal goal—protecting the
reputation of Commissioner L.B. Sullivan235—but would have
significantly impaired the right of the New York Times to speak
free from state regulation. In contrast, applying the First
Amendment to protect the Times’ ability to run an
advertisement criticizing government officials fully realizes the
internal goals of the enumerated right. It does not, however,
significantly impair the internal effect of Alabama’s defamation
law. While that law was designed to protect individual
reputations, several of its elements were apparently not satisfied
in the Sullivan case, the jury’s verdict notwithstanding.236 Thus,
a comparative impairment analysis points to a preference for the
enumerated right in this case.
consider whether the market was already providing efficient protection for injurious
speakers. Notably, defamation insurance policies continue to be sold today, primarily to
media companies (although increasingly as riders to homeowner policies for poorly
capitalized bloggers). This dynamic raises the interesting possibility that between the
Constitution and the market, speech is overinsured and thus, speakers are incentivized
to produce more injurious speech. This is a particularly dangerous problem when crossreferenced with the diminishment of the dignitary tort recourse.
234
N.Y. Times Co. v. Sullivan, 376 U.S. 254, 294 (1964).
235
Id. at 256.
236
For example, it is debatable whether Sullivan was actually “identified” in the
advertisement. See, e.g., id. at 288-89 (expressing the Court’s view that the jury erred in
finding that the ad, in which “[t]here was no reference to respondent . . . either by name
or official position” was “of and concerning him” as required by Alabama law). In addition,
the falsehoods in the advertisement were arguably immaterial, including a mistake
regarding the song that activists sang during a university protest and a characterization
of the police as having “rung” the campus when, in fact, they were not standing in an
unbroken ring. See id. at 258-59. Further, a cynic might wonder whether the average
member of the (white) community in Montgomery actually held Sullivan in lower esteem
for taking a hard line against the civil rights activists whose efforts were not supported
by most city residents. The Court suggested as much. See id. at 260.
2012]
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The same comparative impairment analysis yields a
different result in Snyder. There, the internal effect of the
Maryland intentional infliction law was to protect individuals
from emotional anguish inflicted by those who speak abusively
of or disrespect the dead. The external effect of the law is to
extract monetary payment from speakers whose words injure
and thereby potentially chill injurious speech.237 Again, the
internal effect of the First Amendment is to protect speakers
from state regulation of their speech, while the external effect
of the amendment is to permit speech even when it can inflict
emotional anguish. Here, application of the Maryland
intentional infliction law would have achieved its internal
effect by vindicating the plaintiff-father for slurs about his
deceased son that were circulating on the day of his son’s
funeral and in perpetuity thereafter on the Internet. The
external effect of its application would have been to require the
funeral protesters to compensate the father for the injury their
chosen method of protest inflicted. However, barring them ex
ante from protesting as they wished would not be an effect of
applying the Maryland law, so there is little impairment of the
internal effect of the First Amendment. Had they wished to
avoid the ex post compensation ordered by the jury, they could
have vigorously discussed their views on the American military
and homosexuality generally without circulating false and
demeaning information about the plaintiff’s son, a private
individual. In contrast, applying the First Amendment as the
Court did achieved the First Amendment internal effect of
protecting the protesters’ speech, but significantly impaired the
father’s right to be made whole for the injuries the protesters
inflicted. Thus, because application of the First Amendment
more impairs the internal working of the IIED right retained
than application of the right retained impairs the right to
speech, the right retained is preferred under a “comparative
impairment” Ninth Amendment analysis.
One could argue that the Court’s requirement in
Sullivan that public figures prove a speaker’s “actual malice”
before recovering in defamation is sufficient to balance free
speech interests against dignitary tort interests.238 Why, then, is
237
See, e.g., supra notes 30-35 and accompanying text (discussing the speech
at issue in Snyder and the externalities of that speech imposed on the plaintiff-father).
238
Claus, for one, has stated that a “soft” version of the Ninth Amendment
would require, in a defamation case, that “the interest underlying defamation law must
be accorded its appropriate weight.” Claus, supra note 43, at 618-19. In Sullivan, the
Court did not wipe out the Alabama cause of action for defamation altogether, and did
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it inadequate to satisfy the demands of the Ninth Amendment?
Most important, it fails because current speech–tort
jurisprudence is not conducted within an acknowledged Ninth
Amendment framework, meaning that balancing the rights of
the individual and state to legal recourse for dignitary injuries
against the rights of speakers is not a mandatory step in the
analysis. Snyder, in which the Court indicated that it had no
choice but to protect the injurious speech, illustrates the fact
that absent a Ninth Amendment requirement to acknowledge
and balance the “right retained,” the constitutional right can
automatically occupy the field.239 Second, the “actual malice” test
has been so embroidered by corollary principles that it no longer
functions as a neutral test for sifting through the facts and
interests represented by a particular case.240 Finally, because tort
suits are brought by individual plaintiffs, and because the actual
malice test inquires only into the status of the plaintiff and the
actions of the defendant, the interests of the state in permitting
common-law recovery for dignitary torts are not fully accounted
for.241 The Ninth Amendment mandates a mechanism by which
dignitary rights are weighed in such cases, and “actual malice”
in its existing incarnation fails because it is optional and
arguably constitutionalizes an undervaluation of the dignitary
interests. Comparative impairment, in contrast, would be a
mandatory test compelled by the Ninth Amendment rule of
construction when enumerated rights clash with unenumeratedbut-retained rights. In addition, it requires articulation of the
intended effects of the dignitary and speech laws and calculation
not wipe out the New York Times’ speech rights altogether. Instead, it “narrowed
the . . . reach of state defamation law” and employed a “limiting construction of the
constitutional right to freedom of speech” by permitting private individuals to sue for
defamation without the application of First Amendment guard rails, and permitting
public figures to recover only in limited circumstances where the speaker had abused
its free speech rights by knowingly or recklessly publishing untruths that blemished
reputation. Id. One could interpret this as a “soft” test under which the interests
served by Alabama defamation law were considered and assigned an “optimal” weight
in relation to the speech rights involved.
239
See supra note 32 and accompanying text; see also Snyder v. Phelps, 131 S.
Ct. 1207, 1219-20 (2011).
240
In particular, constitutional rules that carve wide latitude for speech about
“public figures” who have no influence on public affairs but are merely of some interest
to the public, allowing “rhetorical hyperbole,” permitting deliberate non-material
misquotation, shifting the burden of proof on key issues from the defendant to the
plaintiff, taking consideration of key elements from the jury and imposing a standard
of de novo rather than clearly erroneous review on appeal leave virtually no room to
consider the dignitary rights of the plaintiff or the state’s interest in allowing peaceful
recourse for dignitary injuries. See Anderson, supra note 21, at 787.
241
See id. at 771-74.
2012]
RESCUING DIGNITARY TORTS
121
of the impairment that would result for each if the others were
applied. This is a methodical approach that guarantees some
valuation of dignitary interests regardless of where the speech–
dignity line is ultimately drawn in a particular case.
CONCLUSION
Current
First Amendment theory consistently
undervalues the role of the dignitary torts.242 If the Constitution
incorporates a preference for speech over the right to protect
dignitary interest, it compels this result. But if dignitary
interests have some constitutional parity with speech rights,
speech will not always automatically trump dignity. This
article suggests that under the “right-versus-right” rule of
construction theory of the Ninth Amendment, dignitary rights
are protected from the diminishment that necessarily follows
from an expansive reading of the First Amendment. Freed from
constitutional compulsion to shrink dignitary torts, courts may
take into account the social value of those torts and reassert
them accordingly within the constitutional scheme.
Tort law serves a crucial social goal. First and foremost,
it offers a peaceful means of resolving private disputes. Human
nature responds to perceived wrongs with vengeance. “Tort law
promotes the law’s civilizing function.”243 Thus, “an imbalance
[between tort law and speech law] could lead to . . . extralegal
and socially dangerous self-help.”244 Indeed, news accounts
suggest that those who are hamstrung in asserting their
dignity interests against speech, particularly children and
teens, may resort to self-help in the form of suicide or
interpersonal violence.245
242
Not coincidentally, perhaps, this erosion has coincided with what some
torts advocates describe as a certain scholarly contempt for the entire field of tort law.
“Torts seems often to be conceived as a course that teaches students how common law
allocates the costs of accidents,” and as a result, is viewed as “ad hoc and esoteric.”
Goldberg & Zipursky, supra note 2, at 918.
243
Deana Pollard Sacks, Snyder v. Phelps, The Supreme Court’s Speech-Tort
Jurisprudence, and Normative Considerations, 120 YALE L.J. ONLINE 193, 199 (2010)
(internal quotation marks omitted).
244
Id. at 194.
245
See, e.g., Robert D. Richards, Sex, Lies and the Internet: Balancing First
Amendment Interests, Reputational Harm, and Privacy in the Age of Blogs and Social
Networking Sites, 8 FIRST AMEND. L. REV. 176, 179-80 (2009) (documenting instances
in which the inability to assert reputational interests in the face of demeaning speech
led to self-help); see also A.G. Sulzberger, In Small Towns, Gossip Moves to Web, and
Turns Vicious, N.Y. TIMES, Sept. 20, 2011, at A1 (reporting that comments on Topix
news sites in rural areas had “provoked fights and caused divorces”). In many of these
high-profile cases, the injured could not assert dignity rights against the speaker
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These insights apply with unique force in the subset of
torts that compensate for lost dignity, honor, reputation, or
well-being. Unlike other torts, where loss allocation is arguably
the foremost goal, a money verdict is often more symbolic than
compensatory in the dignitary torts.246 The mere fact of a verdict
in the plaintiff’s favor, regardless of the dollar amount, can serve
to restore the plaintiff and the defendant to the equal status
they occupied prior to the dignity-injuring speech, thus valuing
both speech and the interests it can harm.247 To the extent that
American society values lower rates of interpersonal violence,
courts and policymakers should reevaluate a constitutional
scheme that has over the past decades significantly undermined
the availability of the dignitary torts to peacefully vindicate
these interests.
because the speaker was anonymous. However, the impulse to self-help arguably arises
regardless of the reason the injured is thwarted in a quest for vindication, whether it
be inability to identify him or a legal doctrine that tells him his well-being is less
important than the speech that harmed him. See PINKER, supra note 13, at 99
(explaining that “retaliation after an insult” is one of the triggers for violence that
leads to homicide).
246
See, e.g., Walter V. Schaefer, Defamation and the First Amendment, 52 U.
COLO. L. REV. 1, 15 (1980) (“[C]oncentration upon a money judgment as the appropriate
remedy for defamation is a defect that has plagued the common law since it first
undertook to substitute a legal remedy for private vengeance.”); see also THE COST OF
LIBEL, supra note 18, at 25 (documenting that a substantial number of plaintiffs would
have forgone tort suits if they had been offered an apology for the complained-of speech).
247
See, e.g., Solomon, supra note 2, at 1784 n.105 (outlining theories that tort
law establishes expectations that injurer and injured are equals).
NOTES
Giving Battered Immigrant Fiancées a
Way Out of Abusive Relationships
PROPOSED AMENDMENTS TO THE IMMIGRATION
AND NATIONALITY ACT
INTRODUCTION
Ayana is an Ethiopian woman who fell in love with Jason,
a United States Citizen (USC) from New York City.1 They met at
the hotel where Ayana worked while Jason was vacationing in
Addis Ababa. During their courtship, which lasted several years,
Ayana bore three children over the course of Jason’s many visits
to her country. In 2010, Jason filed a petition for a K Visa, which
allowed Ayana, along with her children, to leave her home in
Ethiopia and move to the United States as Jason’s fiancée.2 In
order to obtain the visa, Ayana and Jason were required to show
1
This is a hypothetical real-world situation, using pseudonyms, which
reflects the facts of real clients’ stories from my work as an Edward V. Sparer Public
Interest Law Fellow at African Services Committee in New York City during the
summer of 2011.
2
The K-1 Visa allows a foreign fiancée to immigrate to the United States in
order to marry her intended USC spouse. The K-2 Visa is granted to derivative
beneficiaries, such as Ayana’s children, who move with the K-1 Visa holder as intended
immigrants. SARAH IGNATIUS & ELISABETH S. STICKNEY, NAT’L LAWYERS GUILD,
IMMIGRATION LAW AND THE FAMILY § 8:26 (2011); see also id. § 9:54 n.3 (“The visa itself
is known as the K visa. The principal receives a K-1 visa; derivative beneficiaries
receive K-2 visas.”). This note will refer generally to the principal K-1 Visa beneficiary,
like Ayana, as a “K Visa holder.”
A K Visa holder can be a man (fiancé) or a woman (fiancée) who is engaged
to be married. Fiancé Definition, MERRIAM-WEBSTER.COM, http://www.merriamwebster.com/dictionary/fiance (last visited Sept. 26, 2012); Fiancée Definition,
MERRIAM-WEBSTER.COM, http://www.merriam-webster.com/dictionary/fiancee (last
visited Sept. 26, 2012). I will generally use the feminine term fiancée to refer to abused
K Visa holders, since the majority of them are women. However, when a specific usage
is pertinent for illustrative purposes, I will use one term or the other (e.g. Ayana’s
fiancé, Jason vs. Jason’s fiancée, Ayana).
123
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evidence of their relationship, as well as their intent to marry
within ninety days of Ayana’s arrival in the United States.3
Unfortunately, shortly after she moved into Jason’s
apartment in New York City, Ayana was surprised to find that
Jason was not the man she had fallen in love with. He started
abusing Ayana and using drugs in front of their children, he
strictly controlled the family’s finances, and he even threatened
to have her deported if she did not obey him. Since Ayana
spoke almost no English, was unfamiliar with her new
surroundings, and had very little money of her own, she felt
isolated and completely dependent upon Jason. Moreover,
because she feared deportation, she was reluctant to contact
the police to report the violence that Jason used to control her.
Although unfamiliar with the intricacies of U.S.
immigration law, Ayana knew that she would risk overstaying
her visa if she failed to marry Jason within the K Visa’s ninetyday window. She was aware that, ultimately, refusing to marry
Jason would result in forfeiting her right to apply for
permanent residency in the United States as an immediate
relative of a USC.4 However, Ayana knew that staying in this
abusive relationship would be unhealthy for her and her
children, so she made the brave decision to leave Jason and
seek refuge in a domestic violence shelter. Once there, she was
able to find legal assistance with the child custody proceedings
Jason had initiated against her, in which he raised Ayana’s
lack of valid immigration status as a reason to grant him
custody of the children.5 Yet despite the legal support Ayana
3
See infra notes 27-33, describing the evidentiary requirements of the K Visa.
A K-1 Visa holder is only eligible to adjust to conditional permanent resident
status on the basis of marriage to the USC who petitioned for the K Visa. IGNATIUS &
STICKNEY, supra note 2, § 8:26; see also Markovski v. Gonzales, 486 F.3d 108, 111 (4th
Cir. 2007) (“[T]he language of the statute itself is not ambiguous and bars beneficiaries of
the K-1 Visa from adjusting status on any basis other than marriage to the petition
sponsor.”); Kalal v. Gonzales, 402 F.3d 948, 949 (9th Cir. 2005) (“A K-1 Visa is issued for
the sole purpose of facilitating a valid marriage between an alien and a [USC], and that
marriage must take place within ninety days of entry.” (citing 8 U.S.C.A.
§§ 1101(a)(15)(K)(i), 1184(d)(1) (West 2012))).
5
This should serve as an illustration of how an abusive USC partner might
use the abused immigrant’s status as a tool to exert control over her. “An abusive
husband may easily use his spouse’s immigration status, or lack thereof, as a means of
control and repression.” Katerina Shaw, Note, Barriers to Freedom: Continued Failure
of U.S. Immigration Laws to Offer Equal Protection to Immigrant Battered Women, 15
CARDOZO J.L. & GENDER 663, 665 (2009). This “means of control” can be even more
severe when it concerns an abused immigrant fiancée who has not yet married her
abusive partner. But even for those like Ayana in child custody proceedings, the
relevance of her immigration status may be left to the discretion of the Family Court
under the “best interests of the child” standard, and Ayana may nevertheless be given
full custody of the children if she is deemed the more suitable parent despite her lack of
4
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IMPROVEMENTS FOR IMMIGRANT FIANCÉES
125
received, she had few options, if any, to adjust her immigration
status; by not marrying Jason, she had relinquished the legal
basis to adjust her immigration status to conditional permanent
residency.6 This example illustrates an all-too-frequent
conundrum that beleaguers K Visa holders who are abused by
their intended spouses.7 Although Congress has enacted
numerous measures intended to protect battered immigrants,8
such measures have focused on battered immigrant spouses of
USCs or lawful permanent residents (LPRs), whereas abused
immigrant fiancées have been left out in the cold.
For example, the Violence Against Women Act of 1994
(VAWA) was intended to “permit[] battered immigrant women to
leave their batterers without fearing deportation.”9 Among other
protections, VAWA created—by amending the Immigration and
Nationality Act (INA)10—what is known as the “VAWA selfpetition,” which allows abused spouses of USCs and LPRs to file
for adjustment of immigration status—to that of permanent
residency—on their own behalf, rather than relying on their
abusive spouses to sponsor their applications for adjustment of
status.11 Unfortunately, VAWA’s self-petition provision does not
permit abused women who travel to the United States on fiancée
visas to file self-petitions unless they have married their
intended spouses, since marriage is the basis for adjustment of
status.12 Instead, their options are limited: (1) return to their
home countries;13 (2) remain in the United States illegally; (3)
valid immigration status. Although she could win the child custody battle, she would
still lack legal status and would remain subject to deportation.
6
See supra note 4.
7
Although, presumably, immigrant men as well as women may be abused
by their partners, for the purposes of this note, and for editorial ease, it will be
assumed that the hypothetical abused partner is a woman. “Approximately 95% of all
domestic violence victims are women.” Timm v. Delong, 59 F. Supp. 2d 944, 951 (D.
Neb. 1998) (quoting H.R. REP. NO. 103-395, at 26 (1993)). “Unlike most violence against
men, most violence against women takes place within family or intimate relationships.”
Sally F. Goldfarb, The Supreme Court, The Violence Against Women Act, and the Use
and Abuse of Federalism, 71 FORDHAM L. REV. 57, 106 n.309 (2002). Perhaps this
underscores a need to address the plight of abused immigrant men, who may be
overlooked. Nevertheless, the focus of this note is on abused immigrant K Visa holders,
most of whom are women.
8
See, e.g., discussion infra Part II.
9
Hernandez v. Ashcroft, 345 F.3d 824, 841 (9th Cir. 2003) (alteration in
original) (citing H.R. REP. NO. 103-395, at 25 (1993)) (internal quotation marks omitted).
10
See 8 U.S.C.A. § 1101 (West 2012).
11
8 U.S.C.A. § 1154(a)(1)(A)(v)(I)(cc) (West 2011).
12
See supra note 4.
13
This option may be very dangerous for some women, because of the lack of
domestic violence law enforcement in other countries, for example, as discussed infra
notes 42-48 and accompanying text.
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proceed with the marriage to an abusive partner; or (4) seek
some other less desirable and more arduous avenue to legal
immigration status, such as a U Visa or T Visa.14 If the K Visa
holder does not marry her abusive fiancé during the K Visa’s
ninety-day window—and instead leaves him to escape the
abuse—a devastating cascade of events will ensue: her visa will
expire, she will no longer possess legal immigration status, and
she will be precluded from self-petitioning under VAWA.15 Worst
of all, she will be subject to removal from the United States.16
The exclusion of abused fiancées from VAWA selfpetitions, and the lack of adequate immigration relief
alternatives, creates a perverse incentive for battered women to
remain with their batterers in order to receive immigration
benefits.17 This is the same incentive that the VAWA selfpetition was designed to eliminate among vulnerable immigrant
populations; in particular, the self-petition was intended to
empower women to extricate themselves from abusive
relationships without fearing a violation of immigration law. As
noted by the U.S. Court of Appeals for the Ninth Circuit:
Congress’s goal in enacting VAWA was to eliminate barriers to
women leaving abusive relationships. . . . The notion that Congress
would require women to remain with their batterers in order to be
eligible for the forms of relief established in VAWA is flatly contrary
14
Both of these types of visas, as well as other types of immigration relief,
and their drawbacks for K Visa holders, are discussed infra at Part III. These other
avenues to relief are less desirable in comparison to the self-petition because they do
not provide immediate adjustment of status to lawful permanent residence. In
addition, their evidentiary requirements may make these forms of relief more arduous
to obtain, as discussed infra at Parts III.B and III.C.
15
8 U.S.C.A. §§ 1154, 1255(d); see also Markovski v. Gonzales, 486 F.3d 108,
110 (4th Cir. 2007) (“On its face, subsection (d) [of § 1255 of the Immigration and
Nationality Act (INA)] prohibits an alien who arrived on the K-1 fiancé visa from
adjusting his status on any basis whatever save for the marriage to the K-1 visa
sponsor.”); AUSTIN T. FRAGOMEN, JR. ET AL., IMMIGRATION PROCEDURES HANDBOOK
§ 20:5 (2012).
16
See, e.g., Kalal v. Gonzales, 402 F.3d 948 (9th Cir. 2005) (denying petition
for review of Board of Immigration Appeals’ decision that summarily affirmed an
immigration judge’s removal order, where alien failed to marry her petitioning USC
fiancé and instead married another after the ninety-day marriage period had lapsed).
17
The benefits that may be available to fiancées who marry their abusers
and subsequently file self-petitions include eligibility to adjust status to become an
LPR, to be authorized to work, and to receive certain public assistance. See IGNATIUS &
STICKNEY, supra note 2, §§ 8:24, 8:42; U.S. Dep’t of Health & Human Servs., Domestic
Violence Fact Sheet: Access to HHS-Funded Services for Immigrant Survivors of
Domestic Violence, HHS.GOV, http://www.hhs.gov/ocr/civilrights/resources/specialtopics/
origin/domesticviolencefactsheet.html (last updated Aug. 22, 2012).
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IMPROVEMENTS FOR IMMIGRANT FIANCÉES
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to Congress’s articulated purpose in enacting [the cancellation of
removal provision].18
Few would doubt that protecting abused immigrant
fiancées—some of the most vulnerable members of our society—
is a noble cause, yet even a modest proposal for immigration
reform is naturally met by some resistance. Foremost among
concerns is that offering new forms of immigration relief to K
Visa holders could increase opportunities for fraud, both by
those initially applying for K Visas—who may lack genuine
intent to marry their USC petitioners—and by those claiming
abuse once they arrive in the United States.19 However,
instances of such fraud are rare,20 and moreover, current
evidentiary requirements in the K Visa application and VAWA
self-petition process provide ample deterrents to combat fraud.21
Most importantly, the need to protect abused K Visa holders,
who are currently relegated to a state of legal limbo, is profound
enough to warrant added protections.22
This note, for the first time in the academic literature,
examines the failure of U.S. immigration laws to adequately
protect battered immigrant fiancées and proposes legal
amendments to ameliorate this problem. Part I describes the
fiancée visa (K Visa) process and highlights the unique position
in which abused immigrant fiancées find themselves in relation
to U.S. immigration law. Part II provides a historical overview of
the VAWA self-petition and related provisions in U.S.
immigration law that were devised to protect battered
immigrants. Part III outlines potential relief currently available
to abused K Visa holders and addresses the inadequacies of
18
Hernandez v. Ashcroft, 345 F.3d 824, 841 (2003). The court referred to
section 244(a)(3) of the INA, which details the procedures for “suspension of
deportation,” now known as “cancellation of removal.” See 8 U.S.C.A. § 1229(b) (West
2008); see also NAT’L IMMIGRATION PROJECT OF THE NAT’L LAWYERS GUILD, 1
IMMIGRATION LAW & DEFENSE § 8:17 (2012) [hereinafter 1 IMMIGR. L. & DEF.]
(discussing “cancellation of removal for certain nonpermanent residents”).
19
See, e.g., Battered Immigrant Women Protection Act of 1999: Hearing on
H.R. 3083 Before the Subcomm. on Immigration and Claims of the H. Comm. on the
Judiciary, 106th Cong. (2000) [hereinafter H.R. 3083 Hearing], available at
http://commdocs.house.gov/committees/judiciary/hju66253.000/hju66253_0f.htm; infra
Part IV.A. Additional concerns include the increased number of immigrants who may
benefit from expanding protections, as well as the fact that providing additional relief
to K Visa holders would treat them more like married self-petitioners than temporary
nonimmigrants. See H.R. 3083 Hearing, supra, at 36, 39.
20
See, e.g., James A. Jones, Comment, The Immigration Marriage Fraud
Amendments: Sham Marriages or Sham Legislation?, 24 FLA. ST. U. L. REV. 679, 698700 (1997); see also infra notes 189-91 and accompanying text.
21
See infra Part IV.A.
22
For a more thorough discussion of counter-arguments, see infra notes 184-95.
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those remedies. Finally, Part IV offers practical solutions to the
troubling legal position of abused immigrant fiancées like
Ayana. Ultimately, this note argues that Congress should
amend the INA to allow abused immigrant fiancées to file selfpetitions for adjustment of immigration status, or alternatively,
that certain requirements of the U Visa23 should be relaxed in
order to allow abused fiancées to safely and effectively seek
lawful adjustment of their immigration status.
I.
THE K VISA PROCESS AND THE UNIQUE POSITION OF K
VISA HOLDERS IN RELATION TO U.S. IMMIGRATION LAW
Before coming to the United States, Ayana, like other K
Visa holders, was in a unique position in relation to U.S.
immigration law because she planned to immigrate to the United
States but was not yet eligible to do so, since the basis for
permanent residency—her marriage to Jason—had yet to take
place.24 Moreover, Ayana was “technically ineligible to enter . . . on
a temporary nonimmigrant visa” because of her intent to become a
permanent resident.25 The K Visa solves this problem by granting
fiancées “a nonimmigrant visa which recognizes the beneficiary’s
intent to immigrate based on her planned marriage.”26
However, obtaining a K Visa is no simple task. First,
the K Visa applicant (i.e., the prospective immigrant) must be
engaged to a USC who files a petition form I-129F for her visa
application.27 After the petition is approved, U.S. Citizenship
and Immigration Services (USCIS)28 will conduct a background
23
The U Visa is available to immigrant victims of certain qualifying crimes
who are, have been, or are likely to be helpful in the investigation or prosecution of those
crimes. 8 U.S.C. § 1101(a)(15)(U)(i) (2006). In particular, this note will argue that the
“law enforcement certification” requirement—which is difficult for many abused fiancées
to satisfy—should be lifted for K Visa holders. See infra Parts III.B and IV.B.
24
IGNATIUS & STICKNEY, supra note 2, § 14:5.
25
Id.
26
Id.; see also 3A AM. JUR. 2D Aliens and Citizens § 912 (2012).
A K-1 visa holder is not an immigrant, but rather, as relevant here, is a
person who “is the fiancee or fiance of a citizen of the United States and who
seeks to enter the United States solely to conclude a valid marriage with the
petitioner within ninety days after admission.”
Kalal v. Gonzales, 402 F.3d 948, 950 (9th Cir. 2005) (quoting 8 U.S.C. § 1101(a)(15)(K)(i)).
27
Only USCs, not LPRs, are eligible to petition for their immigrant fiancées to
receive K Visas. IGNATIUS & STICKNEY, supra note 2, § 14:7; see also 22 C.F.R. § 41.81
(2006). For more detailed information on the K Visa process and required forms, see U.S.
Citizenship & Immigration Servs., I-129F, Petition for Alien Fiancé(e), USCIS.GOV,
www.uscis.gov/i-129f (last updated July 25, 2012).
28
USCIS is the office within the U.S. Department of Homeland Security
(DHS) which “oversees lawful immigration to the United States.” About Us,
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IMPROVEMENTS FOR IMMIGRANT FIANCÉES
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check of the petitioner and forward the application to the
consulate in the applicant’s country.29 There, the K Visa
applicant must apply for the visa and submit to an interview
with a consular official, where she must provide a sworn
statement that she intends to marry her USC petitioner fiancé
within ninety days of her admission into the United States.30
An applicant will be denied a K Visa “unless there is
satisfactory evidence that the parties ‘have a bona fide
intention to marry, and are legally able and actually willing to
conclude a valid marriage in the United States within a period
of ninety days after the alien’s arrival.’”31
To adequately demonstrate their mutual intent to marry,
the couple must show that they have met within the two years
before the petition was filed.32 To this end, the couple may provide
evidence such as “affidavits, trip itineraries, plane ticket stubs,
letters, phone bills, photographs taken of the couple together,
and any other evidence which would corroborate the personal
meeting.”33 The K Visa expires ninety days after the fiancée’s
admission into the United States, under the expectation that the
immigrant fiancée will marry the USC petitioner within that
period of time.34 Once the fiancée marries the petitioner, and
prior to their second anniversary, she can apply to adjust her
immigration status to conditional permanent residency.35 If,
USCIS.GOV, http://www.uscis.gov/aboutus (last updated Sept. 12, 2009); see also
Department Components, DHS.GOV, http://www.dhs.gov/department-components (last
visited Sept. 23, 2012); U.S. Dep’t of Homeland Sec. Organizational Chart, DHS.GOV,
http://www.dhs.gov/xlibrary/assets/dhs-orgchart.pdf (last visited Sept. 23, 2012). DHS
subsumed the Immigration and Naturalization Service (INS) in 2003, after passage of
the Homeland Security Act of 2002, whereby USCIS assumed the immigration services
(i.e. visa adjudication) functions of INS. Patricia Medige, Immigration Issues in a
Security-Minded America, COLO. LAW., Mar. 2004, at 11-13 (U.S. Customs and Border
Patrol (CBP) and Immigration Customs and Enforcement (ICE) assumed the
inspection and enforcement functions of INS, respectively.); Who Joined DHS,
DHS.GOV, http://www.dhs.gov/who-joined-dhs (last visited Sept. 25, 2012).
29
IGNATIUS & STICKNEY, supra note 2, § 14:7.
30
22 C.F.R. § 41.81(a)(2); IGNATIUS & STICKNEY, supra note 2, § 14:7.
31
Kalal, 402 F.3d at 950 (quoting 8 U.S.C. § 1184(d)).
32
IGNATIUS & STICKNEY, supra note 2, § 14:6. However, this requirement
may be waived “only if it is established that compliance would result in extreme
hardship to the petitioner or that compliance would violate strict and long-established
customs of the K-1 beneficiary’s foreign culture . . . .” 8 C.F.R. § 214.2(k) (2011).
33
IGNATIUS & STICKNEY, supra note 2, § 14:6.
34
Id. § 14:7.
35
Id. § 14:9. Although the INS proposed a regulation that would prohibit
adjustment to conditional residency status after a marriage exceeds two years, it is
currently unclear whether the fiancée may adjust after the two-year anniversary.
Id. § 14:9 n.3. But once conditional permanent residence is granted, the K Visa
applicant and her spouse must file a Form I-751 to remove the conditional status of
permanent residency within ninety days prior to the two year anniversary of the award
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however, they fail to marry during the ninety-day period, she will
be prevented from adjusting her immigration status36 and will
ultimately risk removal from the United States.37
These requirements present a special problem for K
Visa holders who find themselves in abusive relationships
before marrying their USC petitioners.38 If the relationship
becomes abusive during the ninety-day window and before the
marriage occurs, the immigrant fiancée will find herself in
quite a predicament: if she decides not to marry her fiancé, she
will be unable to obtain the immigration benefits of marriage
and she will either become an out-of-status alien,39 be required
to return home, or be forced to seek another form of
immigration relief. On the other hand, she may be inclined to
stay with her abusive fiancé in order to avail herself of the
of conditional permanent resident status, and failure to timely do so without good
cause will result in termination of such status and the initiation of removal
proceedings. 8 C.F.R. § 216.4(a)(1), (a)(6) (2009). If all goes as planned, however, a K
Visa applicant will eventually be able to adjust her status to lawful permanent
residence and become a naturalized citizen, provided she is otherwise admissible
pursuant to the INA.
36
8 U.S.C.A. § 1255(d) (West 2011); IGNATIUS & STICKNEY, supra note 2,
§ 14:5. But “[u]nder VAWA 2005, a K visa holder can change status to that of a T or UVisa.” Id. For a discussion of these remedies and why they are currently inadequate to
protect abused immigrant fiancées in all cases, see infra Part III.
37
IGNATIUS & STICKNEY, supra note 2, § 14:7 n.23. “If she does not marry
within that time, the beneficiary fiancé(e) becomes removable.” Id.
38
As in the case of “mail order brides,” where “it is not uncommon, after the
fiancée has arrived on her K Visa and married the petitioning U.S. citizen, for the
relationship to become an abusive one,” id. § 14:16, abuse does arise prior to marriages
for some K Visa holders. Often this relationship will develop in person when the USC is
courting the alien fiancée while abroad, rather than in a “mail order bride” scenario. In
these situations, it is also not uncommon for “sex tourists” to court women and then
become abusive and domineering once they bring the women to the United States. The
USC may abuse the fiancée and then refuse to marry her, thereby using the K Visa
holder’s resulting lack of immigration status as a means of holding power over her. E-mail
and Telephone Interview with Andrea Panjwani, Supervising Attorney, African Servs.
Comm. (Aug. 26, 2011) [hereinafter Panjwani Interview] (on file with author).
Additionally, although the International Marriage Broker Regulation Act
of 2005 (IMBRA) addressed some problems in the “mail order bride” industry—
including limiting the number of K Visa petitions that may be filed by the same USC
and creating a database to track repeat K Visa petitioners—IMBRA does not fully
address the problems that face K Visa beneficiaries who enter their engagements
through ordinary (in-person courtship) methods, but then find themselves in abusive
relationships. See Christina Del Vecchio, Note, Match-Made in Cyberspace: How Best to
Regulate the International Mail-Order Bride Industry, 46 COLUM. J. TRANSNAT’L L.
177, 200-01 (2007).
39
The term “out of status” means that she will no longer have valid
immigration status and will be considered undocumented. See Out of Status Definition,
Glossary of Visa Terms, U.S. DEP’T OF STATE, http://travel.state.gov/visa/frvi/
glossary/glossary_1363.html (last visited Sept. 25, 2012).
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IMPROVEMENTS FOR IMMIGRANT FIANCÉES
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VAWA self-petition after the marriage is concluded.40 Given
that the self-petition was specifically designed to remove
abused immigrant spouses’ incentive to remain with their
abusive spouses solely in order to obtain immigration benefits,
the strict requirements of the K Visa—absent a safety valve
similar to the VAWA self-petition—have produced a
counterintuitive result.41 An immigrant fiancée should not be
encouraged by the immigration laws to proceed with a
marriage to an abusive partner. Yet that is exactly the
situation women like Ayana are facing.
Some may argue that Ayana—or any abused K Visa
holder—can simply return to her country of origin since she did
not marry her fiancé within requisite ninety days. However,
returning home could be dangerous for several reasons.42 For
example, if an abused K Visa holder is deported, she would be
more vulnerable to future violence at the hands of her abusive
partner, who could follow her and take advantage of the
paucity of legal protections and remedies available to domestic
violence victims in her home country.43 This is why some
scholars have noted that immigration policy should not be
based upon “the erroneous belief that deportation [will] bring
an end to the domestic violence.”44 Additionally, many women
“face severe social stigma if they [are] forced to return to their
countries of origin after divorcing or separating from their
husbands.”45 In some situations, such women may be forced to
endure “political persecution, war, torture, jail, extreme
poverty, disease, entrenched gender discrimination, or death.”46
40
This scenario assumes an element of shrewdness on the part of the
immigrant fiancée, or could arise in a case where the fiancée encounters a lawyer or an
acquaintance who gives her advice about her immigration options.
41
See supra notes 9, 17-18, and accompanying text.
42
Aside from being risky, returning home can also be problematic if the
abused immigrant has had children with the USC and if she is deemed the more
suitable parent, which is likely to be the case if her fiancé is abusive, as seen in
Ayana’s custody battle. See supra note 5 and accompanying text. Indeed, it may be
against public policy to remove an abused K Visa holder from the United States if it
would result in “constructive deportation” of a USC child. See generally Jessie M.
Mahr, Note, Protecting Our Vulnerable Citizens: Birthright Citizenship and the Call for
Recognition of Constructive Deportation, 32 S. ILL. U. L.J. 723 (2008) (arguing that
“constructive deportation” of USC children should be acknowledged, despite courts’
reluctance to do so, because, they reason, an alien parent who is ordered deported may
simply leave a USC child—who has a right to remain in the United States—behind).
43
Leslye E. Orloff & Janice V. Kaguyutan, Offering a Helping Hand: Legal
Protections for Battered Immigrant Women: A History of Legislative Responses, 10 AM.
U. J. GENDER SOC. POL’Y & L. 95, 104, 133 (2001).
44
Id. at 104.
45
Id. at 135.
46
Id. at 136.
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It is not difficult to understand why a battered immigrant who
returned home because she refused to proceed with the
marriage would be similarly stigmatized.47 This danger is
magnified in certain countries from which fiancées emigrate,
where cultures may view a woman as married once she leaves
the country to live with her husband-to-be.48
Nor should it be overlooked that the deportation of abused
K Visa holders may result in a “chilling effect on other immigrant
victims of domestic violence, making them reluctant to seek any
help from the justice system.”49 It would be just as troubling if the
law coerced future K Visa holders to endure abuse and marry
their abusers in order to avoid deportation and avail themselves
of other immigration benefits, such as the VAWA self-petition.
Regrettably, however, the promise of VAWA—to allow immigrant
women who suffer domestic violence to free themselves from their
abusers without fearing legal penalties—is still inaccessible to
Ayana and many other battered K Visa holders.
II.
HISTORY OF U.S. PROTECTIONS FOR BATTERED
IMMIGRANT WOMEN
U.S. immigration policy has been revised to protect
battered immigrants numerous times since the early 1900s, yet
abused immigrant fiancées have often been excluded.50 The
prevalence of domestic violence in the United States,
particularly violence that affects immigrant women, sheds some
light on the dire need for such protections. When VAWA was
first under consideration in 1993, congressional findings
indicated that “in 1991 at least 21,000 domestic crimes against
women were reported to police every week,” and that in addition
to this astonishing rate, “domestic violence crimes [were] vastly
under reported.”51 A 2000 study estimated that during their
lives, nearly one-third of women in the United States suffer
physical abuse by their husbands or other males they live
47
For an example, see N. v. Sweden, App. no. 23505/09, HUDOC (July 20,
2010), available at http://hudoc.echr.coe.int/sites/eng/pages/search.aspx?i=001-99992
(Eur. Ct. H.R.), discussed infra notes 175-78 and accompanying text.
48
See infra note 175 and accompanying text.
49
Orloff & Kaguyutan, supra note 43, at 104.
50
See, e.g., infra note 184 and accompanying text (discussing the proposed
amendment to the Battered Immigrant Women Protection Act of 1999, H.R. 3083,
which would have permitted abused K Visa holders to file VAWA self-petitions).
51
Orloff & Kaguyutan, supra note 43, at 109.
2012]
IMPROVEMENTS FOR IMMIGRANT FIANCÉES
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with.52 At that time, it was also estimated that “approximately
4.8 million intimate partner rapes and physical assaults [were]
perpetrated against women annually.”53 Although the “annual
incidence of domestic violence has decreased by 53 percent”
since the passage of VAWA in 1994, “domestic and sexual
violence remain a significant and widespread problem.”54 A
more recent survey in 2010 indicated that more than one-third
of women and one-quarter of men “in the United States have
experienced rape, physical violence, and/or stalking by an
intimate partner in their lifetime.”55 Today, virtually onequarter of women in the United States “report experiencing
severe physical violence by an intimate partner . . . .”56 Not
surprisingly, in light of these statistics, U.S. Surgeons General
have underscored domestic violence as the most significant
threat to women’s health in the United States.57
Because of their unique position as dependents of their
abusers for legal immigration status, many immigrant women
comprise an especially at-risk segment of society.58 For example,
one study of female Latina and Filipina immigrants found that
48 percent of those surveyed reported an increase in domestic
violence after they arrived in the United States.59 Additionally,
in a separate study, 9 percent of the female respondents said
that the abuse did not start until after they had immigrated.60 A
full quarter of those respondents said that they decided not to
leave their abusive partners because of their immigration status
and fears of deportation.61 Another study, conducted by the
National Institute of Justice, showed that 65 percent of the
52
Id.; see also FAMILY VIOLENCE PREVENTION FUND, INTIMATE PARTNER
VIOLENCE IN IMMIGRANT AND REFUGEE COMMUNITIES 10 (2009).
53
Orloff & Kaguyutan, supra note 43, at 97.
54
S. REP. NO. 112-153, at 2 (2012).
55
MICHELE C. BLACK ET AL., NAT’L CTR. FOR INJURY PREVENTION & CONTROL,
NATIONAL INTIMATE PARTNER AND SEXUAL VIOLENCE SURVEY: 2010 SUMMARY REPORT
2 (2011).
56
S. REP. NO. 112-153, at 3 (emphasis added).
57
Orloff & Kaguyutan, supra note 43, at 109 (citing S. REP. NO. 103-138, at
41-42 (1993)).
58
Shaw, supra note 5, at 665 (citing Giselle Aguilar Hass et al., Battered
Immigrant and U.S. Citizen Spouses, LEGAL MOMENTUM, Apr. 24, 2006, at 2-3, available
at http://www.legalmomentum.org/assets/pdfs/wwwbatteredimmsanduscspouses.pdf); see
also FAMILY VIOLENCE PREVENTION FUND, supra note 52, at 12.
59
Shaw, supra note 5, at 665 (citing Mary Ann Dutton et al., Characteristics
of Help-Seeking Behaviors, Resources and Service Needs of Battered Immigrant
Latinas: Legal and Policy Implications, 7 GEO. J. POVERTY L. & POL’Y 245, 250 (2000)).
60
Hass et al., supra note 58, at 3 (discussing a survey conducted by AYUDA
in the District of Columbia).
61
Id.
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women surveyed said that their abusers threatened them with
deportation following their arrival to the United States.62
Troubling congressional findings that preceded the
passage of VAWA in 1994 indicated that “[d]omestic battery
problems can become terribly exacerbated in marriages where
one spouse is not a citizen, and the non-citizen[’]s legal status
depends on his or her marriage to the abuser.”63 At the time, the
House Report also stressed that “[c]urrent law fosters domestic
violence in such situations by placing full and complete control of
the alien spouse’s ability to gain permanent legal status in the
hands of the citizen.”64 While USC and LPR spouses are no longer
given “full and complete control” over their spouses’ immigration
status because of the VAWA self-petition, current law still
affords abusive USCs a great deal of control over their immigrant
fiancées’ ability to obtain permanent legal status.65
For women and their children who have immigrated to
the United States, the dangers of abusive relationships are often
more acute.66 For example, between 34 and 49.8 percent of
immigrant women in the United States fall prey to domestic
violence.67 This number spikes to 59.5 percent where only those
immigrant women who are married are concerned.68 Further
exacerbating the negative effects of domestic violence against
immigrant women, many simply do not attempt to avail
themselves of healthcare, law enforcement, or social services
because of language and cultural barriers.69 These circumstances
may help to explain why domestic violence against immigrant
62
Id. Disturbingly, some USC’s will actually engage in a form of immigration
fraud in order to exert control over their immigrant partners, by having the immigrant
travel to the United States on a K Visa although they are already married. Id. at 4.
63
H.R. REP. NO. 103-395, at 26 (1993).
64
Id.
65
See discussion supra Part I.
66
Orloff & Kaguyutan, supra note 43, at 110. But see FAMILY VIOLENCE
PREVENTION FUND, supra note 52, at 11 (“According to a survey of
literature . . . available research indicates that [intimate partner violence] is not more
prevalent, and may be less prevalent, among immigrant and refugee population groups
than others.”).
67
Karyl Alice Davis, Comment, Unlocking the Door by Giving Her the Key: A
Comment on the Adequacy of the U-Visa as a Remedy, 56 ALA. L. REV. 557, 557 (2004)
(citing H.R. 3083 Hearing, supra note 19, at 58 (statement of Leslye Orloff, Director,
Immigrant Women Program, NOW Legal Defense and Education Fund)).
68
Id.
69
FAMILY VIOLENCE PREVENTION FUND, supra note 52, at 11-12, 50-51;
Davis, supra note 67, at 558; see also S. REP. NO. 112-153, at 12 (2012) (“The abusers of
undocumented immigrants often exploit the victims’ immigration status, leaving the
victim afraid to report the abuse to law enforcement and fearful of assisting with the
investigation and prosecution of associated crimes.”).
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IMPROVEMENTS FOR IMMIGRANT FIANCÉES
135
women occurs more often than is reported.70 In fact, a
Department of Justice study found that just over 30 percent of
documented immigrants officially report abuse.71 It is
unsurprising, then, to find that undocumented immigrants who
fear deportation report abuse at even lower rates, falling as low
as 14 percent.72
It is difficult to obtain data on the prevalence of abuse
against K Visa holders, perhaps because “a battered spouse [or
fiancée] may be deterred from taking action to protect himself
or herself, such as filing for a civil protection order, filing
criminal charges, or calling the police, because of the threat or
fear of deportation.”73 This disinclination to act may stem from
an abused immigrant’s limited knowledge of English, a lack of
savvy regarding the legal system and protections available to
her, financial dependence on an abusive partner, or cultural
isolation.74 An abused immigrant fiancée may be even more
reluctant than an abused immigrant spouse to take official
action because she stands on shakier ground in relation to U.S.
immigration law, without the availability of the VAWA selfpetition. Now that the self-petition exists, as counterintuitive
as it may seem, a battered K Visa holder like Ayana has an
70
Davis, supra note 67, at 558 (“[S]tatistics likely underestimate the number
of victims.”); see also FAMILY VIOLENCE PREVENTION FUND, supra note 52, at 11
(describing the limited availability of data).
71
Juliette Terzieff, More Services Reach Abused Immigrant Women,
WOMEN’S ENEWS (Aug. 11, 2005), http://www.womensenews.org/story/domesticviolence/050811/more-services-reach-abused-immigrant-women. Among all females in
the United States as of 2008, the Bureau of Justice Statistics found that “49% of the
intimate partner violence against [them] was reported to police.” SHANNAN CATALANO
ET AL., BUREAU OF JUSTICE STATISTICS FEMALE VICTIMS OF VIOLENCE 2 (2009),
available at http://bjs.ojp.usdoj.gov/content/pub/pdf/fvv.pdf.
72
See Terzieff, supra note 71.
73
H.R. REP. NO. 103-395, at 26 (1993); see also Laura Jontz, Note, Eighth
Circuit to Battered Kenyan: Take a Safari—Battered Immigrants Face New Barrier When
Reporting Domestic Violence, 55 DRAKE L. REV. 195, 197 (2006) (confirming that data on
the prevalence of abuse is difficult to obtain because many incidents go unreported).
I have been unable to locate data for statistics relating specifically to
abused immigrant fiancées. Of course, it is possible that the incidence of domestic
violence against immigrant fiancées is lower than for immigrant spouses, perhaps
because domestic violence may not develop early in the relationship and it may increase
in frequency and severity as the relationship progresses beyond marriage. Nevertheless,
it can be presumed that such violence toward immigrant fiancées does occur at fairly high
rates. For example, applying the aforementioned rates of domestic violence among
immigrant women—the lowest rate of 34 percent, for example—to the 30,445 K-1
immigrant fiancées admitted to the United States in 2010, it appears that approximately
10,351 K Visa holders could have experienced abuse in that year alone. DEP’T OF
HOMELAND SEC., 2010 YEARBOOK OF IMMIGRATION STATISTICS 66 tbl. 25: Nonimmigrant
Admissions by Class of Admission: Fiscal Years 2001 to 2010 (2011), available at
http://www.dhs.gov/xlibrary/assets/statistics/yearbook/2010/ois_yb_2010.pdf.
74
See Hass et al., supra note 58, at 2.
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even greater incentive to remain with her abuser until
marriage; then, at least, she could file a self-petition and gain
LPR status without further relying on her abusive partner.
A.
Pre-VAWA Policies
Prior to the enactment of VAWA, immigration law in
the United States gave USC and LPR spouses complete control
over their immigrant spouses’ legal status.75 The doctrine of
coverture, for example, a “legislative enactment of the common
law theory that the husband is the head of the household,”
essentially stripped women of their legal existence once they
were married.76 In U.S. immigration law, this tradition
informed policies whereby American women automatically
acquired their husbands’ citizenship—and lost their U.S.
citizenship—upon marriage to a foreigner.77 While the doctrine
of coverture was repealed by subsequent laws—such as the
Immigration and Nationality Act of 1952, which made
immigration law gender-neutral and thus gave women the
ability to sponsor their alien husbands’ lawful immigration
status78—the laws concerning the conferral of legal immigration
status on immigrant spouses were “still rooted in the coverture
mentality.”79 Virtually all of the power remained in the hands of
the USC or LPR spouse, because the immigrant spouse’s status
depended on the voluntary sponsorship of the citizen or LPR
spouse.80 And since women comprise the greater proportion of
domestic violence victims, immigrant fiancées, and immigrant
spouses, they are the most dependent on the sponsorship of
75
Orloff & Kaguyutan, supra note 43, at 99.
Id. at 100 (citing S. REP. NO. 81-1515, at 414 (1951)) (internal quotation
marks omitted); see also Ryan Lilienthal, Note, Old Hurdles Hamper New Options for
Battered Immigrant Women, 62 BROOK. L. REV. 1595, 1602 n.31 (1996) (quoting 1
WILLIAM BLACKSTONE, COMMENTARIES *442 (1783) (alteration in original) (emphasis
omitted)):
76
By marriage, the husband and wife are one person in the law: that is, the
very being or legal existence of the woman is suspended during the marriage,
or at least is incorporated and consolidated into that of the husband: under
whose wing, protection, and cover, she performs every thing; and is therefore
called . . . a feme-covert, . . . is said to be covert-baron, or under the protection
and influence of her husband, her baron, or lord; and her condition during her
marriage is called her coverture.
77
78
79
80
Orloff & Kaguyutan, supra note 43, at 100.
Id. at 101.
Id.
Id.
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IMPROVEMENTS FOR IMMIGRANT FIANCÉES
137
their partners and are most dramatically affected by a spouse’s
refusal to sponsor their adjustment of status.81
This disparity in power, prior to VAWA, ensured “that
the immigrant spouse [was] faced with an impossible choice:
either remain in an abusive relationship or leave, become an
undocumented immigrant[,] and be potentially deprived of
home, livelihood and perhaps child custody.”82 While these dire
circumstances have been mitigated by more modern laws
protecting battered immigrants,83 major impediments remain
for battered immigrant fiancées living in the United States on
K Visas, due to their ineligibility to self-petition.
The Immigration Marriage Fraud Amendments of 1986
(IMFA)84 actually enhanced petitioning USC and LPR spouses’
control over their immigrant spouses by creating a presumption
that all immigration marriages were fraudulent until proven
otherwise, and by preventing alien spouses from becoming LPRs
without their petitioning spouses’ sponsorship.85 However, IMFA
did provide the U.S. Attorney General with discretionary power to
grant LPR status to an immigrant spouse, independent of her
husband’s sponsorship, if she demonstrated “extreme hardship or
good faith/good cause.”86 Yet both of these provisions were still
fraught with difficulty for immigrant spouses because domestic
violence was generally not interpreted as adequate grounds for
either waiver.87
The 1990 Battered Spouse Waiver was an early
congressional attempt specifically designed to protect battered
immigrants.88 While it provided some benefits to abused
immigrant spouses, such as allowing those who had already
obtained conditional resident status to gain LPR status without
relying on their spouses for a joint petition,89 the “battered spouse
81
Id.
Id. (internal quotation marks omitted).
83
See infra Parts II.B, III.B, and III.C (describing the VAWA self-petition, U
Visa, and T Visa, respectively).
84
Immigration Marriage Fraud Amendments of 1986, Pub. L. No. 99-639,
100 Stat. 3537 (1986).
85
Orloff & Kaguyutan, supra note 43, at 101-02.
86
Id. at 102 (citing 8 U.S.C. § 1186a(c)(4) (1994) (internal quotation marks
omitted)).
87
Id. at 103.
88
See Orloff & Kaguyutan, supra note 43, at 105 (noting that the battered
spouse waiver “was the first piece of legislation that recognized domestic violence as a
problem experienced by immigrant wives dependent on their spouses for immigration
status” (citing Immigration Act of 1990, Pub. L. No. 101-649, § 701, 104 Stat. 4978
(1990) (codified as amended at 8 U.S.C. § 1186a(c)(4) (1994)))).
89
Id. at 105-06.
82
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waiver” still stipulated that an immigrant spouse could not in the
first instance become a conditional resident without her spouse’s
initial sponsorship.90 This perpetuated immigrant spouses’
dependence on their abusive husbands, and it thus preserved the
control that abusive spouses had over their immigrant spouses.
B.
Violence Against Women Act of 1994 (VAWA) and
Subsequent Revisions
The Violence Against Women Act of 1994 (VAWA)91 did
much to solve this problem. In addition to the broader goals of
enhancing protection for battered women nationwide and
providing funding for law enforcement and domestic violence
service providers,92 VAWA offered shelter via laws specifically
designed to help immigrant women who are abused by USC or
LPR spouses.93 Representing a significant paradigm shift for
battered immigrant spouses, VAWA included the “self-petition”
provision,94 which allows an abused immigrant spouse to file for
LPR status without her abusive spouse’s sponsorship.95
1. Congressional Intent of VAWA 1994
The VAWA 1994 legislation was lauded as “an essential
step in forging a national consensus that our society will not
tolerate violence against women.”96 Congress passed the Act as
“a comprehensive statutory enactment designed to address ‘the
escalating problem of violent crime against women,’ as part of
the larger Violent Crime Control and Law Enforcement Act of
1994 . . . .”97 The self-petition was intended, in part, to “permit[]
battered immigrant women to leave their batterers without
fearing deportation.”98 This helped to alleviate the plight of
90
Id. at 107.
8 U.S.C. § 1154 (2006).
92
Orloff & Kaguyutan, supra note 43, at 108.
93
Id. at 109.
94
8 U.S.C. § 1154(a)(1)(A)(iii)(I).
95
Orloff & Kaguyutan, supra note 43, at 114.
96
Id. at 109 (quoting S. REP. NO. 103-138, at 41-42 (1993)).
97
Doe v. Doe, 929 F. Supp. 608, 610 (D. Conn. 1996) (citing S. REP. NO. 103138, at 38 (1993)).
98
Hernandez v. Ashcroft, 345 F.3d 824, 841 (9th Cir. 2003) (alteration in
original) (citing H.R. REP. NO. 103-395, at 25 (1993)) (internal quotation marks
omitted); see also Pub. L. No. 106-386, 114 Stat. 1464, 1518 (2000) (noting
congressional findings that “the goal of the immigration protections for battered
immigrants included in the Violence Against Women Act of 1994 was to remove
immigration laws as a barrier that kept battered immigrant women . . . locked in
abusive relationships”).
91
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IMPROVEMENTS FOR IMMIGRANT FIANCÉES
139
abused immigrant spouses by removing the incentive to remain
with their abusive spouses to obtain the benefits of sponsorship
based on marriage.99
Underscoring the need for the self-petition, at least one
scholar has noted a study where 72.3 percent of USCs and LPRs
who batter their immigrant spouses never file the immigration
papers.100 Before VAWA, an abusive USC or LPR could still exert
control over his spouse’s immigration status, even embracing the
ability to have her deported, all the while remaining free from
prosecution for domestic violence he perpetrated against her.101
2. Eligibility to Self-Petition Under VAWA
VAWA codified that a spouse of an abusive USC or LPR
may file a self-petition for adjustment of immigration status by
showing that she: (1) married a USC or LPR in good faith, (2)
had been battered or suffered “extreme cruelty” at the hands of
her spouse, (3) resided with the abusive spouse, and (4) was a
person “of good moral character.”102 Under VAWA 1994, the
battered spouse also had the burden of showing that deportation
would result in “extreme hardship.”103 In order to reduce the
burden on battered immigrant spouses, Congress included a
requirement that “any credible evidence” be accepted in
adjudicating self-petitions and “battered spouse waiver” cases.104
3. VAWA 2000
When Congress reauthorized VAWA in 2000,105 it
amended numerous provisions of VAWA to remove barriers
99
Nonetheless, the self-petition avenue to lawful permanent residency is
unavailable to abused fiancées.
100
Orloff & Kaguyutan, supra note 43, at 111; see also Dutton et al., supra
note 59, at 259 (noting that those abusive USC and LPR spouses who did file
immigration documents often waited for nearly four years or longer to do so).
101
Orloff & Kaguyutan, supra note 43, at 113.
102
Id. at 114; see also 3A AM. JUR. 2D Aliens & Citizens § 461 (2011);
FRAGOMEN ET AL., supra note 15, § 13.1. The protections afforded to battered
immigrants, including the right to self-petition if the statutory elements are satisfied,
are gender-neutral and extend to both men and women. 8 C.F.R. § 204.2(c) (2001); see
also Orloff & Kaguyutan, supra note 43, at 114.
103
Shaw, supra note 5, at 671. This “extreme hardship” provision was
repealed by VAWA 2000, discussed infra at Part II.B.3.
104
Orloff & Kaguyutan, supra note 43, at 116 (internal quotation marks
omitted). In the 2009 fiscal year, 6374 VAWA petitions were approved and 1671 were
denied. 1 IMMIGR. L. & DEF., supra note 18, § 4:58.
105
Battered Immigrant Women Protection Act of 2000 (BIWPA), Pub. L. No.
106-386 § 1501, 114 Stat. 1464 (2000).
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and loopholes, and to more accurately implement the
congressional intent behind the law.106 For example, VAWA
2000 abrogated the requirement that abused spouses show
“extreme hardship” that would result from deportation, and it
permitted women who divorced their abusive spouses or who
were widowed to file self-petitions within two years of the
divorce or the batterer’s death.107 It further allowed for the filing
of self-petitions by battered spouses whose LPR spouses had
been stripped of their immigration status (e.g., for certain
criminal convictions), so long as abused spouses filed selfpetitions within two years of their spouses’ loss of status.108
Significantly, VAWA 2000 created the U Visa, a new
visa category designed to afford protection and legal status to
immigrant victims of crime who are, have been, or are likely to
be helpful in prosecuting the crimes perpetrated against
them.109 The tremendous importance of the U Visa lies in its
provision of legal status to battered immigrants who are
undocumented or who are ineligible to self-petition under
VAWA because they are not married to their abusers.110 The U
Visa is therefore ostensibly available to abused K Visa holders
such as Ayana,111 yet certain pitfalls of the U Visa process make
it an unenviable or even unobtainable form of immigration
relief for battered immigrant fiancées.112
106
See, e.g., id. § 1502(b):
The purposes of this title are—
(1) to remove barriers to criminal prosecutions of persons who commit acts of
battery or extreme cruelty against immigrant women and children; and
(2) to offer protection against domestic violence occurring in family and
intimate relationships that are covered in State and tribal protection orders,
domestic violence, and family law statutes.
107
Shaw, supra note 5, at 672.
See id.
109
8 U.S.C.A. § 1101(a)(15)(U) (2011); see also Deanna Kwong, Note,
Removing Barriers for Battered Immigrant Women: A Comparison of Immigrant
Protections Under VAWA I & II, 17 BERKELEY WOMEN’S L.J. 137, 150-51 (2002); Shaw,
supra note 5, at 672. For further discussion of the U Visa as a remedy for K Visa
holders, see infra Part III.B.
110
Shaw, supra note 5, at 672.
111
See Mary B. Clark, Falling Through the Cracks: The Impact of VAWA 2005’s
Unfinished Business on Immigrant Victims of Domestic Violence, 7 U. MD. L.J. RACE,
RELIG., GENDER & CLASS 37, 51 (2007) (“The creation of the U Visa is an extremely
important advance for the rights of battered immigrant women as it offers protection to
female domestic violence victims who are ineligible for VAWA self-petitions because of
their abuser’s lack of a marital relationship or lawful immigration status.”).
112
See infra Part III.B.
108
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IMPROVEMENTS FOR IMMIGRANT FIANCÉES
141
VAWA 2000 extended protection further still, enabling an
abused immigrant spouse to file a self-petition if her marriage is
legally invalid due to her husband’s act of bigamy, of which she
was unaware.113 This ensures that such an abused immigrant—
despite having a marriage to a USC or LPR that is legally void
because of the USC or LPR’s previously existing legal marriage to
another partner—would not be precluded from filing a VAWA selfpetition.114 While this was not the case under VAWA 1994, today,
provided that she is otherwise eligible, a battered immigrant
spouse may still file a self-petition even if her marriage was
technically illegal owing to her abuser’s bigamous practices.115
4. VAWA 2005
VAWA’s third implementation, in 2005,116 provided
additional protections to abused immigrant women because,
even after VAWA 1994 and VAWA 2000, several shortcomings
remained in the legislation’s protection of battered immigrants.117
Among other innovations, VAWA 2005 amended the U Visa
provisions to provide greater protections for family members of
U Visa applicants who may obtain lawful status derivatively,118
and it offered additional remedies for abused immigrants in
removal hearings, such as the “motion to reopen.”119 Although the
self-petition remained unavailable to abused K Visa holders,
VAWA 2005 placed certain limitations on K Visa petitioners
(i.e., USC fiancés) designed to protect the immigrant
beneficiaries of the visas.120 For instance, the USC petitioner
113
Clark, supra note 111, at 48.
See IGNATIUS & STICKNEY, supra note 2, § 4:36 (“Until the passage of
VAWA 2000, it was imperative that the marriage creating the relationship between the
noncitizen and the abuser be legally valid at the time that the noncitizen filed her selfpetition . . . .”).
115
Id. Although the term “intended spouse” appears at first glance to include
K Visa holders, alas it does not. A fuller discussion of the bigamy exception in the selfpetition provision appears infra at Part IV.A.
116
Violence Against Women and Department of Justice Reauthorization Act of
2005, Pub. L. No. 109–162, 119 Stat. 2964 (2006).
117
See generally Clark, supra note 111.
118
Id. at 56.
119
Id. at 54-55. If granted, a motion to reopen provides for “a new
determination [in immigration court] based on new material evidence which was not
available and which could not have been discovered prior to and presented at the
original hearing.” 1 IMMIGR. L. & DEF., supra note 18, § 9:13.
120
Clark, supra note 111, at 54-55. Although Clark states that “relief is
available to women who have been brought to the United States on K Fiancé Visas” in a
section titled “Relief for K Fiancé Visa Self-Petitioners,” id., it is unclear what is meant by
“relief.” Clark’s article does not provide a citation for the above proposition. Additionally,
since K Visa holders are not eligible to self-petition under VAWA, see supra Part II.B.2, it
114
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applying for a K Visa on behalf of his immigrant fiancée must
disclose criminal convictions, must wait two years between
petitions (if he becomes engaged to another individual), and
cannot apply for more than two K Visas in ten years without
the immigrant fiancée receiving notification from the
Department of Homeland Security (DHS) that hers is the
USC’s third petition.121
While VAWA has been critical in relieving immigrant
women from the perils associated with domestic violence, U.S.
immigration law nevertheless provides unequal treatment to
different categories of abused immigrants.122 Indeed, many
abused K Visa recipients are condemned to a legal “no(wo)man’s-land,” where they are unable to access the remedies
afforded to spouses of USCs or LPRs.
C.
VAWA Reauthorization in 2012
In 2011, Senator Patrick Leahy (D-Vt.) introduced the
Violence Against Women Reauthorization Act of 2011123 in the
U.S. Senate. The Senate passed the bill by a bipartisan 68-to31 vote, but the House of Representatives subsequently passed
a competing bill, H.R. 4970, by a 222-to-205 vote along party
lines.124 While the first version of the Senate bill would have
provided additional protections to K Visa holders—such as a
broader definition of background information about USC fiancé
petitioners that the Secretary of Homeland Security must
provide to prospective K Visa beneficiaries125—the amended bill
removed those protections126 and failed to provide the panoply of
seems that Clark’s title for the section is a misnomer as she refers to other types of relief
aside from the self-petition. Clark does, however, outline restrictions on K Visa petitioners
that are designed to protect K Visa beneficiaries. Clark, supra note 111, at 54-55.
121
Clark, supra note 111, at 54-55; Olga Grosh, Note, Foreign Wives, Domestic
Violence: U.S. Law Stigmatizes and Fails to Protect “Mail-Order Brides,” 22 HASTINGS
WOMEN’S L.J. 81, 101 (2011). Some of these requirements derive from the International
Marriage Broker Regulation Act of 2005 (IMBRA), Pub. L. No. 109-162 §§ 831,
832(a)(2)(A), 119 Stat. 3066 (2006), which was also passed along with VAWA 2005.
122
Shaw, supra note 5, at 664.
123
S. 1925, 112th Cong. (2011); S. REP. NO. 112-153 (2012).
124
Bill Summary & Status of S. 1925, 112th Cong. (2011), available at
http://thomas.loc.gov/cgi-bin/bdquery/z?d112:S.1925:; Bill Summary & Status of H.R.
4970, 112th Cong. (2012), available at http://thomas.loc.gov/cgi-bin/bdquery/z?
d112:HR04970:@@@R.
125
See S. 1925, 112th Cong. § 808 (2011), available at http://www.gpo.gov/
fdsys/pkg/BILLS-112s1925is/pdf/BILLS-112s1925is.pdf.
126
See S. 1925, 112th Cong., as amended, available at http://www.gpo.gov/
fdsys/pkg/BILLS-112s1925rs/pdf/BILLS-112s1925rs.pdf. The bill passed by the House,
however, did contain similar provisions. See H.R. 4970, 112th Cong. § 803 (2012).
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IMPROVEMENTS FOR IMMIGRANT FIANCÉES
143
safeguards that K Visa holders like Ayana need. The House bill
would enact even more stringent policies affecting abused
immigrants.127 Concurrently, in a disturbing development for
Ayana and her similarly situated “sisters,” Congressman Lamar
Smith (R-Tex.) and other House Republicans introduced the
HALT Act,128 which could subject undocumented immigrants to
detention and possible removal if they report domestic violence.129
This would be a surprising departure from congressional efforts
to protect battered immigrants, even those who do not possess
legal immigration status.130 The HALT Act could hinder such
efforts to provide adequate protection for battered immigrant
women and discourage reporting of domestic violence.
Accordingly, if a VAWA reauthorization bill is passed, it should
127
See, e.g., Delay on Domestic Violence, Editorial, N.Y. TIMES, July 24, 2012,
at A20, available at http://www.nytimes.com/2012/07/24/opinion/delay-on-violenceagainst-women-act.html. (“The [House] bill did not include new protections
for . . . immigrant . . . victims contained in the Senate measure. It also rolled back
protections for immigrant women, including for undocumented immigrants who report
abuse and cooperate with law enforcement.”); see also Ramsey Cox, Senate Democrats
Tell Speaker Boehner to Adopt Their Domestic Violence Bill, HILL: FLOOR ACTION BLOG
(July 24, 2012, 5:08 PM), http://thehill.com/blogs/floor-action/senate/239837-senatedemocrats-request-speaker-boehner-adopts-their-version-of-vawa.
128
Hinder the Administration’s Legalization Temptation (HALT) Act, H.R. 2497,
112th Cong. (2011), available at http://thomas.loc.gov/cgi-bin/t2GPO/http://www.gpo.gov/
fdsys/pkg/BILLS-112hr2497ih/pdf/BILLS-112hr2497ih.pdf [hereinafter HALT Act]. The
companion bill in the Senate is S. 1380, 112th Cong. (2011), available at
http://thomas.loc.gov/cgi-bin/t2GPO/http://www.gpo.gov/fdsys/pkg/BILLS-112s1380is/pdf/
BILLS-112s1380is.pdf. As of November 17, 2012, neither bill had been passed out of its
committee. The HALT Act would temporarily suspend certain forms of immigration relief,
such as inadmissibility waivers, cancellations of removal, and designations of Temporary
Protected Status, until January 21, 2013.
129
See Kase Wickman, Bill Would Penalize Immigrants Who Report Domestic
Violence, RAW STORY (Oct. 12, 2011, 12:27 PM), http://www.rawstory.com/
rs/2011/10/12/bill-would-penalize-immigrants-who-report-domestic-violence. Opponents
of the HALT Act argued that it would affect battered undocumented immigrants
because it would suspend the form of relief known as deferred action, which may be
used as an alternative to removal of undocumented immigrants who report abuse.
Marcos Restrepo, Two Bills Would Expand, Diminish Govt. Protection for Abused
Women, AM. INDEP. (Oct. 12, 2011, 9:26 AM), http://americanindependent.com/
198582/two-bills-would-expand-diminish-govt-protection-for-abused-women. However,
the bill does provide an exception which would allow a grant of deferred action for
aliens “to be tried for . . . crime[s], or [as] . . . witnesses at trial,” “for any other
significant law enforcement . . . purpose,” or “for a humanitarian purpose where the life
of the alien is imminently threatened.” HALT Act, supra note 128, § 2(f). These
exceptions might be applicable to battered immigrants who report domestic violence—
if they were assisting law enforcement or if the abuse put their lives in imminent
danger—but it would depend on how DHS interprets the law and how it chooses to
exercise discretion case-by-case. Regardless, the HALT Act seems unlikely to pass at
this time due to a lack of bipartisan support.
130
For a more detailed discussion of the U Visa, which provides some
protection to documented and undocumented immigrants who are victims of certain
crimes, see infra Part III.B.
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include the amendments proposed below, which would confer the
protections that abused K Visa holders deserve.
In a statement at a recent U.S. Senate hearing discussing
the reauthorization of VAWA, Senator Leahy said that despite
the progress made in the seventeen years since the passage of
VAWA in 1994:
[O]ur country still has a long way to go. . . .
. . . [A]s we look toward reauthorization of [VAWA], we have to
continue to ensure that the law evolves to fill unmet
needs. . . . We . . . [must prioritize] our response to the high rates of
violence experienced by . . . immigrant women.131
Indeed, the law should evolve to fill the unmet needs of K
Visa holders who are abused before marriage. The proposals
I outline below in Part IV would be significant advancements
in this process.
D.
Recent Steps to Eliminate Discrimination in
Immigration Law
In 2011, Senator Leahy also introduced Senate Bill 821
in an effort to “eliminate discrimination in the immigration
laws,” by amending the INA to allow same-sex “permanent
partners of [USCs] or [LPRs] to obtain [LPR] status in the
same manner as spouses . . . .”132 Although this bill could be
131
The Violence Against Women Act: Building on Seventeen Years of
Accomplishments: Hearing Before the S. Comm. on the Judiciary, 112th Cong. 112-132, at
2 (2011) (statement of Sen. Leahy, Chairman, S. Comm. on the Judiciary), available at
http://judiciary.senate.gov/hearings/testimony.cfm?id=3d9031b47812de2592c3baeba61a
f68b&wit_id=3d9031b47812de2592c3baeba61af68b-0-1.
132
Uniting American Families Act of 2011, S. 821, 112th Cong. (2011),
available at http://thomas.loc.gov/cgi-bin/t2GPO/http://www.gpo.gov/fdsys/pkg/BILLS112s821is/pdf/BILLS-112s821is.pdf. Specifically pertinent to this note is the provision
which provides that:
Section 101(a) (8 U.S.C. [§] 1101(a)) [would be] amended—
(1) in paragraph (15)(K)(ii), by inserting “or permanent partnership” after
“marriage”; and
(2) by adding at the end the following:
“(52) The term ‘permanent partner’ means an individual 18 years of age or
older who—
“(A) is in a committed, intimate relationship with another individual 18 years
of age or older in which both individuals intend a lifelong commitment;
“(B) is financially interdependent with that other individual;
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IMPROVEMENTS FOR IMMIGRANT FIANCÉES
145
construed to allow fiancées in same-sex relationships with
USCs or LPRs to adjust their status to become LPRs
themselves, it would still exclude abused heterosexual K Visa
holders because they would likely be able to “contract with
[their partners] a marriage cognizable under [the] Act,”133 even
if they do not intend to marry their fiancés on account of abuse.
Interestingly, although passage of Senate Bill 821 would
“eliminate discrimination” by allowing same-sex partners to
obtain immigration benefits via “permanent partnerships,”134 it
appears that an abused same-sex partner could more easily
avail herself of the VAWA self-petition—even if she had been
living with her partner for less than ninety days, provided the
bill’s other requirements are satisfied—whereas an abused
opposite-sex partner in the United States on a K Visa would be
precluded from doing so unless she married her petitioning
fiancé.135 This result would seem contrary to VAWA’s aim to
disincentivize battered partners from remaining with abusers,
as well as Senate Bill 821’s promise of ending immigration
law’s discrimination.
INADEQUATE REMEDIES CURRENTLY AVAILABLE TO
BATTERED FIANCÉE VISA HOLDERS
III.
Although adjustment of immigration status, and thus
the VAWA self-petition, is unavailable to a K Visa holder “if
not married to and adjusting on the basis of the original
petitioner,”136 there are other potential avenues to lawful
immigration status for abused immigrant fiancées.137 However,
“(C) is not married to, or in a permanent partnership with, any individual
other than that other individual;
“(D) is unable to contract with that other individual a marriage cognizable
under this Act; and
“(E) is not a first, second, or third degree blood relation of that other
individual.[”]
Id. § 2.
133
See id. (proposed definition “(D)” of the term “permanent partner”).
Id. pmbl.
See id. This is not to argue that S. 821 should not be passed, but only to
point out the disparate application that the bill would have on abused K Visa holders
as compared to those same-sex partners that would be protected by the bill.
136
LAURA L. LICHTER, Adjustment of Status, Admissibility and Waivers of
Inadmissibility, A.L.I.-A.B.A. CLE SN039, at 217, 222 (2008); see also supra Parts I
and II.
137
USCIS publishes a pamphlet designed to inform abused immigrants of their
rights. U.S. CITIZENSHIP & IMMIGRATION SERVS., INFORMATION ON THE LEGAL RIGHTS
AVAILABLE TO IMMIGRANT VICTIMS OF DOMESTIC VIOLENCE IN THE UNITED STATES AND
134
135
146
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these alternatives—which include different types of visas and
defensive immigration court pleadings—provide inadequate
relief for abused K Visa holders. This section will detail each
type of relief and its inadequacies in turn.
A.
Cancellation of Removal
If Ayana chooses to remain in the United States without
valid immigration status and is subsequently placed in removal
proceedings, she may be eligible for non-LPR “cancellation of
removal.”138 However, Ayana could avail herself of this form of
relief only after she shows that she has maintained continuous
physical presence in the United States for at least ten years,
has been a “person of good moral character” during that time,
has not been convicted of certain criminal offenses, and that
her removal from the country would result in “exceptional and
extremely unusual hardship” to a spouse, parent, or child who
is a USC or LPR.139 It is clearly unreasonable to expect that a K
FACTS ABOUT IMMIGRATING ON A MARRIAGE-BASED VISA FACT SHEET, available at
http://www.uscis.gov/portal/site/uscis/menuitem.5af9bb95919f35e66f614176543f6d1a/?vg
nextoid=8707936ba657d210VgnVCM100000082ca60aRCRD&vgnextchannel=8a2f6d26d1
7df110VgnVCM1000004718190aRCRD (last updated Jan. 1, 2011) [hereinafter USCIS
PAMPHLET]. In the section concerning the immigration rights of victims of domestic
violence, USCIS lists three remedies: VAWA self-petitions, cancellation of removal, and
U Visas (for victims of crime). However, the pamphlet notes that because of inadequate
knowledge of immigration laws, and due to language barriers and cultural isolation,
“immigrants are often afraid to report acts of domestic violence to the police or to seek
other forms of assistance. Such fear causes many immigrants to remain in abusive
relationships.” Id.; see also Grosh, supra note 121, at 103 (discussing the Government
Accountability Office’s report on USCIS’s implementation of provisions of IMBRA,
particularly USCIS’s failure to make its pamphlet available to women in languages
other than English and through media other than the Internet). “More importantly, the
pamphlet does not state explicitly that a victim of domestic violence will not be
deported if she seeks help from the police or immigration authorities.” Id. Perhaps the
USCIS pamphlet does not make such a stipulation because deportation is possible
when undocumented immigrants report abuse, especially if they apply for relief—such
as a U Visa—that is subsequently denied.
138
8 U.S.C. § 1229b(b) (2006). Cancellation of removal is a form of relief from
removal (deportation) that allows recipients to remain in the United States and
immediately grants them lawful permanent residency. See 1 IMMIGR. L. & DEF., supra
note 18, § 8:17.
139
1 IMMIGR. L. & DEF., supra note 18, § 8:17. Continuous physical presence
generally means that the applicant has not left the United States for more than 90
days during a single trip or 180 days in aggregated departures. Id. The showing of
“exceptional and extremely unusual hardship” must be in relation to the alien’s spouse,
parent, or child (i.e., not the alien herself) and must be “substantially beyond that
which ordinarily would be expected to result from the alien’s deportation.” Id. (citing
H.R. CONF. REP. NO. 828, 104th Cong. (1996)) (internal quotation marks omitted). Cf. 8
U.S.C. § 1229b(a) (LPR Cancellation), which provides a more lenient standard—such
as maintaining LPR status for at least five years and continuous physical presence for
seven years, and does not require a showing of hardship to a spouse, parent, or child—
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Visa holder—who is abused within ninety days of her arrival—
would surreptitiously remain in the United States for ten
years, without legal status or work authorization, and in
constant fear of being discovered by ICE, to simply raise this
defense to deportation after removal proceedings have been
initiated against her. And this form of relief is completely
unavailable to K Visa holders who do not have a USC or LPR
spouse, parent, or child.
Another type of defensive relief known as “VAWA
cancellation”140 may be available, but this could only be based
on Ayana having a child in common with a USC or LPR abuser
and that child having suffered abuse at the USC or LPR
parent’s hands.141 Since VAWA cancellation is based on abuse of
the child and does not concern itself with abuse of the immigrant
fiancée, Ayana would again be unable to seek lawful status
unless Jason has also abused her children. Even if Ayana were
eligible for VAWA cancellation, she would have to perform a
juggling act if she seeks to defensively raise it in immigration
court: she would have to continuously stay in the United States,
hoping that removal proceedings are not initiated against her
until after three years pass.142 Moreover, K Visa holders who
have no children in common with their abusers would be
altogether barred from pleading VAWA cancellation in
immigration court. Evidently, cancellation of removal is
anything but a viable remedy for most K Visa holders.
B.
U Visas for Victims of Crimes, Including Domestic
Violence
Congress created the U Visa as part of the Battered
Immigrant Women Protection Act of 2000 (also known as
for granting cancellation of removal to certain LPRs. All forms of cancellation of
removal are discretionary and involve a “balancing of equities” concerning the
respondent’s life. IGNATIUS & STICKNEY, supra note 2, § 12:67. “Positive equities” that
would warrant a favorable exercise of discretion “include family ties in the United
States,” “hardship” if removed, and a pattern of employment; negative factors include a
lack of rehabilitation (if the respondent has a criminal record) and a lack of ties to the
community. Id.
140
See Cecilia Olavarria & Moira Fisher Preda, VAWA Cancellation of Removal,
in BATTERED IMMIGRANTS AND IMMIGRATION RELIEF 1 (Nov. 2004), available at
http://www.legalmomentum.org/assets/pdfs/www3_4_vawa_cancellation_of_removal.pdf.
141
See 8 U.S.C. § 1229b(b)(2)(A)(i); 1 IMMIGR. L. & DEF., supra note 18, § 8:23.
Cancellation of removal under VAWA has more lenient evidentiary requirements than
LPR or non-LPR cancellation, such as a three-year continuous presence standard. 8
U.S.C. § 1229b(b)(2)(A)(i).
142
See generally IGNATIUS & STICKNEY, supra note 2, § 4:57.
148
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VAWA 2000),143 in order to provide relief to immigrant victims
of crime and battered immigrant women “who are not married
to a citizen or permanent legal resident and who have been
victims of a crime.”144 As a “new and somewhat untested visa
classification,”145 a U Visa grants legal immigration status to
“victims of certain serious crimes who have suffered substantial
physical or mental harm and can document cooperation with law
enforcement.”146 The provision specifically enumerates “domestic
violence” as a category of victimization worthy of a U Visa.147
In order to obtain a U Visa, an abused K Visa holder (or
other immigrant victim of a qualifying crime) must show that she
(1) “has suffered substantial physical or mental abuse as a result
of having been a victim of [domestic violence, among other
things],” (2) “possesses information concerning the criminal
activity,” (3) “has been helpful, is being helpful, or is likely to be
helpful to a Federal, State, or local law enforcement
official, . . . prosecutor, . . . [or] judge, to [USCIS], or to
other . . . authorities investigating or prosecuting the criminal
activity,” and (4) that “the criminal activity . . . violated the laws
of the United States or occurred in the United States . . . or the
territories and possessions of the United States . . . .”148
Once a U Visa is granted, it gives the recipient legal
nonimmigrant status, valid for four years,149 and it allows the
recipient to pursue LPR status after three years.150 However,
the U Visa recipient’s adjustment of status is contingent upon a
determination by the Secretary of Homeland Security that it “is
143
Lauren Gilbert, Family Violence and U.S. Immigration Law: New
Developments, in 01-03 IMMIGRATION BRIEFINGS 1 & n.2 (citing Pub. L. No. 106-386,
114 Stat. 1464); see also supra Part II.B.3.
144
Davis, supra note 67, at 566 (citing BIWPA, 114 Stat. 1464).
145
SUZANNE B. SELTZER ET AL., N.Y. ANTI-TRAFFICKING NETWORK LEGAL
SUBCOMM., IMMIGRATION RELIEF FOR CRIME VICTIMS: THE U VISA MANUAL A-iv (2010);
see also Shaw, supra note 5, at 672 (noting that issuance of U Visas did not begin until
2007); Press Release, USCIS, USCIS Publishes New Rule for Nonimmigrant Victims of
Criminal Activity (Sept. 5, 2007), available at http://www.uscis.gov/files/pressrelease/Uvisa_05Sept07.pdf.
146
SELTZER ET AL., supra note 145, at A-iv.
147
8 U.S.C. § 1101(a)(15)(U)(i), (iii) (2006); Davis, supra note 67, at 566 n.89
(citing BIWPA, Pub. L. No. 106-386, 114 Stat. 1464). S. 1925, the proposed
reauthorization of VAWA discussed supra at Part II.C, would add “stalking” to the list
of qualifying crimes that would make a victim eligible for a U Visa. S. REP. NO. 112153, at 12 (2012).
148
8 U.S.C. § 1101(a)(15)(U)(i). The third clause in particular presents a
problem for many battered immigrants because law enforcement certification can be
difficult to obtain and rarely given, not least because many battered immigrants are
afraid to contact the police for fear of deportation. Panjwani Interview, supra note 38.
149
SELTZER ET AL., supra note 145, at A-2 (citing 8 C.F.R. § 214.14(g) (2009)).
150
Id. (citing 8 U.S.C. § 1255(m)).
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IMPROVEMENTS FOR IMMIGRANT FIANCÉES
149
justified on humanitarian grounds, to ensure family unity, or is
in the public interest.”151 This requirement reveals at least one
drawback to the U Visa remedy for abused K Visa holders: in
contrast to the VAWA self-petition, U Visa applicants must
clear significant administrative hurdles, while “VAWA selfpetitioners can obtain lawful permanent residency once a visa
becomes available.”152
While certainly beneficial for K Visa holders and other
immigrant victims of violence who are able to satisfy its
requirements, another inadequacy of the U Visa for immigrant
fiancées is the stringent policy of requiring law enforcement
certification that the victim is, has been, or will likely be
helpful in investigating or prosecuting a crime.153 A U Visa
application will be denied outright if the applicant lacks
certification.154 A VAWA self-petition, conversely, does not
require law enforcement certification and may be granted
based on “any credible evidence.”155 Disconcerting for Ayana is
that these certifications can be difficult to obtain, depending on
the availability of evidence of abuse and whether or not the
battered partner was brave enough to report abuse to the
police.156 What is more, law enforcement certification for U
Visas is discretionary, whereby the agency may refuse to
provide certification even if the applicant has been critically
helpful in investigating or prosecuting the crime.157
Applicants who are not represented by counsel may
have even greater difficulty because “some agencies may lack
151
Id. at A-23 (quoting 8 C.F.R. § 245.24(b)(6)) (internal quotation marks omitted).
Id. at A-9.
153
Notably, the VAWA self-petition does not contain a similar certification
requirement.
154
See DEP’T OF HOMELAND SEC., OMB NO. 1615-0104, INSTRUCTIONS FOR
FORM I-918, PETITION FOR U NONIMMIGRANT STATUS 4 (2010) [hereinafter
INSTRUCTIONS FOR FORM I-918], available at http://www.uscis.gov/files/form/i918instr.pdf; see also Tahja L. Jensen, Comment, U Visa “Certification”: Overcoming
the Local Hurdle in Response to a Federal Statute, 45 IDAHO L. REV. 691, 698-99 (2009).
155
Orloff & Kaguyutan, supra note 43, at 116 (internal quotation marks
omitted); see also supra note 104 and accompanying text.
156
Panjwani Interview, supra note 38; see also Clark, supra note 111, at 50
(“Obtaining certification may present a challenge in some cases where the police choose
not to arrest the abuser or press charges. Further, many advocates could face
challenges if their client chooses to drop the charges against her batterer or even
refuses to testify in court.”).
157
See Jensen, supra note 154, at 701 (“An agency’s decision to provide a
certification is entirely discretionary; the agency is under no legal obligation to
complete a Form I-918, Supplement B, for any particular alien.” (quoting
INSTRUCTIONS FOR FORM I-918, supra note 154, Supp. B) (internal quotation marks
omitted)).
152
150
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understanding about U Visas and the role of certification.”158
Additionally, the abusive partner will usually have to be
arrested before law enforcement certification will be issued,159 or
the abused fiancée may need to show other evidence such as a
temporary restraining order. Oftentimes, a battered immigrant
woman will not be aware of these evidentiary requirements and,
irrespective of her level of knowledge, will be afraid to even
report domestic violence for fear that her abuser will have her
deported or that the violence will increase.160 Thus, the
requirement of law enforcement certification is often unsatisfied
because abused immigrant women are so unlikely to appeal to
law enforcement for help.161
Because of these evidentiary difficulties, many lawyers
and advocates suggest that other types of evidence, such as the
victim’s testimony or that of community members, should be
accepted.162 Unfortunately, though, “immigration law has
continued to focus on official reports in order to establish abuse.
As a result of the subjective nature of the qualification process,
no law, including the U-visa, allows women to leave abusive
relationships without the fear of deportation.”163 In part, this is
because an out-of-status immigrant who applies for a U Visa will
be notifying USCIS of her unlawful presence. Thus, if her visa
application is denied, she will be removable. Additionally,
because of the tenuous nature of their immigration status, K
Visa holders are less likely than other battered immigrants—
especially spouses, who can self-petition as a last resort—to
seek assistance from law enforcement.164 The short, ninety-day
158
SELTZER ET AL., supra note 145, at A-15.
Panjwani Interview, supra note 38; see also Sarah M. Wood, Note, VAWA’s
Unfinished Business: The Immigrant Women Who Fall Through the Cracks, 11 DUKE J.
GENDER L. & POL’Y 141, 150 (2004) (“[I]f law enforcement decides not to press criminal
charges against the batterer or decides that the battered woman’s testimony is not
reliable, she will be left in the same position that she would have feared in the absence
of the U visa.”).
160
See generally USCIS PAMPHLET, supra note 137; see also supra Part II.
161
For example, “[a] survey of Latina immigrants in the District of Columbia found
that 21.7% listed fear of being reported to immigration as their primary reason for remaining
in abusive relationships.” Davis, supra note 67, at 570-71; see also supra note 137.
162
Davis, supra note 67, at 572.
163
Id. (emphasis omitted) (footnote omitted). Davis argues for independent
visa status for H-4 Visa holders (spouses accompanying immigrant workers to the
United States) as an alternative to the U Visa because of the troubles abused spouses
would face in obtaining law enforcement certification. Id. at 572-73 (“In contrast to the
U-visa, independent visa status would not require a victim to contact the police or to
prosecute the batterer in order to remain legally in the country or to work.”).
164
See, e.g., Anna Hanson, Legislative Note, The U-Visa: Immigration Law’s
Best Kept Secret?, 63 ARK. L. REV. 177, 183 (2010) (“Even applying for a U-visa is a
frightening proposition for an undocumented immigrant. Undocumented victims who
159
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IMPROVEMENTS FOR IMMIGRANT FIANCÉES
151
timeframe that immigrant fiancées have to marry their
partners is already a cause for concern for fiancées who may
have doubts after arrival, let alone when abuse arises within
that time. A K Visa holder who knows that her immigration
status depends upon her marriage to her abusive fiancé will be
inclined to proceed with the marriage despite the harm. Sadly,
as in the case of immigrant brides who arrive through marriage
brokers, many battered K Visa holders have “everything to
gain from entering into this arrangement and staying in it, no
matter what the circumstances.”165
C.
T Visas for Victims of Trafficking
T Visas are available to victims of severe forms of
trafficking.166 While this visa category takes more creative
framing by practitioners to ensure that their clients can satisfy
its requirements, it may be applicable to abused K Visa holders
who have been brought to the United States by their fiancés
through force, fraud, or coercion for the purposes of “sex
trafficking” or “involuntary servitude.”167 While “sex trafficking”
pertains specifically to using the person for purposes of a
commercial sex act, the statute also permits relief for those
who are trafficked for “labor or services,” including
“involuntary servitude,” and it defines coercion as: “threats of
serious harm to or physical restraint against any person; any
scheme . . . intended to cause a person to believe that failure to
perform an act would result in serious harm to or physical
restraint against any person; or the abuse or threatened abuse
of the legal process.”168 Domestic violence can arguably be
identify themselves to immigration authorities but do not receive U-visas are in
immediate danger of deportation.”); see also supra Part I.
165
Grosh, supra note 121, at 105.
166
8 C.F.R. § 214.11(a) (2009). The T Visa was established by the Trafficking
Victims Protection Act of 2000 (TVPA). SUZANNE B. SELTZER ET AL., N.Y. ANTITRAFFICKING NETWORK LEGAL SUBCOMM., IDENTIFICATION AND LEGAL ADVOCACY FOR
TRAFFICKING SURVIVORS A-iv (3d ed. 2009). Eligibility requires that a T Visa applicant
show that she:
[1] is or has been a victim of a severe form of trafficking in person; [2] is
physically present in the United States due to trafficking; [3] has complied
with any reasonable request for assistance in the investigation or prosecution
of acts of trafficking in persons (if they are over 18); and [4] would suffer
extreme hardship involving unusual and severe harm if removed from the
United States.
Id. at A-11.
167
168
See 8 C.F.R. § 214.11(a); SELTZER ET AL., supra note 166, at A-2, A-12.
SELTZER ET AL., supra note 166, at A-12 to A-13.
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characterized in this way. As such, it may be possible for an
experienced attorney to successfully argue that an abused K
Visa holder like Ayana was trafficked, but this would require
satisfying formidable evidentiary burdens like those confronting
U Visa applicants.169
Another important consideration regarding the T Visa
application process, and indeed for U Visas as well, is the
applicant’s immigration status. If a battered K Visa holder has
left her abuser before entering into a marriage, and the ninetyday period has lapsed, she will be out of status.170 At that point,
initiating an affirmative visa application—such as a T or U
Visa—can put her in danger of having removal proceedings
initiated.171 For these reasons, a T Visa is an impracticable
remedy for most K Visa holders who are abused by their
fiancés, at least after the ninety-day marriage window has
closed.
D.
Asylum
Asylum is available in the United States to those who
satisfy the statutory definition of “refugee,” which requires,
among other things, that an asylum-seeker establish “a wellfounded fear of persecution [if returned to her country of origin]
on account of race, religion, nationality, membership in a
particular social group, or political opinion.”172 An abused K
169
See id. at A-13 to A-14 (“In order to establish that [a] client is a victim of a
severe form of trafficking in persons, he or she must either submit an endorsement
from a law enforcement agency . . . or sufficient credible secondary evidence, describing
efforts to cooperate with law enforcement, as well as the nature and scope of any force,
fraud, or coercion used against the victim. This may include, inter alia, evidence that
the USCIS has granted the alien’s continued presence in the United States as a victim
of trafficking.” (footnotes omitted)).
170
See supra note 39.
171
Id. at A-4 (“The validity of a T applicant’s immigration status is important
because if an applicant is not in valid status, and he or she is being brought to the
attention of USCIS or ICE, the applicant could be issued a Notice to Appear (NTA), and
removal (deportation) proceedings may be commenced.”).
172
8 U.S.C.A. § 1101(a)(42) (West 2011). Withholding of removal is a similar
form of relief based on the same five grounds of persecution, though it has a higher
evidentiary standard—in that an applicant must show that persecution is “more likely
than not” to occur, rather than the “reasonable possibility” standard for asylum which
may be satisfied by showing a ten percent chance of persecution. See INS v. CardozaFonseca, 480 U.S. 421, 421, 440 (1987); see also 3A AM. JUR. 2D Aliens and Citizens
§ 1140 (2012). Withholding also comes with fewer benefits; it only requires that an
alien not be refouled (returned) to the country where she would be persecuted. See
ANNA MARIE GALLAGHER ET AL., 2 IMMIGRATION LAW SERVICE 2D § 10:231 (2012). An
alien who is granted withholding may be removed to a country where she would not be
persecuted, and she may not apply for adjustment of status. Id. However, a
withholding of removal grantee can obtain work authorization. Id. The Convention
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Visa holder might venture applying for asylum on the grounds
that she would be persecuted and stigmatized on account of her
membership in a particular social group, but this would be an
arduous and uncertain path to legal immigration status
because the law is unsettled with respect to how domestic
violence victims can fit into this nebulous category.173
Unfortunately, although various social groups encompassing
domestic violence victims have been proposed, “a particular
social group that is viable for all battered women seeking
asylum has not emerged.”174 Difficulty arises both in terms of
establishing the requisite “nexus” (i.e., that the persecution
was “on account of” membership in the protected group) as well
as attempting to define the social group.
Interestingly, the European Court of Human Rights
(ECtHR) has suggested that women in countries like Afghanistan
might face persecution and qualify as refugees because of their
status as “women whose engagements to be married have been
broken. Unless they marry, which is very difficult given the social
stigma associated with these women, social rejection and
discrimination continue to be the norm.”175 This indicates that
Against Torture (CAT) provides a last-resort form of relief—that an alien cannot be
refouled if she would “more likely than not” face torture by the government or with
government acquiescence, upon returning to the country of persecution. See generally 8
C.F.R. § 1208.18; 3A C.J.S. Aliens § 1392 (2012).
173
See, e.g., GALLAGHER ET AL., supra note 172, § 10:152; 1 IMMIGR. L. & DEF.
supra note 18, § 13:40. The case of Matter of R-A-, 24 I. & N. Dec. 629, 2008 WL
4419696 (B.I.A. Sept. 25, 2008), for example, involves an epic legal battle that finally
ended in a grant of asylum for a Guatemalan woman who suffered severe domestic
abuse by her husband. GALLAGHER ET AL., supra note 172, § 10:152; After 14 Years,
Rodi Alvarado Is Finally Granted Asylum, THOMSON REUTERS, Dec. 21, 2009, available
at 86 No. 48 INTERPRETER RELEASES 3074. The Board of Immigration Appeals (BIA)
articulated its general standard for what constitutes a particular social group in Matter
of Acosta: Members of the group must “share a common, immutable characteristic” that
is “one that the members of the group either cannot change, or should not be required
to change because it is fundamental to their individual identities or consciences.”
Matter of Acosta, 19 I. & N. Dec. 211, 233, 1985 WL 56042 (B.I.A. Mar. 1, 1985). After
Matter of R-A-, DHS proposed its own standard for how domestic violence victims can
constitute a particular social group and be eligible for asylum. Brief of Dep’t of Homeland
Sec. at 4 (B.I.A. Apr. 13, 2009), available at http://cgrs.uchastings.edu/pdfs/
Redacted%20DHS%20brief%20on%20PSG.pdf. However, this standard has not been
accepted by the BIA, and while DHS may accept the argument that a domestic violence
victim qualifies as a member of a particular social group, it remains unclear when the
argument would be successful in Immigration Court or on appeal before the BIA.
174
Marisa Silenzi Cianciarulo & Claudia David, Pulling the Trigger:
Separation Violence as a Basis for Refugee Protection for Battered Women, 59 AM. U. L.
REV. 337, 363 (2009). Cianciarulo and David discuss how violence escalates after
leaving one’s abuser and argue for the recognition of a new social group: “women who
have left severely abusive relationships.” Id. at 343 (internal quotation marks omitted).
175
N. v. Sweden, App. no. 23505/09, 15, HUDOC (July 20, 2010), available at
http://hudoc.echr.coe.int/sites/eng/pages/search.aspx?i=001-99992 (Eur. Ct. H.R.)
154
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there is hope for abused immigrant fiancées who bring cases
before the ECtHR, but it is less clear that a U.S. Immigration
Court would accept the argument that a woman would face
persecution on account of her failed engagement.176
Despite the ostensible availability of this form of relief,
however, the asylum process is fraught with difficulty because
of its onerous standards, statutory bars, discretionary nature,
and the unresolved status of how victims of domestic violence
can qualify as a particular social group. If Ayana can
demonstrate a well-founded fear of persecution based on one of
the aforementioned grounds, she would be eligible for asylum
and, if granted, would not require another form of relief to
attain legal status.177 However, a woman who enters the United
States on a K Visa has already made evidentiary showings of
her intent to immigrate and her good faith intent to marry the
USC who petitioned for her K Visa, so applying for asylum
would seem to represent a step in the wrong direction. Indeed,
she was very close to maintaining legal status; the only hurdle
that she failed to surmount was marrying her abuser.
Moreover, an abused K Visa holder deserves relief on a
basis similar to that of a VAWA self-petitioner—the fact that she
has been abused by her USC petitioning fiancé—irrespective of
whether or not she has a legitimate fear of returning home.
While other asylum seekers may be deserving of protection
based on their fears of persecution, Ayana deserves protection
because she suffered abuse at the hands of a citizen of the United
States who petitioned for her admission in the first instance.
Furthermore, affirmatively applying for asylum would put an
out-of-status K Visa holder in the same predicament she would
be in when applying for a U or T Visa: she would be alerting ICE
and USCIS to her undocumented immigration status, thereby
subjecting herself to potential removal from the United States.
And because of the complex nature of asylum and removal
(internal quotation marks omitted) (finding that deportation of an Afghani woman,
who divorced her husband and remarried a Swedish man, would violate Article 3 of the
European Convention on Human Rights because she would be subjected “to torture or
to inhuman or degrading treatment or punishment”).
176
See, e.g., Vellani v. U.S. Att’y Gen., 296 F. App’x 870 (11th Cir. 2008)
(upholding denial of asylum, withholding, and CAT relief for Pakistani woman whose
fiancé refused to marry her because, although “honor killings” were prevalent in
Pakistan, applicant failed to show that she could not avoid persecution by reasonably
relocating to another part of the country).
177
This is because an asylum grantee can adjust her immigration status to
permanent residency after one year of physical presence as an asylum recipient in the
United States. 8 U.S.C.A. § 1159 (West 2011).
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proceedings, she would be at a severe disadvantage if she could
not obtain legal counsel. Therefore, as with the potential forms of
relief discussed above, asylum and its corollaries (withholding of
removal and CAT protection) are all but unattainable for abused
immigrant fiancées.
IV.
PROPOSED SOLUTIONS TO REMOVE ABUSED IMMIGRANT
FIANCÉES’ INCENTIVE TO REMAIN WITH THEIR ABUSERS
Battered K Visa holders should not be coerced, by the law
or by their abusers, to proceed with a marriage to an abusive
partner, just as those who have already married their USC
petitioner fiancés should not be compelled to remain in abusive
marriages for immigration benefits. Nevertheless, Congress has
chosen to provide relief only to this latter category of victims via
the self-petition. In 2002, then-Senator Joseph Biden remarked
that since the passage of VAWA, more than 12,000 applications
had been approved for “battered immigrant women escaping
abuse and establishing their own residency here . . . [and] there
has been a 41 percent decrease in the rate of intimate partner
victimization of women. . . . This is not the time to scale back our
efforts.”178 In order to remove the perverse incentive that compels
some battered K Visa holders to remain with their abusers, I
offer some amendments to U.S. immigration law that would
allow them to achieve valid immigration status while freeing
them from abusive relationships.
A.
Amend the INA to Allow Abused K Visa Holders to SelfPetition for Adjustment of Immigration Status
Dabaghian v. Civiletti179 helps to illustrate why a K Visa
holder who does not marry her abusive fiancé within the ninetyday timeframe—and thus has not established the basis for
adjusting her immigration status—should nonetheless be
entitled to immigration relief. In that case, the Ninth Circuit
Court of Appeals “set forth the federal rule regarding the
validity of a marriage for purposes of conferring an immigration
benefit: ‘If a marriage is not sham or fraudulent from its
inception, it is valid for the purposes of determining eligibility’
178
Leading the Fight: The Violence Against Women Office: Hearing Before the
Subcomm. on Crime and Drugs of the S. Comm. on the Judiciary, 107th Cong. (2002)
(statement of Sen. Joseph R. Biden, Jr.).
179
607 F.2d 868 (9th Cir. 1979).
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for benefits under the Immigration and Nationality Act.”180 Since
a K Visa recipient has already adduced evidence—which the
U.S. government has accepted—establishing her intent to marry
her USC fiancé and thus showing that the intended marriage
was “not a sham or fraudulent from its inception,” she should
not be precluded from attaining the immigration benefits that
would have been available to her if her partner were not abusive
and the marriage went forward as planned.
The dynamics ultimately dissuading Ayana from
proceeding with the marriage are the control and abuse by her
fiancé, who wooed her into leaving her home and migrating to
the United States. In such cases, it is not the immigrant
fiancée who is simply choosing not to marry the abusive fiancé,
but the abuser who is making the intended marriage
untenable. Significantly, in the VAWA self-petition, there
already exists an exception to the requirement of a bona fide
marriage whereby an immigrant fiancée who enters into a
bigamous marriage unknowingly—that is, she held a good faith
belief that her marriage was lawful, but it turned out to be an
illegitimate marriage because of the USC or LPR’s already
existing marriage to another—would still be eligible to selfpetition even though the marriage was technically unlawful.181
In the hypothetical scenario outlined above,182 Ayana
fully intended to enter into a bona fide marriage when she left
Ethiopia. She demonstrated this intent to the satisfaction of the
U.S. government, which issued her a K Visa under the
applicable immigration laws. Yet after her arrival to the United
States, the abuse perpetrated upon her by her USC fiancé drove
her to flee and caused her to refrain from marrying her abuser.
Therefore, since it was her abuser’s actions—and not her own—
that drove her from the relationship where she previously
intended to conclude a bona fide marriage, the law ought to
carve out a narrow exception for abused K Visa holders similar
to the exception for VAWA self-petitioners whose marriages are
invalid due to the bigamy of their abusers.
180
AUSTIN T. FRAGOMEN, JR. ET AL., 1 IMMIGRATION LAW & BUSINESS § 3:20
(2011) (quoting Dabaghian, 607 F.2d at 869).
181
8 U.S.C.A § 1154(a)(1)(A)(iii)(II) (West 2012) (pertaining to immigrants
who marry bigamous USCs); id. § 1154(a)(1)(B)(ii)(II) (pertaining to immigrants who
marry bigamous LPRs); see also supra Part II.B.3.
182
See supra notes 1-23 and accompanying text.
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Therefore, I propose that the VAWA self-petition
provision, located at 8 U.S.C. § 1154(a)(1)(A)(iii)(II), be
amended as follows183:
For purposes of subclause (I), an alien described in this subclause is
an alien-(aa) (AA) who is the spouse of a citizen of the United States;
(BB) who believed that he or she had married a citizen of the United
States and with whom a marriage ceremony was actually performed
and who otherwise meets any applicable requirements under this
chapter to establish the existence of and bona fides of a marriage,
but whose marriage is not legitimate solely because of the bigamy of
such citizen of the United States;
[(CC) who was admitted to the United States pursuant to a K-1 Visa
as the fiancé(e) of a citizen of the United States but who failed to enter
into a marriage because of that citizen’s abuse; or]
[DD] who was a bona fide spouse of a United States citizen within
the past 2 years and-(aaa) whose spouse died within the past 2 years;
(bbb) whose spouse lost or renounced citizenship status within the
past 2 years related to an incident of domestic violence; or
(ccc) who demonstrates a connection between the legal termination
of the marriage within the past 2 years and battering or extreme
cruelty by the United States citizen spouse;
(bb) who is a person of good moral character;
(cc) who is eligible to be classified as an immediate relative under
section 1151(b)(2)(A)(i) of this title or who would have been so
classified but for the bigamy of the citizen of the United States that
the alien intended to marry; and
(dd) who has resided with the alien’s spouse or intended spouse.
This note does not argue that the INA should be
amended to allow all K Visa holders to adjust their status
irrespective of the basis of marriage, but only that it should be
narrowly amended to permit those K Visa holders who have
been abused within the ninety-day statutory period to file selfpetitions and subsequently adjust their status without being
required to marry their abusive partners. Although this
183
The italicized language in brackets represents the proposed amendments.
Related sections of the United States Code and the Code of Federal Regulations would
likely need to be amended as well.
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amendment would constitute a considerable leap in policy by
allowing battered K Visa holders to self-petition and ultimately
adjust their immigration status to that of lawful permanent
resident, it is warranted because, as previously noted, the
abuser is the cause of the failed engagement. An abused K Visa
holder should not be motivated to proceed with the marriage to
her abusive fiancé in order to be eligible to file a VAWA selfpetition.
Indeed, incentivizing abused fiancées to complete their
marriages is utterly antithetical to the intent of the selfpetition and related provisions, which were enacted to enable
abused immigrants to leave their abusers without fearing
immigration consequences. Although Congress considered
exempting battered K Visa holders from the exclusion on
VAWA self-petitions in 1999 and opted not to pass that version
of the bill,184 this amendment deserves to be reconsidered. As
the Ninth Circuit Court of Appeals noted in Hernandez v.
Ashcroft, “[t]he notion that Congress would require women to
remain with their batterers in order to be eligible for the forms
of relief established in VAWA is flatly contrary to Congress’s
articulated purpose in enacting section 244(a)(3).”185
Opponents of the 1999 provision that would have
allowed abused K Visa holders to self-petition argued that “[a]
person who fails to enter into marriage with the U.S.
citizen . . . should be treated just like any other non-immigrant
when the rationale for temporary admission no longer
applies . . . .”186 However, this argument fails to consider the fact
that abuse by the USC petitioner is likely the precise reason an
abused K Visa holder in Ayana’s situation would not enter into
the intended marriage. She has already proven her intent to
enter into the marriage to the satisfaction of the U.S.
government,187 and she has relied on the U.S. government’s
184
See H.R. 3083 Hearing, supra note 19, at 89 (prepared statement of Dan
Stein, Exec. Dir., Fed’n for Am. Immigration Reform) [hereinafter Stein Statement]
(noting that the ninety-day requirement for fiancée visas was instituted by the
Immigration Marriage Fraud Act to prevent marriage fraud, and would thus be
undermined by the amendment).
185
345 F.3d 824, 841 (9th Cir. 2003).
186
H.R. 3083 Hearing, supra note 19, at 41 (prepared statement of Barbara
Strack, Acting Exec. Assoc. Comm’r for Policy & Planning, Immigration &
Naturalization Serv.).
187
See, e.g., U.S. DEP’T OF STATE, FOREIGN AFFAIRS MANUAL VOL. 9,
DOCUMENTARY
REQUIREMENTS
9
FAM
41.81
N4,
available
at
http://www.state.gov/documents/organization/87391.pdf; IGNATIUS & STICKNEY, supra
note 2, § 14:6.
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IMPROVEMENTS FOR IMMIGRANT FIANCÉES
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criminal background check to ensure that her fiancé is a safe
choice. Drawing the line between the married and the affianced
is not warranted when the USC petitioner’s abuse is what caused
the planned marriage to collapse. If Ayana could satisfactorily
demonstrate the existence of abuse through “any credible
evidence”—the same standard that applies to VAWA selfpetitions—the law should provide her with sufficient protections,
notwithstanding her failure to proceed with the marriage.
Furthermore, concerns about marriage fraud should not
motivate Congress to withhold reasonable protections from
battered K Visa holders. Some would preclude Ayana from selfpetitioning because, as one opponent argued, it would “undermine[]
[the] anti-fraud measure” (i.e., the ninety-day marriage
requirement) which “was adopted to prevent the fiance visa from
being used for fraudulent entry.”188 Yet the anti-fraud argument
overlooks a crucial fact: IMFA was based on flawed research from
the start. IMFA was predicated upon an estimate that “as much as
30 percent . . . of the spouse relationships may be fraudulent.”189
However, the Immigration and Naturalization Service (INS) itself
“conceded the invalidity of the survey” in subsequent litigation,
because the survey was based on data from only three cities and it
only concerned cases where officials merely suspected marriage
fraud, rather than cases of actual fraud.190
While legislators may express valid concerns about
fraudulent circumvention of immigration laws, it has not been
shown that abused K Visa holders would exploit their positions as
nonimmigrants. Moreover, it is unreasonable to presume that K
Visa holders would fabricate abuse; rather, it would be more
appropriate to place the burden on the government to prove fraud
by a K Visa holder who has already undergone the visa
application process.191
188
Stein Statement, supra note 184, at 89.
Jones, supra note 20, at 699 (emphasis added) (quoting Immigration
Marriage Fraud: Hearings Before the Subcomm. on Immigration and Refugee Policy of
the S. Comm. on the Judiciary, 99th Cong. 35 (1985) (statement of INS Comm’r Alan C.
Nelson)) (internal quotation marks omitted). At the same hearing, American
Immigration Lawyers Association president Jules Coven responded that he “would be
extremely surprised to learn, if it could be shown statistically, that more than one or
two percent of the ‘green cards’ issued annually on the basis of marriage involved
fraud.” Id.
190
Id. (citing Manwani v. INS, 736 F. Supp. 1367 (W.D.N.C. 1990)); see also
Manwani, 736 F. Supp. at 1373 (noting that “[t]he INS conceded and the evidence
shows that the . . . survey is not a statistically valid study of the suspected or actual
incidence of marriage fraud.”).
191
During the application process, the applicant must submit to an interview
by consular officials and swear to or affirm her intent to enter into the planned
189
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Indeed, reasonable means already exist for preventing
fraudulent manipulation of this proposed amendment. For
example, immigration law already contains provisions denying
adjustment of status petitions for marriages “determined by
the Attorney General to have been entered into for the purpose
of evading the immigration laws . . . .”192 In order to prevent
fraud by K Visa holders who are not actually abused, Congress
should simply add a clause addressing this specific concern; if
it has been determined that a visa holder acquired the K Visa
merely to evade the immigration laws, then she is ineligible to
obtain the benefits of a self-petition. This can be enforced
through the same process by which fraud is investigated in the
K Visa application process: by interviewing the applicant.193
There are already measures to prevent fraudulent
accusations of abuse in the self-petition process as well: “[The
Department of Homeland Security] can rely on virtually any
evidence that comes to its attention suggesting fraud. For
example . . . [it can] investigate information provided by an
alleged abuser and rely upon it if it can be corroborated.”194
Since a K Visa holder has already established, to the
satisfaction of the U.S. government, her good faith intent to
marry her USC petitioning fiancé within ninety days of her
arrival, adequate “safeguards against fraud” already exist.195
B.
Amend the U Visa Requirements to Provide a
Reasonable Exception for Abused K Visa Holders
Alternatively, the U Visa requirements should be relaxed
for abused K Visa holders, specifically by removing the law
enforcement certification requirement. This change would allow
marriage within ninety days of arrival in the United States. See supra Part I for a
discussion of the K Visa application process.
192
8 U.S.C. § 1154(c) (2006).
193
In-person interviews were set forth in an amendment by Senator Chuck
Grassley (R-Iowa) as a way to prevent fraud in VAWA self-petitions. See S. REP. NO.
112-153, at 45-46 (2012). Cf. IGNATIUS & STICKNEY, supra note 2, § 5:44 (describing
interviews for married couples who are petitioning via form I-751 to remove the
conditions on residence for the immigrant spouse).
194
S. REP. NO. 112-153, at 12 n.31. This statement responds to “claims raised
by a hearing witness and another U.S. citizen who claimed that she had been a victim
of fraud when her non-U.S. citizen [male] spouse filed a VAWA self-petition.” Id.
195
See Wood, supra note 159, at 155 (arguing that illegal immigration will not
increase if protections are given to all battered immigrants regardless of marital
status). “It is absurd to imagine that women will consciously enter abusive
relationships in order to gain legal status or . . . fabricate evidence of abuse sufficiently
credible to convince the [government]. The [immigration authorities] ha[ve] already
erected numerous safeguards against fraud . . . .” Id.
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the applicant to obtain the benefits of the U Visa, which include
lawful immigration status for four years and the ability to file for
adjustment of status after three years.196 Moreover, the amendment
could be achieved by adding a narrow exception for K Visa holders
to allow them to obtain U Visas without meeting the same
evidentiary requirements as other undocumented immigrants.
This exception is justified because, as previously noted, a K Visa
holder has already adequately evidenced her intent to marry her
fiancé and complied with the law, at least until the point where
abuse began. The reason for noncompliance—e.g., allowing the
ninety-day period to lapse without proceeding with the marriage—
is due to her fiancé’s abuse rather than a voluntary decision to
violate the statute. Further illustrating the need for this exception
is the fact that, as discussed above at Parts II and III.B, “abusers of
undocumented immigrants often exploit . . . victims’ immigration
status, leaving the victim afraid to report the abuse to law
enforcement and fearful of assisting with the investigation and
prosecution of associated crimes.”197
Therefore, I propose that the U Visa petitioning
requirements, located within 8 U.S.C. § 1184(p)(1), be amended
as follows198:
(1) Petitioning procedures for section 1101(a)(15)(U) visas
The petition filed by an alien under section 1101(a)(15)(U)(i) of this title
shall contain a certification from a Federal, State, or local law
enforcement official, prosecutor, judge, or other Federal, State, or local
authority investigating criminal activity described in section
1101(a)(15)(U)(iii) of this title. This certification may also be provided by
an official of the Service whose ability to provide such certification is not
limited to information concerning immigration violations. This
certification shall state that the alien “has been helpful, is being helpful,
or is likely to be helpful” in the investigation or prosecution of criminal
activity described in section 1101(a)(15)(U)(iii) of this title.
[Exception: in the case of an alien who was admitted to the United States
pursuant to a K-1 Visa as the fiancé(e) of a citizen of the United States
but who failed to enter into a marriage because of that citizen’s abuse,
certification shall not be required and the alien shall only be required to
demonstrate any credible evidence of abuse, including but not limited to
196
See supra Part III.B.
S. REP. NO. 112-153, at 12. Among the proposed amendments explained in
the Senate report are an expansion of the annual cap on U Visas and adding “stalking”
to the list of qualifying crimes. Id.
198
The italicized language in brackets represents the proposed amendments.
Related sections of the United States Code and the Code of Federal Regulations would
likely need to be amended as well.
197
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photographs, emergency room reports, police reports, affidavits, and
victim and witness testimony.]
This amendment to the U Visa requirements would enable
an abused K Visa holder, such as Ayana, to obtain immigration
relief by demonstrating abuse, rather than by requiring her to
affirmatively report abuse to police and seek law enforcement
certification—something a typical battered immigrant woman is
unlikely to do and that could put her at risk of removal if she has
already overstayed the K Visa without marrying her abuser.199
Moreover, the law should be more concerned with empowering
abused women to escape from relationships where domestic
violence occurs, rather than focusing on the prosecution of
abusers, to the extent those objectives are at odds with one
another. Importantly, the VAWA self-petition does not require
applicants to be helpful in investigating or prosecuting domestic
violence; K Visa holders should not be made to do so simply
because they would prefer not to marry their abusive fiancés.
Accordingly, the proposed amendment is a reasonable alternative
for abused K Visa holders, who would have a more viable
incentive to leave their abusive USC fiancés.
CONCLUSION
As Congress considers reauthorization of the Violence
Against Women Act, it should reflect upon the difficulties affecting
abused immigrant fiancées like Ayana who enter the United States
on K Visas and experience abuse within the first ninety days of
their arrival. Congress should amend the Immigration and
Nationality Act to permit women who enter the United States on
valid K Visas to file VAWA self-petitions if they subsequently find
themselves in abusive relationships with their fiancés, even if they
do not ultimately marry their intended spouses. In the alternative,
the U Visa provisions should be amended to provide abused K Visa
recipients with an easier avenue to legitimate immigration status,
without requiring them to report their abuse to the police or obtain
law enforcement certification. Reporting abuse should be
encouraged, but not required because of abused immigrants’
understandable fears of deportation.
Battered K Visa holders like Ayana find themselves
trapped in an intolerable position, where they must either remain
199
See supra Part III.B. Of course, applying for a U Visa could also put her at
risk of removal—in the event her application is denied—since it would notify the
authorities of her unlawful presence (assuming her K Visa has expired).
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IMPROVEMENTS FOR IMMIGRANT FIANCÉES
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with their abusers to secure the immigration benefits associated
with marriage, return to their home countries, reside in the
United States illegally, or pursue more challenging avenues to
legal immigration status. Unjustly, this puts more power in the
hands of an abusive USC petitioner, who may still threaten his
fiancée with deportation. It also unfairly forces the battered
woman to choose between several untenable options, all because
of the abuse that has been perpetrated upon her by a citizen of
the United States. Obviously, these already dire circumstances
are even worse for a battered K Visa holder who has children.
Ayana relied on the promises of her fiancé to treat her
well and care for her and her children. She endured a long
administrative process and demonstrated satisfactory evidence
of her intent to enter into a marriage within ninety days of her
arrival in the United States. Ayana and her children envisioned
a better life. Instead, when she arrived in New York, she was
beaten, treated cruelly, and left with nothing but difficult
choices. This result is antithetical to VAWA’s promise of
enabling battered women to escape from their abusers, and for
these reasons, the INA should be amended upon VAWA’s
reauthorization to allow for abused K Visa holders to attain
legal immigration status without marrying their batterers.
Ultimately, if abuse arises within the first ninety days of an
immigrant fiancée’s admission into the United States,
immigration policy should not create the perverse incentive for
her to proceed with her marriage to an abusive fiancé. In the
balance between preventing immigration fraud and protecting
battered immigrant women, the scales should not tip so far that
the vulnerable fall to the wayside.
Adam B. Horowitz†
†
J.D. Candidate, Brooklyn Law School, 2013; B.A., University of Rhode
Island, 2002. I would like to thank the Brooklyn Law Review staff for their countless
hours of editing and the several professors at Brooklyn Law School—particularly Mark
Noferi, Stacy Caplow, and Dan Smulian—who provided helpful critique of this note.
Thanks to Andrea Panjwani and African Services Committee for the inspiration. I
would also like to extend my heartfelt gratitude to my family and friends who have
sustained me through life, and to my second family in Karantaba. Thank you, Mom
and Dad, for your love and encouragement. Thanks, Josh, for the life-long technical
support. And to Arame, for all that you are. It is my wish that this work serve as a
contribution to legal developments based on reason, mindfulness, and compassion. I
hope this will give a voice to those who are silenced, and shine light upon those living
in shadows.
Softwood Lumber’s “Termite” Problem
1
WHY THE EXTENSION OF THE 2006 SOFTWOOD
LUMBER AGREEMENT IS RIGHT FOR SOFTWOOD
LUMBER BUT WRONG FOR THE MULTILATERAL
TRADING SYSTEM
INTRODUCTION
On January 24, 2012, United States Trade Representative
Ron Kirk and Canadian Minister for International Trade Ed Fast
signed a two-year extension of the 2006 Softwood Lumber
Agreement (SLA 2006),2 extending the agreement through
October 12, 2015.3 The SLA 2006 governs the most notorious
trade dispute in the history of Canadian-American relations: the
Canada-United States softwood lumber dispute.4 The softwood
lumber dispute centers on allegations by the United States that
the Canadian government unfairly subsidizes its softwood
1
See JAGDISH BHAGWATI, TERMITES IN THE TRADING SYSTEM: HOW
PREFERENTIAL AGREEMENTS UNDERMINE FREE TRADE xii (2008).
2
Softwood Lumber Agreement Between the Government of Canada and the
Government of the United States of America, U.S.-Can., Sept. 12, 2006, Temp. State
Dep’t No. 07-222, KAV 8209, available at http://www.ustr.gov/webfm_send/3254 (last
visited Nov. 21, 2012), amended by Agreement Between the Government of Canada
and the Government of the United States of America Amending the Softwood Lumber
Agreement Between the Government of Canada and the Government of the United
States of America, U.S.-Can., Oct. 12, 2006, Temp. State Dep’t No. 07-223, KAV 8310,
available at http://www.international.gc.ca/controls-controles/assets/pdfs/softwood/
Agreementamending-en.pdf (last visited Sept. 23, 2011) [hereinafter SLA 2006].
3
Agreement Between the Government of Canada and the Government of the
United States of America Extending the Softwood Lumber Agreement Between the
Government of Canada and the Government of the United States of America, as Amended,
U.S.-Can., Jan. 23, 2012, http://www.international.gc.ca/controls-controles/softwood-bois_
oeuvre/other-autres/SLA_2012.aspx?lang=eng&view=d (last visited May 16, 2012).
4
See e.g., GREGORY W. BOWMAN, NICK COVELLI, DAVID A. GANTZ & IHN HO
UHM, TRADE REMEDIES IN NORTH AMERICA 553 (2010) (“The softwood lumber dispute
between the United States and Canada represents the longest-running and perhaps most
bitter trade dispute ever between the two countries.”); DAOWEI ZHANG, THE SOFTWOOD
LUMBER WAR: POLITICS, ECONOMICS, AND THE LONG U.S.-CANADIAN TRADE DISPUTE 1
(2007) (“Since the value of softwood lumber trade currently exceeds US$7 billion
annually, this disagreement easily ranks as the largest trade dispute between the two
countries in the modern era, and its longevity has defied many seasoned observers.”).
165
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lumber industry, allowing Canadian lumber producers to dump
their products into the U.S. market at below production cost.5
In large part, these allegations stem from the countries’
differing systems of forest management.6 In the United States,
forest land is mostly privately owned, and market forces
generally determine the stumpage fees harvesters must pay for
timber.7 In Canada, because the majority of its forests are
considered public land, provincial governments set the fees
that harvesters must pay.8 Many U.S. lumber producers believe
that the Canadian system qualifies as a subsidy, by creating
“chronically below-market-value stumpage charges,”9 and have
long urged the U.S. government to impose countervailing
(CVD) and antidumping (AD) duties on imports of Canadian
softwood products.10 Their claims have led to nearly three
decades of litigation.11
This dispute should be of particular concern to both
Canadians and Americans alike, as Canada is currently the
United States’ largest trading partner in goods, with the two
5
See, e.g., Press Release, Coalition for Fair Lumber Imports, U.S. Coalition
for Fair Lumber Imports Demands Relief from Canadian Subsidies, Dumping (Apr. 2,
2001), available at http://www.uslumbercoalition.org/doc/4_2_01release.pdf [hereinafter
Coalition Demands].
6
BOWMAN ET AL., supra note 4, at 556 (“In the United States, some 70% of
timberlands are privately owned. In Canada, in contrast, 94% of the forests are on
provincial or federal government (‘Crown’) lands.”).
7
Michael Hart & Bill Dymond, The Cul-de-Sac of Softwood Lumber, 26
POL’Y OPTIONS no. 9, 2005, at 20. “Stumpage [fees]” are what lumber companies must
pay for the right to harvest timber. Id. at 19.
8
Id. at 19-20.
9
Henry Spelter, If America Had Canada’s Stumpage System, 52 FOREST SCI.
443, 444 (2006). Spelter believes that it is “unclear whether this is a subsidy in the
sense that the [NAFTA] and [WTO] agreements were meant to deal with, i.e., direct
financial aid furnished by a government.” Id.
10
See, e.g., Coalition Demands, supra note 5. In the United States, a
domestic industry that believes it is being injured by way of a foreign government
subsidizing foreign exporters or a foreign producer dumping an export in the United
States at a price lower than its home market price may file a petition with both the
International Trade Administration, which is part of the Department of Commerce
(Commerce), and the International Trade Commission (ITC), which is an independent
agency. U.S. Dep’t of Commerce, An Introduction to U.S. Trade Remedies, IMP. ADMIN.,
http://ia.ita.doc.gov/intro/index.html (last visited Oct. 29, 2011). Commerce determines
whether the import is, in fact, being subsidized or dumped into the market, while the
ITC determines whether the import is causing material injury, or threatening to cause
an injury, to the domestic industry. Id. “If both Commerce and the ITC make
affirmative findings . . . , Commerce instructs U.S. Customs and Border Protection
[(CBP)] to assess duties against imports of that product into the United States.” Id.
11
Canada-U.S. Softwood Lumber Trade Relations (1982–2006), FOREIGN
AFFAIRS & INT’L TRADE CAN., http://www.international.gc.ca/controls-controles/softwoodbois_oeuvre/notices-avis/82-06.aspx?lang=eng&view=d (last modified Apr. 20, 2009).
2012]
SOFTWOOD LUMBER’S “TERMITE” PROBLEM
167
countries trading over $597 billion during 2011 alone.12 More
specifically, Canada has historically been the largest source of
lumber imports in the United States.13
Culminating with the SLA 2006, the most recent
developments in the softwood lumber dispute resulted from
what commentators have labeled a “hydra” of litigation.14
Disputes were settled under Chapters 11 and 19 of the North
American Free Trade Agreement (NAFTA), the World Trade
Organization (WTO) dispute settlement system, and within
U.S. domestic courts.15 This overlap is a result of the
proliferation of preferential trade agreements (PTAs)16 within
the international trading system, which enable parties to seek
recourse under multiple dispute settlement regimes.17 Although
NAFTA contains a choice of forum clause intended to prevent
overlap in dispute settlement,18 the clause does not apply to
final AD or CVD determinations, such as those at issue in the
12
Top Trading Partners, U.S. CENSUS BUREAU, http://www.census.gov/
foreign-trade/statistics/highlights/top/top1112yr.html (last visited Dec. 19, 2012).
13
BOWMAN ET AL., supra note 4, at 553.
14
John H. Knox, The 2005 Activity of the NAFTA Tribunals, 100 AM. J. INT’L
L. 429, 436 (2006).
15
See infra Part II.
16
Preferential trade agreements (also referred to as “regional trade
agreements”) are agreements by which “parties to [the agreement] offer to each
other . . . more favorable treatment in trade matters than [what is offered] to the rest of
the world, including WTO Members.” Rafael Leal-Arcas, Proliferation of Regional
Trade Agreements: Complementing or Supplanting Multilateralism?, 11 CHI. J. INT’L L.
597, 600 (2011). PTAs are a “departure from the WTO [most-favored nation] principle
of non-discrimination,” but are WTO-consistent under three rules: (i) GATT Article
XXIV:4-10; (ii) the Enabling Clause, and (3) GATT Article V. Id. at 602. The majority of
PTAs are in the form of free trade agreements (FTAs), such as NAFTA. BHAGWATI,
supra note 1, at 1. Because even those commentators who use the term “regional trade
agreements” admit that these agreements “may be . . . concluded between countries not
necessarily located in the same geographic region,” I believe that PTAs is a more
accurate label. Leal-Arcas, supra, at 600. Between 1985 and 2005, the share of world
trade that came from PTAs grew from approximately 20% to around 50%. Id. at 602. To
date, various states have notified over 500 PTAs to the WTO Secretariat and numerous
others are currently under negotiation. Regional Trade Agreements, WORLD TRADE
ORG., http://www.wto.org/english/tratop_e/region_e/region_e.htm (last visited Jan. 7,
2012). Of the 233 PTAs currently in force, approximately 85% are FTAs such as
NAFTA. See List of All RTAs, WORLD TRADE ORG., http://rtais.wto.org/UI/
PublicAllRTAList.aspx (last visited Sept. 12, 2012).
17
Jennifer Hillman, Conflicts Between Dispute Settlement Mechanisms in
Regional Trade Agreements and the WTO—What Should the WTO Do?, 42 CORNELL
INT’L L.J. 193, 194 (2009) (noting the “problems that can arise from the overlap or
conflict between these RTA settlement provisions and the Dispute Settlement
Understanding of the WTO”).
18
North American Free Trade Agreement Between the Government of the
United States of America, the Government of Canada and the Government of the
United Mexican States, U.S.-Can.-Mex., art. 2005(6), Dec. 17, 1992, 32 I.L.M. 612, 695
(1993) [hereinafter NAFTA].
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softwood lumber dispute.19 More generally, there is little clarity
on the exact legal relationship between PTA and WTO dispute
settlement systems.20 General Agreement on Tariffs and Trade
(GATT) Article XXIV addresses only the “formation” of PTAs and
is silent on issues pertaining to the operational relationship
between PTAs and the WTO.21 Moreover, there is no overarching
statute that defines the authority of one tribunal in relation to
another.22 This uncertainty is directly linked to the superfluous
litigation discussed below.
The growth of PTAs has several explanations—most
notably the stalled Doha Round of multilateral trade
negotiations23—and the impact PTAs have on the multilateral
trading system is much debated.24 This debate is beyond the
scope of the instant analysis. For the purposes of this note, which
examines a PTA sub-agreement (the SLA 2006),25 I have accepted
the position that PTAs undercut the multilateral trading system.
The extension of the SLA 2006 raises two important
questions: first, what does it mean for the softwood lumber
dispute itself; and, second, what does it mean for the
multilateral trading system as a whole? Put differently, if PTAs
such as NAFTA are the “termites” of the multilateral trading
system,26 can an agreement spawned from NAFTA’s own failures
act as an insecticide, helping to exterminate these preferential
19
Id. at art. 2004. Parties have also been reluctant to rely on NAFTA Article
2005 even outside the context of AD and CVD cases. Joost Pauwelyn & Luiz Eduardo
Salles, Forum Shopping Before International Tribunals: (Real) Concerns, (Im)Possible
Solutions, 42 CORNELL INT’L L.J. 77, 89 (2009).
20
Hillman, supra note 17, at 197.
21
Sungjoon Cho, Breaking the Barrier Between Regionalism and
Multilateralism: A New Perspective on Trade Regionalism, 42 HARV. INT’L L.J. 419, 452
(2001). The Doha Declaration includes a negotiating mandate to clarify and improve
“disciplines and procedures under the existing WTO provisions applying to regional
trade agreements.” World Trade Org., Ministerial Declaration of 14 Nov. 2001, ¶ 29,
WT/MIN(01)/DEC/1, 41 I.L.M. 746 (2002).
22
Pauwelyn & Salles, supra note 19, at 84.
23
Leal-Arcas, supra note 16, at 621-23 (listing other economic and political
reasons why countries agree to PTAs so frequently); see also BHAGWATI, supra note 1,
at 16-47 (listing the “many reasons why PTAs have now turned into a pandemic and a
pox on the world trading system”).
24
See, e.g., Cho, supra note 21, at 429-35; Leal-Arcas, supra note 16, at 623-26.
25
The term “PTA sub-agreement” is meant to describe a trade agreement
between two countries that have already agreed to a PTA. In this analysis, the PTA
sub-agreement at issue is the SLA 2006, between Canada and the United States who
are both members of NAFTA.
26
BHAGWATI, supra note 1, at xii (“Acting like termites, PTAs are eating
away at the multilateral trading system relentlessly and progressively.”). But see LealArcas, supra note 16, at 629 (arguing that RTAs can “complement” multilateralism). I
should note that termites seem like an especially suitable analogy when discussing a
trade agreement dealing with softwood lumber.
2012]
SOFTWOOD LUMBER’S “TERMITE” PROBLEM
169
agreements? Or, does such an agreement only add to the forces
undercutting the long-term prospects for multilateralism?
This note will argue that parties directly involved in the
Canadian-American softwood lumber trade should welcome the
extension of the SLA 2006. But this support should come with
pause—especially for those who wish to see the global trading
community return more ardently to the multilateral system.
While the streamlined dispute settlement process of the SLA
200627 has thus far proven to be the most effective solution to
the lumber saga, this is only because the alternative monstrous
“hydra” of litigation is impracticable. A workable resolution to
NAFTA’s largest and most bitter dispute that fails to directly
address the systemic shortcomings of PTAs will only
temporarily insulate the parties from the underlying problems
and will draw their attention further away from wholesale
multilateralism.28 The SLA 2006 is not a grand solution for the
problems of the multilateral trading system.
This note is divided into five sections. Part I describes
the early history of the softwood lumber dispute from 1982 to
2001. Part II highlights the superfluous litigation that occurred
between 2001 and 2006, which culminated in the SLA 2006.
This section provides a brief overview of the disputes that
occurred within NAFTA, the WTO, and U.S. domestic courts,
and it highlights the problems that were caused by these
overlapping dispute settlement mechanisms. Part III provides
an overview of the SLA 2006 and briefly addresses the disputes
that have arisen under this agreement. Part IV explains why the
SLA 2006 is the most practical solution to the softwood lumber
dispute, arguing that a negotiated agreement with a
straightforward dispute settlement mechanism is necessary to
offset the United States’ stubborn political protection of its
softwood lumber industry. Finally, Part V explains how the
softwood lumber dispute highlights the shortcomings of PTAs
and argues that, in the case of NAFTA, taking lumber out of the
equation removes a major incentive to correct these deficiencies.
27
SLA 2006, supra note 2, at art. XIV.
See Michael S. Valihora, NAFTA Chapter 19 or the WTO’s Dispute
Settlement Body: A Hobson’s Choice for Canada?, 30 CASE W. RES. J. INT’L L. 447, 471
(1998). (“Perhaps the Softwood Lumber Dispute is simply too big for [NAFTA Chapter
19], but the mechanism is sufficient in most circumstances.”). This point, made in 1998,
highlights both the atypical size of the softwood lumber dispute, and the shortcomings
of NAFTA. A dispute settlement mechanism that is “sufficient in most circumstances”
is, by its nature, patently insufficient.
28
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I.
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THE EARLY BATTLES—THE HISTORY OF THE SOFTWOOD
LUMBER DISPUTE (1982–2001)
The modern history of the softwood lumber dispute is
best understood as four discrete “battles”29: Lumber I (1982–
1983), Lumber II (1986–1991), Lumber III (1991–1996), and
Lumber IV (2001–2006).30 As one commentator suggests, this
history “involves extremely arcane points of anti-dumping and
countervailing duty law and an extraordinarily convoluted
litigation history.”31 Despite the protracted nature of the
dispute, it is important to address each stage in order to
understand how and why wood has been the source of a thirtyyear trade war. Accordingly, this note will briefly address
Lumber I, II, and III below.32 This note will discuss Lumber IV
in greater detail in Part II, given that it culminated in the
agreement that is the focus of this note: the SLA 2006.33
A.
Lumber I (1982–1983)
Lumber I began in 1982 when a coalition of U.S. lumber
producers, later known as the Coalition for Fair Lumber
Imports (Lumber Coalition), filed a CVD petition with the
Department of Commerce (Commerce).34 The petition alleged
that the Canadian government subsidized softwood lumber
through various programs that set artificially low stumpage
rates for Canadian producers.35 Commerce initiated an
investigation, but it eventually determined that no subsidy
existed within the meaning of domestic CVD law and dismissed
29
BOWMAN ET AL., supra note 4, at 554. Other commentators describe the
dispute as “A War between Friends.” See ZHANG, supra note 4, at 1.
30
Canada-U.S. Softwood Lumber Trade Relations (1982–2006), supra note
11. For the purposes of this note, I address Lumber IV as beginning with the expiration
of the 1996 Canada-United States Softwood Lumber Agreement, which occurred on
March 31, 2001. Id.
31
Jeffrey L. Dunoff, The Many Dimensions of Softwood Lumber, 45 ALTA. L.
REV. 319, 320 (2007).
32
Other sources provide excellent summaries of the early history of the
dispute in much greater detail. See, e.g., BOWMAN ET AL., supra note 4, at 556-69;
ZHANG, supra note 4, at 24-165; Kevin C. Kennedy, A Legal History of the Softwood
Lumber Dispute (in a Nutshell), 52 FOREST SCI. 432, 432-36 (2006).
33
See infra Part II.
34
U.S. Dep’t of Commerce, Initiation of Countervailing Duty Investigations;
Certain Softwood Lumber Products from Canada, 47 Fed. Reg. 49,878 (Nov. 3, 1982);
see also supra note 10 (discussing CVD laws).
35
Certain Softwood Lumber Products from Canada, 47 Fed. Reg. 49,878.
2012]
SOFTWOOD LUMBER’S “TERMITE” PROBLEM
171
the petition.36 Lumber I is the only round of the softwood
lumber dispute that did not produce a negotiated settlement.37
B.
Lumber II (1986–1991)
The peace that Lumber I established was short-lived. In
1986, the Lumber Coalition filed a second CVD petition, but
this time Commerce issued an affirmative preliminary
determination, ruling that Canada’s provincial stumpage
programs constituted a 15% subsidy.38 Although an affirmative
preliminary determination is usually followed by a final
determination, no final determination was reached in Lumber
II.39 Rather, the investigation was suspended when Canada and
the United States signed a Memorandum of Understanding
(MOU) in December 1986, where Canada agreed to impose a
15% tax on exports of softwood lumber to the United States,
which Canada could proportionately phase out if the provinces
increased their stumpage fees.40 Despite this agreement, both
governments reserved their positions as to whether Canada’s
stumpage programs qualified as subsidies.41 As a result, the
conflict at the root of the dispute remained unresolved.
By 1991, Canada’s major lumber exporting provinces
had independently increased their stumpage fees and,
pursuant to the terms of the agreement, Canada eliminated the
export tax for exports from British Columbia and lowered it to
3.1% for exports from Quebec.42 Nevertheless, high-level
Canadian officials remained dissatisfied with the agreement.
In October 1991, armed with a new dispute settlement
36
U.S. Dep’t of Commerce, Final Negative Countervailing Duty
Determinations: Certain Softwood Products from Canada, 48 Fed. Reg. 24,159, 24,159
(May 31, 1983) (finding that the subsidies were “de minimis” and therefore did not
constitute subsidies within the meaning of section 701 of the Tariff Act of 1930). CVDs
may only be imposed if the countervailable subsidy is above a de minimis level.
BOWMAN ET AL., supra note 4, at 128. The standard de minimis threshold for CVD
investigations is 1%. Id.
37
David Quayat, The Forest for the Trees: A Roadmap to Canada’s Litigation
Experience in Lumber IV, 12 J. INT’L ECON. L. 115, 122 (2009).
38
U.S. Dep’t of Commerce, Preliminary Affirmative Countervailing Duty
Determination: Certain Softwood Lumber Products from Canada, 51 Fed. Reg. 37,453
(Oct. 22, 1986).
39
BOWMAN ET AL., supra note 4, at 134.
40
See Statement Regarding the Agreement Between the United States and
Canada Concerning Trade in Certain Softwood Lumber Products with Memorandum of
Understanding, Agreed Minute and Related Letters, U.S.-Can., Dec. 30, 1986, Temp.
State Dep’t No. 87-31, KAV 272, at [i].
41
Id. ¶ 3(b).
42
BOWMAN ET AL., supra note 4, at 560.
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provision under the Canada-United States Free Trade
Agreement (CUSFTA)—which permitted review of adverse
AD/CVD determinations directly to a binational panel43—
Canada terminated the MOU.44 The United States’ reaction was
both “swift and unprecedented,”45 and Lumber III was launched
before the end of the month.
C.
Lumber III and the 1996 Softwood Lumber Agreement
(1991–2001)
Although Canada’s termination of the MOU should have
come with little surprise to U.S. officials, Commerce’s swift
response was indicative of its disappointment with Canada’s
decision.46 On October 31, 1991, Commerce took the exceptional
step of self-initiating a CVD investigation for the first time in its
history.47 Unlike in Lumber II, Commerce eventually reached a
final affirmative subsidy determination, which was soon
followed by a final affirmative injury determination by the U.S.
International Trade Commission (ITC).48 As a result of these
rulings, Canadian lumber exporters faced an unprecedented
CVD of 6.51% on all products entering the U.S. market.49
43
Canada-United States: Free-Trade Agreement, U.S.-Can., ch. 19, Dec. 22,
1987, 27 I.L.M. 293 (1988). The Canada-United States Free-Trade Agreement
(CUSFTA) was a predecessor to NAFTA. Quayat, supra note 37, at 123. During the
negotiations for the CUSFTA, AD/CVD were a source of much controversy. Canada
wished to see AD/CVD eliminated, and the United States was intent on retaining them.
Knox, supra note 14, at 434. The result was that the parties were allowed to seek
review of adverse AD/CVD determinations directly to a binational panel, rather than to
the domestic court of the country imposing the duties. Id. Despite the fact that this was
meant only to serve as a temporary solution, NAFTA negotiators included it with only
“minor modifications.” Id.
44
BOWMAN ET AL., supra note 4, at 560.
45
Quayat, supra note 37, at 123.
46
BOWMAN ET AL., supra note 4, at 560-61.
47
U.S. Dept. of Commerce, Self-Initiation of Countervailing Duty
Investigation: Certain Softwood Lumber Products from Canada, 56 Fed. Reg. 56,055
(Oct. 31, 1991); Kennedy, supra note 32, at 434. A CVD investigation is usually
initiated by an industry petition. See supra note 10.
48
U.S. Dep’t of Commerce, Final Affirmative Countervailing Duty
Determination: Certain Softwood Lumber Products from Canada, 57 Fed. Reg. 22,570
(May 28, 1992); Softwood Lumber from Canada, Inv. Nos. 701-TA-414, 731-TA-928, 57
Fed. Reg. 31389 (July 15, 1992) (final). Under U.S. CVD laws, both a finding of an
actionable subsidy and a finding of a material injury are required to apply CVDs. See
supra note 10.
49
Certain Softwood Lumber Products from Canada, 57 Fed. Reg. 22,570.
Commerce found two types of subsidies—stumpage programs and log export
regulations—and determined that they resulted in a net subsidy of 6.51% ad valorem.
Id. at 22,570, 22,580, 22,604. Softwood Lumber I ended when Commerce determined
that no countervailable subsidy existed. See supra Part I.A. Softwood Lumber II ended
with the 1986 Memorandum of Understanding. See supra Part I.B.
2012]
SOFTWOOD LUMBER’S “TERMITE” PROBLEM
173
This, however, was only the beginning of Lumber III. The
defining characteristic of the modern state of the softwood
lumber dispute is a seemingly endless, often controversial course
of litigation. And as a sign of things to come, Canada responded
by exercising its rights under the recently enacted dispute
settlement mechanisms of the CUSFTA and seeking panel
review of the United States’ use of trade remedies against its
exports of softwood lumber.50 Canada appealed both the ITC’s
injury determination51 and Commerce’s subsidy determination.52
These appeals were resolved largely in Canada’s favor.
First, in reviewing the affirmative injury determination,
the CUSFTA panel rejected the ITC’s finding of material injury
and remanded the issue for reconsideration.53 Despite the ITC’s
multiple attempts to address the panel’s concerns on remand,
the CUSFTA panel continued to rule in Canada’s favor.54
Similarly, in reviewing Commerce’s affirmative subsidy
determination, the CUSFTA panel found that a number of
Commerce’s findings were unsupported by law and remanded
the issue to Commerce for further consideration.55 After one
remand, the CUSFTA panel ruled along national lines, with a
Canadian majority finding that Commerce’s determinations
were again unsupported by U.S. law and remanding with
instructions that Commerce make a determination consistent
with the panel’s finding that no countervailable subsidy existed.56
50
Chapter 19 is a dispute resolution mechanism that replaces U.S. or
Canadian judicial review of final AD/CVD determinations with a binational panel. See
supra note 43.
51
United States-Canada Free Trade Agreement Binational Panel Review, In
the Matter of: Softwood Lumber from Canada, Reviewing the Final Determinations of
the U.S. International Trade Commission, at 1, USA-92-1904-02 (July 26, 1993)
[hereinafter Lumber III Injury CUSFTA Panel Decision].
52
United States-Canada Free Trade Agreement Binational Panel Review, In
the Matter Certain Softwood Lumber Products from Canada, at 1, USA-92-1904-01
(May 6, 1993) [hereinafter Lumber III Subsidy CUSFTA Panel Decision].
53
Lumber III Injury CUSFTA Panel Decision, supra note 51, at 20
(concluding that “the [U.S. International Trade] Commission’s determination of
material injury by reason of subsidized Canadian imports is not supported by
substantial evidence on the record,” and remanding “the Commission’s final
determination for reconsideration”).
54
United States-Canada Free Trade Agreement Binational Panel Review, In
the Matter of: Softwood Lumber from Canada, at 8, USA-92-1904-02 (July 6, 1994);
United States-Canada Free Trade Agreement Binational Panel Review, In the Matter
of: Softwood Lumber from Canada, Decision of the Panel on Review of the Remand
Determination of the U.S. International Trade Commission, at 35, USA-92-1904-02
(Jan. 28, 1994).
55
Lumber III Subsidy CUSFTA Panel Decision, supra note 52, at 147.
56
United States-Canada Free Trade Agreement Binational Panel Review, In
the Matter of Certain Softwood Lumber Products from Canada, at 7-8, USA-92-1904-01
(Dec. 17, 1993).
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Adding to the controversy, the United States appealed
the panel’s ruling to an Extraordinary Challenge Committee
(ECC).57 The United States alleged that the panel “exceeded its
powers, authority and jurisdiction by ignoring the Chapter 19
standard of review” and that certain members of the panel were
in “a serious conflict of interest.”58 Ultimately, in another vote
running along national lines, the ECC dismissed the United
States’ challenges.59 Despite this ruling, Lumber III continued.
Although the United States agreed to revoke its CVD
order, terminate the collection of all duties, and refund
approximately $800 million that Canadian softwood lumber
importers had paid,60 Congress responded to the ECC decision by
amending U.S. trade law in a manner that “effectively
neutralized” the CUSFTA panel findings on subsidy and injury.61
Shortly after the passage of these amendments, and
with the Lumber Coalition poised to file a new CVD petition,62
the United States and Canada began negotiating an agreement
to resolve Lumber III. The two countries eventually signed the
1996 Softwood Lumber Agreement (SLA 1996),63 and in
exchange for Canada’s commitment to reduce its lumber
57
Although Chapter 19 decisions are binding and cannot be appealed in
national courts, the ECC may reverse a panel finding where a member of the panel is
“guilty of gross misconduct, bias, or serious conflict of interest,” or where a panel
“seriously departed from a fundamental rule of procedure” or “manifestly exceeded its
powers.” NAFTA, supra note 18, at art. 1904(13).
58
United States-Canada Free Trade Agreement Extraordinary Challenge
Proceeding, In the Matter of: Certain Softwood Lumber Products from Canada, at 1112, ECC-94-1904-01 USA (Aug. 3, 1994) (Opinion of Mr. Justice Gordon L.S. Hart).
59
Id. at 33 (Opinion of the Hon. Herbert B. Morgan). Judge Malcolm Wilkey,
the retired Chief Judge of the D.C. Circuit, dissented and accused the panel of
substituting its judgment for what U.S. law should be, rather than deferring to what
U.S. law was, as required by the Chapter 19 standard of review. Id. at 11 (Dissenting
Opinion of U.S. Circuit Judge (Ret.) Malcolm Wilkey) (“The United States never
contemplated that United States law would be changed by a binational body. If the
[Chapter 19] appellate system does not achieve similar results in applying U.S. law, it
may not be long continued.”). Despite fears of national bias, as of 2006, the Lumber III
review remained the only instance under Chapter 19 where binational panels have
split along national lines. Kennedy, supra note 32, at 435.
60
Notice of Panel Decision, Revocation of Countervailing Duty Order and
Termination of Suspension of Liquidation, 59 Fed. Reg. 42,029 (Aug. 16, 1994); Drew
Fagan & Barrie McKenna, Softwood Duties Coming Home: U.S. to Return About $800million to Canadian Exporters, GLOBE & MAIL (Can.), Dec. 3, 1994, at B1.
61
Quayat, supra note 37, at 125; see also Kennedy, supra note 32, at 435.
62
BOWMAN ET AL., supra note 4, at 565.
63
Softwood Lumber Agreement, U.S-Can., May 29, 1996, available at
http://www.international.gc.ca/controls-controles/assets/pdfs/softwood/treaty-e.pdf (last
visited Nov. 2, 2011) [hereinafter SLA 1996].
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SOFTWOOD LUMBER’S “TERMITE” PROBLEM
175
exports to the United States through a soft quota,64 the United
States agreed not to initiate any new trade actions.65 Few
disputes arose under the SLA 1996,66 but, despite a provision
for extending the agreement,67 Canada and the United States
failed to agree to the terms of an extension. Accordingly, the
agreement expired on March 31, 2001.68
While the disputes under Lumber I, II, and III are
telling examples of a “[w]ar between [f]riends,”69 not until
Lumber IV did it become painstakingly clear that the region’s
foremost trade agreement, NAFTA, was incapable of providing
a Softwood Lumber armistice.
II.
THE SOFTWOOD LUMBER “HYDRA”70—LUMBER IV (2001–
2006)
Canada deployed what has been aptly described as an
“exhaustive” litigation strategy in Lumber IV.71 Following
another round of AD/CVD petitions from the Lumber Coalition,72
a “hydra” of litigation ensued under NAFTA Chapters 11 and 19,
the WTO dispute settlement system, and U.S. domestic trade
law.73 These challenges, which are addressed below,74 created a
chaotic overlap between dispute settlement processes that
ultimately pushed the parties toward a negotiated settlement in
the form of the SLA 2006. Although this agreement
64
Canada was entitled to ship 14.7 billion board feet of lumber duty free
annually. Amounts shipped in excess of the amount were subject to a series of
escalating export taxes. Id. at art. II(2).
65
Id. at art. I.
66
Sarah E. Lysons, Comment, Resolving the Softwood Lumber Dispute, 32
SEATTLE U. L. REV. 407, 421 (2009).
67
SLA 1996, supra note 63, at art. X.
68
BOWMAN ET AL., supra note 4, at 569.
69
ZHANG, supra note 4, at 1.
70
Knox, supra note 14, at 436.
71
Quayat, supra note 37, at 126.
72
In a move that demonstrates why parties directly involved in the
Canadian-American softwood lumber trade should welcome the extension of the SLA
2006, it took all of one business day after the expiration of the SLA 1996 for the
Lumber Coalition to file fresh AD/CVD petitions. BOWMAN ET AL., supra note 4, at 569.
73
Knox, supra note 14, at 436.
74
The futility of overlapping dispute-settlement mechanisms is best
highlighted through a focus on the concurrent litigation that occurred under NAFTA
and the WTO with regards to the United States’ determination that Canada had
subsidized its lumber industry. See, e.g., Sydney M. Cone III, Canadian Softwood
Lumber and “Free Trade” Under NAFTA, 51 N.Y.L. SCH. L. REV. 840 (2006-2007).
These forums, therefore, are discussed first and in the greatest detail. The subsequent
discussions regarding dumping determinations, NAFTA Chapter 11, and disputes
within the U.S. domestic legal system serve to underscore the convoluted nature of the
multilateral trading system’s various dispute settlement mechanisms.
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acknowledges the systemic shortcomings of PTAs and the
overlapping dispute settlement mechanisms they create, the SLA
2006’s failure to address these issues head on does more to add to
the forces undercutting multilateralism than it does to resolve
the issues that created the need for an agreement.
A.
Are Two Heads Better than One?—Canada’s Challenges to
the United States’ Subsidy Determinations Under NAFTA
Chapter 19 and the WTO Dispute Settlement System
Following the Lumber Coalition’s newest AD/CVD
petitions, Commerce and the ITC made final affirmative
determinations that Canada was subsidizing its softwood lumber
industry75 and that the subsidized Canadian softwood lumber
imports presented a threat of material injury to the U.S. lumber
industry.76 Canada sought review of these determinations under
both Chapter 19 of NAFTA and the WTO dispute settlement
mechanisms.77 Although Canada was largely successful in its
appeals, the “two uncoordinated avenues for resolving disputes”
failed—perhaps unsurprisingly—to reach uniform resolutions
and allowed the parties to engage in “litigious gamesmanship”
that prolonged an already protracted dispute.78
1. Canada’s Success Under NAFTA
a. NAFTA’s Review of Commerce’s Affirmative Subsidy
Determination
Canada was successful in its NAFTA challenge to
Commerce’s final affirmative subsidy determination. The NAFTA
panel reviewing the determination found that while Canada’s
75
U.S. Dep’t of Commerce, Notice of Final Affirmative Countervailing Duty
Determination and Final Negative Critical Circumstances Determination: Certain
Softwood Lumber Products from Canada, 67 Fed. Reg. 15,545 (Apr. 2, 2002); U.S. Dep’t
of Commerce, Notice of Final Determination of Sales at Less than Fair Value: Certain
Softwood Lumber Products from Canada, 67 Fed. Reg. 15,539 (Apr. 2, 2002).
76
Softwood Lumber from Canada, Inv. Nos. 701-TA-414, 731-TA-928, 67 Fed.
Reg. 36,022 (May 22, 2002) (final).
77
North American Free Trade Agreement Binational Panel Review, In the
Matter of Certain Softwood Lumber from Canada, Final Affirmative Countervailing
Duty Determination, at 5, USA-CDA-2002-1904-03 (Aug. 13, 2003) [hereinafter Lumber
IV Subsidy NAFTA Panel Decision]; Panel Report, United States—Final
Countervailing Duty Determination with Respect to Certain Softwood Lumber from
Canada, ¶ 1.1, WT/DS257/R (Aug. 29, 2003) [hereinafter Lumber IV Subsidy WTO
Panel Report].
78
Cone, supra note 74, at 850.
2012]
SOFTWOOD LUMBER’S “TERMITE” PROBLEM
177
stumpage program constituted a financial contribution,79 the
evidence Commerce relied on did not reveal the existence of a
benefit. Accordingly, the panel ruled that the imports had not
received an actionable subsidy.80 What resulted was a game of
“ping-pong” between Commerce and the panel, where the panel
would remand the determination, and Commerce would revise
its methodology.81 The result of each revised subsidy
determination was a reduction in the CVD rate, and by the time
Commerce issued its fifth subsidy finding, it had determined
that the benefit given to Canadian producers was de minimis in
nature.82 Essentially, Commerce was forced to reluctantly accept
the panel’s determination that Canada’s provisional stumpage
programs did not confer a benefit on softwood lumber producers,
and thus that no actionable subsidy existed.
b. NAFTA’s Review of the ITC’s Affirmative Injury
Determination
Canada was also largely successful in its challenge to the
ITC’s affirmative threat of injury determination. According to a
NAFTA panel, there was insufficient evidence to support the
ITC’s finding.83 Following this decision, another series of
remands ensued. This time, however, the panel “lost patience
with the game [of ping-pong],”84 refused to remand for further reevaluation, and ordered the ITC to enter a finding of no material
injury.85 From NAFTA’s perspective, a U.S. agency had, again,
improperly applied its domestic trade laws and improperly
subjected Canadian imports of softwood lumber to CVDs.
79
Lumber IV Subsidy NAFTA Panel Decision, supra note 77, at 20. Under
U.S. trade law, for a subsidy to be actionable via the imposition of countervailable
duties, it must result in both a financial contribution and a benefit to the recipients of
the subsidy. Id. at 17.
80
Id. at 35.
81
Knox, supra note 14, at 437.
82
North American Free Trade Agreement Binational Panel Review, In the
Matter of Softwood Lumber from Canada, Final Affirmative Countervailing Duty
Determination, at 4, USA-CDA-2002-1904-03 (Mar. 17, 2006).
83
North American Free Trade Agreement Binational Panel Review, In the
Matter of Softwood Lumber from Canada: Final Affirmative Threat of Material Injury
Determination, at 107, USA-CDA-2002-1904-07 (Sept. 5, 2003).
84
Knox, supra note 14, at 437.
85
North American Free Trade Agreement Binational Panel Review, In the
Matter of Softwood Lumber from Canada: Final Affirmative Threat of Injury
Determination, at 7, USA-CDA-2002-1904-07 (Aug. 31, 2004). The panel noted that,
“The Commission has made it abundantly clear . . . that it is simply unwilling to accept
this Panel’s review authority under Chapter 19 of the NAFTA and has consistently
ignored the authority of this Panel in an effort to preserve its finding of threat of
material injury.” Id. at 3.
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The United States launched an Extraordinary
Challenge to both of the NAFTA panel rulings, but the ECC
upheld the panel’s injury ruling86 and, prior to its decision on
the panel’s subsidy finding, the two parties agreed to the terms
of the 2006 SLA, which ended the challenge.87
Although Canada emerged victorious in the NAFTA
rulings, simply cutting off one of the hydra’s heads does not slay
the beast. Indeed, Canada’s challenges to the United States’
subsidy determinations also took place under the WTO dispute
settlement process. Unfortunately, with no clear roadmap in
place to outline the legal relationship between NAFTA and WTO
dispute settlement systems,88 the WTO proceedings ran the risk
of being, at best, tedious and, at worst, contradictory.
2. Mixed Results at the WTO
a. The WTO’s Review of Commerce’s Affirmative
Subsidy Determination
Canada’s WTO arguments regarding Commerce’s
affirmative subsidy determination “mirrored” its arguments
before the NAFTA Chapter 19 panel.89 Similar to the NAFTA
panel, both a WTO Panel and the Appellate Body (AB) agreed
with the United States that the Canadian stumpage programs
constituted a financial contribution under WTO subsidy law.90
Yet while NAFTA ruled decisively that the subsidy did not
benefit Canadian producers—making it non-actionable—the
WTO ruling on this issue is less clear.
Although the WTO Panel sided with Canada and ruled
that the United States used an improper methodology to
86
North American Free Trade Agreement Binational Panel Review, In the
Matter of Certain Softwood Lumber Products from Canada, Opinion and Order of the
Extraordinary Challenge Committee, at 2, ECC-2004-1904-01USA (Aug. 10, 2005).
Notably, the panel held that “in rare circumstances,” a Panel may remand to the
Commission with instructions to enter a decision that the evidence on the record does
not support a threat of material injury. Id. at 15.
87
Notice of Suspension of Extraordinary Challenge Committee, 71 Fed. Reg.
28,854 (May 18, 2006).
88
See supra notes 18-22 and accompanying text. In addition to there being no
overarching statute that defines the relation between PTA and WTO tribunals, domestic
law concepts such as res judicata, lis pendens, and forum non conveniens, which address
overlapping authority, do not apply in the NAFTA/WTO context where the two panels are,
strictly speaking, applying different law. Pauwelyn & Salles, supra note 19, at 102-13.
89
Quayat, supra note 37, at 135.
90
Appellate Body Report, United States—Final Countervailing Duty
Determination with Respect to Certain Softwood Lumber from Canada, ¶ 76,
WT/DS257/AB/R (Jan. 19, 2004) [hereinafter Lumber IV Subsidy WTO AB Report].
2012]
SOFTWOOD LUMBER’S “TERMITE” PROBLEM
179
determine that Canada’s stumpage programs resulted in a
benefit, the AB reversed this ruling.91 Nevertheless, this
reversal focused on the WTO Panel’s flawed reasoning, leaving
open the question of whether a benefit existed.92 Indeed, due to
an “insufficient factual basis to complete the legal analysis,”
the AB was unable to definitively determine whether Canada’s
financial contribution had produced a benefit and thus was
unable to determine whether both elements for an actionable
subsidy existed.93 An issue that a NAFTA panel determined
decisively was therefore left unresolved at the WTO.
For the United States to successfully defend its
affirmative subsidy determination at the WTO, Commerce also
needed to show that the alleged subsidies to timber harvesters
“pass[ed]-through” to the producers of the softwood lumber
imported into the United States.94 Following several WTO Panel
and AB reports,95 the AB eventually found against Commerce on
this point, ruling that Commerce had conducted a defective
pass-through analysis and had failed to comply with its WTO
obligations.96 This marked yet another victory for Canada.
b. The WTO’s Review of the ITC’s Affirmative Injury
Determination
Canada’s challenge to the ITC’s injury determination
before the WTO was again similar to its challenges brought
under NAFTA. Canada attempted to persuade the WTO that
the ITC’s affirmative threat of injury finding was not supported
by proper evidence.97 A WTO Panel sided with Canada, ruling
that an “objective and unbiased decision maker” could not have
properly found a threat of injury based upon the evidence
presented to the ITC.98 But, the Panel denied Canada’s requests
91
Id. ¶ 119.
Id. ¶ 122.
93
Id.
94
Cone, supra note 74, at 847.
95
These included: (i) an August 19, 2003 Panel Report, (ii) a January 19, 2004
Appellate Body Report, and (iii) an August 1, 2005 Panel Report. Id. at 848.
96
Appellate Body Report, United States—Final Countervailing Duty
Determination with Respect to Certain Softwood Lumber from Canada, ¶ 96,
WT/DS257/AB/RW (Dec. 5, 2005). The AB upheld the panel’s findings that Article 10 of
the SCM Agreement and Article VI:3 of the GATT 1994 require a pass-through analysis
in circumstances in which a subsidy is received by a harvester, and CVDs are then
attached to the imports from an unrelated producer. Id.
97
Panel Report, United States—Investigation of the International Trade
Commission in Softwood Lumber from Canada, WT/DS277/R, ¶¶ 4.2-4.62 (Mar. 22, 2004).
98
Id. ¶ 7.89.
92
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to recommend that the United States revoke its final
determination of threat of injury, stop the application of duties,
and return the cash deposits already collected.99 Neither the
United States nor Canada appealed the Panel’s decision, but
the U.S. response to the ruling gave rise to one of the most
controversial events of Lumber IV.100 This suspect response
underscored both the lengths the United States was willing to
go to protect its softwood lumber industry and the
opportunities for manipulation available within overlapping
dispute settlement forums.101
3. The United States Uses a WTO Defeat to Mitigate
Adverse NAFTA Rulings
After the WTO Panel’s ruling that no threat of injury
existed, the ITC undertook a new injury determination and
again concluded that a substantial increase of Canadian
softwood lumber imports presented a threat of material injury
to the U.S. industry.102 From the United States’ perspective, this
“new” affirmative injury finding meant that earlier rulings by
multiple
NAFTA
panels—finding
the
ITC’s
injury
determination to be unsubstantiated by the evidence—were
now moot because the ITC had made, and Commerce had
adopted, a new finding.103 Put differently, the United States
attempted to “use[] a WTO defeat to justify ignoring several
adverse NAFTA Panel findings.”104
Canada challenged the ITC’s new threat of injury
finding at the WTO, but its legitimacy was never definitively
ascertained. First, a WTO Panel ruled that the ITC had cured
the defects identified in the original WTO ruling, which in
99
Id. ¶¶ 8.7-8.8.
Quayat, supra note 37, at 134.
101
BOWMAN ET AL., supra note 4, at 581.
102
U.S. Trade Rep., WTO Dispute Settlement Proceeding Regarding
Investigation of the International Trade Commission in Softwood Lumber from
Canada, 70 Fed. Reg. 36,687 (June 24, 2005). Under U.S. law, WTO rulings do not
automatically bind the Executive. Rather, Section 129 of the Uruguay Round
Amendments Act allows the U.S. Trade Representative to request that the ITC “issue a
determination in connection with the particular proceeding that would render the
Commission’s action . . . not inconsistent with the findings of the panel or Appellate
Body.” 19 U.S.C § 3538(a)(4) (2006).
103
U.S. Dep’t of Commerce, Amendment to Antidumping and Countervailing
Duty Orders on Certain Softwood Lumber Products from Canada, 69 Fed. Reg. 75,916,
75,917 (Dec. 20, 2004); Quayat, supra note 37, at 134.
104
BOWMAN ET AL., supra note 4, at 581.
100
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SOFTWOOD LUMBER’S “TERMITE” PROBLEM
181
essence affirmed the ITC’s new injury determination.105 The AB,
however, set aside this ruling, finding that the Panel had
applied an improper standard of review and had failed to
perform a complete analysis.106 But the AB did not complete the
analysis itself.107 The AB reasoned that “completing the
analysis . . . would require us to review extensive aspects of the
[ITC]’s threat of injury and causation analyses, and would
require us to engage in a comprehensive examination of highly
complex and contested facts.”108 In the end, the AB was “unable
to make a recommendation to the Dispute Settlement Body,”
and the validity of the ITC’s “new” injury determination was
never definitively settled under WTO law.109
Although U.S. attempts to nullify the adverse NAFTA
rulings were deemed improper once the issue reached the
United States Court of International Trade (CIT),110 the
discordant overlap between NAFTA’s and the WTO’s dispute
settlement mechanisms allowed the United States to—at least
temporarily—disregard a PTA dispute settlement panel’s
rulings under the guise of complying with the rules of the
multilateral trading system. Among the dangers associated with
incongruous legal forums, this is perhaps the most alarming.
B.
New Allegations—Dumping Claims Under NAFTA
Chapter 19 and the WTO
In addition to allegations of illegal subsidies, Lumber IV
also included, for the first time, a dumping claim against
Canadian lumber producers.111 This claim ultimately turned on
105
Reversing its earlier finding, the Panel was unable to “conclude that an
objective and unbiased investigation authority could not find that [the evidence]
supported the conclusion reached by the USITC.” Panel Report, United States—
Investigation of the International Trade Commission in Softwood Lumber from Canada,
Recourse to Article 21.5 of the DSU by Canada, ¶ 7.39, WT/DS277/RW (Nov. 15, 2005).
106
Appellate Body Report, United States—Investigation of the International
Trade Commission in Softwood Lumber from Canada, Recourse to Article 21.5 of the
DSU by Canada, ¶ 138, WT/DS277/AB/RW (Apr. 13, 2006) [hereinafter Lumber IV
Injury WTO AB Report].
107
The AB only has the authority to “uphold, modify, or reverse the findings”
of a WTO Panel. There is no provision at the WTO for remand with instructions. “This
means that the legal issue involved can be resolved only if the [AB] completes the
analysis itself.” DANIEL C.K. CHOW & THOMAS J. SCHOENBAUM, INTERNATIONAL TRADE
LAW: PROBLEMS, CASES, AND MATERIALS 54 (2008).
108
Lumber IV Injury WTO AB Report, supra note 105, ¶ 160.
109
Id. ¶ 163.
110
See infra Part II.D.
111
BOWMAN ET AL., supra note 4, at 569. Dumping occurs under U.S. law when
a foreign producer sells an export in the United States at a price lower than its home
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the United States’ use of a controversial practice known as
“zeroing,” which often results in higher margins with respect to
dumping calculations.112 As with Canada’s challenges to the
United States’ subsidy determinations, Canada appealed to two
independent dispute settlement bodies in order to resolve a
single claim. After the AB upheld a WTO Panel ruling that sided
with Canada and found that the United States’ use of zeroing
was a violation of the WTO’s Antidumping Agreement,113 a
NAFTA Chapter 19 Panel essentially incorporated the WTO’s
decision and directed Commerce to make a determination on
dumping without using the zeroing technique.114 While the two
dumping rulings were consistent with one another, the
duplicative litigation again highlights the inefficiency that
plagued Lumber IV.115
C.
Investor-State Claims Under NAFTA Chapter 11
Adding to the “[s]paghetti bowl of WTO and NAFTA
proceedings,”116 Lumber IV also included claims under NAFTA
market price. See 19 U.S.C. § 1673 (2006). Dumping investigations are conducted much
in the same way as subsidy investigations. See supra note 10.
112
When zeroing is applied,
the analysis treats the margins for transactions made at [less than fair value]
(dumped) in accordance with the actual amounts (positive numbers), while
transactions with dumping margins of less than zero (that is, made at more
than fair value) are treated as zero rather than as negative numbers. Under
such circumstances, higher non-dumped export prices do not offset the lower
dumped export prices.
BOWMAN ET AL., supra note 4, at 574. This has the potential to inflate the margins of
dumping. Id.
113
Appellate Body Report, United States—Final Dumping Determination on
Softwood Lumber from Canada, ¶ 117, WT/DS264/AB/R (Aug. 11, 2004).
114
North American Free Trade Agreement Binational Panel Review, In the
Matter of Certain Softwood Lumber Products from Canada: Final Affirmative
Antidumping Determination, at 2, USA-CDA-2002-1904-02 (June 9, 2005).
115
See, e.g., Lysons, supra note 66, at 423-24 (arguing that Canada’s litigation
strategy in Lumber IV “increased costs to both Canadian and American taxpayers” and
added to “the political tensions between the two countries . . . [making] settlement
negotiations difficult”). The Canadian federal government spent an estimated $13
million on softwood legal fees from 2005 to 2006 alone. Sources indicate that when one
combines the spending of the Canadian federal government, the provinces, individual
forest companies, and forest lobby groups, the figure rises to more than $300 million
over the course of Lumber IV. Sylvain Larocque, Legal Tab in Lumber Battle May Hit
$300M, TORONTO STAR, Oct. 30, 2006, at A3, available at http://www.thestar.com/
news/canada/article/113100--legal-tab-in-lumber-battle-may-hit-300m.
116
Joost Pauwelyn, Adding Sweeteners to Softwood Lumber: The WTONAFTA ‘Spaghetti Bowl’ Is Cooking, 9 J. INT’L ECON. L. 197 (2006). The term “spaghetti
bowl,” when discussing international trade, has been attributed to Professor Jagdish
Bhagwati and is meant to describe the chaotic scene that results from multiple trade
2012]
SOFTWOOD LUMBER’S “TERMITE” PROBLEM
183
Chapter 11.117 Three Canadian lumber producers initiated
separate arbitration proceedings against the United States,118
alleging that its conduct in investigating and imposing of AD
and CVD orders had violated their rights to national
treatment,119 most-favored-nation treatment,120 and the
minimum standard of treatment guaranteed under customary
international law.121 In the end, the arbitral tribunal found that
Chapter 11 does not encompass claims where the allegations
confront the administration of trade remedy laws.122 In other
words, the parties could not use Chapter 11 as an end run
around Chapter 19.123
Although this ruling prevented yet another decision on
the legitimacy of the United States’ use of its trade laws, the
simple initiation of arbitration proceedings during Lumber IV
is another example of the seemingly endless cycle of litigation
that the participants faced. It was not until after the dispute
reached U.S. courts that a final disposition was achieved. To
the chagrin of many, however, this finality would not come by
agreements crisscrossing one another like spaghetti noodles. See, e.g., BHAGWATI, supra
note 1, at 61. Lumber IV is a prime example of this confusion.
117
NAFTA Chapter 11 deals with investor-state arbitrations and contains
provisions designed to protect cross-border investors and facilitate the settlement of
investment disputes. NAFTA, supra note 18, at art. 1101-138.
118
Tembec, Inc. v. United States, Notice of Arbitration and Statement of
Arbitration Claim (NAFTA 2004), available at http://www.state.gov/documents/
organization/27805.pdf; Terminal Forest Prods. Ltd. v. United States, Notice of Arbitration
(NAFTA 2003), available at http://www.state.gov/documents/organization/31360.pdf;
Canfor v. United States, Notice of Arbitration and Statement of Claim (NAFTA 2002),
available at http://www.state.gov/documents/organization/13203.pdf.
119
“Each Party shall accord to investors [and investments of investors] of
another Party treatment no less favorable than that it accords, in like circumstances,
to its own investors [and investments of its own investors] . . . .” NAFTA, supra note 18,
at art. 1102(1)-(2).
120
“Each Party shall accord to investors [and investments of investors] of
another Party treatment no less favorable than that it accords, in like circumstances,
to investors [investments of investors] of any other Party or of a non-Party . . . .” Id. at
art. 1103(1)-(2).
121
“Each Party shall accord to investments of investors of another Party
treatment in accordance with international law, including fair and equitable treatment
and full protection and security.” Id. at art. 1105(1).
122
Canfor v. United States; Terminal Forest Prods. Ltd. v. United States,
Decision on Preliminary Question, ¶ 273 (NAFTA 2006), available at http://www.state.gov/
documents/organization/67753.pdf [hereinafter Canfor Arbitration Decision].
123
See Quayat, supra note 37, at 132-33. The SLA 2006 resulted in the
withdrawal of all claims under NAFTA Chapter 11. See SLA 2006, supra note 2, at art.
XI(2) (“The operation and application of Section B of Chapter Eleven of the NAFTA is
hereby suspended with respect to any matter arising under the SLA 2006 and any
measure taken by a Party that is necessary to give effect to or implement the SLA
2006. Consequently, no claim under Section B of Chapter Eleven of the NAFTA may be
made against a Party by investors of the United States or Canada in respect of any
such matter or measure.”).
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way of judicial disposition, but rather through a negotiated
settlement—calling into question the purpose of the previous
five years’ battles.124
D.
The End of Litigation—Claims Under United States
Law
By the time the parties agreed to the “Basic Terms” of
the SLA, the softwood lumber saga had entered a third arena:
the CIT. Litigation involving a single trade dispute was now
pending in three separate forums. But with Canada poised to
claim victory, a deal was struck, and the SLA 2006 brought an
end to litigation before the effects of the CIT’s rulings were
realized.125 Nevertheless, it is important to briefly address the
two principal issues that were raised before the CIT, adding to
the complexity of Lumber IV.
First, several interested Canadian private and
governmental parties brought suit to have the so-called “Byrd
Amendment” struck down.126 The amendment called for the
distribution of AD/CVD duties directly to members of an
industry that successfully obtained protection under U.S. trade
law.127 This essentially created a financial incentive for
companies to file trade remedy petitions.128 The CIT sided with
Canada and halted future distributions under the Byrd
Amendment for actions brought against NAFTA parties.129 The
United States eventually repealed the amendment, which
made it clear to the Lumber Coalition that further litigation
would not result in the direct delivery of any money to the U.S.
lumber industry.130
Second, another group of Canadian private and
governmental parties sought to challenge what they
characterized as an unlawful exercise of statutory authority by
124
See, e.g., Eliot J. Feldman, Deal or No Deal: Snatching Defeat from the
Jaws of Victory, 13 INT’L TRADE L. & REG. 91, 95 (2007) (arguing that “instead of
winning free trade through legal proceedings, including a confirmation that Canadian
provincial governments do not subsidise softwood lumber production or exports,
Canada accepted draconian managed trade for potentially nine years”).
125
See infra Part III.
126
Can. Lumber Trade Alliance v. United States, 517 F.3d 1319, 1333-34 (Ct.
Int’l Trade 2008).
127
19 U.S.C. § 1675c (repealed 2006).
128
Quayat, supra note 37, at 138.
129
Can. Lumber Trade Alliance, 517 F.3d at 1344 (affirming a 2006 CIT
declaratory judgment that the Byrd Amendment did “not apply to antidumping and
countervailing duties assessed on imports of goods from Canada or Mexico”).
130
Feldman, supra note 124, at 91.
2012]
SOFTWOOD LUMBER’S “TERMITE” PROBLEM
185
the United States in its attempts to evade NAFTA panel
rulings under the guise of implementing a WTO panel
decision.131 A three-judge CIT panel, headed by the Chief
Justice, ruled that Section 129—the tool that the United States
used in its attempt to moot the NAFTA Panels’ adverse rulings
on the ITC’s threat of injury findings—did not permit the
substitution of a new injury determination to support existing
duty orders.132 Consequently, the court validated the original
NAFTA rulings, which held that the United States’ CVD/AD
orders were improper, and it found that NAFTA panel review
had the same legal effect as review in a U.S. court.133 The
United States was, therefore, without a legal basis for
maintaining its CVD/AD orders, and the Canadian parties
were “entitled to a full refund of the deposits collected on
softwood lumber.”134 The United States had, in effect,
improperly collected over $5 billion worth of deposits.135
Over the course of Lumber IV, a disagreement over the
lawfulness of differing forest management systems produced
nearly thirty international and domestic decisions.136 The
discordant dispute settlement mechanisms gave Canada
multiple “bites at the apple” and permitted both superfluous
and disingenuous litigation.137 Nevertheless, it finally appeared
that the CIT’s decisions would allow Canada to claim a definite
victory. Yet with this end in sight,138 it was the negotiating table,
not the courtroom, that finally brought Lumber IV to a close.
131
See supra Part II.A.3; see also Tembec, Inc. v. United States, 441 F. Supp.
2d 1302, 1306 (Ct. Int’l Trade 2006) (“[Plaintiffs] allege that the United States has
illegally continued to enforce antidumping (‘AD’) and countervailing duty (‘CVD’)
orders following the illegal implementation of an affirmative injury determination
issued by the ITC pursuant to section 129 of the Uruguay Round Agreements Act
(‘URAA’).”).
132
Tembec, 441 F. Supp. 2d at 1336 (“Because section 129 only applies where
the United States has lost before the WTO, Congress expected that adoption of WTO
recommendations with respect to an ITC determination would result in determinations
revoking all or part of an existing order, if implementation were necessary at all.”
(emphasis added)).
133
Tembec, Inc. v. United States, 461 F. Supp. 2d 1355, 1364 (Ct. Int’l Trade 2006).
134
Quayat, supra note 37, at 143; see also Tembec, 461 F. Supp. 2d at 1367
(“The legislative history makes it clear that Congress did not set up a system to retain
duties that are not owed.”).
135
BOWMAN ET AL., supra note 4, at 553.
136
See Quayat, supra note 37, at 116. Quayat counts twenty-six NAFTA
(including panel and appellate body) and WTO decisions. Combined with the various
decisions of the CIT, this number rises to nearly thirty.
137
Lysons, supra note 66 at 423.
138
The Canadian government appears to disagree with this proposition.
Canada pressed its softwood lumber industry to accept the SLA 2006 by arguing the
opposite: that litigation would never end. Feldman, supra note 124, at 95.
186
III.
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“SNATCHING DEFEAT FROM THE JAWS OF VICTORY”139—
THE TERMS OF THE 2006 SOFTWOOD LUMBER
AGREEMENT
On September 12, 2006, despite, or perhaps as a result
of,140 Canada’s legal victories during Lumber IV, Canadian and
American authorities signed the SLA 2006—a negotiated
settlement that ended the most recent and heavily litigated
round of the softwood lumber dispute.141 The impacts of the
agreement were twofold. First, it brought stability and clarity
to the dispute settlement process—much to the delight of those
involved in the Canadian-American softwood lumber trade.
And second, it removed much of the parties’ incentive to
address NAFTA’s shortcomings head on—which should raise
concerns for those who are committed to strengthening the
multilateral trading system. But before addressing the
conflicting impacts of the agreement and its subsequent
extension, it is important to first understand what the parties
actually agreed to.
A.
The United States Retains Its Spoils—The Issue of Duty
Deposits
Despite the CIT’s determination that Canada was
entitled to a full refund of the deposits collected on softwood
lumber,142 the SLA 2006 failed to deliver such a result.143 Under
the terms of the agreement, the United States agreed to revoke
its AD/CVD orders and refund approximately $4.5 billion144 in
deposits it collected since 2002.145 The United States, therefore,
was permitted to retain $1 billion of illegally collected duties.146
This included $500 million to the members of the Lumber
Coalition, which some viewed as “a reward for
139
Id. at 91.
See Quayat, supra note 37, at 144-46 (arguing that rather than using
“litigation as a path to victory,” Canada used “litigation as a negotiating tool,” and
“secured a sufficiently broad range of legal victories to create a significant incentive for
the [United States] to find a negotiated settlement”).
141
SLA 2006, supra note 2; Quayat, supra note 37, at 116.
142
See supra Part II.D.
143
SLA 2006, supra note 2, at art. III-IV.
144
Softwood Lumber: Canada-U.S. Softwood Lumber Agreement—
Backgrounder, FOREIGN AFFAIRS & INT’L TRADE CAN., http://www.international.gc.ca/
controls-controles/softwood-bois_oeuvre/notices-avis/agreement-accord.aspx?lang=eng&view=d
(last modified Feb. 13, 2012).
145
SLA 2006, supra note 2, at art. III-IV.
146
Id. at Annex 2C(5).
140
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SOFTWOOD LUMBER’S “TERMITE” PROBLEM
187
sponsoring . . . illegal trade actions” and a “nest egg that will
finance future trade harassment,”147 and $450 million for a
“meritorious initiatives” account, which was viewed as “a gift” to
the U.S. government.148 Needless to say, this outcome was deeply
problematic for opponents of the settlement.149
B.
Canada Agrees to Less than Free-Trade—The Issue of
Export Measures
The SLA 2006 has also been criticized for codifying
protectionist trade remedies.150 Under the agreement, various
regions in Canada are subject to a three-tier tariff or a tariffrated quota system.151 When lumber prices are below $315 per
unit, Canadian lumber exporters pay either: (a) a 15% export
tax, or (b) a 5% tax accompanied by a volume restraint on
exports.152 As the price of lumber increases, export charges
decline and export quotas increase.153 Only when lumber prices
go over $355 per unit is lumber imported without export
charges or volume restraints.154 As those opposed to extending
the agreement point out, “the price [of lumber] has risen above
the $355 threshold only once” since 2006, meaning that the
147
Softwood Lumber Deal: Hearing Before the Standing Comm. on Int’l Trade,
39th Parliament 1st Sess. at 5 (2006) (statement of Mr. Normand Rivard, Council
Chair, United Steelworkers), available at http://www.parl.gc.ca/content/hoc/
Committee/391/CIIT/Evidence/EV2326139/CIITEV23-E.PDF [hereinafter Canadian
Parliament Softwood Lumber Hearing].
148
Id. at 2 (statement of Dr. Elliot Feldman, Trade Lawyer, Baker &
Hostetler LLP); see also SLA 2006, supra note 2, at Annex 2C(5).
149
See Feldman, supra note 124, at 94 (arguing that “had litigation continued
on its course without extra-legal interference from the two sovereign governments . . . ,
Canadian industry would have received back all of its money and the [U.S.] industry
would have received none”). Eventually, however, Mr. Feldman (or at least the clients
he represents) came to support extending the SLA 2006. That support was based on the
fact that “Canada’s softwood lumber industry paid a very significant initiation fee for
the SLA, $1 billion,” and “in light of its prior payment and sacrifice, now looks to
whatever continuing benefits may be derived from the SLA according to its already
agreed terms.” Letter from Elliot J. Feldman, Baker & Hostetler LLP, on behalf of the
Ontario Forest Indus. Assoc. and the Conseil de l’Industrie Forestière du Québec, to
Mary Sullivan Smith, Dir. for Can. Affairs, Office of the U.S. Trade Rep. (Oct. 6, 2011),
available at http://www.regulations.gov/#!documentDetail;D=USTR-2011-0011-0002
(follow “View Attachment: PDF” hyperlink).
150
Soft in Wood and Head U.S.-Canadian Lumber Deal Makes a Mockery of
Free Trade, FIN. TIMES, Apr. 29, 2006, at 6 [hereinafter Soft in Wood and Head]
(arguing that “[i]f private companies were to attempt, on their own, to strike this kind
of anti-competitive deal, they would be rightly hauled before [U.S.] and Canadian
authorities. Yet the latter can call it managed trade, and get away with it.”).
151
SLA 2006, supra note 2, at art. VII.
152
Id.
153
Id.
154
Id.
188
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vast majority of softwood lumber imported from Canada has
arrived subject to trade restrictive duties and volume
restraints.155 This fact gives credence to those who argue that
the agreement is one that would make the “Comecon officials of
the Soviet era look like relative Friedmanites.”156
C.
Slaying the Softwood Hydra—The Issue of Dispute
Settlement Mechanisms
The proliferation of PTAs and the lack of legal certainty
governing their relationship with WTO dispute settlement
mechanisms have negatively affected the softwood lumber
dispute by providing the parties with a near endless recourse to
dissonant legal forums. The SLA 2006 mitigates this problem
by streamlining the dispute settlement process.157
If the parties fail to “arrive at a satisfactory resolution
of the matter” through consultations, the agreement authorizes
the parties to arbitrate the matter in the London Court of
International Arbitration (LCIA).158 Moreover, the SLA 2006
specifically protects against the potential for overlapping
adjudication. For the duration of the agreement, “neither Party
shall initiate any litigation or dispute settlement proceedings
with respect to any matter arising under the SLA 2006,
including proceedings pursuant to the Marrakesh Agreement
Establishing the World Trade Organization or Chapter Twenty
of the NAFTA.”159 Additionally, the United States is not
permitted to “self-initiate” any AD or CVD investigations for
the duration of the agreement, and private parties involved in
various lawsuits were forced to consent in writing to terminate
all outstanding NAFTA and domestic legal proceedings.160
These provisions limit adjudication of the softwood lumber
155
Letter from Gerald M. Howard, Pres. & CEO, Nat’l Ass’n of Home
Builders, to Mary Sullivan Smith, Dir. for Can. Affairs, Office of the U.S. Trade Rep.
(Oct. 14, 2011), available at http://www.regulations.gov/#!documentDetail;D=USTR2011-0011-0003 (follow “View Attachment: PDF” hyperlink) [hereinafter Howard,
USTR Comment] (labeling homebuilders, remodelers, and homebuyers as “downstream
consumers”).
156
Soft in Wood and Head, supra note 150, at 6.
157
SLA 2006, supra note 2, at art. XIV.
158
Id. at art. XIV(4)-(6). This procedure is “unusual” in that the LCIA is
known as a nongovernmental commercial arbitration institution that typically
administers matters between private parties as opposed to sovereign governments.
John R. Crook, United States and Canada Arbitrate a Softwood Lumber Dispute in the
London Court of International Arbitration, 102 AM. J. INT’L L. 192, 192 (2008).
159
SLA 2006, supra note 2, at art. XIV(2).
160
Id. at art. V & Annex 2A.
2012]
SOFTWOOD LUMBER’S “TERMITE” PROBLEM
189
dispute to a single forum, the LCIA, effectively “slay[ing] the
softwood lumber hydra.”161
D.
Agree to Disagree—Disputes Under the SLA 2006
Despite successfully addressing one of the major
problems facing Lumber IV, the SLA 2006 was not designed to
resolve the underlying legal issues of the dispute. The positions
of both parties—with regard to the validity of the United
States’ AD/CVD orders and the legal effect of courts’ or other
dispute settlement bodies’ decisions regarding those orders—
were explicitly reserved.162 Therefore, it is not surprising that
limiting the forums in which disputes can arise has not ended
all conflict with regard to the softwood lumber dispute.
To date, the United States has filed three separate
Requests for Arbitration under the SLA 2006, and decisions in
each case indicate that the LCIA is an effective tribunal.163 The
first request by the United States protested Canada’s alleged
failure to properly calculate export quotas during the first six
months of 2007.164 The tribunal largely sided with the United
States, ruling that Canada had failed to properly calculate
quotas on exports from certain regions and consequently
ordering Canada to impose an additional 10% charge on
exports from those regions.165
Separately, another tribunal was formed in response to
the United States’ request to consider whether certain
provincial assistance programs—which Quebec and Ontario
put into place to aid Canadian softwood lumber producers and
exporters—breached Canada’s obligation under the anticircumvention provisions of the SLA 2006.166 The tribunal again
agreed with the United States, finding that certain measures
161
Knox, supra note 14, at 436. See generally Lysons, supra note 66, at 430
(noting that the dispute settlement provision of the SLA 2006 is “evidence of lessons
learned in the softwood lumber dispute”).
162
SLA 2006, supra note 2, at art. XI(1).
163
See Lysons, supra note 66, at 431 tbl.2 (noting the faster schedule
stipulated in the SLA 2006 as compared to NAFTA and the WTO).
164
United States v. Canada, Request for Arbitration, ¶¶ 12-14 (LCIA Aug. 13,
2007), http://www.ustr.gov/sites/default/files/us_request_for_arbitration.pdf.
165
United States v. Canada, Case No. 7941, Award on Remedies, at 148 (LCIA
Feb. 23, 2009), http://www.ustr.gov/sites/default/files/award_on_remedy.pdf.
166
United States v. Canada, Request for Arbitration, ¶ 4 (LCIA Jan. 18,
2008), http://www.ustr.gov/sites/default/files/provincial_us_request_for_arbitration.pdf.
The “Anti-circumvention” provision of the SLA 2006 states that “[n]either
Party . . . shall take action to circumvent or offset the commitments under the SLA
2006.” SLA 2006, supra note 2, at art. XVII.
190
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taken by Canada violated its obligations under the agreement.167
Yet, the tribunal sided with Canada on how to calculate the
remedy and granted significantly less compensation than was
initially sought by the United States.168 Following this ruling,
both Canada and the United States offered their continued
support for the agreement.169 Given the litigious back and forth of
Lumber IV, these responses are encouraging.170
The most recent Request for Arbitration, brought by the
United States in early 2011, involved U.S. allegations that
timber harvested from public lands in British Columbia’s
interior region was being sold at prices below those provided
for under the timber pricing system, which was grandfathered
under the SLA 2006.171 Canada fought these allegations,
arguing that the increased amount of low-priced timber from
British Columbia was the result of a mountain pine beetle
infestation and was not a violation of the SLA 2006’s anticircumvention provisions.172 In July of 2012, the LCIA sided
with Canada and dismissed the U.S. claims in their entirety.173
Although the Lumber Coalition was “very disappointed” with
the ruling, it has reiterated its “respect and appreciat[ion] [for]
the efforts of [the LCIA] and the U.S. government to grapple
with the complex issues involved in this case.”174
167
United States v. Canada, Case No. 81010, Award, ¶ 415 (LCIA Jan. 20,
2011), http://www.ustr.gov/webfm_send/2573.
168
Id.
169
Barrie McKenna, Lumber Deal Still A Good One Despite New Arbitration
Loss, Ottawa Says, GLOBE & MAIL (Can.), Jan. 21, 2011; Lumber Deal is Safe, Emerson
has Heard, TORONTO STAR, Mar. 6, 2008, at B2 (noting that the Canadian trade
minister received assurances from the United States Trade Representative that the
SLA 2006 was safe). Following the ruling, the president of the Quebec Forest Industry
Council stated that, “[t]he Canadian government has indicated it intends to comply
with the ruling and impose the additional export charges by the end of February
[2011].” U.S. Prevails in Lumber Dispute with Canada, But Falls Short on Remedy, 29
INSIDE U.S. TRADE, Jan. 28, 2011, available at 2011 WLNR 1763804.
170
See supra Part II.
171
United States v. Canada, Case No. 111790, Request for Arbitration, ¶ 4
(LCIA Jan. 18, 2011), http://www.ustr.gov/webfm_send/2484.
172
United States v. Canada, Case No. 111790, Canada’s Response to Request for
Arbitration, ¶¶ 1-6 (LCIA, Feb. 17, 2011), http://www.international.gc.ca/controlscontroles/assets/pdfs/softwood/Resp_Req_%20Arbitration_Can_2011_02_17%20.pdf
(alleging that the United States has attempted to “create a violation of the SLA out of the
devastation inflicted on the forests of British Columbia by the Mountain Pine Beetle”).
173
United States v. Canada, Case No. 111790, Final Award, ¶ 439 (LCIA July 26,
2012), http://www.international.gc.ca/controls-controles/assets/pdfs/softwood/111790.pdf.
174
Press Release, U.S. Lumber Coal., U.S. Lumber Coalition Disappointed by
Arbitral Decision Regarding British Columbia Softwood Lumber Agreement Timber
Pricing Violations (July 18, 2012), available at http://www.uslumbercoalition.org/
doc/press_release_07-18-12.pdf.
2012]
SOFTWOOD LUMBER’S “TERMITE” PROBLEM
191
Despite these continued disputes, the extension of the
SLA 2006 offers the best hope for lumber peace to both Canada
and the United States. Without first addressing the underlying
conflicts between the dispute settlement mechanisms in NAFTA
and the WTO, a return of the softwood lumber hydra, in the
form of a prospective “Lumber V,” would force the parties back
into a costly and ineffective system of trade litigation.
IV.
WHY THE 2006 SOFTWOOD LUMBER AGREEMENT IS
RIGHT FOR SOFTWOOD LUMBER
Supporters of the SLA 2006 extension argued that it has
“brought an element of stability and predictability to trade in
softwood lumber products.”175 Those who wished to see it expire
derided it as protectionist and claimed that it “reduces the
incentive for the U.S. [lumber] producers . . . to increase
production and improve efficiency of their mills so as to be
internationally competitive,” which ultimately has a negative
economic effect on consumers.176 While there is truth to both of
these statements, a negotiated agreement that streamlines the
dispute settlement process is necessary to offset the United
States’ aggressive support for its softwood lumber industry.
Furthermore, although the SLA 2006 is not a complete victory
for either country, new trading partners have the potential to
alleviate the remaining tensions between the parties, increasing
the likelihood that the SLA 2006 extension will bring internal
peace to the softwood lumber dispute.
A.
A Stable and Predictable Dispute Resolution Mechanism
Is Needed to Offset the United States’ Obdurate Political
Protection of Its Softwood Lumber Industry
An exasperated Prime Minister Jean Chretien once
reminded President George W. Bush, “You want gas, you want
oil and you don’t want wood? It’s too bad, but if you have free
175
Letter from David A. Yocis et al., Picard Kentz & Rowe LLP, on behalf of the
U.S. Lumber Coal., to Mary Sullivan Smith, Dir. for Can. Affairs, Office of the U.S. Trade
Rep. (Oct. 14, 2011), http://www.regulations.gov/#!documentDetail;D=USTR-2011-00110004 (follow “View Attachment: PDF” hyperlink) [hereinafter Yocis, USTR Comment].
176
Howard, USTR Comment, supra note 155 (labeling homebuilders,
remodelers, and homebuyers as “downstream consumers”). The National Association of
Home Builders, whose members construct approximately 80% of the new homes built
each year in the United States, is a trade association whose “mission is to enhance the
climate for housing and the building industry.” Id.
192
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trade, you have free trade.”177 While this statement is
theoretically sound, in reality trade does not exist in isolation,
and when it is influenced by political favoritism, economic logic
does not always prevail.178 The United States has shown
tremendous political resolve in its commitment to protect its
softwood lumber industry and has brazenly used controversial
litigation tactics in order to stretch the limits of that protection.
Conversely, such steadfastness does not exist north of the
border. Until U.S. resolve is weakened or until the overlapping
dispute settlement mechanisms of global trade are
disentangled in a way that prevents disingenuous litigation, a
negotiated agreement with a single dispute resolution forum is
the only outcome capable of guiding softwood lumber through
the current mix of regionalism and multilateralism in the
international trading regime.
1. Political Support Within the United States for Trade
Restrictions on Canadian Softwood Lumber
Influential Senators from lumber-producing states, such
as Max Baucus (D-Mont.), have long expressed their desire for
a negotiated settlement to the lumber dispute in order to limit
imports of Canadian softwood products. In an attempt to
“spark a return . . . to the negotiating table,” Baucus went so
far as to introduce the Softwood Lumber Duties Liquidation
Act in 2004, which sought to liquidate $3 billion in Canadian
duty deposits prior to the resolution of ongoing legal appeals
surrounding those deposits.179 Although Canadian lumber
industry insiders downplayed the legislation, characterizing it as
a “message bill and not a serious threat,” evidence indicates that
past U.S. Presidents have responded to Senators’ softwood lumber
demands by supporting restrictions on imports of Canadian
177
Barry Brown, Lumber Dispute Could Affect State’s Imports of Canadian
Gas, BUFFALO NEWS, Aug. 23, 2001, at E1.
178
See, e.g., Daniel N. Adams, Comment, Back to Basics: The Predestined
Failure of NAFTA Chapter 19 and Its Lessons for the Design of International Trade
Regimes, 22 EMORY INT’L L. REV. 205, 228 (2008) (noting that the SLA 2006 was a
bargain “heavily influenced by political considerations”). During a 2009 Canada-United
States Law Institute Conference on “North American Dispute Resolution,” John Terry,
a Canadian trade lawyer, argued that, “despite the dispute settlement mechanisms
[Canada has] put into place, realpolitik tends to continue to play the role it has always
or has traditionally played.” John A. Terry, Canadian Speaker, North American
Dispute Resolution, Proceedings of the Canadian-United States Law Institute
Conference (Apr. 2-4, 2009), in 34 CAN.-U.S. L.J. 399, 416 (2010).
179
Baucus Pressures Canada on Lumber with Bill to Liquidate Duties, INSIDE
U.S. TRADE, Nov. 19, 2004, available at 2004 WLNR 10906271.
2012]
SOFTWOOD LUMBER’S “TERMITE” PROBLEM
193
lumber.180 Indeed, evidence from both Lumber III and Lumber IV
shows that such demands were catalysts for trade restrictions.
After Canada notified the United States of its plans to
withdraw from the MOU signed during Lumber II,181 a group of
sixty-four Senators wrote a letter to the President, demanding
that the Administration take action against Canada.182 The
letter threatened that “if [diplomatic or trade] remedies are not
pursued, we are prepared to find a legislative remedy to fully
offset Canada’s timber subsidies.”183 Lumber III was initiated in
the immediate wake of this threat, with Commerce selfinitiating trade proceedings against Canada.184 Then, with the
SLA 1996 set to expire, a group of fifty-one Senators wrote to
the President, urging him “to make resolving the problem of
subsidized lumber imports from Canada a top trade priority.”185
The response to this petition was Lumber IV, launched on the
first business day after the 1996 agreement expired.186 At
minimum, these two letters coincided with major events in the
softwood lumber dispute and highlight the broad level of
political protection enjoyed by the U.S. lumber industry.187 Most
180
Id. In all four rounds of the softwood lumber dispute, Senators involved
themselves indirectly in the negotiations by writing letters to the President,
Commerce, and the USTR, urging them to resolve the dispute through negotiation with
Canada or by imposing trade restrictions. Daowei Zhang & David Laband, From
Senators to the President: Solve the Lumber Problem or Else, 123 PUB. CHOICE 393,
393-94 (2005) (conducting a roll call analysis to identify the factors influencing a
Senator’s willingness to sign letters demanding that the executive branch solve the
lumber problem and showing that the economic importance of the lumber industry in a
Senator’s home state is positively correlated with signatory on these letters and that
the presence of a large housing industry in a state makes a Senator less likely to sign
these letters).
181
See supra Part I.B.
182
Zhang & Laband, supra note 180, at 397.
183
Id.
184
See supra Part I.C.
185
Zhang & Laband, supra note 180, at 399.
186
See supra Part II.
187
Commentators argue that these Senators are influenced by the highly
effective lobbying efforts of the Lumber Coalition. Zhang & Laband, supra note 180, at
407 (arguing that their findings are consistent with the “interest group theory of
political decision making” whereby a “small but concentrated softwood lumber industry
can successfully lobby their elected officials such as Senators and demand protection
from foreign competition, despite the fact that such protectionism harms the economic
welfare of the nation as a whole”). Although the Lumber Coalition has faced opposition
in its quest to impose trade penalties on Canadian lumber, primarily from the National
Association of Home Builders, the opposition has proven ineffective in its lobbying
efforts as compared to the Lumber Coalition. Id. at 396, 398. As recently as 2011,
Lumber Coalition officials have publicly stated that, “in the absence of an agreement
between the two governments, the Coalition would have no choice but to petition for
new antidumping and countervailing duty orders against unfairly traded softwood
lumber products from Canada.” Yocis, USTR Comment, supra note 175. Considering
the Lumber Coalition filed fresh AD/CVD petitions on the first business day after the
194
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recently, at least twenty-three members of Congress formally
offered their support for the SLA 2006 extension.188 In a letter
to the United States Trade Representative, these lawmakers
offered their support for extending the agreement in exchange
for an “iron clad commitment that any Canadian violations will
be addressed in a timely and effective manner.”189
2. Controversial Litigation Tactics Utilized by the
United States to Protect Its Softwood Lumber
Industry
In addition to overt political support for trade
restrictions, the United States has also proved willing to push
the legal envelope in its attempts to protect its domestic
softwood lumber industry. The most blatant example of this
controversial gamesmanship is evident from the United States’
attempt to moot the unfavorable NAFTA rulings regarding the
ITC’s injury determinations, under the guise of WTO
compliance.190 Although the CIT denounced this particular
practice,191 it is indicative of how far the U.S. government is
willing to go to protect domestic lumber interests.192 Until a
solution is found to deal with the discordant overlap of dispute
settlement mechanisms, other opportunities to thwart the
system will remain. Therefore, express agreements like the SLA
2006 are—at least for the time being—essential in providing
legal clarity and limiting the parties’ ability to manipulate the
incongruous relationship between NAFTA and the WTO.193
expiration of SLA 1996, the parties would be well served to give credence to these
warnings. See supra Part II. One commentator also notes that the SLA 2006 delivered
$500 million to the Lumber Coalition, “many times more than enough to protect its
interests,” which means the “[Lumber] Coalition is more than ready for trade action
were it to think more restraints needed.” Feldman, supra note 124, at 96.
188
Rossella Brevetti, 23 House Lawmakers Condition Support for Lumber
Pact Extension on Enforcement, 28 Int’l Trade Rep. (BNA) 1755 (Oct. 27, 2011).
189
Id.
190
See supra Part II.A.3.
191
See supra Part II.D.
192
BOWMAN ET AL., supra note 4, at 581; Quayat, supra note 37, at 134.
193
See Pauwelyn & Salles, supra note 19, at 117 (arguing that the best short
term solution to address forum shopping among international tribunals is to regulate
overlaps with explicit treaty clauses).
2012]
SOFTWOOD LUMBER’S “TERMITE” PROBLEM
195
3. Canada’s Lackluster Response to the United States’
Steadfast Support of Its Lumber Industry
In contrast to the United States’ commitment to the
lumber trade, Canada’s support for its own lumber industry
does not appear as steadfast. During the negotiations of the
SLA 2006, some have argued that newly elected Canadian
Prime Minister Stephen Harper prioritized restoring ties with
the Bush Administration over supporting the Canadian lumber
industry.194 Prior to announcing the SLA 2006, Canada had to
persuade most of its softwood lumber producers to refrain from
objecting publicly to an agreement that the industry did not
favor.195 Today, Canada continues to waver in its support.
Critics contend that the federal government “still strong-arms
provincial governments to change [their] forestry practices.”196
And the government has applauded British Columbia for
increasing the amount of its forest land put to auction.197 These
actions suggest that—despite numerous legal victories to the
contrary—the Canadian federal government believes that the
provinces do subsidize their production of exported lumber, and
they offer a contrast to the rigid support for the industry found
south of the border.198
In explaining why Canadian lumber producers
consented to the SLA 2006, the executive director of the
Alberta Forest Products Association stated, “We picked the
best of two bad situations.”199 This may be the most apt
description of the current agreement. Although far from
perfect, the SLA 2006 appeases U.S. demands for managed
trade and provides Canada with a degree of legal certainty
absent from the overlapping dispute settlement mechanism of
NAFTA and the WTO. And while Canada may still have
misgivings about its neighbor’s fickle free trade preferences,
new markets will provide Canada with options to escape the
restricted U.S. market, and they will offer the United States
relief from an otherwise continued influx of Canadian products.
194
Adams, supra note 178, at 228.
Feldman, supra note 124, at 91; Canadian Parliament Softwood Lumber
Hearing, supra note 147, at 5 (statement of Normand Rivard, Council Chair, United
Steelworkers) (opposing the SLA 2006).
196
Feldman, supra note 124, at 97.
197
Id.
198
Id.
199
Josie Newman, Timber Accord Rankles Canadian Firms, CHRISTIAN SCI.
MONITOR, Oct. 18, 2006, at 7, available at http://www.csmonitor.com/2006/1018/
p07s02-woam.html.
195
196
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B.
New Lumber Markets Will Allow Canada and the
United States to Mitigate Any Lasting Tensions
Throughout much of the softwood lumber dispute, the
United States has been Canada’s only major export market for
softwood lumber.200 Recently, however, lumber exports to China
have grown significantly, and Canada’s reliance on the U.S.
market has declined.201 May 2011 was the first month in which
the value of softwood lumber from British Columbia exported
to China outstripped that exported to the United States.202
China’s purchases of softwood lumber from Canada grew from
9.04% of Canadian softwood exports in 2010 to 21.4% in 2011.203
This corresponded with a drop in Canada’s softwood exports to
the United States, from 66.71% of total exports in 2010 to
54.63% in 2011.204 This diversification of Canada’s lumber
market will only alleviate U.S. concerns that too much
Canadian lumber is entering its market, and it will provide the
Canadian lumber industry with alternative trading options if it
finds the terms of the SLA 2006 too onerous.
While critics abound, and future conflicts are sure to
emerge, the SLA 2006 both effectively slays the softwood lumber
hydra and appeases the obdurate demands of U.S. lawmakers.
Unfortunately, an unwanted side effect of this peace is that it
removes a major incentive to address the monstrous dispute
resolution system that exists beneath the softwood lumber
dispute. In short, while the SLA 2006 is a workable solution to
the softwood lumber dispute, it also adds to the perilous forces
undercutting the multilateral trading system.
V.
A PYRRHIC VICTORY—WHY THE SLA 2006 ADDS TO THE
FORCES UNDERCUTTING THE MULTILATERAL TRADING
SYSTEM
Before the SLA 2006 was signed, commentators
predicted that the new dispute settlement system proposed in
the agreement “spell[ed] the end of NAFTA’s [C]hapter 19, and
200
BOWMAN ET AL., supra note 4, at 553-54.
Forest Product Markets, NAT. RES. CAN., http://cfs.nrcan.gc.ca/pages/330
(last updated Oct. 22, 2012).
202
Jeremy Hainsworth, British Columbia Lumber Exports to China Outstrip
in Value Softwood Exports to U.S., 28 Int’l Trade Rep. (BNA) 1249 (July 28, 2011).
203
Id.
204
Id.
201
2012]
SOFTWOOD LUMBER’S “TERMITE” PROBLEM
197
in many ways the end of NAFTA itself.”205 If this were the
lasting impact of the SLA 2006, it would be cause for
celebration: a response to the failures of NAFTA would have
highlighted a major problem brought on by the proliferation of
PTAs—namely, discordant dispute resolution—and brought
about the demise of one of those problematic agreements.
Unfortunately, this did not occur, and Chapter 19 is still used
today.206 Indeed, since 2006, the most bitter trade dispute in
North America has been immunized from many of the problems
caused by the existence of PTAs. Unless Canada and the
United States recognize that the SLA 2006’s straightforward
dispute settlement mechanism is what has alleviated their
softwood lumber problems and choose to apply a similarly
coherent principle to the larger trading regime, the extension of
the SLA 2006 is, at most, a Pyrrhic victory.
A.
A Dispute Settlement Cacophony—The Problems with
Preferential Trade Agreements
Although some argue that “overlapping legal systems
[are] unavoidable” in today’s global landscape,207 the softwood
lumber dispute presents a telling example of the “wastefulness
and potential futility” of such overlap in hotly contested trade
disputes.208 Specifically, the unresolved fragmentation between
regionalism and multilateralism creates at least three serious
205
Canadian Parliament Softwood Lumber Hearing, supra note 147, at 1
(statement of Dr. Elliot Feldman, Trade Lawyer, Baker & Hostetler LLP).
206
See, e.g., North American Free Trade Agreement Binational Panel Review,
In the Matter of: Certain Welded Large Diameter Line Pipe from Mexico, at 1, USAMEX-2007-1904-03 (Aug. 29, 2011) (reviewing the ITC’s decision “that revocation of
[an] antidumping order on Certain Large Diameter Line Pipe from . . . Mexico would
not likely result in the continuation or recurrence of material injury to the domestic
industry within a reasonably foreseeable time”).
207
See, e.g., Elizabeth Trujillo, Disaggregating the Regional-Multilateral
Overlap: The NAFTA Looking-Glass, 19 IND. INT’L & COMP. L. REV. 533, 558 (2009).
According to Trujillo, “In order to preserve its power, the WTO must share its
adjudicatory power and force regional and bilateral tribunals to settle matters regionally”
and must become “the coordinating force of the global trade system by creating concrete
linkages to its Member States and their regional concerns.” Id. at 568.
208
Cone, supra note 74, at 849 (arguing that free trade areas comprising the
United States and countries with substantially less economic strength “run the risk of
becoming extensions of hegemonic U.S. policies”); see also Dunoff, supra note 31, at 337
(noting that other trade disputes raise similar issues, but arguing that “with three
different lines of litigation proceeding virtually simultaneously before domestic fora,
NAFTA panels, and WTO panels, the Softwood Lumber dispute presents in a
particularly stark form the issues raised by litigation before multiple fora”).
198
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problems for the current international trade dispute settlement
system.209
First, it prolongs the underlying dispute.210 Despite
numerous legal victories over the course of Lumber IV, it took
Canada over five years to slay the softwood lumber hydra.211
Moreover, the longer the dispute carried on, the more
opportunities there were for U.S. agencies to issue additional
determinations, each of which started the challenge process
anew.212 Second, when multiple forums address the same issue,
the possibility of inconsistent judgments increases.213 In
particular, state practices, such as the United States’ use of
zeroing, may be deemed valid in one forum and invalid in
another.214 Finally, the existence of multiple forums gives rise to
litigious gamesmanship. If a state is able to win even a partial
affirmation of an AD/CVD ruling, as the United States did at
the WTO during Lumber IV,215 its trade agencies may argue
that, notwithstanding adverse rulings in one forum, success in
another provides legal cover to ignore the unfavorable result.
During the course of the softwood lumber dispute, the
relationship among the various dispute settlement forums
spanned a “continuum from deference to defiance,”216 but there
was an ever-present possibility that one of the issues discussed
above would surface and derail any apparent progress. Canada
and the United States addressed this concern by drafting a
PTA sub-agreement, the SLA 2006, which effectively trumped
NAFTA and the WTO with a new dispute resolution
mechanism exclusively for softwood lumber disputes.217 As will
be shown below, this was a misguided attempt to solve a much
deeper problem.
209
Dunoff, supra note 31, at 332.
Knox, supra note 14, at 436.
211
See supra Part II.
212
Knox, supra note 14, at 436.
213
Id.
214
Dunoff, supra note 31, at 332 (noting that by late 2004, the United States’
use of zeroing had been upheld in both the U.S. Court of Appeals for the Federal
Circuit and NAFTA, but that the WTO’s AB had found the zeroing to be inconsistent
with U.S. obligations under international trade law).
215
See supra Part II.A.2.b.
216
Dunoff, supra note 31, at 337-38.
217
See supra Part III.
210
2012]
B.
SOFTWOOD LUMBER’S “TERMITE” PROBLEM
199
PTA Sub-Agreements Deter a Return to Multilateral
Trade
While PTAs have their own set of problems, the
additional risks of PTA sub-agreements are twofold. They both
pilfer from the finite amount of human and administrative
capital available to conduct trade agreements, and they remove
incentives to address the larger issues at stake.
One of critics’ main concerns with the proliferation of
PTAs is that their negotiation, ratification, implementation, and
enforcement come at the expense of the multilateral system.218
PTA sub-agreements take this problem one step further by
focusing additional human and administrative energy on
agreements that are further removed from multilateral objectives.
This would not be a cause for concern if these sub-agreements
solved the fundamental shortcomings of PTAs. Unfortunately,
agreements such as the SLA 2006 merely immunize certain key
industries from the drawbacks of PTAs while leaving others to
languish in an entangled mess of trade agreements.
The SLA 2006 acknowledges the problems with bilateral
agreements, yet it provides the largest trade dispute in
Canadian-American relations with immunity from those
problems. As of 2006, the “longest running and perhaps most
bitter trade dispute ever between the two countries” is no longer
saddled with a cacophony of dispute settlement mechanisms.219
With billions in trade now beyond the convoluted interplay
between NAFTA and the WTO, Canada and the United States
are that much less likely to address the problems of overlapping
jurisdiction.220 While the saying is that things get worse before
they get better, those in the multilateral trading community
might worry that PTA sub-agreements are an example of things
getting better before they get worse.
218
As a World Bank study noted, “[r]eserves of administrative skill, political
capital, or imagination are finite; if they are devoted to a [PTA] they are not available
for multilateral objectives.” Dunoff, supra note 31, at 334 (citation omitted).
219
BOWMAN ET AL., supra note 4, at 553.
220
Id. (noting that Canada exported nearly $7 billion worth of softwood
lumber to the United States in 2000). By 2011, bilateral trade in softwood lumber had
decreased to $3 billion. Canada Applauds Softwood Lumber Ruling on British Columbia’s
Timber-Pricing System, FOREIGN AFF. & INT’L TRADE CAN., http://www.international.gc.ca/
media_commerce/comm/news-communiques/2012/07/18a.aspx?view=d (last modified
July 19, 2012).
200
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CONCLUSION
Softwood lumber’s termite problem is an infestation
that concerns the entire trading community, and PTA subagreements are not the insecticide that the multilateral system
is waiting for. If Canada and the United States are to assist in
addressing the real issues at stake, they must look beyond
creating a solution only for lumber. Rather than allowing an
armistice in the softwood lumber dispute to serve as an excuse
to ignore the concerns surrounding PTAs, the two parties must
recognize why the SLA 2006 has been able to mitigate the
dispute and extend that rationale to the greater disconnect
between NAFTA and the WTO.
The SLA 2006 replaces a discordant dispute settlement
scheme with a straightforward and efficient arbitral tribunal.
Until Canada and the United States integrate a similar
solution into the larger trading system, the lessons of the
softwood lumber dispute will continue to go unheeded.
K. Craig Reilly†
†
J.D. Candidate, Brooklyn Law School, 2013; B.A., Princeton University,
2007. Many thanks to all of those who provided invaluable assistance throughout the
writing process. A special thank you to Professor Claire Kelly, the editors and staff of
the Brooklyn Law Review, and my unofficial editor and new wife Caitlin.
Count Your Chickens Before They
Hatch
HOW MULTIPLE PREGNANCIES ARE
ENDANGERING THE RIGHT TO ABORTION
INTRODUCTION
Reconciling the constitutional right to procreate with
the constitutional right to abortion produces a paradox. The
former protects citizens’ interests in having a child, and the
latter protects women’s interests in terminating a pregnancy.
Yet, the right to procreate can also directly implicate a
woman’s right to terminate her pregnancy. Indeed, sweeping
medical advancements in the area of reproductive technology
put this incongruity in sharp relief.
“Assisted Reproductive Technology” refers to treatment
methods that infertile women use to attain pregnancy.1 According
to the Centers for Disease Control and Prevention, “[Assisted
Reproductive Technology] includes all fertility treatments in
which eggs and sperm are handled.”2 In vitro fertilization (IVF) is
one of the most popular techniques used in the United States to
assist women in achieving pregnancy.3 During an IVF procedure,
it is customary to implant more than one embryo in the woman’s
uterus, with the hope that at least one embryo will result in a
pregnancy.4 However, one of the common, well-known outcomes
of an IVF procedure is for a woman to attain multiple
pregnancies after one cycle of implantation.5 Since the United
1
Marsha Garrison, Regulating Reproduction, 76 GEO. WASH. L. REV. 1623,
1623 (2008).
2
Ctrs. for Disease Control & Prevention, Assisted Reproductive Technology
(ART), CDC.GOV, http://www.cdc.gov/art (last visited Nov. 3, 2011).
3
Id.
4
Kirsten Riggan, Regulation (or Lack Thereof) of Assisted Reproductive
Technologies in the U.S. and Abroad, CTR. FOR BIOETHICS & HUMAN DIGNITY (Mar. 5,
2011), http://cbhd.org/content/regulation-or-lack-thereof-assisted-reproductive-technologiesus-and-abroad.
5
Fact Sheet: Fertility Drugs and the Risk of Multiple Births, AM. SOC’Y FOR
REPROD. MED., http://www.asrm.org/Fertility_drugs_and_the_risk_of_multiple_births/
(last visited Sept. 21, 2012) [hereinafter Fact Sheet: Fertility Drugs].
201
202
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States supports the notion of “patient autonomy”6 and does not
limit the number of embryos that can be transferred into a
woman’s uterus during a cycle, physicians and patients are free
to choose how many embryos are actually implanted in a single
cycle.7 Although professional medical organizations, such as the
American Society for Reproductive Medicine and the Society for
Assisted Reproductive Technology, provide guidelines for
embryo transplantation according to a woman’s age, these
guidelines represent only nonbinding recommendations.8
The unpredictability of the IVF procedure has prompted
enormous scrutiny from legal scholars and the general public.
For example, in 2009, Nadya Suleman—commonly known as
“Octomom”9—gave birth to octuplets with the assistance of IVF.10
Suleman already had six other children who were conceived
through IVF.11 Furthermore, it soon came to light that Suleman
was an unemployed single mother who was receiving public
assistance and had serious psychological problems.12 Inevitably,
questions arose about the ethical and moral implications of the
dearth of legislation regulating embryo transfer and the IVF
procedure.13 Suleman’s story highlights the controversy of “unfit
mothers” who gain the ability to bear more children than they
are capable of providing for through IVF. On the other hand,
IVF’s increasing prevalence has also drawn attention to women
on the opposite end of the spectrum: women who undergo IVF,
knowing that it will likely result in multiple pregnancies, and
then choose to reduce their pregnancy to fewer fetuses.
“Multifetal pregnancy reduction” describes procedures
involving multiple fetuses where a woman chooses to terminate
one or more fetuses.14 In the past, doctors have performed
reductions for women carrying multiple fetuses because a
multifetal pregnancy is significantly more dangerous than a
6
Garrison, supra note 1, at 1633.
See Riggan, supra note 4.
8
Id.
9
See Alan Duke, Nadya Suleman’s Doctor Loses California Medical License, CNN
(June 1, 2011), http://articles.cnn.com/2011-06-01/us/california.octuplets.doctor.revoked_
1_kamrava-fertility-doctor-embryos?_s=PM:US; Riggan, supra note 4.
10
Randal C. Archibold, Octuplets, 6 Siblings, and Many Questions, N.Y.
TIMES, Feb. 4, 2009, at A14.
11
Duke, supra note 9.
12
Deborah L. Forman, When “Bad” Mothers Make Worse Law: A Critique of
Legislative Limits on Embryo Transfer, 14 U. PA. J.L. & SOC. CHANGE 273, 277 (2011).
13
See Archibold, supra note 10.
14
Ruth Padawer, The Two-Minus-One Pregnancy: Unnatural Selection, N.Y.
TIMES, Aug. 10, 2011, (Magazine), at 24, available at http://www.nytimes.com/2011/
08/14/magazine/the-two-minus-one-pregnancy.html.
7
2012]
TWIN REDUCTIONS AND THE ABORTION RIGHT
203
twin or single pregnancy15—although generally doctors will not
reduce any further than a twin pregnancy, barring health
risks.16 Reducing a twin pregnancy, also known as “twin
reduction,” is increasingly controversial. In fact, a growing
number of women undergoing IVF treatments are opting for a
twin reduction, even when there are no health risks to the
mother or the fetuses.17 Many physicians have refused to perform
the procedure altogether, claiming that twin reductions are
more unethical than multifetal pregnancy reductions18 because a
twin reduction is often chosen for “social” reasons rather than
for medical reasons.19 This aspect of twin reductions enables the
public to equate it with abortions.
A woman’s right to an abortion is a fundamental right
protected by the U.S. Constitution. The Supreme Court decided
Roe v. Wade on January 22, 197320 and determined that the right
to privacy under the Fourteenth Amendment encompasses a
woman’s decision to terminate her pregnancy.21 The Court later
reaffirmed its central holding from Roe in Planned Parenthood v.
Casey.22 Although the Court unexpectedly changed course in its
analysis, introducing the concept of personal autonomy rather
than the right to privacy to justify its holding, it concluded that
a woman’s right to an abortion is a fundamental right.23 The
Supreme Court has rarely visited the abortion issue since
Casey in 1992. However, given the advancement of assisted
reproductive technology in general, and IVF in particular,
coupled with a lack of legislation regarding the procedure, new
questions are emerging as to what decisions are encompassed
within the meaning of personal autonomy.
This note explores the implications IVF may have on the
notion of personal autonomy as enunciated in Casey. The note
will present two protected fundamental rights—the right to
procreate and the right to an abortion—and analyze the
15
Id.
Id. at 25.
17
Id.
18
Id.
19
See Mark I. Evans & David W. Britt, Multifetal Pregnancy Reduction:
Evolution of the Ethical Arguments, 28 SEMINARS IN REPROD. MED. 299-300 (2010),
available at http://www.compregen.com/pdf/ethicalarguments.pdf; Gretchen Sisson, Having
One-Minus-One Choices, ABORTION GANG (Aug. 15, 2011), http://www.abortiongang.org/
2011/08/having-one-minus-one-choices/.
20
Roe v. Wade, 410 U.S. 113, 153 (1973).
21
Id.
22
Planned Parenthood of Se. Pa. v. Casey, 505 U.S. 833, 845-46 (1992).
23
Id. at 869.
16
204
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inherent conflict between them. In particular, this note will
discuss how twin reductions lead the public to question the
right to abortion, rather than the countervailing right to
procreate and the unregulated IVF procedure. Finally, the note
will demonstrate that the current state of abortion rights
already endangers a woman’s right to privacy and therefore
should not be targeted to solve problems associated with twin
reductions. Rather, to effectively preserve both the right to
abortion and the right to reproductive freedom, the legislature
should enact regulations to more strictly govern the use of the
IVF procedure.
Part I of this note briefly summarizes the IVF procedure
and its place within the legal landscape. This section also
further describes the twin reduction procedure. Part II provides
background and analysis of the Supreme Court precedents
governing the legal doctrines that twin reductions implicate.
Part III presents moral and ethical considerations that arise
from twin reductions and why the practice is often associated
with regular abortions. Part IV explains why abortion rights are
currently susceptible to deterioration. Finally, Part V will
propose possible solutions to the issue of twin reductions and
other problems resulting from an unregulated IVF process.
I.
IN VITRO FERTILIZATION
A.
The Procedure
IVF is the artificial process of fertilizing a female egg
with sperm in a laboratory.24 A typical IVF “cycle”25 begins with
the woman undergoing about two weeks of hormone therapy to
increase the number of eggs her ovaries produce.26 The eggs are
then retrieved and harvested through different outpatient
procedures.27 Finally, the eggs are placed in a petri dish and
24
CHARLES P. KINDREGAN, JR. & MAUREEN MCBRIEN, ASSISTED
REPRODUCTIVE TECHNOLOGY: A LAWYER’S GUIDE TO EMERGING LAW AND SCIENCE 91
(2d ed. 2011).
25
An IVF procedure is referred to as a cycle because “the procedure consists
of several steps that take place over a period of about two weeks and is not a single
medical procedure at one point in time.” Id. at 94.
26
Id. at 93.
27
There are various outpatient procedures used for the retrieval of the eggs
during which the eggs are aspirated from the ovary by either placing a
needle, guided by ultrasound through the vaginal wall, by laparoscopic
surgery or by Trans-Abdominal Oocyte Retrieval. Typically only one local
2012]
TWIN REDUCTIONS AND THE ABORTION RIGHT
205
fertilized.28 As cell division begins and “the zygote is between 2
and 16 cells,”29 the embryos are either transplanted into the
woman’s uterus or cryopreserved.30
Each cycle of IVF is financially burdensome.31 Rates
vary among fertility clinics, but the cost for each cycle is
typically between $10,000 and $20,000,32 averaging around
$12,400.33 Most states do not require insurance companies to
cover IVF, and if they do, coverage is limited.34 Because each
cycle does not guarantee a pregnancy, many women go through
several cycles without any success.35 Very few people can afford
to pay for IVF cycles themselves,36 and as a result, it is common
practice for physicians to transfer multiple embryos into a
woman’s uterus during one cycle, leading to the high and
distinct possibility of multiple pregnancies.37
B.
Legal Landscape Governing the Number of Implanted
Embryos
The United States has no actual legislation regulating
the IVF procedure itself. This laissez-faire approach gives
anesthe[tic] is required for this process, but general anesthesia in the form of
conscious sedation may be used.
Id. (citing Tracey S. Pachman, Disputes over Frozen Preembryos and the “Right Not to
Be a Parent,” 12 COLUM. J. GENDER & L. 128, 129 (2003) and authorities cited therein).
28
Id. at 94.
29
Id.
30
Id. at 91. Each instance of egg implantation does not guarantee a
pregnancy. Therefore, multiple eggs are fertilized at once, “so that the process can be
repeated if necessary.” Id. at 94. Cryopreserved embryos are the fertilized eggs, which
are not implanted in an IVF cycle and are persevered for possible future implantation.
If a patient decides against future implantation, the fertility clinics are usually left
with the conundrum about what to do with these “surplus” embryos. See id. at 121. A
large controversy exists regarding the disposition of cryopreserved embryos; however,
that issue is beyond the scope of this note.
31
Id. at 95.
32
Id.; see also State Laws Related to Insurance Coverage for Infertility
Treatment, NAT’L CONF. ST. LEGISLATURES, http://www.ncsl.org/issues-research/health/
insurance-coverage-for-infertility-laws.aspx (last updated Mar. 2012).
33
Frequently Asked Questions About Infertility, AM. SOC’Y FOR REPROD. MED.,
http://www.asrm.org/awards/index.aspx?id=3012 (last visited Jan. 16, 2012).
34
See State Laws Related to Insurance Coverage, supra note 32. “Since the
1980s, 15 states . . . have passed laws that require insurers to either cover or offer
coverage for infertility diagnosis and treatment.” Id. However, this coverage does not
necessarily extend to IVF procedures. “While most states with laws requiring
insurance companies to offer or provide coverage for infertility treatment include
coverage for in vitro fertilization, [several of those states] have laws that specifically
exclude coverage for the procedure.” Id.
35
KINDREGAN & MCBRIEN, supra note 24, at 95.
36
Id.
37
See Riggan, supra note 4.
206
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doctors and patients38 complete control without any legal
restrictions. Instead, the entire field of IVF is solely guided by
professional medical organizations such as the American Society
for Reproductive Medicine and the Society for Assisted
Reproductive Technology. These organizations’ guidelines
encourage physicians to inform patients about the risks39 and costs
of IVF,40 and they state the recommended number of embryos to
transfer based on the woman’s age41 and other factors.42 Should the
physician or patient decide to transfer more than the
recommended number of embryos, the guidelines provide for an
exception,43 so long as the physician documents “the justification
for exceeding the recommended limits . . . in the patient’s
permanent medical record.”44 Even if physicians fail to follow the
recommendations, they will not be liable under the law.45
Outside of the United States, many countries have
enacted legislation that limits the number of embryos that can
be transferred during an IVF cycle.46 For example, Germany,
38
See, e.g., Fact Sheet: Fertility Drugs, supra note 5 (“Before the placement of
these embryos . . . [the patient and the] doctor will decide how many embryos to place
in [the] womb.”).
39
Like any medical procedure, IVF comes with certain risks during each
cycle. During the initial drug therapy, ovary stimulation can cause rare, but significant
physical side effects, such as nausea or vomiting, shortness of breath, weight gain,
severe abdominal pain, among others. In Vitro Fertilization: IVF, AM. PREGNANCY
ASS’N, http://www.americanpregnancy.org/infertility/ivf.html (last updated May 2007).
Egg retrieval can cause bleeding and infections. Id. These side effects are very rare and
only occur in one percent or less of cases. Id. However, the existence of possible risks
provides another incentive for multiple-embryo transfers, increasing the chance of
pregnancy so that a patient need not endure another IVF cycle.
40
Practice Comm., Soc’y for Assisted Reprod. Tech. & Practice Comm., Am.
Soc’y for Reprod. Med., Guidelines on Number of Embryos Transferred, 92 FERTILITY &
STERILITY 1518, 1518 (2009) [hereinafter Guidelines on Number of Embryos], available
at www.sart.org/publications/detail.aspx?id=3966.
41
The guidelines suggest the following recommendations for the number of
embryos transferred: For women under the age of thirty-five, one or two embryos; for
ages of thirty-five to thirty-seven, two or three embryos; for ages of thirty-eight to forty,
three to four embryos; and for over the age of forty, up to five embryos. Id.
42
Additional
factors
include
embryo
quality,
opportunity
for
cryopreservation, patient’s previous results with IVF, and accumulation of newer
techniques. Id.
43
Id. at 1519.
44
Id.
45
See Molly Hennessy-Fiske, Octuplets Doctor Could Still Lose Medical
License, L.A. TIMES (Feb. 10, 2011), http://articles.latimes.com/2011/feb/10/local/la-me0210-kamrava-20110210 (“[F]ertility specialists are not required to adhere to strict
standards concerning how many embryos they implant.”). Although physicians are not
legally bound, they may face repercussions for noncompliance from state medical
boards. See Duke, supra note 9 (“The California Medical Board ruled that Dr. Michael
Kamrava committed ‘gross negligence’ with ‘repeated negligent acts, for an excessive
number of embryo transfers’ into Suleman in 2008.”).
46
See Riggan, supra note 4.
2012]
TWIN REDUCTIONS AND THE ABORTION RIGHT
207
Italy, Spain, and Switzerland have implemented regulations
limiting the number of embryos to three per cycle.47 The United
Kingdom’s Human Fertilization and Embryo Authority has
restricted the number of embryos to no more than two for
women under the age of forty and no more than three for women
over forty.48 Among other countries, Belgium and Sweden have
endorsed the idea of a single embryo transfer, where “a fresh
embryo is transferred in the first cycle and single cryopreserved
embryos are transferred in subsequent cycles.”49 European
countries have been successful in reducing the number of
multiple pregnancies following such regulations.50 However, the
United States has yet to follow Europe’s approach, currently
relying on standards and guidelines rather than federally
imposed regulations that would limit the number of embryos
transferred during each IVF cycle.
C.
Problems Associated with a Lack of Regulation
As with most areas of medical practice, IVF procedures
are largely self-regulated on a voluntary basis.51 The sole piece
of legislation the federal government has enacted relating to
the IVF procedure is the Fertility Clinic Success Rate and
Certification Act of 1992,52 which requires all clinics to submit
reports regarding their pregnancy success rates per IVF cycle.53
The report allows patients to compare clinics based on their
rates of patient pregnancy. The higher the rate of successful
pregnancies, the more attractive a clinic appears to a patient
struggling with infertility. Therefore, clinics may transfer a
higher number of embryos to increase their success rate,54
despite the dangers of a multiple pregnancy.55 At the same
47
Id.
Id.
49
Id.
50
Urška Velikonja, The Costs of Multiple Gestation Pregnancies in Assisted
Reproduction, 32 HARV. J.L. & GENDER 463, 467 (2009).
51
Id. at 465; see also Garrison, supra note 1, at 1631. (“[A]cross all areas of
medical practice, the law of medical choice is dominated by the principle of patient
autonomy.”). Therefore, courts generally do not interfere in this area, and emphasize
the notion that a human being should have complete control over decisions that relate
to their body. Id.
52
42 U.S.C. §§ 263a-1 to -7 (2006).
53
Id. § 263a-1.
54
Velikonja, supra note 50, at 483. Furthermore, clinics are not required to
report the actual number of multiple pregnancies or the number of children born with
medical problems—thus depriving the patient of important, useful information. Id.
55
See infra Part I.D.
48
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time, patients who desperately want children are incentivized
to choose clinics that are willing to transfer a greater number
of embryos.56 If a clinic refuses to implant the number of
embryos that the patient demands, she can simply find a
competitor clinic57 that is willing to comply with her request.58
Therefore, many doctors will agree to the patient’s demand for
multiple embryo transfer, even if it means noncompliance with
the medical standards.59
The general discretion given to doctors and their patients
has its advantages,60 but an abuse of the discretion inevitably
leads to moral and ethical concerns among society. Nadya
Suleman, widely known as “Octomom,” provides a pertinent
example of the scrutiny that the lack of embryo transfer
legislation invites.61 After she gave birth to octuplets by utilizing
IVF, it was disclosed62 that Suleman’s physician, Michael
Kamrava, implanted twelve embryos into her womb.63 Suleman
had six other children, also conceived through IVF,64 three of
whom had developmental disabilities.65 In addition, Suleman
was an unemployed single mother receiving public assistance,66
56
Velikonja, supra note 50, at 482.
The fertility industry has rapidly grown into more than $1 billion business,
providing for strong competition among clinics. Stephanie Saul, Birth of Octuplets Puts
Focus on Fertility Clinics, N.Y. TIMES (Feb. 11, 2009), http://www.nytimes.com/
2009/02/12/health/12ivf.html. “The industry has doubled in size . . . . At last count, the
number of procedures was up to 134,260 and there were more than 483 clinics across
the country.” Id.
58
Id.
59
Id.
60
An unregulated industry allows doctors and scientists to experiment and
procure new medical advancements. Velikonja, supra note 50, at 465. Furthermore,
fertility patients enjoy the freedom to choose the reproductive methods that best suits
their needs and preferences. Id.
61
See Forman, supra note 12, at 275; Radhika Rao, How (Not) to Regulate
ARTs: Lessons from Octomom, 21 ALB. L.J. SCI. & TECH. 313, 313-14 (2011); see also
Saul, supra note 57.
62
Originally, Suleman claimed that Dr. Kamrava had implanted six
embryos, and two of them had divided into twins, but Dr. Kamrava admitted that he
had in fact implanted twelve embryos. Shari Weiss, Octomom Nadya Suleman’s Doctor,
Michael Kamrava, Loses Medical License After Long Investigation, N.Y. DAILY NEWS
(June 2, 2011), http://articles.nydailynews.com/2011-06-02/gossip/29631720_1_michaelkamrava-octomom-nadya-suleman-fetal-reduction; Molly Hennessy-Fiske, Suleman
Doctor Says Implanting a Dozen Embryos Was Wrong, L.A. TIMES (Oct. 22, 2010),
http://articles.latimes.com/2010/oct/22/local/la-me-1022-octuplets-doctor-20101022; see
also Saul, supra note 57.
63
Hennessy-Fiske, supra note 62. The ASRM Guidelines provides that only
two eggs should be implanted in a woman of Suleman’s age; however, Suleman had
been implanted with six times the recommended amount of embryos. Guidelines on
Number of Embryos, supra note 40, at 1518; see also Weiss, supra note 62.
64
Weiss, supra note 62.
65
Forman, supra note 61, at 273.
66
Weiss, supra note 62.
57
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TWIN REDUCTIONS AND THE ABORTION RIGHT
209
propelling her further toward public condemnation as an
irresponsible and unfit mother.67 Dr. Kamrava was also the
subject of a prolonged investigation by California’s medical
board,68 resulting in the revocation of his medical license.69
Kamrava claimed that Suleman insisted on the dozen-embryo
transfer, and that she had agreed to undergo fetal reduction if
she became pregnant with more than triplets.70 The medical
board rejected Kamrava’s defense, emphasizing that the initial
consideration of an appropriate number of embryos transferred
is imperative and that doctors should not rely on the fetal
reduction procedure in the event that multiple pregnancies
result.71 Suleman’s circumstances transformed the public
attitude toward IVF, animating concerns regarding the lack of
embryo transfer legislation and prompting state legislatures to
act.72 Ultimately, none of the proposed legislation passed,73 and
multiple pregnancies still occur at significantly high rates74—a
fact that brings to the forefront another controversial aspect of
IVF: multifetal pregnancy reductions.
67
Forman, supra note 61, at 273; Rao, supra note 61, at 313.
The investigation led by the California medical board was to determine
“whether accepted standards of medical practice has been violated.” See Saul, supra
note 57. Administrative law judge Daniel Juarez “found that Kamrava committed gross
and repeated negligence by implanting Suleman with an excessive number of
embryos . . . [but that he] was unlikely to repeat his mistakes.” Hennessy-Fiske, supra
note 45. Judge Juarez recommended that the medical board place Kamrava on five
years’ probation, instead of revoking his license. Id. The board eventually rejected the
recommendation and revoked Kamrava’s license. Weiss, supra note 62. It has been
suggested the close review of Kamrava was largely due to the fact that there is a lack
of regulation combined with the “international notoriety of the octuplets.” HennessyFiske, supra note 45.
69
Weiss, supra note 62. However, Kamrava can petition for reinstatement of
his medical license three years after the date of revocation. Id.
70
Hennessy-Fiske, supra note 62; Saul, supra note 57.
71
Weiss, supra note 62.
72
Forman, supra note 61, at 278; Rao, supra note 61, at 313. Georgia and
Missouri were among states that proposed bills that would specifically limit the
permissible number of embryos to transfer for each IVF cycle. Rao, supra note 61, at
314; Forman, supra note 61, at 278.
73
Forman, supra note 61, at 278; Rao, supra note 61, at 314.
74
AM. SOC’Y FOR REPROD. MED., MULTIPLE PREGNANCY AND BIRTH: TWINS,
TRIPLETS & HIGH-ORDER MULTIPLES—A GUIDE FOR PATIENTS 3 (2012) [hereinafter MULTIPLE
PREGNANCY AND BIRTH], available at http://www.asrm.org/uploadedFiles/ASRM_Content/
Resources/Patient_Resources/Fact_Sheets_and_Info_Booklets/multiples.pdf.
The
2008
Assisted Reproductive Technology Report produced by the Center for Disease Control and
Prevention further advises that the percentage of multiple pregnancies might have been
higher than reported, due to pregnancies that end before the number of fetuses is
determined. CTRS. FOR DISEASE CONTROL & PREVENTION, 2008 ASSISTED REPRODUCTIVE
TECHNOLOGY REPORT 25, available at http://www.cdc.gov/art/ART2008/index.htm (last
visited Nov. 24, 2012) [hereinafter ART2008].
68
210
D.
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Multifetal Pregnancy Reductions75
Multiple pregnancies create tremendous health risks to
both the mother and fetuses.76 Women are at a higher risk of
pregnancy complications, such as miscarriage, premature labor,
gestational diabetes, anemia, and post-partum hemorrhaging.77
Furthermore, the fetuses are at great risk of premature birth,
low birth weight, cerebral palsy, and other long-term medical
and developmental complications.78 As a result, physicians
perform multifetal pregnancy reductions to lower the number of
fetuses that will be carried to term in order to increase the
chance of a healthy and successful pregnancy.79
Pregnancy reduction procedures usually take place
within the first twelve weeks of the pregnancy.80 Potassium
chloride is injected into the gestational sac81 of the fetus or
fetuses to terminate the fetal heart motion.82 Often, doctors
perform ultrasounds to detect if any of the fetuses have
abnormalities, because abnormal fetuses are most frequently
selected for reduction.83 When considering a pregnancy
reduction, patients are strongly urged to discuss the possible
outcomes with their doctors and spouses before making a final
determination about the future of their pregnancy.84
75
“Multifetal pregnancy reduction” is the medical term used by medical
professional organizations and physicians to describe the procedure that reduces the
number of fetuses in the uterus. It is also known as “selective reduction” or “pregnancy
reduction.” MULTIPLE PREGNANCY AND BIRTH, supra note 74, at 9, 14. I will use the
term “pregnancy reduction” to refer to this procedure.
76
Id.
77
Id.; Fact Sheet: Fertility Drugs, supra note 5; see also Riggan, supra note 4.
78
MULTIPLE PREGNANCY AND BIRTH, supra note 74, at 8; Fact Sheet: Fertility
Drugs, supra note 5; see also Riggan, supra note 4.
79
Fact Sheet: Fertility Drugs, supra note 5. One out of three multiple
pregnancies also result in a natural pregnancy reduction, where the woman’s body
itself reduces the number of fetuses. Id.
80
Id.
81
At this early stage of pregnancy, “the fetus is enclosed in a fluid-filled
pouch, called a gestational sac.” Id.
82
Id.; see also ROBERT BLANK & JANNA C. MERRICK, HUMAN REPRODUCTION,
EMERGING TECHNOLOGIES, AND CONFLICTING RIGHTS 92 (1995).
83
BLANK & MERRICK, supra note 82, at 92.
84
Fact Sheet: Fertility Drugs, supra note 5.
It’s hard for most couples to decide to have multifetal pregnancy reduction,
especially if [the patient] has tried hard to get pregnant in the first place. If
[a patient is] thinking about having this procedure, [the patient and their]
partner should talk to [their] doctor who may recommend a visit with a
maternal-fetal medicine specialist or get professional counseling before the
procedure. Both partners need to be comfortable with their decision and may
need emotional support prior to and immediately following the procedure.
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TWIN REDUCTIONS AND THE ABORTION RIGHT
211
Throughout the 1990s, physicians held opposing views on
whether it was even necessary to reduce triplets to twins.85
Eventually, as technology progressed and the pregnancy
reduction procedure evolved,86 physicians agreed that reducing
triplets to twins was safer than carrying triplets to term.87 On the
other hand, a twin pregnancy has been considered safe for both
the mother and the fetuses,88 resulting in many doctors refusing
to reduce a twin pregnancy to a “singleton”89 and generating
rhetoric that equates twin pregnancy reductions to abortions.90
E.
Twin Reductions
Twin reductions spark intense public debate in the
abortion context, not only among those who are pro-life, but also
among those who identify themselves as pro-choice.91 Because
multiple pregnancies are a well-known result of IVF, women
undertake the procedure informed that a twin pregnancy is a
very likely possibility.92 Furthermore, recent reports released by
the Center for Disease Control and Prevention have confirmed
Fact Sheet: Complications and Problems Associated with Multiple Births, AM. SOC’Y
FOR REPROD. MED., http://www.asrm.org/uploadedFiles/ASRM_Content/Resources/
Patient_Resources/Fact_Sheets_and_Info_Booklets/complications_multiplebirths.pdf
(last visited Jan. 16, 2012).
85
Padawer, supra note 14, at 25.
86
Pregnancy reductions came with a high risk of miscarriages. However,
with better ultrasound equipment and higher physician “technical expertise,” the
number of miscarriages effectively decreased. Id.
87
Id.
88
See A.J. Antsaklis, Reduction of Multifetal Pregnancies to Twins Does Not
Increase Obstetric or Prenatal Risks, 14 OXFORD J. HUMAN REPROD. 1338, 1338 (1998).
The study compared twin pregnancies resulting from assisted reproduction with
standard twin pregnancies, and observed “no significant difference in miscarriage rate,
mean gestational age at delivery, mean neonatal weight at birth or perinatal mortality
rate.” Id.; see also Twin Pregnancies from Assisted Conception Are No More Risky than
Those Resulting from Spontaneous Conception, STORKNET (Feb. 24, 2004),
http://www.storknet.com/cubbies/infertility/news-twins.htm (noting that researchers at
four academic medical centers monitored twin pregnancies and found that assisted
reproduction conception did not contribute to an increased risk to the pregnancy).
89
Singleton is a term used to describe a pregnancy carrying a single fetus.
See e.g., MULTIPLE PREGNANCY AND BIRTH, supra note 74, at 14.
90
Padawer, supra note 14, at 25.
91
See generally Jennifer Fulwiler, What Pro-Choice Intellectual Honesty
Looks Like, NAT’L CATH. REG. (Aug. 12, 2011, 7:12 AM), http://www.ncregister.com/
blog/jennifer-fulwiler/what-pro-choice-intellectual-honesty-looks-like; Anna North, The
Complicated Ethics of Twin Reductions, JEZEBEL (Aug. 12, 2011, 1:00 PM),
http://jezebel.com/5830054/the-complicated-ethics-of-twin-reduction.
92
See ART2008, supra note 74 (reporting that twin pregnancies accounted for
29% of all overall births resulting from IVF pregnancies); see generally MULTIPLE
PREGNANCY AND BIRTH, supra note 74; Fact Sheet: Fertility Drugs, supra note 5.
212
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that twin births in the United States are escalating,93 and the
rise in twins is largely attributed to the growing popularity of
IVF treatments.94
As a result, patients who undergo fertility treatment and
affirmatively choose to reduce their twin fetuses to a singleton
without the attendant health risks are viewed in a somewhat
different light than those with multifetal pregnancy reductions.
Unlike multifetal pregnancy reductions, twin reductions convert
the existing controversy surrounding the lack of embryo transfer
regulation into a misplaced debate regarding abortion rights.95
The attitude equating twin reductions to abortions is largely due
to the fact that twin pregnancies are considered to be safe.
Accordingly, reducing down to a singleton pregnancy is viewed
as an “elective” procedure,96 and therefore the procedure has
engendered attacks on constitutional abortion rights.
Even though twin reductions are seen as an unpleasant
result of IVF, the public outcry to eliminate twin reductions often
resorts to restricting abortion rights rather than targeting the
source of the problem: an unregulated embryo transfer system.
Why does twin reduction add fuel to the abortion controversy?
93
Ctrs. for Disease Control & Prevention, Multiple Births, CDC.GOV,
http://www.cdc.gov/nchs/fastats/multiple.htm (last updated Nov. 30, 2011). In 2009, one
in every thirty babies born in the United States was a twin, a significant increase over
the one in fifty-three rate in 1980. Id. Nationally, 3.3 percent of all births were twins in
2009, up from 2 percent in 1980. Id.
94
Joyce Martin, an epidemiologist who co-authored the CDC Birth report,
expressed that an increase in twins were expected as more women are delaying
pregnancy until they are over thirty. For some unknown reason, women over thirty
years of age are more likely to conceive twins naturally than younger women. About a
third of the twin birth rate increase can be attributed to that. However, the remaining
portion of the rise of twin births is due to fertility drugs and treatments. Attack of the
Twins! Older Moms, IVF Spurring More Double Births, N.Y. DAILY NEWS (Jan. 5,
2012), http://articles.nydailynews.com/2012-01-05/news/30595170_1_twins-older-momsfertility-drugs; Janice D’Arcy, Twins are Multiplying, Raising New Questions for the Nature
vs. Nurture Debate, WASH. POST (Jan. 5, 2012), http://www.washingtonpost.com/blogs/onparenting/post/twins-are-multiplying-raising-new-questions-for-the-nature-vs-nurturedebate/2012/01/05/gIQALYOAdP_blog.html; Robin Wulffson, New CDC Report: Twin Birth
Rate Soaring in U.S., EMAXHEALTH (Jan. 5, 2012, 2:05 PM), http://www.emaxhealth.com/
11306/new-cdc-report-twin-birth-rate-soaring-us. Furthermore, the greatest increase in twin
rates was reported for women 40 and older, who are more likely to require fertility
treatments and more likely to implant a higher number of embryos in a single IVF cycle.
D’Arcy, supra; Wulffson, supra. Another interesting aspect reported is that over the last
three decades, the twin rate increase was not uniform for Caucasian and African
American women. Without fertility treatment, African Americans have a higher rate of
twin pregnancies. Wulffson, supra; Attack of the Twins!, supra. The increase in
Caucasian twins conveys the disparity that exists with the availability of IVF
treatments among different races and socioeconomic classes.
95
See infra Part III.
96
Robin Marty, The “Elective” Selective Reduction, RH REALITY CHECK (Aug. 10,
2011, 4:47 PM), http://www.rhrealitycheck.org/blog/2011/08/10/elective-selective-reduction.
2012]
TWIN REDUCTIONS AND THE ABORTION RIGHT
213
The answer has to do with the initial desire of
desperately wanting children and the subsequent termination,
which requires the selection of one of the fetuses. It can be
difficult to reconcile the fact that a woman who struggles with
infertility and crosses significant emotional, physical, and
financial leaps to become pregnant would subsequently choose
to terminate a pregnancy for non-medical reasons. Antiabortion activists argue that it is immoral for the woman to
initiate a pregnancy knowing it could result in a termination
that is not justified on health risk grounds.97 Some even say
that a woman loses her personal autonomy when she initially
chooses IVF and therefore has a greater responsibility to carry
the pregnancies to term.98 Heated debates ensue about the
nature of the selection: the patient is essentially choosing or
selecting one fetus over the other.99 Typically, if one fetus has a
genetic disorder or other complications, it is not surprising that
the healthier fetus is chosen to survive.100 However, if a patient
has two equally healthy fetuses, her selection of one over the
other becomes a contentious issue.101
The inquiries presented above summarize the
controversial nature of twin reductions. Personal autonomy and
reproductive freedom are staples of American values, reflected
in the Constitution. Twin reductions are an example of the
conundrum that inevitably develops when reproductive choices
increase. The ethical and moral considerations that have
emerged from twin reductions are a source of dispute and
confusion. In addition, the societal response to these concerns is
further complicated by the fact that twin reductions accentuate
the apparent conflict between two fundamental rights. It is
therefore helpful to examine the doctrines implicated by twin
reductions, given that legislatures must account for two types of
reproductive choices that are guaranteed by the fundamental
right of privacy but are not often seen together.
97
See, e.g., Thomas Peters, Coin Toss Abortion? Why Our Protracted National
Tolerance for Abortion Must End, LIVEACTION (Aug. 16, 2011), http://liveaction.org/
blog/coin-toss-abortion-why-our-protracted-national-tolerance-for-abortion-must-end/.
98
See Danielle Friedman, A New Debate over In Vitro, DAILY BEAST (July 26,
2010, 8:03 AM), http://www.thedailybeast.com/articles/2010/07/27/can-ivf-women-havean-abortion.html.
99
See William E. May, “Reducing” Pregnancies and “Wanting” Children,
CHRISTENDOM, http://www.christendom-awake.org/pages/may/reducing-pregnancies.htm
(last updated Sept. 28, 2011).
100
See Liza Mundy, Too Much to Carry?, WASH. POST (May 20, 2007),
http://www.washingtonpost.com/wp-dyn/content/article/2007/05/15/AR2007051501730.html.
101
See Peters, supra note 97.
214
II.
BROOKLYN LAW REVIEW
[Vol. 78:1
THE HISTORY OF CONFLICTING FUNDAMENTAL RIGHTS
Twin reductions invoke constitutional concerns primarily
in two situations: (1) IVF, where an affirmative choice to
procreate is made, and (2) the reduction procedure, where an
affirmative choice to terminate a part of the pregnancy is made.
The Supreme Court has ultimately recognized that a right to
procreate is fundamental and intermingled with a broad right to
privacy. On the other hand, the right to abortion is much
narrower because the Court has recognized that states have an
interest in intervening and limiting it. An analysis of the
constitutional protections will reveal that, in comparison to the
right to procreate, abortion is a much narrower right that is
already in danger of state intrusion.
A.
Protection of the Right to Procreate
The Supreme Court has established the right to
procreate as a fundamental right, as evidenced by the fact that
states cannot compel a person to procreate102 nor can they
obstruct a person’s ability to procreate.103 The cases dealing
with the latter support the idea that access to IVF is a
constitutionally protected right.
In Skinner v. Oklahoma,104 the Court struck down an
Oklahoma statute that compelled sterilization of habitual
criminals.105 Even though the rights to marriage and
procreation are not explicitly listed in the Constitution, the
Court declared that those rights were “basic civil rights of man”
and “fundamental to the very existence and survival” of
individuals.106 The Court applied a strict scrutiny standard of
review to invalidate the statute,107 declaring the choice of
whether to procreate as a paramount right that should be free
from unnecessary state intrusion.108
102
See infra Part III. The Court’s abortion precedents prohibit states from
imposing an undue burden on a woman’s right to terminate her pregnancy. See
generally Planned Parenthood of Se. Pa. v. Casey, 505 U.S. 833 (1992).
103
See Eisenstadt v. Baird, 405 U.S. 438, 453 (1972); Griswold v. Connecticut,
381 U.S. 479, 497 (1965); Skinner v. Oklahoma, 316 U.S. 535, 541 (1942).
104
316 U.S. 535.
105
Id. at 541.
106
Id.
107
Id. (“We advert to them merely in emphasis of our view that strict scrutiny
of the classification which a State makes in a sterilization law is essential . . . .”).
108
Id.
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TWIN REDUCTIONS AND THE ABORTION RIGHT
215
Subsequently, in Griswold v. Connecticut,109 the Court
struck down a law prohibiting the use of contraception, holding
that the law infringed upon a married couple’s right to privacy
that is enshrined within the “zone of privacy created by several
fundamental constitutional guarantees.”110 A married couple’s
right to privacy was extended to individuals in Eisenstadt v.
Baird.111 The Court emphasized, “If the right of privacy means
anything, it is the right of the individual, married or single, to be
free from unwarranted governmental intrusion into matters so
fundamentally affecting a person as the decision whether to bear
or beget a child.”112 The Court clarified that the constitutional
right to privacy not only protects an individual’s general decision
whether to procreate,113 but also that it protects access to the
particular method chosen to achieve or avoid procreation.114 The
emphasis on “individual” autonomy applies neutrally to both
men and women, regardless of their marital status.115 Through
these precedents, therefore, IVF, which enables an individual to
bear a child, is protected by an individual’s right to procreate.116
B.
The Right to Abortion
The broad privacy right found in the penumbra of
constitutional guarantees that protect an individual’s choice to
procreate117 did not extend to the right to abortion.118 Instead, the
109
381 U.S. 479 (1965).
Id. at 485. The Court found the zone of privacy within the penumbra of
expressed constitutional rights. It reasoned that the First, Third, Fourth, and Fifth
Amendments created this zone of privacy protection. Id. at 484. The Court further held
that a law that destructs the privacy given to married couples is “repulsive to the
notions of privacy surrounding the marriage relationship.” Id. at 486. (“We deal with a
right of privacy older than the Bill of Rights . . . .”).
111
405 U.S. 438 (1972).
112
Id. at 453. The Court relied on the prior precedents from Griswold and
Skinner as a basis for its holding. Id.
113
Id. at 453-54.
114
In the present case, the means chosen was contraceptives to avoid procreation,
and a state could not ban access to these contraceptives. Id. at 453. See generally Carey v.
Population Serv. Int’l, 431 U.S. 678 (1977) (striking down a state statute that limited the
distribution of nonprescription contraceptives to licensed pharmacists as
unconstitutionally interfering with the rights of individuals to use contraceptives.).
115
Eisenstadt, 405 U.S. at 453-54.
116
Lower federal courts have also interpreted these precedents to uphold IVF
procedures as constitutional. See, e.g., Lifchez v. Hartigan, 735 F. Supp. 1361, 1377
(N.D. Ill. 1990) (“It takes no great leap of logic to see that within the constitutionally
protected choices that includes the right to have access to contraceptives, there must be
included within that cluster the right to submit to a medical procedure that may bring
about, rather than prevent, pregnancy.”)
117
See supra note 111 and accompanying text.
110
216
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Court placed abortion rights in a narrower privacy doctrine,
substantially increasing a state’s power to intrude on the right.119
The first landmark abortion case the Supreme Court decided
was Roe v. Wade, where the Court struck down a Texas law
banning abortions.120 The Court recognized abortion as a
fundamental right protected by the Fourteenth Amendment’s
Due Process Clause.121 Therefore, any law attempting to restrict
abortions would have to pass the “strict scrutiny test.”122 The
Court did not find the state’s interests—protecting women’s
health and protecting the potentiality of fetal life—to be
sufficiently compelling to uphold an outright ban on abortions.123
However, the Court explicitly stated that a woman’s right to an
abortion is not absolute124 by acknowledging that states have
sufficient interests to warrant some regulation, even in areas
encroaching on a fundamental right.125 To balance the interests,
the Court created a “trimester approach,”126 emphasizing that a
state’s interest in protecting the life of the mother and the life
of the fetus becomes increasingly compelling as the pregnancy
term progresses.127 The Court held that the state’s interests
118
The Court made clear that the right to abortion would not fall in the same
realm as the right to procreate:
The pregnant woman cannot be isolated in her privacy. She carries an
embryo and, later, a fetus . . . . The situation therefore is inherently different
from marital intimacy . . . or procreation, or education, with which Eisenstadt
and Griswold . . . were . . . concerned. As we have intimated above, it is
reasonable and appropriate for a State to decide that at some point in time
another interest, that of health of the mother or that of potential human life,
becomes significantly involved. The woman’s privacy is no longer sole and
any right of privacy she possesses must be measured accordingly.
Roe v. Wade, 410 U.S. 113, 159 (1973) (citation omitted).
119
“We, therefore, conclude that the right of personal privacy includes the
abortion decision, but that this right is not unqualified and must be considered against
important state interests in regulation.” Id. at 154.
120
Id. at 162.
121
Id. at 153 (“This right to privacy, whether it be founded in the Fourteenth
Amendment’s concept of personal liberty and restrictions upon state action, as we feel it
is, . . . is broad enough to encompass a woman’s decision whether or not to terminate
her pregnancy.” (emphasis added)).
122
Id. at 155. Under the strict scrutiny test, a government restriction on a
fundamental right must be narrowly tailored to fulfill a legitimate and compelling
government interest. Otherwise, the state regulation is ruled unconstitutional in
violation of the Due Process Clause.
123
Id. at 153.
124
Id. (“[A]ppellant and some amici argue that a woman’s right is absolute
and that she is entitled to terminate her pregnancy at whatever time, in whatever way,
and for whatever reason she alone chooses. With this we do not agree.”).
125
Id. at 154.
126
Id. at 163.
127
Id. at 162-63.
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TWIN REDUCTIONS AND THE ABORTION RIGHT
217
during the first trimester are not sufficiently compelling to
restrict first trimester abortions.128 Furthermore, during the
second trimester, the state may protect its interest in the
mother’s health, as long as the regulations “reasonably relate”
to her health.129 However, the Court determined that, because
states have a compelling interest in protecting the potential life
of the fetus, states may regulate or even ban abortions during
the third trimester, reasoning that this was the period when
the fetus typically becomes viable.130
This trimester approach was overruled in Planned
Parenthood v. Casey,131 in part because technological
advancements paved the way for a more precise determination
of the point of fetal viability,132 but also to give recognition to
state interests.133 The Court emphasized that the rigid trimester
framework presented in Roe “misconceives the nature of the
pregnant woman’s interests and . . . undervalues the State’s
interest in potential life . . . .”134 The Court expanded its analysis
of abortion and recognized the right as part of the right to
privacy encompassed within a broader concept of liberty and
personal autonomy protected by the Fourteenth Amendment,
which includes the ability to make choices involving the most
“intimate and personal” matters and the right to define one’s
own concept of existence.135 The Court reaffirmed that a woman
has a right to abortion before viability,136 but it also emphasized
that a state has “legitimate interests from the outset of the
pregnancy in protecting the health of the woman and the life of
the fetus that may become a child.”137
In order to highlight that some governmental intrusion
may be warranted, the Court established the “undue burden”
standard, which replaced the previous strict scrutiny test.138 “A
128
Id. at 163.
Id.
130
Id.
131
Planned Parenthood of Se. Pa. v. Casey, 505 U.S. 833, 872 (1992).
132
Id. at 860. At the time of Roe, viability was thought to occur at twenty-eight
weeks, but by 1992, viability was determined to occur as early as twenty-three weeks.
133
“[I]t must be remembered that Roe v. Wade speaks with clarity in
establishing not only the woman’s liberty but also the State’s ‘important and legitimate
interest in potential life.’ That portion of the decision in Roe has been given too little
acknowledgment and implementation by the Court in its subsequent cases.” Id. at 871.
134
Id. at 873 (emphasis added).
135
Id. at 857.
136
Id. at 846.
137
Id.
138
Id. at 876. (“The very notion that the State has a substantial interest in
potential life leads to the conclusion that not all regulations must be deemed
129
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finding of an undue burden is shorthand for the conclusion that
a state regulation has the purpose or effect of placing a
substantial obstacle in the path of a woman seeking to abort an
unviable fetus.”139 In Casey, the Court emphasized that,
notwithstanding a woman’s right to abortion, a state has
substantial “interest[s] in the potential life within the woman,”140
and “[n]ot all governmental intrusion is of necessity
unwarranted.”141 Furthermore, the Court explicitly acknowledged
that a State has an interest in protecting potential life
throughout a woman’s pregnancy142:
Though the woman has a right to choose to terminate or continue
her pregnancy before viability, it does not at all follow that the State
is prohibited from taking steps to ensure that this choice is
thoughtful and informed. Even in the earliest stages of pregnancy,
the State may enact rules and regulations designed to encourage her
to know that there are philosophic and social arguments of great
weight that can be brought to bear in favor of continuing the
pregnancy to full term and that there are procedures and
institutions to allow adoption of unwanted children as well as a
certain degree of state assistance if the mother chooses to raise the
child herself. The Constitution does not forbid a State or city,
pursuant to democratic process, from expressing a preference for
normal childbirth.143
Thus, after Casey, a state may not ban abortions
outright before viability,144 but it may enact regulations to
“promote the State’s profound interest in potential life,”145 as
long as it does not place an undue burden on a woman’s right to
abortion.146 After viability, “the State in promoting its interest
in the potentiality of human life may, if it chooses, regulate,
and even proscribe, abortion except where it is necessary, in
appropriate medical judgment, for the preservation of the life
or health of the mother.”147
unwarranted. Not all burdens on the right to decide whether to terminate a pregnancy
will be undue.”).
139
Id. at 877.
140
Id. at 875.
141
Id.
142
Id. at 876.
143
Id. at 872 (internal quotation marks omitted).
144
Id. at 879.
145
Id. at 878. (emphasis added) (“[T]hroughout the pregnancy, the State may
take measures to ensure that the woman’s choice is informed, and measures designed
to advance this interest will not be invalidated as long as their purpose is to persuade
the women to choose childbirth over abortion.”).
146
Id.
147
Id. at 879 (citations omitted).
2012]
TWIN REDUCTIONS AND THE ABORTION RIGHT
219
Casey’s departure from Roe altered the right to abortion in
three significant ways. First, Roe’s trimester framework prohibited
governmental intrusion in the first trimester, but by adopting the
undue burden approach in Casey, the Court dismantled the period
once set aside for the woman to make her decision free from
governmental intrusion and firmly established that the state has
an interest in the fetus from the outset of the pregnancy.148
Second, Casey’s undue burden approach still identifies the right to
abortion as fundamental, but it does not invalidate a state’s
imposition on a woman’s decision-making process when exercising
that right.149 Therefore, states are free to enact regulations to
influence a woman’s choice about her abortion, as long as the
state does not infringe on the right to abortion outright.150 Third,
the undue burden standard undoubtedly granted significant
weight to a state’s interest in potential life, broadening the
number of permissible abortion regulations.151
Despite these restrictions, IVF and the reduction
procedure remain largely unregulated. However, public outcry is
growing in recognition of the ethical and moral concerns
presented by situations—like twin reductions—that result from
unregulated embryo transfers. These ethical and moral concerns
have redirected the public’s focus onto the termination aspect of
twin reductions, even though such concerns fundamentally stem
from the IVF procedure itself.
III.
WHY TWIN REDUCTIONS BECOME ANALOGOUS TO
ABORTIONS
Medically speaking, a reduction procedure is not the
same as an abortion.152 Nevertheless, society uses the term “twin
reductions” and abortions interchangeably. Some anti-abortion
activists have even gone so far as to claim that a twin reduction
is a cowardly “euphemism for murder.”153 Others have claimed
148
See Caitlin E. Borgmann, Abortion, The Undue Burden Standard, and The
Evisceration of Women’s Privacy, 16 WM. & MARY J. WOMEN & L. 291, 310 (2010).
149
Casey, 505 U.S. at 877 (“What is at stake is the woman’s right to make the
ultimate decision, not a right to be insulated from all others in doing so.”).
150
Id.
151
See Priscilla J. Smith, Give Justice Ginsburg What She Wants: Using Sex
Equality Arguments to Demand Examination of the Legitimacy of State Interests in
Abortion Regulation, 34 HARV. J.L. & GENDER 377, 396 (2011).
152
An abortion terminates the fetus and empties the uterus, whereas, a
reduction does not result in an empty uterus. Mundy, supra note 100.
153
Albert Mohler, This Isn’t Meddling—It’s Murder, CHRISTIAN POST (Aug. 17,
2011, 10:26 AM), http://www.christianpost.com/news/this-isnt-meddling-its-murder54062; Peter Saunders, “Selective Reduction”—A Euphemism for Deliberately Killing One
220
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that abortion is the “safety net” for IVF, referring to twin
reductions.154 Why is there such a concentrated effort to lobby
bringing twin reductions under the umbrella of abortions?
Perhaps the best explanation is that a twin reduction is often
seen as “elective” rather than medically necessary.155 Therefore,
people tend to scrutinize the reasons why a woman might choose
twin reductions, and such intense scrutiny ends up underscoring
the same ethical and moral dilemmas that are attributed to
abortions in the normal course. Those dilemmas are particularly
used by anti-abortion activists to explain why they think
abortion is “wrong” and should be illegal.
However, twin reductions go one step further and cause
additional outrage in light of the initial use of IVF to attain a
pregnancy that is later partially terminated. Thus, although
the focus on the reason equates twin reductions to abortions,
twin reductions also raise issues that result from IVF and the
initial choice to procreate.
To illuminate this controversial landscape, imagine the
following hypothetical scenarios that highlight the similar
ethical and moral considerations associated with twin reductions
and abortions. After each hypothetical, an explanation will
present the main ethical and moral issues stemming from each
situation. These observations will demonstrate that the
problems associated with twin reductions are in fact quite
different and are a result of engaging in the initial IVF process.
A.
Hypotheticals156
In the hypotheticals below: (1) all patients are informed
of the high possibility of multiple pregnancies; (2) all patients
are implanted with two or more embryos, either as a result of
the patient’s choice, the doctor’s choice, or both; (3) none of the
patients or fetuses are in danger of any health risks; and (4) all
or More Babies, NAT’L RIGHT TO LIFE NEWS TODAY (Jan. 11, 2012),
http://www.nationalrighttolifenews.org/news/2012/01/selective-reduction-a-euphemismfor-deliberately-killing-one-or-more-babies; Rebecca Taylor, Pro-Life Review of Top 10
Bioethic Stories from 2011, LIFENEWS.COM (Jan. 3, 2012, 7:28 PM),
http://www.lifenews.com/2012/01/03/pro-life-review-of-top-10-bioethics-stories-from-2011.
154
Rebecca Taylor, Abortion: The “Safety Net” for IVF, MARY MEETS DOLLY
(Nov. 23, 2010, 9:10 AM), http://www.marymeetsdolly.com/blog/index.php?/archives/994Abortion-the-safety-net-for-IVF.html.
155
Marty, supra note 96.
156
All hypotheticals, including names and facts are fictional. I constructed
these hypotheticals through the different sources and cases I studied. Some are, of
course, exaggerated to emphasize the possible controversies.
2012]
TWIN REDUCTIONS AND THE ABORTION RIGHT
221
of these patients live in State X, a fictitious state in the United
States that has no legislation regarding the permissible
number of embryos transferred per IVF cycle.
1. Caroline: Post-Menopausal Pregnancies
Caroline is a fifty-year old single woman and a prominent
marketing executive. She has never been married and has not
found her ideal partner. Due to the amount of stress she
experienced and the time commitment required to achieve her
career goals, Caroline has never tried to have a child. However,
now that she is a successful executive, she decides that she
wants a child in her life. Because of her age, it is difficult for her
to conceive naturally, so she begins IVF treatments. Caroline is
now pregnant with twins but has decided that she does not want
to raise two children by herself at her age. Therefore, she asks
her doctor to perform a twin reduction.
To begin, a massive debate already exists regarding the
age when a woman should no longer be able to procreate. Caroline
is fifty years old, so the only way she would realistically be able to
have a child is through IVF. Many critics condemn postmenopausal pregnancies as “an unnatural act.”157 Furthermore,
Caroline does not want to raise two children by herself, even
though she can afford it financially. Anti-abortionists would
conclude that Caroline is fashioning her life as she wants and
would label her reasoning as “profoundly selfish.”158
2. Laura & Will: Consumerism
Laura, a high-school teacher, and Will, a mechanic,
have been married for twenty-five years and have two children.
They decide that they are ready for another child. However,
Laura has trouble conceiving naturally. After five years of IVF
treatments, Laura is finally pregnant with twins. The couple
decides that they do not have the energy to take care of two
newborns in addition to raising their other two children.
Furthermore, they do not believe they are financially capable of
supporting four children, particularly after the exorbitant IVF
treatments. Laura fears that she will not be able to devote
157
Lylah Alphonse, Too Old to Be a Parent? Post-Menopausal Pregnancy Triggers
Moral Outrage, ALLVOICES (Dec. 18, 2009, 2:32 PM), http://www.allvoices.com/contributednews/4840901-too-old-to-be-a-parent-postmenopausal-pregnancy-triggers-moral-outrage.
158
Ryan Sprague, “This Is Not What I Want for My Life,” RYANSPRAGUE.COM (Jan.
11, 2012), http://www.ryansprague.com/2012/01/11/this-is-not-what-i-want-for-my-life.
222
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enough time and attention to her older children and is terrified
that she will become a bad mother. However, she states that
she would forego twin reduction had she conceived the twins
naturally. Will fully supports her decision.
Laura and Will are a middle-class couple who already
have two children, but who choose to have more children. This
would be viewed as “willful disregard” of their prior
experiences.159 However, a larger issue highlighted in this
scenario is Laura’s statement that she would have kept both
children had they been conceived naturally. First, the couple’s
rationale that they were not financially secure to afford two
children is cast into doubt. Raising a child born through IVF
will not cost more than raising a natural born child. A natural
child would pose the same problems the couple predicts they
will face if they do not reduce the pregnancy.160 Moreover, this
scenario highlights a major criticism of IVF and abortions:
consumerism of reproductive health.161 The possibility that an
IVF baby is treated differently than a natural baby is a major
source of concern.162 Furthermore, Laura’s statements can be
construed as justifying abortion because of the way the
pregnancy was conceived. Anti-abortion activists will view this
reasoning as “dehumanizing children”163 and will claim that
abortion allows women to play God and dispose of otherwise
healthy and viable children.164
3. Rob & Jackie: Selection
Rob is a successful real-estate mogul who yearns for a
son to carry on his family’s name and businesses. Jackie is
unable to conceive children naturally and begins IVF
treatments in hopes of giving Rob a son. Jackie is pregnant
with twins, one boy and one girl. Because she is a stay-at-home
159
Id.
Lynne Marie Kohm, A Hitchhiker’s Guide to ART: Implementing SelfGoverned Personally Responsible Decision-Making in the Context of Artificial
Reproductive Technology, 39 CAP. U. L. REV 413, 426 (Children born through IVF are “the
same as people conceived the old-fashioned way.” (internal quotation marks omitted)).
161
See generally Judie Brown, Consumerism in the Womb, AM. LIFE LEAGUE
(Aug. 16, 2011), http://www.all.org/article/index/id/OTE0NQ; Frances Kelly, From
Octomom to MomMinusOne, Is Sex in America Too “Consumerish”?, RENEW AM. (Aug.
12, 2011), http://www.renewamerica.com/columns/kelly/110812.
162
See Brown, supra note 161; Kelly, supra note 161.
163
Brown, supra note 161.
164
Ken Connor, Infertility and Abortion: When Playing God Destroys Lives,
LIFENEWS (Oct. 13, 2012, 10:17 AM), http://www.lifenews.com/2012/10/03/infertilityand-abortion-when-playing-god-destroys-lives/.
160
2012]
TWIN REDUCTIONS AND THE ABORTION RIGHT
223
mother, Jackie is thrilled with the idea of raising twins. Rob,
on the other hand, does not want to raise a girl. He convinces
Jackie that daughters are much more difficult to handle. Jackie
eventually agrees and decides to reduce her pregnancy,
choosing the male fetus over the female.
This scenario presents a chief source of resentment that
anti-abortionists have over twin reductions. Because there are
originally two fetuses, pro-lifers view the procedure as a
selection process, where one fetus is “selected” to survive over
the other.165 Here, Rob only desires a male child and persuades
his wife to abort the female fetus. With twin reductions, gender
preference is one of the primary ways that the patient decides
which fetus to keep.166 The moral and ethical implications of
gender selection practices in general relate to a contentious issue
within society.167 If the gender is the same or the patient has no
preference, the doctor usually chooses the fetus that is easier to
access,168 which ignites another source of concern for antiabortionists.169 Indeed, numerous conservatives have coined twin
reductions as “coin toss” abortions, “where one twin lives and
one twin dies simply because one twin is closer to the
abortionist’s needle.”170 Lastly, by referring to this procedure as a
“selection,” many conservatives view it as treating children as
disposable commodities.171
B.
How Do We Fix This?
These issues inevitably cause anti-abortionists to add
twin reductions to their list of reasons to ban abortions. The
issues presented in the hypotheticals illustrate the questionable
ethical practices associated with twin reductions. It is thus
reasonable to pursue government regulation. However, to
suggest, as many have, that abortion rights are too broad and
should be reined in is a mistake. Anti-abortion activists who
voice their concern about twin reductions rarely call for
regulation of the IVF process. The attack solely targets the
termination aspect of the pregnancy, even though most twin
165
May, supra note 99.
Mundy, supra note 100.
167
See Meredith Leigh Birdsall, An Exploration of “The ‘Wild West’ of
Reproductive Technology”: Ethical and Feminist Perspectives on Sex-Selection Practices
in the United States, 17 WM. & MARY J. WOMEN & L. 223, 234 (2010).
168
Mundy, supra note 100.
169
Peters, supra note 97.
170
Id.
171
May, supra note 99.
166
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reductions occur as a result of IVF and the number of embryos
implanted in a single cycle.172 In light of the fact that abortion
rights have been significantly weakened over the past decades
and remain in uncertainty today, twin reductions should not
perpetuate further attacks on the right to abortion. Therefore,
an effective solution to the twin reduction problem should target
the IVF practice directly rather than abortion more broadly.
IV.
THE CURRENT SUSCEPTIBILITY OF ABORTION RIGHTS
A.
Post-Casey Weakening of the Right to Abortion
As mentioned in Part II, the Court in Casey held that
states have a legitimate interest in potential life and are
permitted to enact regulations to advance their interest, so long
as those regulations do not pose an undue burden on the right
to abortion.173 Many scholars have lamented that although
Casey was technically a victory for the right to abortion, in
reality the decision enabled the state to further interfere with a
woman’s right to abortion.174 For example, in Gonzales v.
Carhart,175 the Court upheld the Partial-Birth Abortion Ban
Act, which bans a particular method of abortion so long as a
safe, alternate abortion method is available.176 Some argue that
the Gonzales decision, by affirming the Court’s protection of the
state interest in potential life, opened the floodgates for
government intrusion.177 They fear that the state interest will
become so broad that, when coupled with the Court’s lack of
scrutiny, it will inevitably allow regulations that chip away at
the right to abortion.178
This fear may already be justified, as evidenced by
numerous state legislatures’ attempts to restrict abortions179 by
172
See Evans & Britt, supra note 19, at 299; Trisha Macnair, Selective
Reduction in Pregnancy, BBC HEALTH BLOG, http://www.bbc.co.uk/health/physical_
health/pregnancy/pregnancy_reduction.shtml (last updated June 2008) (stating that
“Selective reduction became more common as a result of IVF techniques”); see generally
Padawer, supra note 14.
173
See generally Part II supra.
174
See Borgmann, supra note 148, at 291 (“Casey’s ‘undue burden’ test has
fostered extensive encroachments on women’s personal privacy.”); Smith, supra note
151 at 379 (Through Casey, “the ability of a state to regulate abortion in furtherance of
its interest in protecting potential life has expanded . . . .”).
175
550 U.S. 124 (2007).
176
Id. at 129.
177
Smith, supra note 151, at 379-80.
178
Id.
179
See Anna Holmes, GOP Candidates Revive Issue of Birth Control, WASH. POST,
Jan. 12, 2012, at C1, available at http://www.washingtonpost.com/lifestyle/style/conversation-
2012]
TWIN REDUCTIONS AND THE ABORTION RIGHT
225
developing new ways to leverage the broad and vaguely defined
term “interest in potential life.” Some states have tried to
implement “fetal pain”180 measures, which encourage patients to
request anesthesia because the fetus is “capable of feeling
pain.”181 These measures publicize a state’s moral opposition to
abortion and also convey another aspect of Casey that is
extremely beneficial for states.
The Court’s decision in Casey granted states the ability to
persuade a woman, throughout the course of her pregnancy, to
opt out of an abortion.182 This resulted in a proliferation of
“informed consent” laws, which require doctors to describe the
abortion procedure to their patients183 using a graphic script
drafted by the state.184 Another purpose behind informed consent
laws is to warn the woman of possible regret if she goes through
with her choice to terminate her pregnancy.185 Furthermore,
compulsory ultrasound laws are designed to dissuade women
from choosing abortion by forcing them to look and listen to the
ultrasound of an unwanted pregnancy.186 Such measures not only
convey the state’s obvious opposition to abortion, but they also
essentially harass women during their decision-making process
by attempting to torment them with guilt.187
Moreover, state legislatures have recently attempted to
use the democratic process to eradicate abortion rights. One
example of this strategy can be gleaned from the recent
“Personhood Amendment” proposals.188 The purpose of these
amendments is to declare an embryo as a person, thereby
entitling it to full legal rights and consequently equating
over-abortion-continues-39-years-later/2012/01/05/gIQA5j0luP_story_1.html (“By the end of
[2011], 135 measures had been enacted [in efforts to threaten abortion rights] . . . a record
number of abortion restrictions.”).
180
Borgmann, supra note 148, at 319.
181
Smith, supra note 151, at 397.
182
See Brown, supra note 161.
183
Borgmann, supra note 148, at 319; Smith, supra note 151, at 398.
184
Borgmann, supra note 148, at 320.
185
Id.
186
Id. at 319; see generally GUTTMACHER INST., STATE POLICIES IN BRIEF:
REQUIREMENTS FOR ULTRASOUND (Oct. 2012), available at http://www.guttmacher.org/
statecenter/spibs/spib_RFU.pdf; see also Smith, supra note 151, at 397.
187
See Jonathan Gray, Compulsory Ultrasound Audiences and Feminism,
ANTENNA (Feb. 27, 2012), http://blog.commarts.wisc.edu/2012/02/27/compulsory-ultrasoundaudiences-and-feminism/; Carolyn Jones, “We Have No Choice”: One Woman’s Ordeal
with Texas’ New Sonogram Law, TX. OBSERVER (Mar. 15, 2012, 9:03 AM),
http://www.texasobserver.org/we-have-no-choice-one-womans-ordeal-with-texas-newsonogram-law/.
188
Erik Eckholm, Push for “Personhood” Amendment Represents New Tack in
Abortion Fight, N.Y. TIMES (Oct. 25, 2011), http://www.nytimes.com/2011/10/26/us/
politics/personhood-amendments-would-ban-nearly-all-abortions.html.
226
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abortion to murder.189 Mississippi, Nevada, and Alabama, among
other states, have enacted such initiatives,190 which are viewed
as “the most extreme in a field of extreme anti-abortion
measures that have been before the states this year.”191 The
personhood initiative goes beyond the abortion restrictions
adopted by states—such as the informed consent laws—because
its main purpose is to “narrow or hamper access to abortions by,
for example, sharply restricting the procedures at as early as 20
weeks, curbing insurance coverage and imposing expensive
regulations on clinics.”192 If the proposals are initially successful
but later declared unconstitutional by the Supreme Court,
abortion rights activists claim that the amendment could
“disrupt vital care and force years of costly court battles.”193 The
more dangerous prospective result of the personhood
amendments is that they would allow states to interpret Roe to
uphold abortion restrictions by reasoning that an embryo’s
right to life outweighs a woman’s privacy rights.194 Even if
voters disapprove the personhood initiatives, it is clear that
“personhood groups” will not give up the fight to declare an
embryo a person and will continue to push this agenda to
attack abortion rights.195
B.
The Political Landscape of Abortion
The current composition of the Supreme Court makes
many scholars uneasy about the future of Roe.196 The previous
years dominated by the Republican Party have seen a shift
among the bench toward the conservative end of the spectrum.197
189
Id.; see also Laura Bassett, Nevada Judge Rules Fetal Personhood Initiative
Misleading to Voters, HUFFINGTON POST (Dec. 19, 2011, 6:34 PM),
http://www.huffingtonpost.com/2011/12/19/nevada-fetal-personhood_n_1159082.html;
Robin Marty, Mississippi Plans to Push “Personhood” Through Legislature After Voters
Say No, CARE2 (Jan. 4, 2012, 11:00 PM), http://www.care2.com/causes/mississippi-plansto-push-personhood-through-the-legislature-after-voters-say-no.html; Mike McClanahan,
Voters May Define Start of Human Life: Alabama Personhood Bill, CBS42 NEWS (Jan.
3, 2012, 9:08 PM), http://www.cbs42.com/content/localnews/story/Voters-may-definestart-of-human-life-Alabama/3pN4m91MaEa8sOLFF6b_cQ.cspx.
190
See Bassett, supra note 189; Marty, supra note 189; McClanahan, supra note 189.
191
Eckholm, supra note 188.
192
Id.
193
Id.
194
See Rita M. Dunaway, The Personhood Strategy: A State’s Prerogative to
Take Back Abortion Law, 47 WILLAMETTE L. REV. 327, 328 (2011); Tom Venzor,
Protecting the Unborn Child: The Current State of Law Concerning the So-Called Right
to Abortion and Intervention by the Holy See, 89 NEB. L. REV. 1132, 1140 (2011).
195
See, e.g., Marty, supra note 189.
196
See Borgmann, supra note 148, at 311; Smith, supra note 151, at 403.
197
Smith, supra note 151, at 403.
2012]
TWIN REDUCTIONS AND THE ABORTION RIGHT
227
Since Justice O’Connor’s retirement, Justice Kennedy is now
seen as the swing vote on abortion issues.198 Scholars are not
confident that Justice Kennedy will protect abortion rights,199
claiming that his interpretation of Casey’s undue burden
standard “gives unprecedented weight to the state’s interest in
the embryo or fetus, thereby permitting all manner of
encroachments on the privacy of women seeking abortions.”200
Furthermore, presidential elections generally play an
important role in the political climate for abortion rights. First,
presidents often have the opportunity to appoint a new Supreme
Court Justice during their term in office.201 If a Supreme Court
justice retires at any point during a Republican administration,
it is more than likely that a conservative justice will be
appointed202 who will uphold the current Republican agenda to
abolish abortion rights.203
Second, a Republican President would almost surely
pursue anti-abortion policies and strengthen public opposition to
abortion. It is undisputed that “[t]he assault on women’s
reproductive health is a central part of the Republican agenda.”204
For example, the Republican Party tends to support “personhood
amendments,” which would declare that human life begins at the
moment of fertilization, granting legal rights to human embryos
and banning all abortions.205 Therefore, it is vital to acknowledge
198
Borgmann, supra note 148, at 311; Smith, supra note 151, at 403.
Smith, supra note 151, at 403.
200
Borgmann, supra note 148, at 311.
201
See U.S. CONST. art. II, § 2.
202
See, e.g., Alan Wirzbicki, Election’s Winner May Shape Supreme Court, BOS.
GLOBE, Oct. 1, 2012, at A1, available at http://www.bostonglobe.com/news/politics/
2012/09/30/supreme-court-could-reshaped-next-four-years/0UfIGTSjcQFXZKpbCmrQ0H/
story.html (“Republican presidents have made it a greater priority to appoint
conservative Supreme Court justices.”).
203
See 2012 Republican Party Platform, WHITE HOUSE 2012,
http://whitehouse12.com/republican-party-platform/ (last visited Nov. 7, 2012) (“We
support the appointment of judges who respect traditional family values and the
sanctity of innocent human life.”).
204
Editorial, Republicans Versus Reproductive Rights, N.Y. TIMES, Jan. 8, 2012,
at A18, available at http://www.nytimes.com/2012/01/09/opinion/republicans-versusreproductive-rights.html.
205
2012 Republican Party Platform, supra note 203 (“[W]e assert the sanctity
of human life and affirm that the unborn child has a fundamental individual right to
life which cannot be infringed. We support a human life amendment to the
Constitution and endorse legislation to make clear that the Fourteenth Amendment’s
protections apply to unborn children.”); see also Erik Eckholm, Republican Presidential
Candidates Embrace Granting Legal Rights to Human Embryos, N.Y. TIMES (Dec. 22,
2011, 1:31 PM), http://thecaucus.blogs.nytimes.com/2011/12/22/republican-presidentialcandidates-embrace-granting-legal-rights-to-human-embryos;
Peter Hamby,
GOP
Platform Committee Approves Tough Anti-Abortion Stance, CNN (Aug. 21, 2012, 11:51
199
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that a Republican victory in presidential elections inevitably
throws abortion rights into a state of limbo.
V.
SOLUTIONS TO TWIN REDUCTIONS
For the reasons presented in Part IV, I again emphasize
that the right to abortion is not the key to solving the moral
and ethical dilemmas resulting from twin reductions. Rather,
the unregulated field of IVF represents the true root of the
twin reduction problem. The dearth of regulation regarding
embryo transfer increasingly generates ethical problems.
Therefore, the most effective solution is to limit the number of
embryos transferred in an individual cycle.
Recent studies have shown that, particularly as IVF
techniques advance, a single embryo transfer is just as effective
in achieving pregnancy as two or three embryos.206 However,
doctors have a difficult time convincing patients of this fact.207
The longstanding idea is that the more embryos, the better the
chances of a pregnancy; as a result, patients who are
desperately seeking pregnancy are hesitant to accept that a
single embryo could be equally as effective.208 Therefore, it is
imperative that professional medical associations and doctors
themselves promote this new idea. Patients need to become
comfortable with the effectiveness of a single embryo, and this
will only occur if the medical community proactively informs
them of this preferred method.
Additionally, another possible solution is enactment of
actual legislation. But this poses a few problems of its own.
First, IVF implicates the right to procreate, which is broadly
protected and would be subject to strict scrutiny by the Court if
it were infringed.209 Moreover, the United States is generally very
deferential to doctors and patients in the area of medicine.210
Patient autonomy plays a big role in the relationship between
the government and its regulation of medicine.211 Therefore, any
actual IVF legislation would also clash with this traditional
AM),
http://politicalticker.blogs.cnn.com/2012/08/21/gop-platform-committee-approvestough-anti-abortion-stance/.
206
See Kim Carollo, One Embryo Better than Two in In Vitro Fertilization,
ABC NEWS (Dec. 21, 2010), http://abcnews.go.com/Health/WomensHealth/singleembryo-transfer-effective-safer-double-embryo-transfer/story?id=12451473.
207
See id.
208
Id.
209
See generally supra Part II.
210
Garrison, supra note 1, at 1631-32.
211
Id.
2012]
TWIN REDUCTIONS AND THE ABORTION RIGHT
229
notion. However, legislation may be permissible because IVF is a
medical procedure and a state has a recognized interest in
maintaining health and safety standards for its citizens.212 Since
multiple pregnancies pose tremendous health risks,213 a state
may be able to enact legislation directed at regulating the
occurrence of multiple pregnancies. Moreover, since a single
embryo transfer may be just as effective in producing a
pregnancy, any infringement on the right to procreate would be
minimal at best.
On the other hand, perhaps granting more authority to
professional medical associations, such as the American Society
of Reproductive Medicine or the Society for Assisted
Reproductive Technologies, would curb the abuse of embryo
transfers. Currently, these associations have no authority to
enforce their guidelines. If the medical associations had more
power, this would likely help to minimize the market incentives
for physicians to deviate from the guidelines.
Regardless of which solutions society chooses to pursue,
the most important objective is that changes be made to impact
embryo transfers directly. Any of these proposed changes would
only represent an initial step toward preventing future
problems associated with multiple pregnancies.
CONCLUSION
The increasing availability of reproductive choices is a
double-edged sword. On one hand, IVF has brought happiness
and fulfillment to many people who struggle with infertility. On
the other hand, with more choices comes the increased pressure
of ethical and moral responsibility. Choices should remain and
continue to increase, but there is also a need for the individual to
wisely consider all aspects and consequences of their choices,
given that they will impact the society in which we live. Twin
reductions are an excellent example of how individual choices
affect society. One person’s enjoyment of reproductive freedom,
by engaging in IVF, can cause negative repercussions for
women’s privacy and autonomy. It is easy for the public to
engage in a general attack on abortion rights or to view
individual instances of twin reductions and make negative
judgments. However, the choices we make for ourselves about
our bodies, our lifestyles, and our families are private. These
212
213
Planned Parenthood of Se. Pa. v. Casey, 510 U.S. 833, 857 (1992).
See generally supra Part I.
230
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[Vol. 78:1
choices should not require justification. With reproductive
freedom, we must never forget that whatever personal choice we
make for ourselves can impact the existence of choices for others.
Priyanka Shivakumar†
†
J.D. Candidate, Brooklyn Law School, 2013; B.A., The George Washington
University, 2007. I would like to thank the Brooklyn Law Review editorial staff for
their incredible patience and assistance. I am also grateful to my fantastic family and
friends for their unwavering support and encouragement. I am indebted to Nicholas
Jackson for being my invaluable sounding board and for continuously believing in me.
Finally, I give my deepest gratitude to my mother, Jyothi, and my father, Shivakumar,
for their unconditional love and selflessness throughout my life. Dedicated in loving
memory of Matthew Phillips, a twin, who inspired me always to write.
“Only Dust Remains[?]”
1
THE 9/11 MEMORIAL LITIGATION AND THE REACH
OF QUASI-PROPERTY RIGHTS
INTRODUCTION
On September 12, 2011, at a quiet Pennsylvania field
softened from days of rainfall, several families gathered for a
private funeral service to bury three coffins in the ground.2 The
approximately-six-foot steel boxes held not bodies, but the
fragmented and unidentified remains of the passengers from
United Airlines Flight 93 (United 93), one of the airplanes
hijacked by terrorists on 9/11.3 United 93 crashed into this
same field in Shanksville ten years earlier, killing everyone on
board.4 Because the plane plunged into the earth at more than
570 miles per hour, only eight percent of the victims’ remains
were ultimately recovered.5 Nevertheless, partial remains for
each of the forty victims were identified.6 This fact brought
closure to the families, who had reached a consensus regarding
the final resting place of their loved ones’ commingled remains.7
Over the previous ten years, family members had attended
countless memorials for the victims of United 93, but they
could now declare, “This will be our last funeral . . . .”8
Nearly 300 miles away in New York City, the families of
victims of the World Trade Center (WTC) attack lacked similar
closure and accord.9 Unlike at Shanksville, the remains of more
than 1100 victims had yet to be identified.10 For the last ten
1
WTC Families for a Proper Burial, Inc. v. City of New York, 567 F. Supp.
2d 529, 532 (S.D.N.Y. 2008), aff’d, 359 F. App’x 177 (2d Cir. 2009).
2
See Katharine Q. Seelye, At a 9/11 Site, a “Last Funeral,” N.Y. TIMES,
Sept. 10, 2011, at A9.
3
Id.
4
Id.
5
Id.
6
Id.
7
Id.
8
Id.
9
See Anemona Hartocollis, An Unsettled Legacy for 9/11 Remains, N.Y.
TIMES, Apr. 1, 2011, at MB1.
10
See Jo Craven McGinty, As 9/11 Remains Are Identified, Grief Is Renewed,
N.Y. TIMES, Nov. 12, 2011, at A1; see also Seelye, supra note 2, at A9. At the Pentagon,
231
232
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years, the Office of the Chief Medical Examiner of New York
City (OCME) has housed the unidentified remains in a
temporary structure adjacent to its Manhattan office building.11
At that site, forensic scientists continue to test the remains for
DNA identification. In 2013, however, New York City (City)
officials plan to transfer the 9000-plus unidentified fragments
to a repository located underneath the National September 11
Memorial and Museum (Memorial).12 There, OCME will have
sole access to the facility to continue DNA testing, except for
family members wishing to visit the site.13 Memorial
administrators claim that the remains repository was
established “[i]n response to overwhelming feedback received
from families,”14 and that it “will provide a dignified and
reverential setting for the remains to repose—temporarily or in
perpetuity—as identifications continue to be made.”15
In the months preceding the tenth anniversary of the
9/11 attacks, the media reported a growing dispute between
some of the victims’ families and City officials concerning the
relocation of the remains to the Memorial repository.16 These
families denounced the planned repository, arguing that they
were neither properly notified nor given the opportunity to
participate in the decision.17 Additionally, they contended that
placing the remains within a museum would be disrespectful to
the memory of the victims.18 In response, Memorial officials
issued a statement summarizing their efforts to reach out to
the WTC families regarding the repository.19 The release noted
five of the 184 victims’ remains also were never identified. See id. All unidentified
remains were buried at Arlington National Cemetery. See id.
11
See Remains Repository at the World Trade Center Site, 9/11 MEMORIAL,
http://www.911memorial.org/remains-repository-world-trade-center-site (last visited
Jan. 16, 2012) [hereinafter Remains Repository].
12
See Hartocollis, supra note 9, at MB1 (outlining how the objecting families,
“appalled by the idea of remains that could belong to their loved ones being turned into
a lure for tourists, want[ed] them kept in a separate above-ground memorial that
would be treated like hallowed ground”).
13
See Remains Repository, supra note 11. The repository “will not be accessible
or visible to the public” and any family member wishing to visit the facility will be
permitted access without having to pay an admission fee to enter the Memorial. Id.
14
Id.
15
Id. (emphasis added).
16
Hartocollis, supra note 9, at MB1.
17
See id.
18
See id.
19
See 9/11 MEMORIAL, SUMMARY OF OUTREACH REGARDING PLANS TO
RELOCATE THE CITY OF NEW YORK’S OFFICE OF CHIEF MEDICAL EXAMINER’S (OCME’S)
REPOSITORY FOR THE UNIDENTIFIED AND UNCLAIMED REMAINS OF 9/11 VICTIMS, available
at http://s3.documentcloud.org/documents/97985/memorial-museum-response.pdf (last
visited Oct. 20, 2012) [hereinafter SUMMARY OF OUTREACH].
2012]
“ONLY DUST REMAINS?”
233
that a committee purportedly representing the victims’ families,
and assembled under the aegis of the Lower Manhattan
Development Corporation (LMDC),20 had approved the repository
proposal, and it detailed how, from 2002 to 2006, LMDC sought
input from the families via direct mailings and public forums.21
The dissenting families subsequently requested the
names and addresses of all the victims’ next of kin from the
City in order to poll them about the proposed repository.22 After
the City refused, they filed for injunctive relief in New York
court.23 In Regenhard v. City of New York, the New York County
Supreme Court sided with the City, concluding that releasing
the names and addresses “would constitute an unwarranted
invasion of personal privacy.”24 The court explained that the
City had “no obligation to seek the families’ input as to where
the unidentified human remains will be located—they are only
required to disclose the information as to where the remains
will be located.”25 The dissenting families appealed the decision,
which is currently pending.26
Regenhard has significance beyond its seemingly
exiguous purposes. In particular, this preliminary lawsuit
raises a more fundamental and perhaps more difficult question:
who is legally empowered to determine the final disposition of
these unidentified human remains? Like most jurisdictions in
the United States,27 New York has recognized the surviving next
20
In November 2002, LMDC announced that it was creating the Memorial
Mission Statement Drafting Committee in order to “draft a mission statement that will
be used to guide the development” of the WTC Memorial. Press Release, LMDC,
Committees Created to Draft WTC Memorial Mission Statement and Program (Nov.
12, 2002), available at http://www.renewnyc.com/displaynews.aspx?newsid=e3f871881ed5-4193-943b-5fd10befab20. The starting point for the statement would be a
preliminary draft authored by the LMDC Families Advisory Council. Id. LMDC said
that the mission statement would incorporate “extensive public input . . . through
Advisory Councils, public forums in every borough and New Jersey, a questionnaire
sent to relatives of every World Trade Center victim, and thousands of emails sent to
LMDC.” Id.; cf. Families Advisory Council Meeting Minutes, LMDC (Aug. 13, 2002),
available at http://www.renewnyc.com/AboutUs/AdvisoryMeetings.aspx.
21
See SUMMARY OF OUTREACH, supra note 19.
22
See Anemona Hartocollis, Poll of 9/11 Families Is Sought over Unidentified
Remains, N.Y. TIMES (June 2, 2011), http://cityroom.blogs.nytimes.com/2011/06/02/pollof-911-families-is-sought-over-unidentified-remains/.
23
See Order to Show Cause at 1-2, Regenhard v. City of New York, No.
109548/2011 (N.Y. Sup. Ct. Aug. 18, 2011).
24
Regenhard, No. 109548/2011, slip op. at 6 (N.Y. Sup. Ct. Oct. 25, 2011).
25
Id. at 7.
26
See Maria Alvarez, 9/11 Families Appeal to Judge on Victims List, NEWSDAY
(Aug. 20, 2012), http://www.newsday.com/long-island/9-11-families-appeal-to-judge-onvictims-list-1.3916407.
27
See, e.g., Fuller v. Marx, 724 F.2d 717, 719 (8th Cir. 1984) (Arkansas law);
Enos v. Snyder, 63 P. 170, 171 (Cal. 1900); Culpepper v. Pearl St. Bldg., Inc., 877 P.2d
234
BROOKLYN LAW REVIEW
[Vol. 78:1
of kin’s right to immediate possession of the deceased’s body for
preservation and burial as a legally protected interest since as
early as 1857.28 Often referred to as a “quasi-property right,”29 or
alternatively as the “right of sepulcher,” this common-law
creation vests something less than full ownership in the next of
kin “to choose and control the burial, cremation, or other final
disposition of a dead human body.”30 Under New York law, the
next of kin has the right to receive the body once the coroner’s
office has concluded its statutorily-authorized investigative
duties.31 However, whether the quasi-property right extends to
unidentified remains possessed by the medical examiner upon
completion of its responsibilities remains unsettled.32
The primary question this note seeks to answer is
whether the New York quasi-property right attaches to the
commingled and yet-to-be-identified remains of WTC victims.
While the answer to this question may appear trivial in light of
877, 880 (Co. 1994); Dunahoo v. Bess, 200 So. 541, 542 (Fla. 1941); Louisville & N. R.
Co. v. Wilson, 51 S.E. 24, 26-27 (Ga. 1905); Beam v. Cleveland, C., C. & St. L. Ry. Co.,
97 Ill. App. 24, 28 (App. Ct. 1901); Anderson v. Acheson, 110 N.W. 335, 336 (Iowa
1907); Blanchard v. Brawley, 75 So. 2d 891, 893 (La. App. 1st Cir. 1954); Radomer
Russ-Pol Unterstitzunf Verein v. Posner, 4 A.2d 743, 747 (Md. 1939); Weld v. Walker,
130 Mass. 422, 423 (1881); Doxtator v. Chicago & W.M. Ry. Co., 79 N.W. 922, 922
(Mich. 1899); Larson v. Chase, 50 N.W. 238, 238 (Minn. 1891); Spiegel v. Evergreen
Cemetery, 186 A. 585, 586 (N.J. 1936); Barela v. Hubbell Co., 355 P.2d 133, 136 (N.M.
1960); Gurganious v. Simpson, 197 S.E. 163, 164 (N.C. 1938); Wynkoop v. Wynkoop, 42
Pa. 293, 301 (1862); Pierce v. Proprietors of Swan Point Cemetery, 10 R.I. 227, 242-43
(1872); Griffith v. Charlotte, Columbia & Augusta R.R., 23 S.C. 25, 32 (1885); Coty v.
Baughman, 210 N.W. 348, 350 (S.D. 1926); Terrill v. Harbin, 376 S.W.2d 945, 947 (Tex.
Civ. App. 1964); Smart v. Moyer (In re Estate of Moyer), 577 P.2d 108, 110 (Utah 1978)
(holding that the right to a decedent’s body “is a property right of a special nature . . .
[but] should [not] be regarded as an absolute property right . . . .”); Nichols v. Cent. Vt.
Ry. Co., 109 A. 905, 907-08 (Vt. 1919); Sanford v. Ware, 60 S.E.2d 10, 13-14 (Va. 1950);
Koerbor v. Patek, 102 N.W. 40, 45-46 (Wis. 1905).
28
See Correa v. Maimonides Med. Ctr., 629 N.Y.S.2d 673, 675 (Sup. Ct. 1995)
(“The law is well settled that the surviving next of kin have a right to the immediate
possession of a decedent’s body for preservation and burial and that damages will be
awarded against any person who unlawfully interferes with that right or improperly
deals with the decedent’s body.”); In re Widening of Beekman St., 4 Brad. Sur. 503, 530,
532 (N.Y. 1857).
29
Pierce, 10 R.I. at 238.
30
Kimberly E. Naguit, Note, Letting the Dead Bury the Dead: Missouri’s Right
of Sepulcher Addresses the Modern Decedent’s Wishes, 75 MO. L. REV. 249, 250 (2010).
31
See Shipley v. City of New York, 908 N.Y.S.2d 425, 427-32 (App. Div. 2010).
32
See, e.g., WTC Families for a Proper Burial, Inc. v. City of New York, 567
F. Supp. 2d 529, 537 (S.D.N.Y. 2008) (finding that “[n]o case has extended . . . a right to
an undifferentiated mass of dirt that may or may not contain undetectable traces of
human remains not identifiable to any particular human being”), aff’d, 359 F. App’x
177 (2d Cir. 2009); Comite en Memoria del Vuelo 587 Inc. v. Hirsch, No. 100382/2005,
slip op. at 3 (N.Y. Sup. Ct. Apr. 26, 2005) (noting that no New York State “case, statute,
rule or regulation . . . deals specifically with a situation where human remains are
unable to be identified or are identified in increments”).
2012]
“ONLY DUST REMAINS?”
235
the extraordinary facts of the Memorial case,33 the issue is not
novel. The families of the American Airlines Flight 58734 crash
victims litigated this very issue, but New York law failed to
provide these families with a mechanism to decide how to
dispose of the remains held by OCME.35 The disposition of
unidentified remains also arose in the aftermath of Hurricane
Katrina, and one commentator noted the “urgent need
for . . . application and contemplation” of the quasi-property
right in mass-disaster events.36 More recently, newspapers
chronicled how the Dover Air Force Base mortuary disposed of
military service-members’ cremated and unidentifiable remains
by dumping them in landfills.37 DNA testing has “found
increasing use as a means to identify remains after . . . mass
disasters,” and “[s]uccessful identifications have been made in
recent years following aircraft crashes and for misplaced
crematory corpses.”38 Therefore, an analysis of the Memorial
litigation carries implications extending far beyond the unique
facts of the case.
For the time being, OCME has the right to possess the
remains indefinitely while it continues DNA testing. As
33
For purposes of this note, in order to avoid confusion with WTC Families, a
2008 case in S.D.N.Y., I will refer to the current dispute over the relocation of the WTC
victims remains as the “Memorial case” or “Memorial litigation.”
34
Flight 587 crashed into Belle Harbor, Queens on November 12, 2001
shortly after takeoff from John F. Kennedy International Airport, killing all 260
passengers and crew aboard the aircraft as well as five people on the ground. See
Verified Petition at 2-3, Hirsch, No. 100382/2005; see also Amy Z. Mundorff,
Anthropologist-Directed Triage: Three Distinct Mass Fatality Events Involving
Fragmentation of Human Remains, in RECOVERY, ANALYSIS, AND IDENTIFICATION OF
COMMINGLED HUMAN REMAINS 123, 126 (B. Adams & J. Byrd eds., 2008).
35
See Hirsch, No. 100382/2005, slip op. at 3.
36
Sarah Tomkins, Priam’s Lament: The Intersection of Law and Morality in the
Right to Burial and Its Need for Recognition in Post-Katrina New Orleans, 12 UDC/DCSL
L. REV. 93, 94 (2009); see also Laura Maggi, Katrina Dead Interred at New Memorial,
TIMES-PICAYUNE
(Aug.
29,
2008),
http://www.nola.com/news/index.ssf/2008/08/
katrina_dead_interred_at_new_m.html.
37
See Craig Whitlock & Mary Pat Flaherty, Hundreds of Troops’ Ashes Put in
Landfill, WASH. POST, Dec. 7, 2011, at A1, available at http://www.washingtonpost.com/
world/national-security/air-force-dumped-ashes-of-more-troops-in-va-landfill-thanacknowledged/2011/12/07/gIQAT8ybdO_print.html.
38
C.H. Brenner & B.S. Weir, Issues and Strategies in the DNA Identification
of World Trade Center Victims, 63 THEORETICAL POPULATION BIOLOGY 173, 173 (2003)
(citations omitted); see also Dorothy Nelkin & Lori Andrews, Do the Dead Have
Interests? Policy Issues for Research After Life, 24 AM. J.L. & MED. 261, 285 (1998)
(describing a California case where “[t]he emotional distress of relatives was also at
issue in . . . a 1991 class action against mortuaries, funeral homes and crematoriums
that had handled as many as 16,000 bodies”). For additional information on the 1991
class action case, see Suit Says UCLA Medical School Illegally Disposed of Bodies, L.A.
TIMES, Nov. 1, 1996, at 4, available at http://articles.latimes.com/1996-11-01/local/me60189_1_body-program.
236
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discussed below, improvements in forensic DNA analysis have
enabled OCME to identify WTC victims in ways that were
impossible ten years ago.39 It is conceivable that OCME will
eventually be able to identify remains for most, and possibly
all, of the WTC victims.40 Nevertheless, thousands of fragments
will likely never be identified. If and when the medical
examiner terminates DNA testing, some entity, individual, or
collection of individuals will have to decide what to do with the
residual remains. As the dispute over the Memorial repository
indicates, the WTC families care deeply about the final
disposition of their loved ones’ remains, and some have been
willing to litigate the issue.
This note contends that in situations like the Memorial
case, where the next of kin claim a quasi-property right over
commingled and unidentified remains, the complex web of New
York common and statutory law relegates the remains to a
state of legal limbo. The next of kin are able to claim or waive
their rights to any remains identified by OCME in the future,
but they cannot assert their quasi-property rights to immediate
possession of these remains until they are affirmatively
identified. At the same time, OCME, which ostensibly
possesses the right to dispose of unidentified human remains,
is unlikely to do so while claims are outstanding. Consequently,
any residual remains will persist as OCME laboratory
specimens in perpetuity, subject of course to further advances
in DNA testing. It certainly appears, as one participant in this
dispute has lamented, that “since unidentified remains
potentially belong to all the families, they belong to none.”41
Though no perfect solution exists, legislators need not
acquiesce to the status quo. New York City law should be
modified to establish standards and procedures to ensure
mandatory repatriation and consultation with the next of kin
when determining how commingled and unidentified remains
should be put to rest. Part I of this note will briefly summarize
recent advances in forensic DNA analysis to demonstrate that,
inevitably, the City will have to grapple with who controls the
WTC residual remains’ final disposition. Part II will evaluate
current New York law governing the disposition of human
remains, concluding that it relegates unidentified remains to a
39
See infra Part I.
See infra Part I.
Chip Colwell-Chanthaphonh & Alice M. Greenwald, “The Disappeared”:
Power over the Dead in the Aftermath of 9/11, 27 ANTHROPOLOGY TODAY, June 2011, at 6.
40
41
2012]
“ONLY DUST REMAINS?”
237
state of legal limbo. Part III will then survey the origins,
underpinnings, and scope of the modern quasi-property right,
concluding that the Memorial case has highlighted the outer
boundary of the right: DNA identification. Finally, this note
recommends that New York City modify its laws governing the
disposition of human remains. Specifically, the City should look
to repatriation of Native American remains under the Native
American Graves Protection and Repatriation Act,42 a federal
statute that endeavors to resolve analogous collective disputes
over unidentified human remains.
I.
ADVANCES IN FORENSIC DNA ANALYSIS HAVE IMPROVED
THE PROSPECT OF IDENTIFYING REMAINS FOR MOST OF
THE WORLD TRADE CENTER VICTIMS
On September 11, 2001, 2753 people perished at the
World Trade Center after terrorists flew two commercial jets
into the towers.43 In the aftermath, “the Mayor of New York
City directed [OCME] to do everything humanly possible to
identify every fragment of human remains.”44
Given the unprecedented nature of the WTC disaster
with respect to the volume and condition of the remains,45
forensic DNA analysis constituted the most efficacious means
to identify the victims.46 The vast majority of the victims were
fragmented by the towers’ collapse, which amalgamated body
parts with the steel, concrete, and glass of the destroyed
42
25 U.S.C. §§ 3001-3013 (2006).
OFFICE OF THE CHIEF MED. EXAMINER, WORLD TRADE CENTER OPERATIONAL
STATISTICS (last updated Oct. 16, 2012) [hereinafter WTC OPERATIONAL STATISTICS] (on
file with the author). While some sources vary on the total fatalities and other statistics,
this note uses OCME’s official tabulations unless otherwise noted.
44
Glenn R. Schmitt, Introduction to Excerpts from Lessons Learned from
9/11: DNA Identification in Mass Fatality Incidents, 1 S. NEW ENG. ROUNDTABLE
SYMP. L.J. 13, 17 (2006).
45
Leslie G. Biesecker et al., DNA Identifications After the 9/11 World Trade
Center Attack, 310 SCIENCE 1122, 1122 (2005).
46
Robert Shaler & Thomas J. Bode, DNA Identification of the Missing After
the WTC Attacks: A Cooperative Public/Private Effort, FORENSIC MAG., Aug.-Sept.
2011, available at http://www.forensicmag.com/article/dna-identification-missing-afterwtc-attacks-cooperative-publicprivate-effort; see also Brenner & Weir, supra note 38, at
177 (noting that “[i]n most cases little but DNA [could] possibly be used to identify
[WTC victims]”). These predictions proved prescient as 88% of the 999 victims
identified by a “single modality” were identified by DNA. WTC OPERATIONAL
STATISTICS, supra note 43. Nearly “one-third of all the decedents (over half of those
ultimately identified) would not have been identified” but for DNA analysis. James R.
Gill et al., The 9/11 Attacks: The Medicolegal Investigation of the World Trade Center
Fatalities, 6 FORENSIC PATHOLOGY REVS. 181, 186 (2011).
43
238
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[Vol. 78:1
buildings.47 Some victims “disappeared without a trace”48 as
body parts were exposed to 1000°C fires that took over three
months to squelch, leaving them nearly indistinguishable from
inorganic material.49 These problems were compounded by
OCME’s understandable unpreparedness for a disaster of this
magnitude.50 Initial estimates placed the number of potential
victims at 20,000.51 Accordingly, Dr. Charles Hirsch, the Chief
Medical Examiner, made the unprecedented decision “to DNAtest every piece of human remains no matter how small,”
ensuring that no potential victims would be overlooked.52
Expectations that OCME scientists would promptly
identify all WTC victims by DNA testing proved to be
misguided.53 The extreme conditions at the WTC site quickly
deteriorated the quality of DNA profiles, overwhelming
contemporary scientific capabilities.54 Moreover, the remains
47
Biesecker et al., supra note 45, at 1122; Zoran M. Budimlija et al., World
Trade Center Human Identification Project: Experiences with Individual Body
Identification Cases, 44 CROATIAN MED. J. 259, 259 (2003) (cataloguing “the impact of
the aircrafts and abnormally high temperatures due to the fuel explosion, collapse of
the towers, prolonged exposure to different weather conditions, fire and water, as well
as the use of heavy equipment in the recovery effort”); Mitchell M. Holland et al.,
Development of a Quality, High Throughput DNA Analysis Procedure for Skeletal
Samples to Assist with the Identification of Victims from the World Trade Center
Attacks, 44 CROATIAN MED. J. 264, 265 (2003).
48
Brenner & Weir, supra note 38, at 177; see also WTC Families for a Proper
Burial, Inc. v. City of New York, 567 F. Supp. 2d 529, 531 (S.D.N.Y. 2008)
(“Approximately 1,100 of the victims perished without leaving a trace, utterly
consumed into incorporeality by the intense, raging fires, or pulverized into dust by the
massive tons of collapsing concrete and steel.”).
49
Biesecker et al., supra note 45, at 1122. Moreover, tissue fragments
recovered many months after the collapse had deteriorated due to “bacterial and other
processes . . . .” Id.
50
See Shaler & Bode, supra note 46 (noting that despite its status as the
“largest forensic DNA laboratory in the United States,” the operation “would require
nonexistent resources . . . .”); Biesecker et al., supra note 45, at 1123 (describing how
“OCME recognized that its computers and data communication facilities were
inadequate for this project”).
51
Gill et al., supra note 46, at 183.
52
Mundorff, supra note 34, at 128. The decision was unprecedented because
“[i]vestigators in mass fatality events generally do not DNA-test every fragment . . . .” Id.
53
See David W. Chen, New Test for 9/11 ID’s is Moving Much Slower than
Scientists Hoped, N.Y. TIMES, Nov. 30, 2002, at B3 (noting how the identification “process
has unfolded far more slowly than anticipated” and OCME had not yet identified remains
for fifty-one percent of the victims in November 2002). In April of 2002, OCME had
identified 968 decedents after examining 19,219 remains and by December 2008, 657
additional victims had been identified. Gill et al., supra note 46, at 186.
54
Shaler & Bode, supra note 46; see also Biesecker et al., supra note 45, at
1122 (noting that the conditions at WTC “made it difficult to isolate and genotype the
DNA from the specimens”); Amy Z. Mundorff et al., DNA Preservation in Skeletal
Elements from the World Trade Center Disaster: Recommendations for Mass Fatality
Management, 54 J. FORENSIC SCIENCE 739, 739 (2009) (describing how “UV radiation,
2012]
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consisted of thousands of bone fragments and, according to one
OCME director, a “robust, reliable, and rapid method for extracting
DNA from bones did not exist” in 2001.55 As of this writing, fortyone percent of the victims have yet to be even partially identified.56
OCME currently possesses over 8500 unidentified human
remains57 out of the nearly 22,000 fragments recovered after the
towers’ collapse.58 Recent advances in forensic science, however,
have brought the original forecast closer to fruition.59
Over time and in cooperation with private industry,
OCME has developed the ability to extract viable DNA samples
from bone fragments.60 Ten years later, scientists at OCME
continue the laborious work of evaluating hundreds of remains
per month “in an ongoing attempt to match a name to each
piece of human remains recovered from [the WTC].”61 Whereas
OCME scientists could only evaluate a few fragments per day
ten years ago, improved technology now allows them to analyze
several hundred per month.62 Better techniques for extracting
viable DNA from miniscule and degraded samples led OCME to
generate thirty-two new identifications in the last five years.63
OCME scientists “have utilized these advances to go back and
retest inconclusive fragments every few years, often succeeding
where they had previously failed.”64 The improved technology
has borne fruit. In May and August 2011, OCME successfully
matched DNA for two previously unidentified WTC victims.65
humidity, moisture, heat, fire, and mold . . . contributed to the advanced state of
decomposition of the remains and to the degradation of DNA”).
55
Shaler & Bode, supra note 46.
56
WTC OPERATIONAL STATISTICS, supra note 43.
57
The remains consist of “mainly bone fragments but also tissue that has
been dehydrated for preservation.” Hartocollis, supra note 9.
58
See WTC OPERATIONAL STATISTICS, supra note 43.
59
See N.Y. Univ. Langone Med. Ctr., A Decade Later, the Office of the Chief
Medical Examiner Upholds Its Promise to Identify Every Remnant of the Lives Lost in
the World Trade Center Attacks, NEWS & VIEWS, July-Aug. 2011, at 5 [hereinafter A
Decade Later].
60
Id. at 5; see also Shaler & Bode, supra note 46 (discussing the development
and efficacy of coordination with private companies like Bode Technology Group,
Celera and Orchid Biosciences to develop ever-refined techniques to analyze DNA in
bone fragments).
61
A Decade Later, supra note 59, at 5.
62
Id.
63
Id. For a comprehensive review of the scientific processes utilized in the
WTC identification effort, see generally Mundorff et al., supra note 54; Biesecker et al.,
supra note 45; Holland et al., supra note 47; Budimlija et al., supra note 47.
64
A Decade Later, supra note 59, at 5.
65
See Al Baker, A 9/11 Victim Is Identified by the Medical Examiner, N.Y. TIMES
(Aug. 23, 2011, 5:53 PM), http://cityroom.blogs.nytimes.com/2011/08/23/a-911-victim-isidentified-by-the-medical-examiner/; Anemona Hartocollis, First New Identification of 9/11
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OCME now identifies remains on a daily basis.66 Thus,
improvements in DNA typing raise the prospect that most, if
not all, WTC victims will be partially identified.67 It now
appears, however, that the original goal of identifying every
single fragment has yielded to a more feasible target:
identifying each victim.68 Indeed, OCME has publicly
committed itself to testing the remains until every victim has
been identified.69 This shift accords with previous mass-disaster
identification efforts, where “the standard of care is to identify
each victim, not each remain.”70
Thus, the families and the City must confront the nearcertain prospect that DNA testing will end without identifying
all of the WTC remains. Consequently, the question arises as to
who should determine the final disposition of any residual
human remains. In Part II, this note examines the existing
legal framework in New York concerning the disposition of
human remains in order to determine which party holds the
power to decide this question.
II.
NEW YORK LAW HAS NOT ADEQUATELY ADDRESSED THE
DISPOSITION OF UNIDENTIFIED REMAINS
In dismissing the Regenhard petition,71 the New York
County Supreme Court wrote that neither the City nor OCME
was obligated “to seek the families’ input as to where the
unidentified remains will be located—they are only required to
disclose the information as to where the remains will be
located.”72 The court, however, cited no statute, regulation, or
Victim Since 2009, N.Y. TIMES (May 12, 2011, 6:38 PM), http://cityroom.blogs.nytimes.com/
2011/05/12/first-new-identification-of-911-victim-since-2009/.
66
McGinty, supra note 10, at A1.
67
A Decade Later, supra note 59, at 5. Dr. Charles Hirsch, Chief Medical
Examiner recently stated: “This process is not time limited . . . . Ten years ago, we
promised the victims’ families that we would never quit working to identify every last
individual who died that day—and we’re going to keep that promise. It’s a sacred
obligation.” Id.
68
See Brenner & Weir, supra note 38, at 177 (concluding that “there is no
prospect of attaining a closed-system” and setting “a plausible upper bound for the
eventual number of [WTC victim] identifications” at 2100).
69
See Gill et al., supra note 46, at 194; Hartocollis, supra note 65; Letter from
Charles S. Hirsch, Chief Medical Examiner (Sept. 21, 2006) (on file with author) (“Recent
advances in the technique for extracting DNA from bone . . . have provided us the
opportunity to renew our efforts to identify your loved ones. We are working actively on
World Trade Center identifications, and new identifications will be forthcoming.”).
70
Budimlija et al., supra note 47.
71
See supra text accompanying notes 23-26.
72
Regenhard v. City of New York, No. 109548/2011, slip op. at 7 (N.Y. Sup.
Ct. Oct. 25, 2011).
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“ONLY DUST REMAINS?”
241
case to support that assertion.73 In the following sections, this
note will analyze the few laws that exist concerning the
disposition of unidentified remains to determine whether the
Regenhard court was correct.
A.
Statutes and Cases Governing the Disposition of Human
Remains
Both New York State statutes and New York City
municipal ordinances govern the authority and responsibilities
of OCME.74 As one court has noted, “the statutory powers and
discretionary authority of [OCME] are extensive.”75 Pursuant to
the New York City Charter, Chapter 12, section 557 (Section
557), OCME is empowered to “provide forensic and related
testing and analysis . . . in furtherance of investigations
concerning persons both alive and deceased . . . .”76 Moreover,
subdivision 557(f) grants OCME the authority to “perform the
functions of the city mortuary . . . including the removal,
transportation and disposal of unclaimed or unidentified human
remains . . . .”77 Thus, OCME ostensibly holds the legal right to
determine the final disposition of the WTC unidentified remains.
Where human remains are identifiable, the statutory
“person in control of disposition” is entitled to the remains
upon completion of autopsies, DNA testing, or other authorized
analysis.78 Absent testamentary direction by the deceased, New
York Public Health Law (PHL) section 4201 determines the
person in control of disposition.79 It codifies the common-law
order of priority,80 beginning with the surviving spouse and
73
See id.
N.Y. PUB. HEALTH LAW § 4200 (McKinney 2011); N.Y.C. R. & REGS.
§ 205.01 (2011).
75
Shipley v. City of New York, 908 N.Y.S.2d 425, 430 (App. Div. 2010).
76
N.Y.C. CHARTER § 557(f)(3) (Supp. I 2011).
77
Id. § 557(f)(2) (emphasis added).
78
See N.Y. PUB. HEALTH LAW § 4201(2)(a) (delineating “in descending
priority [the persons who] shall have the right to control the disposition of the remains
of such decedent”).
79
Id. § 4201(2).
80
See, e.g., Secord v. Secor, 18 Abb. N. Cas. 78, 81-82 (N.Y. Sup. Ct. 1870)
(“In the absence of a testamentary direction, is it not better that the husband should
bury the wife, and the wife the husband, than that the door should be opened to an
unseemly contest between the surviving parent and the next of kin?”); Frank W.
Grinnell, Legal Rights in the Remains of the Dead, 17 GREEN BAG 345, 347-52 (1905)
(citing cases explicating the general rule that in the absence of a will, the right to
determine burial falls to the spouse first, and then descending to the children,
grandchildren, parents, and siblings).
74
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devolving to any surviving children, parents, and siblings.81
PHL section 4201 further provides that the “person in control
of disposition . . . shall faithfully carry out the directions of the
decedent to the extent lawful and practicable . . . in a manner
appropriate to the moral and individual beliefs and wishes of
the decedent . . . .”82 Should a dispute arise over the remains’
disposition, the statute dictates that it “shall be resolved by a
court of competent jurisdiction” pursuant to an Article Four
proceeding under the New York Civil Practice Law and Rules.83
A New York appellate court evaluated the interplay
between OCME’s statutory powers and the quasi-property
right84 in Shipley v. City of New York.85 In that case, an OCME
medical examiner, while performing an autopsy, removed and
retained the brain of the plaintiffs’ son and returned the body
without informing the plaintiffs that their son’s brain was still
in his possession.86 The parents sued for damages based on a
quasi-property theory.87 In its defense, OCME contended that
“the common-law right of sepulcher cannot infringe upon
[OCME’s] expansive authority . . . to discharge its duties in the
exercise of its professional discretion.”88
The
court
wrote
that
OCME’s
“statutory
powers[,] . . . [though] extensive[,] . . . [are] not unlimited.”89
The state law governing disposition, autopsy, and dissection of
cadavers, said the court, “reflects [the] concerns for respecting
the corporal remains of decedents and protecting the feelings of
family members by strictly limiting the circumstances under
which autopsies may be performed.”90 Specifically, PHL
section 4215 “safeguards the rights of the next of kin to
receive [the] remains for burial” once the “legitimate purposes
of an autopsy have been satisfied . . . .”91 That is, under the
court’s interpretation, section 4215 “implicitly acknowledges” the
common-law quasi-property right to possess the remains.92 By
81
82
83
84
85
86
87
88
89
90
91
92
N.Y. PUB. HEALTH LAW § 4201 (2)(a)(i-v). Cf. N.Y.C. R. & REGS. § 205.01 (2011).
N.Y. PUB. HEALTH LAW § 4201(2)(c).
Id. § 4201(8).
See infra Part III.
908 N.Y.S.2d 425, 429-31 (N.Y. App. Div. 2010).
Id. at 427.
Id.
Id. at 429.
Id. at 430.
Id. (alteration in original) (citation and internal quotation marks omitted).
Id.
Id. The statute at the time read:
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“ONLY DUST REMAINS?”
243
mandating the return of the human remains, the statute
“strikes an appropriate balance between fulfillment of the
legitimate scientific and investigative duties of [OCME] and the
recognition of the long-established rights of next of kin to receive
and provide final repose to the remains of their loved ones.”93
Since the medical examiner in Shipley had no further legitimate
need to retain the decedent’s brain, the court concluded that
plaintiffs had a valid cause of action against OCME.94
Whereas Shipley involved the removal of an identifiable
brain from a corpse, Comite en Memorial del Vuelo 587 Inc. v.
Hirsch concerned a quasi-property action over commingled and
unidentified remains.95 In Hirsch, which preceded Shipley by five
years, the Comite en Memoria del Vuelo 587 Inc. (the
Committee), representing the families of the victims of American
Airlines Flight 587 (Flight 587),96 filed a mandamus action to
compel OCME to bury the victims’ unidentified remains.97
OCME had identified partial remains for all 265 victims but
could not identify 308 residual fragments through DNA testing.98
When the families discovered that OCME intended to inter
these residual remains in a “nondescript common burial
ground,” they objected vociferously. Instead, the families
proposed that OCME bury the unidentified remains in a private
cemetery chosen by the relatives.99
The Committee had held a meeting of family members
representing 100 of the crash victims, who approved by
majority vote a plan to entomb the remains at Trinity
Cemetery in New York City.100 However, several families that
did not participate in the vote objected and submitted a letter
to OCME complaining that the vote was flawed.101 In response,
In all cases in which a dissection has been made, the provisions of this
article, requiring the burial or other lawful disposition of a body of a deceased
person, and the provisions of law providing for the punishment of interference
with or injuries to it, apply equally to the remains of the body after dissection
as soon as the lawful purposes of such dissection have been accomplished.
Id. (emphasis added) (quoting N.Y. PUB. HEALTH LAW § 4215(1)) (internal quotation
marks omitted).
93
Id. at 431.
94
Id. at 427.
95
Comite en Memoria del Vuelo 587 Inc. v. Hirsch, No. 100382/2005, slip op.
at 1, 3 (N.Y. Sup. Ct. Apr. 26, 2005).
96
See supra note 34.
97
Hirsch, No. 100382/2005, slip op. at 1.
98
See id. at 2.
99
See Verified Petition, supra note 34, at 3.
100
See id. at 5-6.
101
See id. at 7.
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the medical examiner’s office announced that it would not
release the remains without either unanimous consent from
the surviving next of kin or a court order.102
In its supporting briefs, the Committee stressed that it
was not “seeking custody and control of the unidentified
remains or that they be released to it.”103 Rather, it contended
that OCME, as legal custodian, was required to transfer the
remains to Trinity Cemetery as there was no longer any
investigative reason to withhold the remains.104 OCME, claimed
the Committee, had an “affirmative and non-discretionary
duty,” under PHL section 4200,105 to ensure that the remains
received a “decent burial within a reasonable time after the
crash of Flight 587.”106 Since the families had already voted for
the Trinity location, a “decent burial” consisted of complying
with their referendum.107
In response, OCME justified its decision to delay
disposing of the unidentified remains based on “continuous,
contentious and significant dissent among groups of next of
kin . . . .”108 Even so, OCME contended that it had no obligation
to seek input from the victims’ families. Under the Rules of the
City of New York, Title 24, subsection 205.01(d), OCME
conceded, it would normally be required to release human
remains to the next of kin.109 But in the case of unidentifiable
remains, there were no identifiable next of kin for purposes of
the statute.110 In this situation, OCME “maintains custody and
control over the remains” and, accordingly, “it is within the
discretion of OCME to dispose of the remains in an appropriate
manner to be determined by OCME.”111
102
See id.
See Reply Memorandum of Law in Support of the Application of Petitioner
Comite en Memoria del Vuelo 587 Inc. at 2, Hirsch, No. 100382/2005 [hereinafter Reply
Memorandum of Law] (emphasis omitted).
104
See id. at 2.
105
Hirsch, No. 100382/2005, slip op. at 1. New York Public Health Law
Section 4200(1) provides that “[e]xcept in the cases in which a right to dissect it is
expressly conferred by law, every body of a deceased person, within this state, shall be
decently buried or incinerated within a reasonable time after death.” N.Y. PUB.
HEALTH LAW § 4200(1) (McKinney 2011).
106
Hirsch, No. 100382/2005, slip op. at 1 (emphasis omitted).
107
See Reply Memorandum of Law, supra note 103, at 2.
108
See Respondent’s Memorandum of Law in Support of the Verified Answer
at 3, Hirsch, No. 100382/2005.
109
Id. at 3-4.
110
Id. at 4.
111
Id.
103
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“ONLY DUST REMAINS?”
245
The court denied the petition and dismissed the suit on
multiple grounds.112 First, the court held that the Committee
lacked standing because it could not demonstrate that it was
“the appropriate entity to act as the representative of the
interests” of all the next of kin.113 The Committee’s Trinity
Cemetery proposal, ratified by a majority vote of the
representatives of only 100 victims, could not be said to
represent the majority will of the representatives of all 265
victims.114 Furthermore, the court found no “safeguards” in place
“to protect the interests” of the non-voting families.115 Any
decisions about the remains’ disposition, ruled the court,
required “direct participation” by the “appropriate” next of kin.116
The court also addressed the merits of the petition,
holding that the plaintiffs had failed to state a legally
cognizable claim.117 The court correctly noted, like in Shipley,
that the pertinent statutes “make it clear that, if there were no
further investigatory reason for [OCME] to retain remains of
an identified decedent, the [medical examiner] is obligated to
promptly release such remains . . . upon the demand of the
decedent’s next of kin.”118 But the court distinguished an
identified decedent from the remains in the case at bar:
[N]either of the parties has cited (nor has the court’s own research
revealed) any case, statute, rule or regulation which deals
specifically with a situation where human remains are unable to be
identified . . . . Under the current circumstances and apparently
without regulatory or statutory guidance, the OCME has established
a suitable procedure to obtain direction for the disposition of remains
from the victims’ next of kin as they become identified . . . .119
The “suitable procedure” that the court referred to was
OCME’s policy of providing a “Release Authorization” to any
families wishing to claim remains identified in the future.120 The
release “gave the next of kin the choice of claiming any remains
identified in the future or authorizing the OCME to dispose of
112
The court dismissed the proceeding on three separate grounds. First, the
Committee lacked standing. Hirsch, No. 100382/2005, slip op. at 2-3. Second, the
Committee failed to join all necessary parties. Finally, the Committee failed to state a
legal claim for relief. Id. at 2-4.
113
Id. at 2-3.
114
Id. at 3.
115
Id.
116
Id.
117
Id.
118
Id.
119
Id. at 3-4.
120
Id. at 2.
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such remains as deemed appropriate by the OCME.”121 Under
such a procedure, the families were faced with the unenviable
choice between assigning away their rights to the remains and
waiting for piecemeal identifications conditioned upon advances
in DNA testing. Had the Committee vote represented a majority
of the 265 victims’ representatives here, under the court’s ruling
the vote still would not have been binding unless every legal
representative had participated. While the latter requirement
supposedly safeguards the interests of all the families, it
effectively precludes collective decisions over the disposition of
unidentified remains. Paradoxically, because the court reasoned
that “decisions to be made with respect to the interment of the
remains of a loved one are so highly personal,” none get to decide
unless all decide.122
In the Memorial case,123 OCME has likewise provided
release authorization forms to the victims’ next of kin. The
responses have varied: “Some families retrieve[d] new remains
right away, conducting small ceremonies and reopening graves to
bury them. Some [have] wait[ed] for years, and are still waiting,
in order to collect them all at once. Families of about 150 victims
have asked not to be notified at all.”124 Unless relatives inform
OCME that they do not wish to be notified temporarily or
permanently, they “will continue to receive calls for as long as
[OCME], aided by advancing technology, makes identifications.”125
Two years after Hirsch was decided, the New York City
Council amended Section 557,126 subdivision (f),127 thus granting
OCME the authority to “perform the functions of the city
mortuary . . . including the removal, transportation and
disposal of unclaimed or unidentified human remains . . . .”128
The legislative record reveals that the amendments were
viewed as mere housekeeping measures updating the New
York City Charter to reflect responsibilities that OCME had
121
Id. (citation omitted).
Id. at 3.
123
See supra note 33.
124
McGinty, supra note 10, at A1.
125
Id.
126
See supra notes 76-77 and accompanying text.
127
NEW YORK CITY, N.Y., LOCAL LAW NO. 53 (2007), available at
http://legistar.council.nyc.gov/LegislationDetail.aspx?ID=447342&GUID=7EB32EF259DF-401E-889B-D8B96EBDBD1D&Options=ID%7cText%7c&Search=medical+examiner
(follow “Local Law” hyperlink under “Attachments”) (last visited Oct. 30, 2012).
128
Id. The current Charter contains the exact same language. See N.Y.C.
CHARTER § 557(f)(2) (Supp. I 2011).
122
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“ONLY DUST REMAINS?”
247
already been performing.129 In other words, the Council rubberstamped the proposed language without considering, or even
contemplating, its scope or consequences.130
As the preceding analysis demonstrates, unidentified
remains exist in a legal limbo. Until a fragment is identified, the
families have no right to determine its disposition and OCME
has no legal duty to release it. And under the black letter law,
OCME may dispose of unidentified remains even where the next
of kin wish to claim them.131 If the dissenting families end up
litigating the WTC remains, the courts would have to determine
whether Section 557 precludes the next of kin from claiming
unidentified remains in OCME’s possession. Sparse case law
exists interpreting Section 557, but in a prior case concerning
WTC remains, the court suggested that the next of kin have no
proprietary interest in unidentified remains, and thus no legal
authority to determine the manner of disposal.132
129
See Transcript of the Minutes of the Committee on Health at 3, Council of
the City of New York (Oct. 11, 2007) [hereinafter Health Committee Transcript],
available at http://legistar.council.nyc.gov/LegislationDetail.aspx?ID=447342&GUID=
7EB32EF2-59DF-401E-889B-D8B96EBDBD1D&Options=ID%7cText%7c&Search=
medical+examiner (statement of Joel Rivera, Chairman, Comm. on Health) (“This
legislation would update the law to reflect changes in technology and increase
responsibilities that [OCME] has taken on over time.”); Press Release, Office of
Communications, Council of the City of New York, Updating Responsibilities of Office
of
the
Chief
Medical
Examiner
(Oct.
17,
2007),
available
at
http://legistar.council.nyc.gov/LegislationDetail.aspx?ID=447342&GUID=7EB32EF259DF-401E-889B-D8B96EBDBD1D&Options=ID%7cText%7c&Search=medical+examiner
(“The Council is also voting on legislation to amend the City Charter to reflect new
responsibilities of the Office of the Chief Medical Examiner (OCME). Due to
restructuring and advances in technology OCME has taken on new duties that are not
reflected in the Charter, such as performing the functions of City mortuaries, and
conducting DNA and other forensic testing. These will now be codified as formal
responsibilities of OCME.”).
130
The only testimony the Committee on Health heard was from a single
OMCE representative, who read from a prepared statement. See Health Committee
Transcript, supra note 129, at 5-8. The only mention of unidentified remains in the
statement was a description of how OCME was responsible for “transporting and
storing the remains of unidentified people and unclaimed people. Id. at 6-7. After the
testimony, Committee chairperson opined, “I think this is just a common sense process
that we’re going through right now.” Id. at 9. He then opened the floor to the other
committee members, who asked no questions. See id.
131
N.Y.C. CHARTER § 557(f)(3).
132
See WTC Families for a Proper Burial, Inc. v. City of New York, 567 F.
Supp. 2d 529, 537 (S.D.N.Y. 2008), aff’d, 359 F. App’x 177 (2d Cir. 2009).
248
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The Precursor Case to the Memorial Litigation: WTC
Families for a Proper Burial, Inc. v. City of New York
Finds No Property Interest in Intangible and
Unidentifiable Human Remains
On September 12, 2001, the City began relocating the
WTC debris to Fresh Kills, the inveterate garbage dump located
in Staten Island, so that federal and local officials could begin
the colossal task of scrutinizing the wreckage for evidence and
human remains.133 The initial, ad-hoc process for prospecting
remains by rake and shovel evolved over ten months to
increasingly sophisticated screening mechanisms whereby
480,000 tons of commingled organic and inorganic materials
were sifted through screens less than one-quarter inch thick.134
The miniscule pieces passing through these screens, referred to
as “fines,” included cremated remains of WTC victims.135
Families of the victims earnestly believed that City
officials had promised to segregate the fines containing human
remains from the residual waste stored at the landfill, in order
to accord dignity to the memory of the victims and ensure that
the remains would ultimately receive a proper burial.136 In
September 2004, however, several family members visited
Fresh Kills and discovered that sanitation employees had been
commingling the fines with household garbage and consigning
the mixture underneath a layer of earth.137 After failing to
convince the City to remedy the purported wrong,138 some of the
families established a nonprofit corporation139 in order to
effectuate a proper burial site for the fines. The corporation
subsequently filed a lawsuit140 in federal district court to compel
133
WTC Families, 567 F. Supp. 2d at 532; Amended Complaint at ¶¶ 28-30,
WTC Families, 567 F. Supp. 2d 529 (No. 05CV7243).
134
Amended Complaint, supra note 133, ¶¶ 31-40.
135
Id. ¶¶ 42-46.
136
Id. ¶¶ 47-49; WTC Families, 567 F. Supp. 2d at 533.
137
Amended Complaint, supra note 133, ¶¶ 51-53; WTC Families, 567 F.
Supp. 2d at 534.
138
Amended Complaint, supra note 133, ¶¶ 55-63.
139
World Trade Center Families for a Proper Burial, Inc. was incorporated in
2003 and professed to act on behalf of nearly 1000 families whose loved ones perished
at the WTC. See WTC Families, 567 F. Supp. 2d at 533 (noting that the nonprofit was
incorporated “with the stated purposes of representing the bereaved families,
retrieving the remains of 9/11 victims located at Fresh Kills, and providing a proper
burial and resting place for the remains”); Amended Complaint, supra note 133, ¶¶ 5-6.
140
The Air Transportation Safety and System Stabilization Act of 2001 grants
the United States Court for the Southern District of New York “original and exclusive
jurisdiction over all actions brought for any claim (including any claim for loss of
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“ONLY DUST REMAINS?”
249
the City to reclaim the cremated fines, remove them from Fresh
Kills, and establish a cemetery for their final resting place.141
In WTC Families for a Proper Burial, Inc. v. City of New
York, the plaintiff families claimed that the City violated the
Due Process Clause (DPC) of the Fourteenth Amendment, 42
U.S.C. § 1983, and New York State law “by depriving [them] of
their rights over the remains of their deceased relatives,
including their right to provide a proper and decent burial for
their deceased family members.”142 Plaintiffs argued that their
quasi-property rights to the victims’ remains were entitled to
DPC protection under federal law. Neither federal nor state
law, according to plaintiffs, distinguished cremated remains
from an intact body.143 Accordingly, the families retained a
proprietary right to the “body parts, bone fragments, small
tissue particles and cremated remains” at Fresh Kills.144 Having
assumed responsibility for the recovery effort, the City “owed
[the families] a duty of reasonable care to insure that such
recovery effort was properly done.”145
The City moved to dismiss the suit, contending that the
DPC did not impose “an obligation to search and sift the WTC
material in any particular manner.”146 In its briefs, the City
argued that while no Second Circuit or New York State court
had yet considered whether the quasi-property right in the
deceased’s remains rises to the level of a DPC-protected property
interest,147 the case at bar should nevertheless be dismissed
because plaintiffs could not demonstrate that identifiable
remains were present at the landfill.148 In other words, the family
property, personal injury, or death) resulting from or relating to the terrorist-related
aircraft crashes of September 11, 2001.” Pub. L. No. 107-42, 115 Stat. 230 (2001).
141
WTC Families, 567 F. Supp. 2d at 532; see also Anemona Hartocollis,
Landfill Has 9/11 Remains, Medical Examiner Wrote, N.Y. TIMES, Mar. 24, 2007, at B3
(describing how “family members are trying to force the city to separate many
thousands of tons of debris that they believe still includes body parts and other human
remains from the landfill, and to create a formal burial place for them”).
142
Amended Complaint, supra note 133, ¶¶ 68-95. Plaintiffs also alleged a
cause of action, inapposite for purposes of this note, for violation of their right to free
exercise of religion because the City purportedly prevented the families from burying
their loved ones according to their religious tenets. See id. ¶¶ 81-84.
143
Id. ¶ 3.
144
Id.
145
Id. ¶ 8.
146
Defendants’ Memorandum of Law in Support of Their Motion to Dismiss
the Amended Complaint or in the Alternative for Partial Summary Judgment, at 3,
WTC Families, 567 F. Supp. 2d 529 (S.D.N.Y. 2008) (No. 05CV7243) [hereinafter
Defendants’ Memorandum of Law].
147
See infra Part III.
148
Defendants’ Memorandum of Law, supra note 146, at 28-29.
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members, at most, could only prove that “the remains of some
undifferentiated and unspecified victims of the WTC disaster”
may have been commingled with the debris at Fresh Kills.149
Mindful of the families’ irreparable emotional anguish,
the court nevertheless held that plaintiffs had failed to state a
legally cognizable claim and dismissed the suit.150 The court
recognized that New York common law grants the next of kin
the right to possess, and determine the final disposition of, a
decedent’s remains.151 The court, however, qualified that right
as constituting something less than “a property right in the
ordinary sense of the term . . . .”152 Rather, it “extends only as
far as necessary to entitle the next of kin to protection from
violation or invasion of the place of burial, and to protect the
next of kin’s right to ensure a proper burial.”153
Moreover, the court found the quasi-property right
operative only in cases where the next of kin claim possession
over “identifiable, recoverable bodies . . . .”154 Neither the
plaintiffs nor the court itself could find a case which extended
“such a right to an undifferentiated mass of dirt that may or
may not contain undetectable traces of human remains not
identifiable to any particular human being.”155 Accordingly, the
court concluded that “[w]ithout something tangible or
identifiable, there is no property right.”156 And without a
property right, the DPC claim must fail:
[T]his case concerns a total and complete absence of identifiable
remains of any identifiable person. And just as that crucial fact was
fatal to plaintiffs’ Constitutional claims, it is fatal as well to
plaintiffs’ state law claims . . . . [W]ithout identified remains of an
identifiable deceased, there is no person, or part of a person, and
there can be no right, to bury . . . . [P]laintiffs have no property right
in an undifferentiated, unidentifiable mass of dirt that may or may
not contain the remains of plaintiffs’ loved ones.157
149
Id. at 29.
WTC Families, 567 F. Supp. 2d at 534.
Id. at 537 (citing Colavito v. N.Y. Donor Network, Inc., 356 F. Supp. 2d
237, 243 (E.D.N.Y. 2005)).
152
WTC Families, 567 F. Supp. 2d at 537.
153
Id.
154
Id.
155
Id.
156
Id. (emphasis added) (citing Comite en Memoria del Vuelo 587 Inc. v.
Hirsch, No. 100382/2005, slip op. at 3 (N.Y. Sup. Ct. Apr. 26, 2005)).
157
Id. at 541-42.
150
151
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251
WTC Families cited Hirsch for the proposition that
there can be no property interest in unidentifiable remains.158
As precedent for that assertion, Hirsch is dubious at best. The
Hirsch court merely concluded that no case law, statute, or
regulation directly deals with a situation where OCME
possesses yet-to-be-identified remains.159 The Memorial case
presents an opportunity for the New York courts to reconsider
whether Hirsch and WTC Families remain good law.
The facts of the Memorial case are distinguishable from
WTC Families in one major respect. There is no doubt that
OCME possesses WTC victims’ remains, whereas in WTC
Families, the court made a factual determination that “all
human remains that could be identified, were identified. Only
dust remains.”160 That is, the WTC Families court rested its
decision partly on the fact that there was no concrete proof that
the fines contained human remains at all. No such ambiguity
exists in the Memorial case.
Thus, the courts may have the opportunity to decide
whether the quasi-property right embraces tangible and
potentially-but-not-currently-identifiable
human
remains.
While the courts can easily avoid settling this issue on any
number of technicalities,161 this note argues that the courts, and
ultimately the legislature, should directly confront this issue.
III.
THE QUASI-PROPERTY RIGHT IN CORPSES
If the dissenting families are to succeed in challenging
the City’s plan to transfer the unidentified remains to the
Memorial repository, they must establish a legal basis for their
authority to determine the final disposition of the remains held
by OCME. That necessarily entails proving that the next of kin
have a quasi-property right to the remains. Within the quasiproperty right:
[T]he law has recognized in the kin having the duty of burial a right
to possession of the body so that the duty can be carried out. This is
a right to receive possession of the body immediately and in the
same condition it was in at the time of death. There is also a
correlative duty imposed upon anyone who may have the possession
158
Id. at 537.
Hirsch, No. 100382/2005, slip op. at 3.
160
WTC Families, 567 F. Supp. 2d at 532.
161
See Brotherton v. Cleveland, 923 F.2d 477, 480 (6th Cir. 1991) (describing
how courts “confronted with determining the nature of the [quasi-property] right have
avoided characterizing it” as property and settled suits on other grounds).
159
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not to mutilate the body and to deliver possession. The right to
possession of the body exists only in order to aid the accomplishment
of the duty of burial and, therefore, should only be co-extensive with
that duty.162
While a surviving spouse or relative may not have the
same property interest in a dead body as he or she would in a
house or automobile, he or she does have a proprietary right to
exclusive possession of a corpse for the purpose of burial.163 In
the proceeding sections, this note will survey the origin and
scope of the modern quasi-property right to determine whether
it embraces unidentified human remains.
A.
What Is Property?
The meaning of the quasi-property interest in a dead
body lacks consistency.164 According to one recent commentator,
“The right to burial is an academic subject which could
encompass several volumes . . . .”165 Proprietary rights to
corpses are nonexistent in some jurisdictions but are expansive
in others.166 Courts have held body parts to be both protected
and unprotected as a property of sorts under the Due Process
Clause.167 To understand what it means to have a quasiproperty right in a dead body, it is necessary to contrast the
right from general conceptions of property.
Under the prevailing scholarly view,168 property is
viewed as a metaphorical bundle of rights, with each stick or
twig in the bundle representing a right relative to the world at
162
B. Joan Krauskopf, The Law of Dead Bodies: Impeding Medical Progress,
19 OHIO ST. L.J. 455, 458 (1958) (citing Finley v. Atl. Transp. Co., 220 N.Y. 249 (1917)).
163
Melissa A.W. Stickney, Note, Property Interests in Cadaverous Organs:
Changes to Ohio Anatomical Gift Law and the Erosion of Family Rights, 17 J.L. &
HEALTH 37, 43 (2002).
164
See Elizabeth E. Appel Blue, Redefining Stewardship over Body Parts, 21
J.L. & HEALTH 75, 105-06 (2008) (noting that “currently, there is no consensus in the
courts over how to treat bodies . . . [and] the law of the body remains in a state of
confusion and chaos” (internal quotation marks omitted)).
165
Tomkins, supra note 36, at 94.
166
See Appel Blue, supra note 164, at 106 (finding that “American
jurisdictions are today divided between the ‘no property’ jurisdictions and the ‘quasiproperty’ jurisdictions, with each side claiming a majority”).
167
For cases finding a Due Process Clause entitlement in a dead body, see
Brotherton v. Cleveland, 923 F.2d 477 (6th Cir. 1991), and Newman v.
Sathyavaglswaran, 287 F.3d 786 (9th Cir. 2002). For cases rejecting due process
claims, see Fuller v. Marx, 724 F.2d 717 (8th Cir. 1984), and Lawyer v. Kernodle, 721
F.2d 632 (8th Cir. 1983).
168
See Stickney, supra note 163, at 42 (describing how property “has been broadly
defined as consisting of a bundle of rights, an analogy the Supreme Court has employed a
number of times” (citing Kaiser Aetna v. United States, 444 U.S. 164, 176 (1979))).
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253
large.169 “Property,” therefore, has a legal meaning distinct from
its pedestrian connotation, and “has been described as an
aggregation of a person’s legally protected expectations in
regard to a [thing].”170 The right to a thing, commonly labeled
an entitlement, is traditionally dichotomized as either a
property right or personal right.171 The former defines an
“entitlement to a certain thing (proprietary rights in rem) and
the law protects this entitlement against the world as a
whole.”172 The latter defines an “entitlement which is
enforceable against a specific person or a specific class of
persons (rights in personam), such as those which result from
obligations like liability in tort or contractual entitlements.”173
The right to something in rem is stronger than an in personam
right because it protects the “property” of the “owner” from a
larger, indefinite class of persons.174
Legal niceties aside, property simply can be understood
as rights that the government guarantees and enforces through
the courts.175 Some of the most prominent rights include “the
rights of possession, exclusion, use, and disposition, the right to
enjoy fruits or profits, and the right of destruction.”176 For courts
to recognize a property interest, “the party must have a
sufficient number of the ‘twigs’ in the property bundle, though
not the complete bundle. There is, however, no bright-line test
for determining the threshold amount of ‘twigs’ necessary to
establish a property interest.”177 But does the quasi-property
right contain enough of these twigs for the WTC families to
“own” the unidentified remains?
169
See, e.g., NILS HOPPE, BIOEQUITY—PROPERTY AND THE HUMAN BODY 49 (2009).
Michael H. Scarmon, Brotherton v. Cleveland: Property Rights in the Human
Body—Are the Goods Oft Interred with Their Bones?, 37 S.D. L. REV. 429, 429 (1991).
171
See HOPPE, supra note 169, at 70.
172
Id.
173
Id.
174
See generally THOMAS W. MERRILL & HENRY E. SMITH, THE OXFORD
INTRODUCTIONS TO U.S. LAW: PROPERTY 9 (2010) (“Because the [in rem] right attaches
to the object, rather than to particular people, it is universally binding on all who
encounter the object.”).
175
See Roy Hardiman, Toward the Right of Commerciality: Recognizing Property
Rights in the Commercial Value of Human Tissue, 34 UCLA L. REV. 207, 215 (1986).
176
Erik S. Jaffe, Note, “She’s Got Bette Davis[’s] Eyes”: Assessing the
Nonconsensual Removal of Cadaver Organs Under the Takings and Due Process
Clauses, 90 COLUM. L. REV. 528, 549 (1990).
177
Stickney, supra note 163, at 43.
170
254
B.
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Historical Origin of the American Quasi-Property Right
English common law, inherited by the American colonies,
did not recognize a human corpse as property.178 Instead, a dead
body was considered “nullius in bonis,” the property of no one.179
Authority over human remains belonged to ecclesiastical courts,
which “monopolized the judicial power over the subject of
burial . . . .”180 As a result of this jurisdictional peculiarity, family
members had “no property interest in the body or ashes of an
ancestor,” and thus no legal remedy “for disturbance of a
corpse.”181 This led to an absurd result, whereby surviving next of
kin could sue for things like defacing the headstone but not for
exhuming the body from the grave.182
When the United States severed political ties with its
colonial master, the states jettisoned ecclesiastical jurisdiction.183
As a consequence, states were free to develop autonomous
property rules concerning corpses.184 Most repudiated the
perceived injustices of the English system,185 first by granting
jurisdiction over dead bodies in courts of law.186 Ensuing familial
disputes led courts to reconsider whether someone could validly
claim that a dead body was his property. Empowered with
jurisdiction, several courts began to modify the no-property-in-acorpse rule.187
178
See Larson v. Chase, 50 N.W. 238, 238-39 (Minn. 1891).
See id. at 239 (citing Lord Coke, Third Part of the Institutes of the Law of
England, 3 CO. INST. 203 (1797)).
180
R.P. Taylor, Right of Sepulture, 53 AM. L. REV. 359, 359-60 (1919); see also
Pettigrew v. Pettigrew, 56 A. 878 (Pa. 1904); Pierce v. Proprietors of Swan Point Cemetery,
10 R.I. 227, 238 (1872); Ritter v. Couch, 76 S.E. 428 (W. Va. 1912); Denay L. Wilding
Knope, Comment, Over My Dead Body: How the Albrecht Decisions Complicate the
Constitutional Dilemma of Due Process & the Dead, 41 U. TOL. L. REV. 169, 176 (2009).
181
Wilding Knope, supra note 180, at 175-76.
182
See id.; cf. In re Widening of Beekman St., 4 Brad. Sur. 503, 519-20 (N.Y. 1857).
183
See, e.g., REMIGIUS N. NWABUEZE, BIOTECHNOLOGY AND THE CHALLENGE
OF PROPERTY 46 (2007); Tanya K. Hernández, The Property of Death, 60 U. PITT. L.
REV. 971, 993 (1999); Knope, supra note 180, at 175-76.
184
See Stickney, supra note 163, at 41.
185
See Wilding Knope, supra note 180, at 176 (describing how American
courts, “[l]acking ecclesiastic influence and disliking the potential injustice that the noproperty system created . . . , devised a way around the rule, and . . . assumed
jurisdiction over dead bodies” (citations and internal quotation marks omitted)); cf.
Pettigrew, 56 A. at 879; Pierce, 10 R.I. at 235-39; Ritter, 76 S.E. at 430.
186
Larson v. Chase, 50 N.W. 238, 238 (Minn. 1891).
187
Id. One court went as far as holding that “the bodies of the dead belong to
the surviving relations . . . as property, and that they have the right to dispose of them
as such, within restrictions analogous to those by which the disposition of other
property may be regulated.” Bogert v. City of Indianapolis, 13 Ind. 134, 138 (1859)
(emphasis added).
179
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“ONLY DUST REMAINS?”
255
[S]ome American courts [started] to recognize a right to possession of
a body for burial, which they recognized as a property right of sorts.
Eventually, recognizing that property might not be the best
description of the right to a corpse for burial, some courts in the
United States articulated a hybrid term they called quasi-property
which gave families and friends a right to claim a corpse to effect a
burial, but not for any other reason . . . .188
The judiciary, however, did not stray far from the
English no-property rule; almost no early American courts
seemed willing to view a corpse as property “in the common
commercial sense of that term.”189 Instead, the courts came up
with the concept of “quasi-property,” which gave the next of kin
the right to “possession of a dead body for the purposes of
decent burial.”190
C.
The Quasi-Property Right Is an In Rem Property Interest
The quasi-property right was not created in a vacuum.
It is not a static concept but has evolved in response to
“changed conditions of society” and scientific advances.191 The
first incarnation, from the mid- to late-nineteenth century,
arose from exhumations and internecine familial disputes over
the burial locus.192 Ecclesiastical jurisdiction having been
discarded, the courts placed a duty upon the next of kin to
ensure that decedents were properly and timely buried. The
courts, therefore, conferred a corresponding legal right upon
the survivors in order to reinforce this obligation and protect
188
Appel Blue, supra note 164, at 106.
Larson, 50 N.W. at 239-40.
190
Id. at 238-39 (holding that a widow “had the legal right to the custody of
[her husband’s] body for the purposes of preservation, preparation, and burial” and
could maintain a cause of action for the defendant’s unlawful dissection of the
husband’s cadaver); see also Pierce, 10 R.I. at 242 (holding that although “the body is
not property in the usually recognized sense of the word, [it may be considered] as a
sort of quasi property, to which certain persons may have rights”); but see Bogert, 13
Ind. at 138 (holding that dead bodies belong to the next of kin “as property”).
191
Foley v. Phelps, 37 N.Y.S. 471, 473 (App. Div. 1896) (noting “the obdurate
common-law rule has been very much relaxed, and changed conditions of society, and
the necessity for enforcing that protection which is due to the dead, have induced
courts to re-examine the grounds upon which the common-law rule reposed, and have
led to modifications of its stringency”); see also Brotherton v. Cleveland, 923 F.2d 477,
481 (6th Cir. 1991) (explaining that “[t]he importance of establishing rights in a dead
body has been, and will continue to be, magnified by scientific advancements”).
192
See, e.g., Bogert, 13 Ind. at 135 (concerning illegal interment of a dead body
in a municipal cemetery); In re Donn, 14 N.Y.S. 189, 190-91 (Sup. Ct. 1891); Wynkoop
v. Wynkoop, 42 Pa. 293, 293 (1862) (adjudicating an appeal challenging injunction
barring appellant from relocating decedent’s remains to another cemetery); Pierce, 10
R.I. at 228, 243.
189
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the repose of the dead.193 Absent a legal right and remedy, the
criminal law punished the intermeddler and the civil law taxed
the vandal, but the survivor would be powerless to reinter the
body.194 Thus, in In re Donn,195 the court explained that unless
the next of kin received the right to possess and control “the
body of their deceased relative, it might be left unprotected:
and in case a corpse should be found in the possession of one
who had invaded the grave and disinterred it, they would be
powerless to reclaim it.”196 The courts could adhere to the noproperty rule because a corpse had no pecuniary value at that
time.197 There was simply no other path for a dead body to take
other than directly to the cemetery. Consequently, the courts
saw no calamitous ramifications to labeling a body as a
property of sorts, because it easily settled internecine disputes
among families as to who should control death.198 The courts
granted an in rem interest which they enforced through
equitable remedies like injunctions.199
The late-nineteenth century, however, saw an
“outpouring” of New York cases litigating rights to cadavers as
a result of modern conditions and scientific innovation.200 First,
the transformation of kinship and “loosened family ties” led to
contests over control of the decedent’s remains, often between a
man’s widow and his children.201 Second, cremation gradually
became a preferred alternative to interment and the next of kin
brought suits against the deceased’s testator challenging such
a disposition of the body.202 Finally, the demand for human
cadavers for medical research led enterprising individuals to
193
See In re Donn, 14 N.Y.S. at 190.
See In re Widening of Beekman St., 4 Brad. Sur. 503, 522, 530 (N.Y. 1857).
195
In re Donn, 14 N.Y.S. at 189.
196
Id. at 190.
197
In re Beekman St., 4 Brad. Sur. at 529 (“[M]uch of the apparent difficulty of
this subject arises from a false and needless assumption, in holding that nothing is
property that has not a pecuniary value. The real question is not of the disposable,
marketable value of a corpse, or its remains, as an article of traffic, but it is of the
sacred and inherent right to its custody, in order to decently bury it, and secure its
undisturbed repose.”).
198
See, e.g., Weld v. Walker, 130 Mass. 422 (1881); Wynkoop v. Wynkoop, 42
Pa. 293 (1862); Pierce v. Proprietors of Swan Point Cemetery, 10 R.I. 227 (1872);
Secord v. Secor, 18 Abb. N. Cas. 78 (N.Y. Sup. Ct. 1870).
199
See, e.g., Weld, 130 Mass. at 423; Wynkoop, 42 Pa. at 302-03 (reversing
lower court’s injunction ordering removal of the deceased’s body); Pierce, 10 R.I. at 24243; Secord, 18 Abb. N. Cas. at 78, 81.
200
In re Johnson’s Estate, 7 N.Y.S.2d 81, 85 (Sur. Ct. 1938).
201
Id.; see also Secord, 18 Abb. N. Cas. at 78.
202
In re Johnson’s Estate, 7 N.Y.S.2d at 86.
194
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257
engage in the lucrative trade of body snatching.203 In response
to the cadaver trade, states enacted “anatomy laws” permitting
medical institutions to dissect certain unclaimed bodies, thus
mollifying the stringent “common law right to immediate burial
intact” and relieving the public duty to effectuate a decent
burial for all deceased persons.204 As “cases involving
unauthorized mutilations” continued to increase, “courts began
to recognize an exclusive right of the next of kin to possess and
control the disposition of the bodies of their dead relatives, the
violation of which was actionable at law.”205
In this context, the seminal case of Larson v. Chase
delineated the quasi-property right quite broadly.206 There, a
widow brought a civil action for emotional distress resulting
from the defendant’s illegal dissection of her husband’s body,
alleging interference with her exclusive right to control the
body.207 The defendant argued that the suit failed to state a
claim, since a dead body is not property and mental damages
could not be sustained without a showing of “actual tangible
injury to person or property.”208 The court reasoned that a
person’s right to possession of a corpse “leads necessarily to the
conclusion that it is his property in the broadest and most
general sense of that term, viz., something over which the law
accords him exclusive control.”209 Therefore, despite the fact
that the widow could not claim damages for pecuniary loss
resulting from the dissection itself, the court permitted
compensation for mental suffering because it was a “direct,
proximate, and natural result” of an interference with the
widow’s exclusive right to possession.210
Likewise, in Foley v. Phelps, the New York Appellate
Division held that a widow could maintain a civil cause of
action for the unauthorized dissection of her husband’s body.211
The court wrote that “changed conditions of society, and the
necessity for enforcing that protection which is due to the dead”
requires New York courts to reconsider the “obdurate” common
203
See Nelkin & Andrews, supra note 38, at 263; Wilding Knope, supra note
180, at 177-78.
204
Krauskopf, supra note 162, at 459-60; Nelkin & Andrews, supra note 38, at 263.
205
Newman v. Sathyavaglswaran, 287 F.3d 786, 791-92 (9th Cir. 2002).
206
Larson v. Chase, 50 N.W. 238, 239-40 (Minn. 1891).
207
Id. at 238.
208
Id.
209
Id. at 239 (emphasis added).
210
Id. at 239-40.
211
Foley v. Phelps, 37 N.Y.S. 471, 474 (App. Div. 1896).
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law rule that there was no property interest in a dead body.212
While the court stopped short of grounding its decision in a full
property right, it wrote:
Irrespective of any claim of property, the right which inhered in the
plaintiff, as . . . [the] nearest relative, was a right to the possession of
the body for the purpose of burying it . . . . That right of possession is
a clear legal right . . . . The right is to the possession of the corpse in
the same condition it was in when death supervened . . . . If this
right exists, as we think it clearly does, the invasion or violation of it
furnishes a ground for civil action for damages. It is not a mere idle
utterance, but a substantial legal principle, that wherever a real
right is violated a real remedy is afforded by the law.213
Though the widow had a clear legal right to possess the
body, there did not appear to be a remedy. Under the common
law, someone who had a right to immediate possession of an
item could seek redress of any number of theories, including
replevin214 and conversion.215 But since the quasi-property right
was something less than full property, these remedies were
inapplicable. Instead of finding an in rem right in the next of
kin, the court ostensibly found an in personam right sounding
in tort law, allowing the widow to recover damages from the
defendant for “mental suffering.”216 It is understandable that
the court would come out this way. Besides the moral
implications of labeling a body as property, it would be almost
impossible for the courts to calculate damages for illegal
dissections or autopsies since bodies had no readily identifiable
value. If the widow here could not collect damages for
emotional injury, she would, in effect, have no real remedy for
violation of her right to possess her husband’s body.
Larson and Foley are among the first in a long line of
decisions upholding damages for what has come to be known as
intentional infliction of emotional distress (IIED), based on an
212
Id. at 473.
Id. at 473-74.
214
See 23 N.Y. JUR. 2D Conversion § 90 (2011) (summarizing that an action in
replevin “is to provide a lawful remedy for one who is lawfully entitled to the
possession of a chattel that is in the custody of another and who cannot simply take
possession if, in so doing, a breach of the public peace will ensue”).
215
See Colavito v. N.Y. Organ Donor Network, Inc., 8 N.Y.3d 43, 49-50 (2006)
(“A conversion takes place when someone, intentionally and without authority,
assumes or exercises control over personal property belonging to someone else,
interfering with that person’s right of possession.” (citation omitted)).
216
Foley, 37 N.Y.S. at 474 (analogizing the quasi-property right to the right to
vote as “merely a personal right”).
213
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“ONLY DUST REMAINS?”
259
underlying quasi-property right to dead bodies.217 The quasiproperty right subsequently sounded predominantly in tort
law, as opposed to actions like replevin or conversion for
interference with a possessory right.218 As such, the policy
undergirding the quasi-property right came to be understood as
merely protecting the emotional sensibilities of the decedent’s
family.219 Accordingly, this right has garnered considerable
criticism. One commentator notes that this “dubious ‘property
right’ . . . cannot be conveyed, can be used only for the one
purpose of burial, and not only has no pecuniary value but is a
source of liability for funeral expenses.”220 Another critic
contends that the purported property interest is a “legal fiction
to fashion a remedy” for sympathetic plaintiffs.221
Contrary to the scholarly criticism, the availability of
emotional damages actually demonstrates how robust the
quasi-property right is and the extent to which courts “have
been jealous to protect and enforce” it.222 IIED damages became
predominant in quasi-property suits not because the right is
spurious or merely a “convenient hook upon which liability is
hung,”223 but rather because the “property” at issue was a dead
body. For moral and practical reasons, a corpse had no legal
217
See, e.g., Darcy v. Presbyterian Hosp., 95 N.E. 695, 696 (N.Y. 1911)
(concluding that Larson “fully meets [the New York Court of Appeals’] approval”);
Foley, 37 N.Y.S. at 474; Wilding Knope, supra note 180, at 177 (describing how the
quasi-property right came to embrace “the right to refuse an autopsy, the right to
prevent the removal of body parts, and the right to recover damages for any outrage,
indignity, or injury to the body of the deceased” (quoting Philippe Ducor, The Legal
Status of Human Materials, 44 DRAKE L. REV. 195, 229 (1996))).
218
Cf. Michelle Bourianoff Bray, Personalizing Personalty: Toward a Property
Right in Human Bodies, 69 TEX. L. REV. 209, 228 (1990) (arguing that “American
courts have evolved from protecting the family’s interest in the corpse through property
law to contending that there is no property in a corpse and instead protecting the
family’s interest through tort law, a position functionally similar to that taken by
English courts”).
219
See Hernández, supra note 183, at 991-94.
220
Id. at 994 (quoting WILLIAM PROSSER, THE LAW OF TORTS 44 (2d ed. 1955)).
221
NWABUEZE, supra note 183, at 59 (“The concept of quasi-property is an
ingenious invention by the US courts to help a deserving plaintiff. It is a legal fiction. It
has no relationship with property in the ordinary sense of that word. The concept of
quasi-property is a judicial contrivance that provides a legal basis for judicial remedy.
It does not mean that a plaintiff has property interest in a corpse in the traditional
sense of property right.” (footnotes omitted)); see also Ga. Lions Eye Bank, Inc. v.
Lavant, 335 S.E.2d 127, 128 (Ga. 1985) (“It seems reasonably obvious that such
property is something evolved out of thin air to meet the occasion, and that in reality
the personal feelings of the survivors are being protected, under a fiction likely to
deceive no one but a lawyer.” (internal quotation marks omitted)).
222
Danahy v. Kellogg, 126 N.Y.S. 444, 448 (Sup. Ct. 1910).
223
Carney v. Knollwood Cemetery Ass’n, 514 N.E.2d 430, 434 (Ohio App.
1986) (internal quotation marks omitted).
260
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market value.224 Accordingly, the courts were incapable of
quantifying damages in the usual manner for violations like
illegal dissections. In the quasi-property context, therefore,
IIED constituted a surrogate theory whereby the courts
supplanted more traditional claims for interference with a
possessory right.
As noted earlier, from the earliest inception of the
quasi-property right in the American common law, courts
adhered to the rule that “there is no right of property in a dead
body.”225 The next of kin had an exclusive right to possess the
body, but only for a singular purpose: burial. As a result, the
right occupied an anomalous position between an in rem and an
in personam entitlement.226 This was possibly a curious
consequence of the common law system. As one scholar seems to
suggest, “Whereas the civil law defines property as the aggregate
of these expectations, the common law focuses on the separate
legal interests. Under the common law, there is no requirement
that an interest satisfy all of these expectations before it qualifies
as property.”227 In other words, because American courts only
needed to focus on the right to possession in contests over burial
of dead bodies, they could happily ignore the inconsistency
between granting a right to exclude while simultaneously
proclaiming that dead bodies were not property.228
Several authors have argued that via the quasi-property
right, the next of kin hold “the most essential sticks in the
bundle,” including the right to immediate possession, to
determine disposition, and to seek redress.229 Although some
224
See NWABUEZE, supra note 183, at 59.
Danahy, 126 N.Y.S. at 447.
226
Compare Larson v. Chase, 50 N.W. 238, 239 (Minn. 1891) (finding that the
right to immediate possession for burial is “property in the broadest and most general
sense of that term, viz., something over which the law accords [to the next of kin]
exclusive control”), with Foley v. Phelps, 37 N.Y.S. 471, 474 (App. Div. 1896)
(analogizing the right to possession of a corpse with the right to vote, which “can in no
sense be called a pure right of property . . . [but] is merely a personal right”).
227
Hardiman, supra note 175, at 218-19.
228
See Wilding Knope, supra note 180, at 176 (describing how American
courts “circumvented the no-property rule by declaring that a decedent’s relatives did
have an interest in the body for burial and interment purposes”).
229
Mary L. Clark, Keep Your Hands Off My (Dead) Body: A Critique of the
Ways in Which the State Disrupts the Personhood Interests of the Deceased and His or
Her Kin in Disposing of the Dead and Assigning Identity in Death, 58 RUTGERS L. REV.
45, 89 (2005); cf. Jaffe, supra note 176, at 553; but see Brian Morris, Note, You’ve Got to
be Kidneying Me!: The Fatal Problem of Severing Rights and Remedies from the Body of
Organ Donation Law, 74 BROOK. L. REV. 543, 547 (2009) (arguing that the quasiproperty right constitutes “nothing more than a right and corresponding duty to bury
or dispose of a body”).
225
2012]
“ONLY DUST REMAINS?”
261
twigs are missing, most notably the right to sell or commercially
exploit a dead body, the quasi-property right “include[s] more
twigs than some interests which have received protection.”230
Therefore, quasi-property should be considered an in rem
entitlement and afforded the strongest legal protections.
D.
The New York Quasi-Property Right
Whichever court has jurisdiction to entertain a lawsuit
over the WTC victims’ remains,231 substantive New York law
will govern whether the families of those WTC victims have a
right to claim the unidentified remains.232 As the following
subsections illustrate, under existing case law, the quasiproperty right also attaches to body parts, cremated remains,
and even the identified remains of WTC victims.
1. The Quasi-Property Right Applies to Constituent
Parts of Dead Bodies
In Shipley,233 the court had to decide whether the
plaintiffs could validly claim a quasi-property right to their
son’s excised brain.234 After OCME completed its autopsy, it
released the body to the plaintiffs without informing them that
the brain had been removed and stored in the examiner’s
office.235 The plaintiffs discovered what happened after they had
already buried the body.236
The court held that OCME violated the plaintiffs’ quasiproperty right to exclusive and complete possession of their
son’s body.237 Shipley therefore stands for the proposition that
the quasi-property right embraces claims to constituent body
parts removed from a corpse. The WTC victims’ unidentified
230
Jaffe, supra note 176, at 553.
The Air Transportation Safety and System Stabilization Act of 2001 grants
S.D.N.Y. “original and exclusive jurisdiction over all actions brought for any claim
(including any claim for loss of property, personal injury, or death) resulting from or
relating to the terrorist-related aircraft crashes of September 11, 2001.” Pub. L. No.
107-42, 115 Stat. 230, 241 (2001).
232
See Memphis Light, Gas & Water Div. v. Craft, 436 U.S. 1, 9 (1978)
(explaining that “the underlying substantive interest is created by an independent
source such as state law” (internal quotation marks omitted)).
233
See supra Part II.A.
234
Shipley v. City of New York, 908 N.Y.S.2d 425, 427 (App. Div. 2010).
235
Id.
236
Id. at 427-28.
237
Id. at 427, 430-32. See supra notes 85-94 and accompanying text for a
review of the court’s analysis.
231
262
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remains are likewise components separated from a human
body. But are fragmented pieces of bone and tissue analogous
to an intact organ like a brain? Shipley moves a step in the
right direction to support quasi-property claims to the WTC
remains but requires further support.
2. The Quasi-Property Right Applies to Cremated
Remains
In the few New York cases where plaintiffs claimed a
right to their relatives’ cremated remains, they succeeded.238
For instance, in Schmidt v. Schmidt, the court held that a
widow was entitled to her husband’s ashes pursuant to her
quasi-property right.239 The court directed her brother-in-law—
who had possession of the ashes—to return the remains and
awarded damages for emotional distress.240
Booth v. Huff also involved a suit over the right to
dispose of cremated human remains.241 After the decedent’s
wife, who was seeking a divorce at the time of her husband’s
death, scattered his ashes in the Hudson River, his daughters
sought damages for mental distress.242 They claimed to be the
decedent’s lawful next of kin and that defendant interfered
with their quasi-property right to bury the remains by
“refusing to turn over the remains and disposing of them
without notifying plaintiffs.”243 Although the immediate issue
confronting the appellate court involved procedural questions,
the court assumed that the quasi-property right inhered to the
decedent’s cremated remains so that it did not have to
determine who was legally entitled to them.244
3. The Quasi-Property Right Applies to the Identified
Partial Remains of the WTC Victims
One New York court has already ruled that quasiproperty rights attach to the identified remains of a WTC
238
See infra notes 239-43.
267 N.Y.S.2d 645, 646-47 (Sup. Ct. 1966) (citing Gostkowski v. Roman
Catholic Church of Sacred Hearts of Jesus & Mary, 262 N.Y. 320 (1933), and Lubin v.
Sydenham Hosp., 26 N.Y.S.2d 18 (App. Div. 1941)).
240
Id.
241
708 N.Y.S.2d 757, 758 (App. Div. 2000).
242
Id.
243
Id. at 759.
244
Id. at 759 n.3.
239
2012]
“ONLY DUST REMAINS?”
263
victim.245 Caseres v. Ferrer concerned the right to receive partial
remains of Michael Trinidad, who died in the towers on 9/11.246
Partial remains of his body were recovered and identified by
OCME through DNA testing.247 Trinidad’s sister had petitioned
the lower court for an order releasing the remains from OCME
for burial.248 Meanwhile, the decedent’s ex-wife also claimed his
remains.249
The Appellate Division affirmed the lower court’s ruling
that the remains should be released to the decedent’s sister.250
Because the decedent died intestate, “the only people who have
standing to seek possession of the remains for preservation and
burial are his surviving next of kin.”251 Therefore, the ex-wife
had no standing.252 Under the Rules of the City of New York,
Title 24, section 205.01,253 the sister “was the next of kin
qualified to receive his remains and to give instructions
regarding the burial.”254 Thus, once OCME has affirmatively
identified by DNA testing the partial remains of a WTC victim,
the quasi-property right attaches and the statutorily defined
next of kin are entitled to possession of the remains.
IV.
NEW YORK CITY SHOULD MODIFY SECTION 557 TO
REQUIRE MANDATORY CONSULTATION WITH THE NEXT
OF KIN CONCERNING THE DISPOSITION OF CLAIMED BUT
UNIDENTIFIED HUMAN REMAINS
As evidenced by Part II, the law governing the
disposition of unidentified human remains lacks clarity. While
Hirsch ruled that the next of kin could collectively determine
the remains’ disposition, provided that all directly participate
in the process,255 WTC Families concluded that unless remains
are identifiable, the next of kin have no proprietary interest in
them.256 Both cases stressed the lack of legislative or judicial
245
See Caseres v. Ferrer, 774 N.Y.S.2d 372, 373 (App. Div. 2004).
Id.
247
Id. at 372-73.
248
Id. at 372.
249
Id. at 373.
250
Id.
251
Id. at 372-73 (internal quotation marks omitted).
252
Id. at 373.
253
See supra notes 74 and 81 and accompanying text.
254
Caseres, 774 N.Y.S.2d at 373. The sister qualified as next of kin because
decedent never remarried, his children were under eighteen and his parents were not
alive. Id.
255
See supra text accompanying notes 113-16.
256
See supra text accompanying notes 156-57.
246
264
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guidance on the issue.257 Moreover, although the text of Section
557 literally grants OCME authority to dispose of unidentified
remains, the New York City Council rubber-stamped this
language without considering, or even contemplating, whether
that authority should apply in situations where unidentified
remains have been claimed by the next of kin.258 The dispute
over the Memorial repository reveals the dangers of this lack of
clarity and guidance.
A.
The Memorial Dispute Revisited
Both sides of the divide in the Memorial dispute agree
that the families should have the last word over how to
determine the final disposition of the WTC victims’ unidentified
remains. Advocates of the repository plan argue that this has, in
fact, already happened.259 The decision to return the remains to
the WTC site, according to Memorial director Alice M.
Greenwald, was “a direct result of an extensive consultative
process led by [LMDC] . . . .”260 In 2002, LMDC invited the
leaders of various 9/11 family advocacy groups to join its Family
Advisory Council (FAC). FAC ratified the “idea of a repository”
in the summer of 2002.261 Because LMDC selected
representatives from the family advocacy groups to speak for all
the families in a “republican manner,” a former member
maintains, FAC represented the majority will.262
In contrast, the gravamen of the Regenhard lawsuit is
that the families were not adequately consulted in decisions
concerning the WTC remains.263 The dissenting families contend
that they were not represented in the LMDC-led process.
Instead, the families propose that a “democratic” process
should prevail, in which a decision is fashioned in “consultation
257
See supra text accompanying notes 119, 155.
See supra notes 126-30 and accompanying text.
259
See Patricia Cohen, Laying Unidentified Remains to Rest, in A Context for
Terror, N.Y. TIMES (June 6, 2012), http://www.nytimes.com/interactive/2012/
06/04/arts/design/museum-panel.html (quoting Charles G. Wolf, a member of the FAC
whose wife died at the WTC); Hartocollis, supra note 22 (quoting a spokesperson for
Mayor Michael R. Bloomberg, who stated that the repository plan “was driven by 9/11
family members and the Family Advisory Council”); Hartocollis, supra note 65
(reporting that Memorial “officials have said that the families were adequately
consulted and that they believe the [repository] plan reflects the wishes of the
majority”).
260
Colwell-Chanthaphonh & Greenwald, supra note 41, at 5.
261
See SUMMARY OF OUTREACH, supra note 19.
262
Cohen, supra note 259.
263
See Hartocollis, supra note 9.
258
2012]
“ONLY DUST REMAINS?”
265
with all of the 2,753 families whose loved ones perished on
9/11.”264 To that end, they assert that the City should begin by
“writing a letter to all of the victims’ families on this issue,
holding a series of forums exclusively for them and inviting
them to take a principal role in the decision.”265 Any final
disposition, they argue, should represent the will of the
majority of families.266
Although these seventeen dissenting families may
ultimately represent the minority view with respect to the
repository plan, their lawsuit raises serious concerns about the
legality, and thus the legitimacy, of that process. Even
assuming that the outreach efforts undertaken by LMDC were
adequate and the repository plan did, in fact, represent what
most family members wanted,267 it is still unclear where LMDC
derived the authority to initiate and lead this process. LMDC is
a “joint State-City corporation” created after 9/11 to “help plan
and coordinate the rebuilding and revitalization of Lower
Manhattan,” including the Memorial.268 It is a subsidiary of
New York State Urban Development Corporation (doing
business as Empire State Development), the state’s “lead
economic development agency” whose mandate is to “provide
the highest level of assistance and service to businesses in
order to encourage economic investment and prosperity . . . .”269
Thus, a subsidiary of a corporate governmental agency charged
with assisting business development in Lower Manhattan
appointed members to a committee purportedly representing
all 2753 victims’ families; the families then ratified the
agency’s decision to relocate the remains to the Memorial, and
all the while the only on-the-books law mentioning anything
about unidentified remains unequivocally granted power to
remove, transport, or dispose of them to OCME.
It should not be surprising that, absent legislative
guidance, such extra-legal measures were taken. This dispute,
264
Cohen, supra note 259.
Id.
266
Id.
267
Such an assumption is far from ironclad. A reasonable observer could
interpret LMDC’s summary of outreach to the families as merely providing notice of a
plan LMDC and FAC had already decided to pursue. See SUMMARY OF OUTREACH,
supra note 19.
268
About Us, LMDC, http://www.renewnyc.com/overlay/AboutUs/ (last visited
Oct. 10, 2012).
269
About
Us:
Empire
State
Development
Corporation,
LMDC,
http://www.renewnyc.com/AboutUs/empire_state_development_corporation.asp
(last
visited Oct. 19, 2012).
265
266
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therefore, should be seen as a clarion call to legislators to
clarify the law governing the disposition of human remains. In
the following section, this note suggests one possible solution to
the problem of unidentified human remains, borrowed from the
repatriation of Native American remains under the Native
American Graves Protection and Repatriation Act (NAGPRA).270
B.
An Apt Analogy: NAGPRA Mandates Consultation in
the Case of Culturally Unidentifiable Human Remains
As discussed earlier, the law as it currently exists
relegates unidentified remains to a state of legal limbo in
situations where next of kin claim commingled and
unidentified remains.271 This note recommends that, at a
minimum, the New York City Council revisit Section 557 to
consider whether it really intended to grant OCME such
blanket authority over unidentified human remains. The
Council would then have three choices. First, it could simply
decide that OCME should have absolute authority over
unidentified remains and may dispose of them at its discretion.
Second, the Council could modify Section 557 to require that
OCME retain possession of unidentified remains indefinitely
until advances in DNA testing allow for identification and
repatriation. Finally, it could amend Section 557 to provide a
mechanism by which the next of kin determine, to the fullest
extent practicable, the disposition of unidentified remains.
This note argues that the third option represents the
best possible outcome. Though DNA identification represents a
logical, bright-line threshold before the quasi-property right
will obtain, it seems unjust for a government agency—and not
the families—to determine the victims’ “final and most
enduring state.”272 Indeed, the establishment of the quasiproperty right—though it is inapplicable here—was as much
about the needs of the next of kin as it was about according
dignity to the decedent: it assists the survivors “in coming to
terms with the loss and their grief, particularly where the
death was unexpected.”273 Consequently, lawmakers should
270
25 U.S.C. §§ 3001-3013 (2006).
See supra Part II.
272
Clark, supra note 229, at 89.
273
Hernandez, supra note 183, at 991-92; Secord v. Secor, 18 Abb. N. Cas. 78
(N.Y. Sup. Ct. 1870) (finding “cogent reasons connected with public policy and the
peace of families why . . . the possession of a corpse and right to determine its burial
271
2012]
“ONLY DUST REMAINS?”
267
contemplate new standards and procedures for the disposition
of claimed but unidentifiable human remains. In devising this
new legal framework, the Council should look to the
repatriation of unidentified human remains under NAGPRA as
a paradigm.
Congress enacted NAGPRA274 in 1990 to “remedy
inadequacies in state law dealing with the protection of Native
American remains and cultural objects.”275 Among various
provisions, the statute and its accompanying regulations
establish rules and procedures requiring and administering the
return of culturally identifiable276 human remains possessed by
museums or federal agencies to the appropriate Native
American tribe.277 By passing this human-rights legislation,
Congress was “concerned with treating Indian remains with
dignity and allowing tribes possessory rights over human
remains . . . associated with their tribes.”278 Implicit in
NAGPRA is the idea that Native American descendants
possess quasi-property rights in their ancestors’ remains.279
Additionally, in circumstances where the cultural
affiliation of human remains cannot be positively determined
by the agency or museum, NAGPRA nevertheless mandates
their return if a claimant is able to demonstrate cultural
affiliation by a preponderance of the evidence.280 The standard
is not one of “scientific certainty”; rather, NAGPRA only
requires a “reasonable connection” based on the evidence
should follow the administration of the estate[] [including] proper respect to the dead, a
regard for the sensibilities of the living, and the due preservation of the public health”).
274
25 U.S.C. §§ 3001-3013.
275
Aaron H. Midler, Note, The Spirit of NAGPRA: The Native American
Graves Protection and Repatriation Act and the Regulation of Culturally Unidentifiable
Remains, 86 CHI.-KENT L. REV. 1331, 1340 (2011).
276
Under NAGPRA, “cultural affiliation is the repatriation standard for
human remains housed in institutional collections.” Id. at 1342. Cultural affiliation is
defined as “a relationship of shared group identity that can be reasonably traced
historically or prehistorically between members of a present-day Indian tribe or Native
Hawaiian organization and an identifiable earlier group.” 25 U.S.C. § 3001(2). Federal
agencies and museums that have determined a cultural affiliation between the remains
and a lineal descendent, Indian tribe, or Native Hawaiian organization are required to
return the remains upon request. 43 C.F.R. § 10.10 (2005).
277
See Jack F. Trope & Walter R. Echo-Hawk, The Native American Graves
Protection and Repatriation Act Background and Legislative History, 24 ARIZ. ST. L.J.
35, 58-59 (1992).
278
Kimberly Self, Note, Self-Interested: Protecting the Cultural and Religious
Privacy of Native Americans Through the Promotion of Property Rights in Biological
Materials, 35 AM. INDIAN L. REV. 729, 752 (2011).
279
Id.
280
43 C.F.R. § 10.10(b)(1)(ii)(B).
268
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proffered by a claimant.281 NAGPRA as initially promulgated,
however, left a glaring regulatory hole. It failed to address the
disposition of culturally unidentifiable human remains in cases
where a claimant was unable to meet the preponderance of the
evidence standard.282 In 2010, however, the U.S. Department of
the Interior added new regulations to “clarify NAGPRA’s
procedures in situations involving culturally unidentifiable
human remains.”283 Prior to these amendments, NAGPRA
permitted institutions to retain culturally unidentifiable
human remains indefinitely.284 Now, however, institutions are
required to take measures to repatriate these remains.
The crux of the new regulations lies in 43 C.F.R.
§ 10.11.285 First, subdivision (c) places an affirmative duty upon
any museum or federal agency that cannot prove a right of
possession286 to culturally unidentifiable human remains to offer
to return the remains to the appropriate tribe or organization, in
the order of priority delineated in the regulation.287 Second,
subdivision (b) triggers a duty on the part of these institutions to
“initiate consultation regarding the disposition of culturally
unidentifiable remains” with tribes from whose tribal or
aboriginal lands the remains had been recovered.288 Consultation
is required after an institution receives a repatriation claim and
before it offers to transfer control of the human remains.289 The
aim of consultation is for the institution “to develop a proposed
281
Midler, supra note 275, at 1343.
See id.; Zoe E. Niesel, Comment, Better Late than Never? The Effect of the
Native American Graves Protection and Repatriation Act’s 2010 Regulations, 46 WAKE
FOREST L. REV. 837, 839 (2011).
283
Niesel, supra note 282, at 839.
284
Midler, supra note 275, at 1331.
285
43 C.F.R. § 10.11. Section 10.11 “applies to human remains previously
determined to be Native American . . . but for which no lineal descendent or culturally
affiliated Indian tribe or Native Hawaiian organization has been identified.” Id. § 10.11(a).
286
To prove right of possession, the agency or museum must demonstrate that
it obtained the human remains “with the voluntary consent of an individual or group
that had authority of alienation.” Id. § 10.10(a)(2). Seeking to strike a balance between
repatriation claims and the scientific community’s interest in studying ancient human
remains, see Midler, supra note 275, at 1331, NAGPRA also contains a “scientific
study” exception, which allows an institution in possession of culturally affiliated
human remains to suspend the repatriation process if “such items are indispensable for
completion of a scientific study, the outcome of which would be of major benefit to the
United States.” 25 U.S.C. § 3005(b) (2006); 43 C.F.R. § 10.10(c)(1). Once the study is
completed, the institution must repatriate the remains within ninety days. 25 U.S.C.
§ 3005(b); 43 C.F.R. § 10.10(c)(1).
287
43 C.F.R. § 10.11(c).
288
Id. § 10.11(b)(1).
289
Id.
282
2012]
“ONLY DUST REMAINS?”
269
disposition for culturally unidentifiable remains . . . that is
mutually agreeable to the parties . . . .”290
By incorporating these two concepts—mandatory
repatriation and consultation—into Section 557 in the case of
claimed but unidentified remains, the Council would
potentially resolve several issues highlighted by the Memorial
case. First, mandatory repatriation would switch the burden,
requiring OCME to demonstrate valid cause to retain the
remains, rather than requiring the next of kin to compel their
release. Thus, it would significantly diminish OCME’s ability to
withhold the remains indefinitely.291 Second, mandatory
consultation would provide a legal mechanism, heretofore
nonexistent, to facilitate collective decisions by the next of kin
about the remains’ final disposition. Admittedly, NAPGRA’s
standard—a disposition “mutually agreeable to the parties”—is
vague. But the Council could find any number of dispositions
sufficient. One possibility is that the majority will of the families
should prevail. Another is for OCME itself to formulate a
disposition based on discussions with the next of kin, subject to
court approval.292 Perhaps even the FAC’s “republican” model293
may be appropriate, which transitions nicely to the final point: a
procedure under the color of law in which all claimants are
entitled to consultation confers legitimacy upon the proposed final
disposition, whatever its form. According to one expert in the field
of repatriation of Native American remains, the “most important
stakeholders are the descendants and the best way to resolve
conflict is through open and respectful dialogue.”294 Indeed, the
dissenting WTC families have stated that they want only an
equal voice in the decision over the remains’ disposition.295 If the
repository plan received the approbation of a majority of families,
they would accept that judgment—but “decisions made by those
without authentic authority should not be binding.”296
290
Id. § 10.11(b)(5).
To demonstrate a right of possession, OCME would have to point to a
legitimate, authorized scientific or investigative duty, akin to NAGPRA’s scientific
study exception. See supra note 286. Since, however, OCME could justify retaining
claimed remains indefinitely by the simple fact that they are unidentified, the Council
should contemplate some kind of “override” provision in which the families’ decision to
end DNA testing would trump OCME’s desire to continue it.
292
A judicial inquiry into whether a disposition is “fair, reasonable and adequate,”
akin to class action settlements, comes to mind. See generally FED. R. CIV. P. 23(e).
293
See supra text accompanying note 262.
294
Cohen, supra note 259.
295
Colwell-Chanthaphonh & Greenwald, supra note 41, at 5.
296
Cohen, supra note 259.
291
270
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CONCLUSION
No one but the Creator knows whose remains are among these
remains and whose is not. Therefore, no one family or group of
families can lay claim to saying, “my son,” “my daughter,” “my
husband,” etc., is among the remains, and no one can have exclusive
say of what should happen with them. This is why these remains are
still in the custody of [OCME].297
This note set out to discover who is legally empowered to
control the disposition of claimed but yet-to-be-identified human
remains in the context of the legal battle over New York City’s
plan to transfer the WTC victims’ remains to the National
September 11 Memorial and Museum. Under the complex web of
existing New York laws, these remains float in a state of legal
limbo. While the quasi-property right to possession of a
decedent’s body is robust, strong enough even to entitle the next
of kin to an identified fragment of a WTC victim,298 the Memorial
case has circumscribed the boundary of that right: DNA
identification.299 So until OCME identifies the remains, the
victims’ families have no legal basis to control or dispose of
them. Meanwhile, pursuant to a hastily enacted amendment to
the New York City Charter, OCME may dispose of unidentified
remains even if the next of kin have submitted claims.300
Therefore, this note recommends that the New York
City Council reevaluate Section 557 in order to clarify the
ambiguities and deficiencies in the law governing unidentified
human remains. In doing so, the Council should devise a
means for the next of kin, rather than OCME or the City, to
determine the remains’ final disposition. These changes should
be modeled upon the mandatory repatriation and consultation
provisions in NAGPRA.
Patrick J. Mulqueen†
297
Cohen, supra note 259 (quoting Charles G. Wolf, a member of the FAC
whose wife died at the WTC).
298
See supra Part III.D.3.
299
See supra Part III.
300
See supra Part II.A.
†
J.D. Candidate, Brooklyn Law School, 2013; B.A., University of
Pennsylvania, 2006. To the editors and staff of the Brooklyn Law Review, I am grateful
for your patience and hard work. To my mother Karen, I thank you for your
unconditional love, support, and encouragement. Everything I am or ever hope to be, I
owe to you.
Combating Inaccuracies in Criminal
Background Checks by Giving Meaning
to the Fair Credit Reporting Act
INTRODUCTION
In today’s workplace, employers are either highly
incentivized or legally mandated to ensure that they have
knowledge of an employee’s criminal record. As a result, an
overwhelming majority of employers now require criminal
background checks as a condition of employment,1 and millions
of these checks are performed each year.2 Such checks are
especially prevalent in the midst of today’s gripping recession,
1
A 2010 survey by the Society for Human Resource Management found that
73 percent of employers conduct criminal background checks on all job candidates,
while an additional 19 percent conduct criminal background checks on select job
candidates. SOC’Y FOR HUMAN RES. MGMT., BACKGROUND CHECKING: CONDUCTING
CRIMINAL BACKGROUND CHECKS (Jan. 22, 2010), available at http://www.shrm.org/
Research/SurveyFindings/Articles/Pages/BackgroundCheckCriminalChecks.aspx. When
asked for their primary reasons for conducting criminal background checks, respondents
answered as follows: “to ensure a safe work environment for employees” (61 percent);
“to reduce legal liability for negligent hiring” (55 percent); “to reduce/prevent theft and
embezzlement, other criminal activity” (39 percent); “to comply with applicable state
law requiring a background check (e.g. daycare teachers, licensed medical
practitioners, etc.) for a particular position” (20 percent); “to assess the overall
trustworthiness of the job candidate” (12 percent); “other” (4 percent). Id. (noting that
“[p]ercentages do not total to 100% as respondents were allowed multiple choices”).
2
According to a 2008 ABC News investigation, “There has been a surge in
interest in criminal background checks in the last 15 years. Private companies conduct
millions of such checks a year.” Scott Michels, Advocates Complain of Background
Check Errors, ABC NEWS (Oct. 13, 2008), http://abcnews.go.com/TheLaw/
story?id=6017227&page=1. “[E]mployers are relying increasingly on privately
maintained criminal history records.” Michael H. Jagunic, Comment, The Unified
“Sealed” Theory: Updating Ohio’s Record-Sealing Statute for the Twenty-First Century,
59 CLEV. ST. L. REV. 161, 170 (2011). Although “comprehensive, industry-wide data are
not available,” one CRA alone, “ChoicePoint[,] reported that it conducted
approximately 3.3 million background investigations during 2002, the vast majority of
which included a criminal justice information component.” SEARCH: NAT’L
CONSORTIUM FOR JUSTICE INFO. & STATISTICS, REPORT OF THE NATIONAL TASK FORCE
ON THE COMMERCIAL SALE OF CRIMINAL JUSTICE INFORMATION 7 (2005), available at
http://search.org/files/pdf/rntfcscjri.pdf [hereinafter SEARCH].
271
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which has truly “transformed the employment application
process into a survival of the fittest.”3
In general, information relating to arrests, convictions,
and other court proceedings is a matter of public record.4
Rather than search these records themselves, employers solicit
consumer reporting agencies (CRAs)5 to provide them with
consumer reports about potential employees, containing,
among other things, information about criminal records.6
Employers ultimately base their hiring decisions in part on the
information contained in these consumer reports.7 Not
3
Roberto Concepción, Jr., Pre-Employment Credit Checks: Effectuating
Disparate Impact on Racial Minorities Under the Guise of Job-Relatedness and
Business Necessity, 12 SCHOLAR 523, 524 (2010).
4
In the seminal case on this matter, Paul v. Davis, the Supreme Court
denied a claim alleging that publicizing an arrest record was a violation of
constitutional privacy rights. 424 U.S. 693, 713 (1976). The Court definitively stated
that the petitioner’s case was based “on a claim that the State may not publicize a
record of an official act such as an arrest. None of our substantive privacy decisions
hold this or anything like this, and we decline to enlarge them in this manner,” thereby
closing the door on any future proceedings attempting to extend constitutional privacy
protection to criminal records. Id.; see generally Eric J. Mitnick, Procedural Due Process
and Reputational Harm: Liberty as Self-Invention, 43 U.C. DAVIS L. REV. 79 (2009)
(providing an overview and critique of the persistence of Paul v. Davis and its progeny).
5
Under the FCRA,
[t]he term “consumer reporting agency” means any person which, for monetary
fees, dues, or on a cooperative nonprofit basis, regularly engages in whole or in
part in the practice of assembling or evaluating consumer credit information or
other information on consumers for the purpose of furnishing consumer reports
to third parties, and which uses any means or facility of interstate commerce for
the purpose of preparing or furnishing consumer reports.
15 U.S.C. § 1681a(f) (2006). In some of the cases discussed in this note, CRAs are
referred to as credit reporting agencies. For all intents and purposes, these are the
same as consumer reporting agencies. Credit reports and consumer reports are
interchangeable terms as well.
6
Under the FCRA,
[t]he term “consumer report” means any written, oral, or other communication of
any information by a consumer reporting agency bearing on a consumer’s credit
worthiness [creditworthiness], credit standing, credit capacity, character,
general reputation, personal characteristics, or mode of living which is used or
expected to be used or collected in whole or in part for the purpose of serving as a
factor in establishing the consumer’s eligibility for . . . (B) employment
purposes . . . .
Id. § 1681a(d)(1) (footnote omitted). “[C]riminal histories fall under the purview of the
FCRA . . . [b]ecause a criminal history touches on an applicant’s ‘character, general
reputation, or personal characteristics’ . . . .” Christopher M.A. Lujan, Using Criminal
Histories to Make Sound Hiring Decisions, COLO. LAW., Nov. 2008, at 57, 58.
7
However, in making such decisions, employers must be careful not to
violate “Title VII of the Civil Rights Act of 1964 (Title VII) which prohibits employment
discrimination based on race, color, religion, sex, or national origin.” EQUAL EMP’T
OPPORTUNITY COMM’N, EEOC ENFORCEMENT GUIDANCE ON THE CONSIDERATION OF
ARREST AND CONVICTION RECORDS IN EMPLOYMENT DECISIONS UNDER TITLE VII OF
THE CIVIL RIGHTS ACT OF 1964 (2006), available at http://www.eeoc.gov/laws/
2012]
GIVING MEANING TO THE FCRA
273
surprisingly, “research unequivocally demonstrates that having a
criminal record greatly reduces one’s employment opportunities.”8
For this system to have any value, consumer reports
must be accurate and up to date; a flawed consumer report can
have adverse consequences for both the job-seeking
consumer9—who loses a conditional offer of employment—and
the employer—who rescinds an offer from a potentially
valuable and otherwise qualified employee.10 In 1970, Congress
recognized the “vital role”11 that CRAs play in this system and
enacted the Fair Credit Reporting Act (FCRA)12 to regulate the
production and use of consumer reports.13 To accomplish this
goal, the FCRA regulates the information that can be included
guidance/arrest_conviction.cfm [hereinafter EEOC GUIDANCE]; see Title VII, codified at
42 U.S.C. § 2000 et seq. (2006); see also Robb Mandelbaum, U.S. Push on Illegal Bias
Against Hiring Those with Criminal Records, N.Y. TIMES, June 21, 2012, at B8. To
avoid Title VII liability, an employer must be able to show that denial of employment
based on a criminal record was consistent with business necessity; that it considered
three factors: “the nature and gravity of the offense(s), . . . the time that has passed
since the [conviction] and/or completion of the sentence; and [t]he nature of the job held
or sought.” EEOC GUIDANCE, supra. According to the Equal Employment Opportunity
Commission (EEOC), “[a] policy or practice that excludes everyone with a criminal
record from employment will not be job related and consistent with business necessity
[as required by statute] and therefore will violate Title VII, unless it is required by
federal law.” EQUAL EMP’T OPPORTUNITY COMM’N, QUESTIONS AND ANSWERS ABOUT
THE EEOC’S ENFORCEMENT GUIDANCE ON THE CONSIDERATION OF ARREST AND
CONVICTION RECORDS IN EMPLOYMENT DECISIONS UNDER TITLE VII (2006), available at
http://www.eeoc.gov/laws/guidance/qa_arrest_conviction.cfm; see also 42 U.S.C.
§ 2000e-2(k)(1)(A)(i). Even where an employer develops a screening system that
considers these three factors, the EEOC suggests that an individualized assessment of
any excluded applicants will further insulate the employer from Title VII liability.
EEOC GUIDANCE, supra (listing factors that should be considered in an individualized
assessment). Further, the EEOC treats arrests and convictions differently, as “[a]rrests
are not proof of criminal conduct.” Id. Therefore, “an arrest record standing alone may
not be used to deny an employment opportunity, [but] an employer may make an
employment decision based on the conduct underlying the arrest if the conduct makes
the individual unfit for the position in question.” Id.
8
Miriam J. Aukerman, The Somewhat Suspect Class: Towards a
Constitutional Framework for Evaluating Occupational Restrictions Affecting People
with Criminal Records, 7 J.L. SOC’Y 18, 21 (2005).
9
In the context of this note, the consumer will almost always be a
prospective employee. Therefore, this note will use the term employee and consumer
interchangeably.
10
See NAT’L CONSUMER LAW CTR., BROKEN RECORDS: HOW ERRORS BY
CRIMINAL BACKGROUND CHECKING COMPANIES HARM WORKERS AND BUSINESSES 6
(Apr. 2012), available at http://www.nclc.org/images/pdf/pr-reports/broken-recordsreport.pdf [hereinafter NAT’L CONSUMER LAW CTR.]. A consumer report can be flawed
in two ways: it can attribute an erroneous criminal record to an individual or it can
report an individual’s criminal record in a flawed manner. In the latter instance, the
report may contain information relating to an expunged matter or it may fail to state
an ultimate disposition of the matter that was favorable to the consumer.
11
15 U.S.C. § 1681(a)(3) (2006).
12
Id. § 1681 et seq.
13
Id. § 1681(b).
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in consumer reports14 and the users with whom that
information can be shared.15 In the employment context, before
CRAs can prepare a report for an employer, the FCRA also
requires disclosure to consumers and their written consent.16
The FCRA mandates that CRAs employ mechanisms to
ensure compliance with its provisions. In § 1681e(b), the
statute requires that CRAs use “reasonable procedures to
assure maximum possible accuracy” when preparing any
consumer report.17 In the employment context, § 1681k places
heightened compliance requirements on CRAs when consumer
reports are created using public records. When such a report is
“likely to have an adverse effect” on an employment decision,
CRAs must either notify the consumer at the time they send
the report to the employer or “maintain strict procedures
designed to insure that [the information reported] is complete
and up to date.”18
The FCRA creates a private right of action for injured
consumers, intended in part as one means of enforcing the
statute.19 Yet, the FCRA is not a strict liability statute. Instead,
it provides for liability only in cases of negligent or willful
noncompliance.20 Thus, an injured consumer’s only recourse
against a CRA is to bring a cause of action and prove elements
similar to those of a traditional tort claim: that the CRA
engaged in a negligent or willful breach of a duty imposed by
the FCRA, which proximately caused the consumer’s injury.21
However, due to the FCRA’s general lack of guidance
with respect to its requirements, injured consumers and courts
have struggled to impose liability on CRAs for violating the
statute. Forty years of extensive litigation has produced little
clarity as to the types of procedures required for CRA compliance.
14
Id. § 1681c.
Id. § 1681b.
16
Id. § 1681b(b)(2).
17
Id. § 1681e(b).
18
Id. § 1681k(a).
19
Cahlin v. Gen. Motors Acceptance Corp., 936 F.2d 1151, 1156 (11th Cir. 1991).
20
15 U.S.C. §§ 1681n-o. Negligent violation of the statute entitles plaintiffs
to recover actual damages, while willful violation allows for recovery of both statutory
and punitive damages. Id.; see Williams v. LexisNexis Risk Mgmt., No. 3:06-cv-241,
2007 U.S. Dist. LEXIS 62193, at *27-28 (E.D. Va. Aug. 23, 2007) (holding that class
certification could be permissible in a case alleging willful violation, even absent any
claim for actual damages). In Safeco v. Burr, the Supreme Court held that a CRA
willfully violates the FCRA when it acts in reckless disregard of the statutory
requirements. 551 U.S. 47, 52 (2007).
21
Bryant v. TRW, Inc., 487 F. Supp. 1234, 1242 (E.D. Mich. 1980) (noting
that “[t]he standard of conduct by which the agency’s action is to be judged is deeply
rooted in the law of negligence”).
15
2012]
GIVING MEANING TO THE FCRA
275
And although the FCRA, in § 1681k, purports to impose a
heightened standard on CRAs when furnishing criminal
background reports for employment purposes, these problems
still persist. Further, § 1681k contains an enigmatic provision
allowing CRAs to “opt-out” of its heightened standards (by
sending contemporaneous notice to consumers), while providing
no corresponding enhancement of consumer protection.22
Therefore, while private litigation may have been intended as a
way to enforce the FCRA’s goal of ensuring accuracy in the
reporting industry, the reality of engaging in protracted litigation
often presents an insurmountable hurdle for consumers seeking
relief, and, even then, only after they have been injured by
erroneous reports. By amending § 1681k to require that CRAs
provide consumers with a copy of their purported criminal
records before distributing the report to prospective employers,
Congress could solve many of these problems and give meaning
to the heightened requirements of § 1681k.
The rest of this note is divided into five parts. Part I
explores some of the reasons why employers conduct criminal
background checks and identifies some of the dangers that
over-reliance on these reports poses to consumers, especially in
light of documented inaccuracies.23 Part II provides an
introduction to the FCRA, its purpose, and some of its relevant
provisions. Part III analyzes the requirements for proving a
violation of the general compliance procedures contained in
§ 1681e(b), illustrating the current legal framework’s inadequacies
in providing meaningful relief to injured consumers. Part IV
explores the supposed heightened compliance requirements of
§ 1681k and shows how that section fails to meaningfully
22
See infra Part IV.C.
In a report issued in April 2012, the National Consumer Law Center
(NCLC) found that “evidence indicates that professional background screening
companies routinely make mistakes with grave consequences for job seekers.” NAT’L
CONSUMER LAW CTR., supra note 10, at 3. The report documented the many types of
mistakes found in these reports and their causes, and also addressed some of the same
legal issues raised in this note. See generally id. In response to the NCLC report, the
National Association of Professional Background Screeners issued a press release
denouncing the report’s findings and claiming that “[o]f the small number of reports
that are disputed by a consumer, more than 95 percent are ultimately found to be
accurate.” Press Release, Nat’l Ass’n of Prof’l Background Screeners, Background
Screening Industry Denounces NCLC Report (June 19, 2012), available at
http://www.prweb.com/releases/2012/6/prweb9603002.htm. It is not the intention of
this note to join in this empirical debate concerning whether or not inaccuracies are
rampant in the background screening industry. Instead, given that it is undisputed
that some inaccurate criminal background reports are produced, this note focuses on
improving the means of recourse available for consumers injured by such reports and
offers a legislative suggestion to improve accuracy overall.
23
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[Vol. 78:1
enhance consumer protection—in large part because the
FCRA’s ex-post approach provides consumers an opportunity to
identify mistakes in their reports only after the damage has
been done. Finally, Part V suggests that amending § 1681k to
require that reports be provided to consumers before being
supplied to potential employers can ameliorate many of private
litigation’s failures in FCRA enforcement.
I.
CRIMINAL BACKGROUND CHECKS FOR EMPLOYMENT: THE
GOOD, THE BAD, AND THE UNRELIABLE
A.
The Use of Criminal Background Checks Protects Society
and Employers
There are many reasons why employers conduct
criminal background checks of prospective employees, but
those reasons all share a central theme: the recognition that
certain positions have the potential to be used as a means of
inflicting harm—either against the employer or the public.24 In
some instances, employers are mandated to conduct these
checks by a wide range of state and federal laws prohibiting the
employment of people with criminal records in certain fields,
such as the healthcare, financial services, trucking, and
community care facility industries.25
24
Lujan, supra note 6, at 57 (“[I]f there is a high probability that an employee
will interact frequently with the public or handle valuable property, a prudent employer
will obtain a criminal history and analyze the relationship between the criminal conduct
and the position sought before determining if hiring is appropriate.”); see also supra note
1. While this note focuses on CRA responsibilities and liabilities when providing criminal
background in consumer reports, the FCRA also regulates the use of that information by
user-employers. 15 U.S.C. § 1681m. For an in-depth discussion of employer
responsibilities when soliciting criminal background checks from CRAs, see generally
Susan Gardner et al., Does Your Background Checker Put You in Jeopardy?: A Case for
Best Practices and Due Diligence, 11 J. LEGAL ETHICAL & REG. ISSUES 111 (2008).
25
Aukerman, supra note 8, at 23; Gardner et al., supra note 24, at 118;
James Jacobs & Tamara Crepet, The Expanding Scope, Use, and Availability of
Criminal Records, 11 N.Y.U. J. LEGIS. & PUB. POL’Y 177, 177-78 (2008). The
requirement of a license for certain jobs poses problems as well. According to a 2006
report by the New York State Bar Association,
Over 100 occupations in New York State require some type of license,
registration, or certification by a state agency. Although only a few statutes
automatically bar people from licensure solely based on past convictions, New
York places many statutory restrictions based on an individual’s criminal history
through general “good moral character” requirements for almost all licenses. For
example, an individual with a criminal conviction cannot obtain a license to
work as a barber because “a criminal history indicates a lack of good moral
character and trustworthiness required for licensure.”
2012]
GIVING MEANING TO THE FCRA
277
Even where criminal background checks are not
required by law, many employers will demand them as a
condition of employment. Employers tend to view those with
criminal records as untrustworthy or unreliable.26 Additionally,
the state law doctrine of negligent hiring liability provides a
large incentive for employers to insist on conducting criminal
background checks.27 Under this doctrine, “[a]n employer may
be liable for negligently hiring employees when such negligence
results in harm to third parties, even when the harm inflicted
by the employee occurs outside the scope of employment . . . .”28
Thus, “a direct duty running from the employer to those
members of the public whom the employer might reasonably
anticipate would be placed in a position of risk of injury as the
result of the hiring” is imposed.29 An employer can be liable if
he “knew or should have known” of an employee’s propensities
towards criminal acts.30 To avoid potential liability, an
employer’s “safest course of action sometimes appears to be
automatically
disqualifying
applicants
with
criminal
histories . . . .”31 As one writer put it, “many companies [have]
N.Y. STATE BAR ASS’N, RE-ENTRY AND REINTEGRATION: THE ROAD TO PUBLIC SAFETY,
REPORT AND RECOMMENDATIONS OF THE SPECIAL COMMITTEE ON COLLATERAL
CONSEQUENCES
OF
CRIMINAL
PROCEEDINGS
60-61
(2006),
available
at
http://www.nysba.org/AM/Template.cfm?Section=Substantive_Reports&ContentID=1141
5&template=/CM/ContentDisplay.cfm [hereinafter STATE BAR REPORT] (quoting Clyde
Haberman, He Did Time, So He’s Unfit to Do Hair, N.Y. TIMES, Mar. 4, 2005, at B1).
26
See James B. Jacobs, Mass Incarceration and the Proliferation of Criminal
Records, 3 U. ST. THOMAS L.J. 387, 390 (2006).
27
Gardner et al., supra note 24, at 111 (“[W]ith the upsurge in negligent
hiring and retention lawsuits, employers [have] continued their prevention efforts by
checking the qualifications and backgrounds of prospective and current employees.”);
Lujan, supra note 6, at 57 (“Having this information before a hiring decision is made
can help in defending the employer against negligent hiring or supervision claims.”);
STATE BAR REPORT, supra note 25, at 83. “Virtually all states have recognized a cause
of action in tort for persons injured by an employer’s negligence in hiring, retaining or
supervising a dangerous employee.” 1 LEX K. LARSON, EMPLOYMENT SCREENING § 10.01
(MB 2012); see also Katherine A. Peebles, Note, Negligent Hiring and the Information
Age: How State Legislatures Can Save Employers from Inevitable Liability, 53 WM. &
MARY L. REV. 1397, 1404 (2012) (“Every state recognizes the tort of negligent hiring.”).
28
Stephen F. Befort, Pre-Employment Screening and Investigation:
Navigating Between a Rock and a Hard Place, 14 HOFSTRA LAB. L.J. 365, 376 (1997).
To be successful, “a plaintiff must establish that (1) the employer owed the third party
a duty of reasonable care, (2) the employer breached the duty[,] and (3) the breach
proximately caused the third party’s harm.” Id. (footnotes omitted).
29
Ponticas v. K.M.S. Invs., 331 N.W.2d 907, 911 n.5 (Minn. 1983).
30
Jennifer Leavitt, Note, Walking A Tightrope: Balancing Competing Public
Interests in the Employment of Criminal Offenders, 34 CONN. L. REV. 1281, 1301 (2002)
(emphasis added).
31
Id. at 1302.
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adopted Ben Franklin’s adage, ‘an ounce of prevention is worth
a pound of cure.’”32
B.
Over-Reliance on Criminal Background Checks Hurts
Offenders and Society
While criminal background checks can help employers
avoid liability, overzealous reliance on this information leads to
an unfounded bias against individuals with criminal records. In
theory, “[t]he law conducts a balancing test between the
employer’s right to maintain an environment free from criminal
behavior and providing individuals with a criminal history the
opportunity to work.”33 However, critics of mandated proscription
from certain jobs34 and proponents of limiting negligent hiring
liability feel that these practices create an insurmountable
obstacle for people who have criminal records.35 As a result,
while “background screening can be helpful in identifying
applicants whose records makes [sic] them unsuitable for a
particular position . . . , such screening also discloses records
which should not be disqualifying, but which, in practice, are
treated as disqualifying by employers.”36 High recidivism rates
have been attributed in part to the difficulty of obtaining
meaningful employment with a criminal record,37 and it has been
suggested
that
“[r]ehabilitation
through
employment
opportunities is one clear way to stem the tide of ex-offenders
leaving and re-entering society through the jailhouse doors.”38
32
Gardner et al., supra note 24, at 111 (quoting Benjamin Franklin, c. 1736).
Lujan, supra note 6, at 60.
34
One such critique of “[r]ecord based employment disqualifications [is that
they] are imposed by operation of law, without any consideration of their
appropriateness for the individual involved.” Aukerman, supra note 8, at 25.
35
“Despite the protections afforded by federal and state law, a demonstrated
preference for hiring people without criminal records still exists.” STATE BAR REPORT,
supra note 25, at 80; Fruqan Mouzon, Forgive Us Our Trespasses: The Need for Federal
Expungement Legislation, 39 U. MEM. L. REV. 1, 45-46 (2008) (stating that a criminal
record can carry with it “a stigma so indelible as to subject even non-violent offenders to
lifelong sentences”). “The more accessible these records, the more likely the stigma of a
criminal conviction, or even an arrest, will endure.” Jacobs & Crepet, supra note 25, at 211.
36
Aukerman, supra note 8, at 23.
37
“Research from both academics and practitioners suggest that the chief
factor which influences the reduction of recidivism is an individual’s ability to gain
‘quality employment.’” STATE BAR REPORT, supra note 25, at 50 (citing, e.g.,
MEASURING RECIDIVISM: CRIMINAL HISTORY COMPUTATION OF THE FEDERAL
SENTENCING GUIDELINES, A COMPONENT OF THE FIFTEEN YEAR REPORT ON THE U.S.
SENTENCING COMMISSION’S LEGISLATIVE MANDATE, at 12 (May 2004), available at
http://www.ussc.gov/publicat/Recidivism_General.pdf).
38
Leavitt, supra note 30, at 1282.
33
2012]
C.
GIVING MEANING TO THE FCRA
279
Accuracy Is Paramount, but Elusive
Whether one agrees with the logic behind them or not,
the reality is that criminal background checks are regularly
performed. Assuming that these checks are important for
employment decisions, it is clear that such reports should
contain accurate and complete information. Unfortunately,
“[n]o single source exists that provides complete and up-to-date
information about a person’s criminal history.”39 Many
employers, therefore, rely on information from “commercial
databases[, which] are frequently inaccurate . . . .”40 Even
information taken directly from courthouse computer systems
can be unreliable, as “human errors, court delays, processing
lags, and staffing shortages impair the quality of data.”41
“Misspelled words, erroneous birthdates, and transposed
address numbers can cause mis- or no information for the
report.”42 As a result, courthouse “repositories are notorious for
being ‘outdated, inaccurate and incomplete.’”43
Yet, according to Craig Kessler, president of the CRA
Backgroundchecks.com, “We’re not in the business of
authenticating the identity of individuals. All we do is report
the data that’s supplied to us from the courts.”44 This attitude
has a direct effect on the accuracy of consumer reports, as
illustrated by the experience of Ron Peterson. Peterson, a
California resident, was denied employment based on an
erroneous criminal report compiled by Backgroundchecks.com.45
According to Peterson, “In Florida I’m a female prostitute
(named Ronnie); in Texas I’m currently incarcerated for
manslaughter . . . . In New Mexico I’m a dealer of stolen goods.
39
U.S. DEP’T OF JUSTICE, THE ATTORNEY GENERAL’S REPORT ON CRIMINAL
HISTORY BACKGROUND CHECKS 6 (2006), available at http://www.justice.gov/
olp/ag_bgchecks_report.pdf [hereinafter ATTORNEY GENERAL’S REPORT]; see also
Gardner et al., supra note 24, at 119.
40
Gardner et al., supra note 24, at 119.
41
Id. at 120 (internal quotation marks omitted).
42
Id.
43
Id. at 118 (quoting Jason B. Morris, Criminal Background Checks: You Get
What You Pay For, VERIFIER (Background Info. Servs., Cleveland, Ohio) June/July
2004, at 4, available at http://www.employeescreen.com/web/pdfs/verifier_issue3.pdf).
“Misinformation can occur for a number of reasons—clerks mis-key information,
criminal charges get dropped but not updated in files, or arrested suspects provide
authorities with the name and Social Security number of someone else.” Kim Zetter,
Bad Data Fouls Background Checks, WIRED (Mar. 11, 2005), http://www.wired.com/
politics/security/news/2005/03/66856?currentPage=all.
44
Zetter, supra note 43.
45
Id.
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Oregon has me as a witness tamperer. And in Nevada—this is
my favorite—I’m a registered sex offender.”46
Peterson represents one type of consumer that can be
hurt by an inaccurate or incomplete criminal background
check: those who have never been arrested yet have a criminal
history mistakenly ascribed to them. Inaccurate or incomplete
reports can also harm individuals who were previously arrested
or convicted of crimes because, while their charges might have
been dropped or their records expunged, those records might
still show up in a criminal background check.47
There is currently no industry-wide data dealing
directly with the accuracy of criminal record reports.48 However,
a 2004 study by the National Association of State Public
Interest Research Groups surveyed credit reports of adults in
30 states.49 The study found that “[f]ifty-four percent (54%) of
the credit reports contained personal demographic information
that was misspelled, long-outdated, belonged to a stranger, or
was otherwise incorrect[.]”50 The study also found that
“[a]ltogether, 79% of the credit reports surveyed contained
either serious errors or other mistakes of some kind.”51 At least
one writer has opined that, “[g]iven that many of the same
organizations conduct background and credit checks, errors in
conducting one kind of check (credit) should make [us]
similarly suspect of the accuracy of the other (background).”52
Given how frequently criminal background checks are
performed for employment purposes,53 the pervasiveness of
such deficiencies poses a grave problem.54 In a recent class
46
Id.
“[C]ommercial databases may also be missing important disposition
information that is relevant to a conviction record’s use for employment suitability
purposes, such as sealing and expungement orders or entry into a pre-trial or post-trial
diversion program.” ATTORNEY GENERAL’S REPORT, supra note 39, at 2.
48
See NAT’L CONSUMER LAW CTR, supra note 10, at 7; SEARCH, supra note 2, at 7.
49
NAT’L ASS’N OF STATE PIRGS, MISTAKES DO HAPPEN: A LOOK AT ERRORS IN
CONSUMER CREDIT REPORTS 4 (June 2004), available at http://cdn.publicinterestnetwork.org/
assets/BEevuv19a3KzsATRbZMZlw/MistakesDoHappen2004.pdf.
50
Id.
51
Id.
52
Gardner et al., supra note 24, at 118; see also Zetter, supra note 43 (stating
that “[t]here’s no reason to believe that criminal records are any more accurate” than
credit reports).
53
See supra note 1.
54
According to a recent study, the current recession has not lead to a
significant increase in the percentage of employers that conduct criminal background
checks. SOC’Y FOR HUMAN RES. MGMT., BACKGROUND CHECKING: GENERAL
BACKGROUND CHECKS 8 (Jan. 22, 2010), available at http://www.shrm.org/
Research/SurveyFindings/Articles/Documents/Background%20Check_General.pptx. Still,
it is safe to assume that with a constant rate of background checking, the increase in job
47
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281
action lawsuit, 665,391 consumers brought a claim against the
CRA HireRight, alleging that between 2004 and 2010
HireRight failed to comply with the FCRA in the preparation of
consumer reports, all of which contained adverse information
about the consumers.55 And that is just a single case against a
single agency. In fact, litigation for this issue continues.56 For
these injured consumers, winning lawsuits depends on proving
that the CRA violated the FCRA—the statute that was
implemented to regulate this industry.
II.
FCRA—PURPOSE AND BACKGROUND
In the latter half of the twentieth century, Congress
recognized that “[c]onsumer reporting agencies [had] assumed
a vital role in assembling and evaluating consumer credit and
other information on consumers.”57 Even forty years ago, House
Representative and FCRA sponsor Leonor Sullivan remarked:
[W]ith the trend towards computerizations and billings and the
establishment of all sorts of computerized data banks, the individual
is in great danger of having his life and character reduced to
impersonal “blips” and key-punch holes in a stolid and unthinking
machine which can literally ruin his reputation without cause, and
make him unemployable . . . .58
Therefore, in 1970, Congress enacted the FCRA to
address what it perceived as the “need to insure that consumer
reporting agencies exercise their grave responsibilities with
fairness, impartiality, and a respect for the consumer’s right to
privacy.”59 To that end, the FCRA’s stated purpose is “to require
that consumer reporting agencies adopt reasonable procedures
applicants in the past several years has led to a higher incidence of criminal
background checks overall. See AP, Employers Post Fewest Job Ads in Five Months,
USA TODAY (Nov. 6, 2012, 2:33 PM), http://www.usatoday.com/story/money/business/
2012/11/06/job-ads-september/1685879/ (“With 12.1 million people unemployed in
September [2012], there were 3.4 unemployed people, on average, competing for each
open job. In a healthy economy, that ratio is roughly 2-to-1.”).
55
Order of Preliminary Approval of Class Action Settlement at 3, ¶ 3, Ryals
v. HireRight Solutions, Inc., No.3:09cv625, (E.D. Va. July 7, 2011).
56
See, e.g., King v. Gen. Info. Servs., Inc., 2012 U.S. Dist. LEXIS 159380
(E.D. Pa. Nov. 6, 2012) (class action suit upholding constitutionality of FCRA); Moore v.
First Advantage Enter. Screening Corp., 2012 U.S. Dist. LEXIS 136721 (N.D. Ohio
Sept. 24, 2012) (dismissing class allegations and allowing individual claims); Farmer v.
Phillips Agency, Inc., 2012 U.S. Dist. LEXIS 146144 (N.D. Ga. Sept. 20, 2012) (denying
class certification).
57
15 U.S.C. § 1681(a)(3) (2006).
58
116 CONG. REC. 36570 (1970) (statement of Rep. Sullivan), quoted in
Bryant v. TRW, Inc., 689 F.2d 72, 79 (6th Cir. 1982).
59
15 U.S.C. § 1681(a)(4).
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for meeting the needs of commerce for consumer credit,
personnel, insurance, and other information in a manner which
is fair and equitable to the consumer, with regard to the
confidentiality, accuracy, relevancy, and proper utilization of
such information.”60 In effect, the FCRA “governs the collection,
assembly, and use of consumer report information and provides
the framework for the credit reporting system in the United
States.”61 Enforcement of the FCRA occurs “at the federal and
state levels, as well as through private litigation.”62
To accomplish its goal, the FCRA regulates how CRAs
compile and distribute consumer reports. Section 1681b lists the
“[p]ermissible purposes of consumer reports”63 for which a CRA
“may furnish a consumer report.”64 Use of information contained
in a consumer report by an employer—the user—to make an
employment decision about a prospective employee—the
consumer—is one such “[p]ermissible purpose” under the FCRA.65
To comply with § 1681b, CRAs must have procedures
requiring “prospective users of the information [to] identify
themselves, certify the purposes for which the information is
sought, and certify that the information will be used for no
other purpose.”66 When the purpose of a consumer report is to
make an employment decision, the user is required to provide
additional certifications before a CRA may furnish a report.
The employer-user must also certify that a written disclosure
was made to the consumer,67 that the consumer provided
written authorization for the procurement of the report,68 and
that “information from the consumer report will not be used in
60
Id. § 1681(b).
FED. TRADE COMM’N, 40 YEARS OF EXPERIENCE WITH THE FAIR CREDIT
REPORTING, AN FTC STAFF REPORT WITH SUMMARY OF INTERPRETATIONS 1 (2011), available
at http://ftc.gov/os/2011/07/110720fcrareport.pdf [hereinafter FTC STAFF REPORT].
62
Id. at 3.
63
15 U.S.C. § 1681b.
64
Id. § 1681b(a).
65
Id. § 1681b(a)(3)(B).
66
Id. § 1681e(a). CRAs must also “make a reasonable effort” to independently
verify such certifications from new users. Id. “What constitutes adequate verification
will vary with the circumstances.” FTC STAFF REPORT, supra note 61, at 65.
Interestingly, according to one FTC Staff opinion letter, the requirements for such
verification are more lax when a CRA only provides consumer reports that contain
public records, such as criminal background checks. The staff opinion did not consider
such information “sensitive personal information, as in a traditional credit report,” and
therefore advised that simply relying on the client’s certification would satisfy the
statute. FTC Informal Staff Opinion Letter of William Haynes (June 9, 1998), available
at http://www.ftc.gov/os/statutes/fcra/leblanc.shtm.
67
15 U.S.C. § 1681b(b)(2)(A)(i).
68
Id. § 1681b(b)(2)(A)(ii).
61
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283
violation of any applicable Federal or State equal employment
opportunity law or regulation . . . .”69 Additionally, the
employer-user must certify that “before taking any adverse
action based in whole or in part on the report, [it will provide
the consumer with] a copy of the report; and a description in
writing of the rights of the consumer . . . .”70
Section 1681c contains the “[r]equirements relating to
information contained in consumer reports.”71 Because criminal
records are public information,72 there is no specific federal law
that prohibits CRAs from providing criminal background
checks in consumer reports. However, the FCRA does
temporally restrict CRAs’ ability to include information
pertaining to criminal records other than criminal
convictions—e.g., arrests that did not lead to convictions. With
a few exceptions not relevant to this note, CRAs cannot report
any arrests that “antedate the report by more than seven
years . . . .”73 There is, however, no time limit on reporting
information pertaining to criminal convictions.74
The general procedures for CRA compliance with the
FCRA, applicable in all situations, are laid out in § 1681e.75
Section 1681e(b) states that “[w]henever a consumer reporting
agency prepares a consumer report it shall follow reasonable
procedures to assure maximum possible accuracy of the
information concerning the individual about whom the report
69
Id. § 1681b(b)(1)(A)(ii).
Id. § 1681b(b)(3)(A). “There is no specific period of time an employer must
wait after providing a pre-adverse action notice and before taking adverse action
against the consumer. Some reasonable period of time must elapse, but the minimum
length will vary depending on the particular circumstances involved.” FTC STAFF
REPORT, supra note 61, at 52. The problems inherent in this lack of specificity will be
discussed in detail, infra Part IV.C.
71
15 U.S.C. § 1681c.
72
See supra note 4.
73
15 U.S.C. § 1681c(a)(2). Some states place further limits on the reporting of
criminal records. In New York, for example, in most instances, a consumer report may
contain information about an arrest only if it resulted in a criminal conviction or if the
charges are still pending. N.Y. GEN. BUS. LAW § 380-j(a)(1) (McKinney 2012).
74
15 U.S.C. § 1681c(a)(5).
75
Prior to enactment of the FCRA, a House amendment was accepted that
extended the requirement to follow reasonable procedures to apply to all CRAs—an
extension from the original Senate bill that applied this requirement only to CRAs that
prepared investigative consumer reports. 116 CONG. REC. 35940 (1970) (remarks of
Sen. Proxmire introducing the conference report), quoted in Bryant v. TRW, Inc., 689
F.2d 72, 77-78 (6th Cir. 1982). Additionally, even when subject to the “heightened”
requirements of § 1681k, a CRA will have to follow § 1681e(b), and the analysis of a
court will often rest on an interpretation of § 1681e(b). See infra notes 157-61 and
accompanying text.
70
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relates.”76 When CRAs produce consumer reports for employment
purposes based on public records, they are subject to ostensibly
heightened compliance requirements under § 1681k. If the report
is likely to have an adverse effect on an employment decision,
CRAs must either notify the consumer at the time they send the
report to the employer or use “strict procedures designed to
insure that [the report] is complete and up to date.”77 The next
two parts of this note will explore how courts analyze private
causes of action alleging violations of these two provisions.
III.
PRIVATE LITIGATION UNDER SECTION 1681E(B)
Section 1681e(b) is the general compliance provision in
the FCRA and mandates that “[w]henever a consumer
reporting agency prepares a consumer report it shall follow
reasonable procedures to assure maximum possible accuracy of
the information concerning the individual about whom the
report relates.”78 The FCRA, however, does not impose strict
liability on CRAs for providing erroneous reports.79 Instead,
liability can be found if the CRA committed negligent or willful
violations of this provision.80 Yet litigation of this provision is
no easy task, because the legislative history of § 1681e(b) is, as
one Sixth Circuit case called it, “sketchy,”81 and the exact
standards required by the provision have remained elusive.
The elements required for proving a negligent violation
of § 1681e(b) appear simple enough, mirroring the
requirements for proving a general tort action:
To succeed on a claim under this section, a plaintiff must establish
that: (1) the consumer reporting agency was negligent in that it
failed to follow reasonable procedures to assure the accuracy of its
credit report; (2) the consumer reporting agency reported inaccurate
information about the plaintiff; (3) the plaintiff was injured; and (4)
the consumer reporting agency’s negligence proximately caused the
plaintiff’s injury.82
Basing their analyses on these elements, courts
recognize that “[t]he threshold question in a [§] 1681e(b) action
76
15 U.S.C. § 1681e(b).
Id. § 1681k(a).
78
Id. § 1681e(b).
79
Cahlin v. Gen. Motors Acceptance Corp., 936 F.2d 1151, 1156 (11th Cir. 1991)
(stating that the FCRA “does not make reporting agencies strictly liable for all inaccuracies”).
80
15 U.S.C. §§ 1681n-o.
81
Bryant v. TRW, Inc., 689 F.2d 72, 77 (6th Cir. 1982).
82
Whelan v. Trans Union Credit Reporting Agency, 862 F. Supp. 824, 829
(E.D.N.Y. 1994).
77
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GIVING MEANING TO THE FCRA
285
is whether the challenged credit information is inaccurate. If the
information is accurate no further inquiry into the
reasonableness of the consumer reporting agency’s procedures is
necessary.”83 On the other hand, “Whether the credit reporting
agency followed reasonable procedures ‘will be a jury question in
the overwhelming majority of cases.’”84 In that way,
reasonableness, “like other questions concerning the application
of a legal standard to given facts . . . , is treated as a factual
question even when the underlying facts are undisputed. It
therefore cannot be resolved on summary judgment unless the
reasonableness or unreasonableness of the procedures is beyond
question . . . .”85 Proving causation and injury are also questions
for the jury.86 Thus, a CRA may succeed on a motion for summary
judgment “only if a court finds, as a matter of law, that a credit
report was accurate,”87 thereby employing the “accuracy
defense.”88 But, because the definitions of these elements remain
unclear, injured consumers struggle to prove their cases.
A.
Accuracy Is Not Defined by the Statute
The inaccuracy of a consumer report is the threshold
question in a § 1681e(b) claim, yet the statute provides no
definition of the term accuracy, and the circuit courts are split
between two different views on the type of accuracy required by
the statute.89 This disagreement exists because “[a]ccuracy is
quite clearly not a self-defining concept, and [the] FCRA’s
fragmentary legislative history provides little, if any, guidance
as to how Congress intended this standard to be applied.”90
83
Houston v. TRW Info. Servs., 707 F. Supp. 689, 691 (S.D.N.Y. 1989) (citing
Middlebrooks v. Retail Credit Co., 416 F. Supp. 1013, 1015 (N.D. Ga. 1976) (stating
that a “court need not reach the issue of ‘reasonableness’ if it finds initially that the
report furnished was accurate”)); see also Williams v. LexisNexis Risk Mgmt., No.
3:06cv241, 2007 U.S. Dist. LEXIS 62193, at *18 (E.D. Va. Aug. 23, 2007) (stating that
“when a report is in fact accurate, the procedure is per se reasonable”).
84
Adams v. Nat’l Eng’g Serv. Corp., 620 F. Supp. 2d 319, 330 (D. Conn. 2009)
(quoting Cahlin, 936 F.2d at 1156); see also Guimond v. Transunion Credit Info. Co., 45
F.3d 1329, 1333 (9th Cir. 1995) (“The reasonableness of the procedures and whether the
agency followed them will be jury questions in the overwhelming majority of cases.”).
85
Crabill v. Trans Union, L.L.C., 259 F.3d 662, 664 (7th Cir. 2001).
86
Adams, 620 F. Supp. 2d at 330.
87
Cahlin, 936 F.2d at 1156 (internal quotation marks omitted).
88
Id. “This term of art is actually a misnomer because the burden of proving
that a particular report is inaccurate is part of the plaintiff’s case and not an
affirmative defense for a defendant credit reporting agency.” Id. at 1156 n.9.
89
Id. at 1157.
90
Id.
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One approach to the definition of accuracy—the
“business friendly interpretation”91—is known as the “technical
accuracy standard.”92 Under this interpretation, “a credit
reporting agency satisfies its duty under [§ 1681e(b)] if it
produces a report that contains factually correct information
about a consumer that might nonetheless be misleading or
incomplete in some respect.”93 Courts that adopt the technical
accuracy standard fear that requiring more would place too
heavy a burden on CRAs.94
By contrast, under the “maximum possible accuracy
also
known
as
the
“consumer-friendly
approach,”95
96
interpretation,” an “entry may be inaccurate within the
meaning of [§ 1681e(b)] either because it is patently incorrect,
or because it is misleading in such a way and to such an extent
that it can be expected to adversely affect credit decisions.”97
The rationale for this approach is based on statutory
interpretation and a basic recognition of the FCRA’s purpose.
Looking at the statute’s language, “[§ 1681e(b)] does not
require that a consumer reporting agency follow reasonable
procedures to assure simply that the consumer report be
91
Neil Vanderwoude, Comment, The Fair Credit Reporting Act: Fair for
Consumers, Fair for Credit Reporting Agencies, 39 SW. U. L. REV. 395, 400 (2009)
(internal quotation marks omitted).
92
Smith v. HireRight Solutions, Inc., 711 F. Supp. 2d 426, 433 n.5 (E.D. Pa.
2010) (citing Holmes v. TeleCheck Int’l, 556 F. Supp. 2d 819, 833 (M.D. Tenn. 2008)).
93
Cahlin, 936 F.2d at 1157.
94
See, e.g., Heupel v. Trans Union LLC, 193 F. Supp. 2d 1234, 1240 (N.D.
Ala. 2002) (reluctant to place “too great a burden on credit reporting agencies” and
holding that “[r]equiring ‘technical accuracy’ in credit reports best captures the balance
Congress struck between consumers’ concern for fair and equitable treatment and
reporting agencies’ goal of maintaining accurate and cost-effective credit reporting”);
Grant v. TRW, Inc., 789 F. Supp. 690, 692 (D. Md. 1992) (“‘Accuracy’ can be tested by
verification whereas a determination of ‘completeness’ requires the exercise of
judgment on potentially difficult questions concerning the meaning and effect of
contextual information.”). In Alexander v. Moore & Associates, the court criticized the
technical accuracy standard as leading to the result “that a consumer reporting agency
could report that a person was ‘involved’ in a credit card scam, and without regard to
[§ 1681e(b)] fail to report that he was in fact one of the victims of the scam.” 553 F.
Supp. 948, 952 (D. Haw. 1982). However, the Grant court rejected the example given by
the Alexander court, characterizing it as an “extreme instance[] in which a technically
accurate statement is so inherently misleading that it would run afoul of the
‘maximum possible accuracy’ requirement of § 1681e(b).” Grant, 789 F. Supp. at 692.
The Grant court felt that “the possibility that such extreme cases might be presented
does not justify rewriting the FCRA to render actionable the initial reporting of
information which although accurate is deemed to be misleading because it is
incomplete.” Id.
95
Smith, 711 F. Supp. 2d at 433.
96
Vanderwoude, supra note 91, at 400.
97
Sepulvado v. CSC Credit Servs., 158 F.3d 890, 895 (5th Cir. 1998) (internal
quotation marks omitted).
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GIVING MEANING TO THE FCRA
287
accurate, but to assure maximum possible accuracy.”98 Because
fairness in consumer reporting is one of the stated purposes of
the FCRA,99 courts have held that § 1681e(b), “fairly read,
would apply to consumer reports even though they may be
technically accurate, if it is shown that such reports are not
accurate to the maximum possible extent.”100
Whether a court adopts the “technical accuracy
standard” or the “maximum possible accuracy approach” can
impact the court’s disposition as to a CRA’s successful use of
the accuracy defense, and therefore is fundamental to
determining whether a violation of § 1681e(b) occurred.101 A
recent case helps to illustrate this point. In Smith v. HireRight,
the Eastern District court in Pennsylvania denied the
defendant CRA’s motion to dismiss a claim under § 1681e(b).102
Smith, the named plaintiff in this class-action suit, had applied
for several truck-driving positions, and each of his prospective
employers solicited the defendant, CRA HireRight, to provide
them with his consumer report.103 Smith had been arrested
once, a few years earlier, but the consumer report prepared by
HireRight listed this single incident multiple times.104 In its
motion to dismiss, HireRight cited a Sixth Circuit case using
the “technical accuracy standard” to argue that “no claim can
be stated based on the publication of factually accurate
information, even if the information was presented in a format
that created some risk it could be misconstrued by a third
party.”105 Under this argument, since Smith had been arrested
on the date reported, the report contained factually correct,
albeit repeated, information.106 But the court rejected this
argument and chose to “adopt the maximum accuracy approach
over the technical accuracy approach.”107 Having adopted this
98
Alexander, 553 F. Supp. at 952 (internal quotation marks omitted).
15 U.S.C. § 1681(a)(4) (2006).
100
Alexander, 553 F. Supp. at 952.
101
“Although courts have assumed that the so-called ‘accuracy defense’ is a
question fit for disposition on motion for summary judgment, they have widely
diverged in their interpretations of what constitutes an ‘accurate’ credit report.” Cahlin
v. Gen. Motors Acceptance Corp., 936 F.2d 1151, 1156-57 (11th Cir. 1991).
102
Smith v. HireRight Solutions, Inc., 711 F. Supp. 2d 426, 439 (E.D. Pa. 2010).
103
Id. at 430.
104
Id.
105
Reply Memorandum of Law in Further Support of Motion to Dismiss
Plaintiff’s Complaint at 3-4, Smith, 711 F. Supp. 2d 426 (No. 09-06007) (citing Holmes
v. Telecheck Int’l, 556 F. Supp. 2d 819, 833 (M.D. Tenn. 2008)).
106
Id. (claiming that “no court has ever held that the mere repetition of
factually accurate information within a background report renders that report legally
inaccurate for the purposes of Section 1681e(b)”).
107
Smith, 711 F. Supp. 2d at 433 n.5.
99
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standard, the court held that Smith had pleaded sufficient facts
to state a viable cause of action under § 1681e(b) and denied
the defendant’s motion to dismiss.108 Had the case been brought
in a circuit employing the “technical accuracy standard,” the
result would likely have been different.
B.
The Statute Provides No Guidance on the Reasonable
Procedures Required
While proving that a CRA supplied inaccurate information
is the threshold question often resolved during the summary
judgment stage, a plaintiff must still prove the other three
elements of a § 1681e(b) claim at trial, beginning with showing
that the CRA was negligent or willful when it failed to use
reasonable procedures to ensure accuracy. Indeed, as the D.C.
Circuit stated, “The reasonableness requirement thus severely
limits an agency’s duty to maximally assure precise and complete
reporting.”109 The duty imposed by the statute is much like that of
the standard tort test: it requires the CRA to do “what a
reasonably prudent person would do under the circumstances.”110
Whether a CRA has satisfied this burden will almost
always be left up to a jury,111 yet juries are given little guidance
by the statute or the courts for determining the reasonableness
of such procedures. As was the case with accuracy, the FCRA
does not explicitly explain what types of mechanisms would
constitute reasonable procedures. Some courts explain that
108
Id. at 438. The court acknowledged that plaintiff’s claim “would not
necessarily withstand summary judgment scrutiny.” Id. The burden of proving the
inaccuracy of a report has had the effect of deterring at least some class actions from
being brought for § 1681e(b) claims. See, e.g., Williams v. LexisNexis Risk Mgmt., No.
3:06cv241, 2007 U.S. Dist. LEXIS 62193, at *13 (E.D. Va. Aug. 23, 2007) (“Asserting a
§ 1681e(b) claim for the entire class would render the class-action device useless, note
Plaintiffs, because it would require an assessment of whether or not each class
member’s report was, in fact, inaccurate.”).
109
Koropoulos v. Credit Bureau, Inc., 734 F.2d 37, 45 (D.C. Cir. 1984). This is
not to imply that CRAs have no duty above merely reporting information that is
provided to them. See Bryant v. TRW, Inc., 689 F.2d 72, 77 (6th Cir. 1982) (holding
that the requirement to follow reasonable procedures “requires a consumer reporting
agency to do more than correctly report the information supplied to it by creditors”).
Still, a CRA will not be strictly liable for errors contained in a report, assuming it did
employ reasonable procedures.
110
Bryant v. TRW, Inc., 487 F. Supp. 1234, 1242 (E.D. Mich. 1980) (noting
that “[t]he standard of conduct by which the agency’s action is to be judged is deeply
rooted in the law of negligence”). Before enacting the FCRA, a House amendment was
accepted that changed the standard for liability from gross negligence to ordinary
negligence. H.R. REP. NO. 91-1587 (1970) (Conf. Rep.), reprinted in 1970 U.S.C.C.A.N.
4411, 4416, quoted in Bryant, 689 F.2d at 79.
111
See supra notes 84-85 and accompanying text.
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289
“[j]udging the reasonableness of an agency’s procedures
involves weighing the potential harm from inaccuracy against
the burden of safeguarding against such inaccuracy.”112 But this
balancing act does little to inform or exemplify.
Little direction comes from the Federal Trade Commission
(FTC). Although tasked with enforcement of the FCRA,113 the FTC
lacks the authority to establish firm interpretations of its rules.114
Guidance from an Unofficial FTC Staff Interpretation provides
scant illumination: “The exact nature of a ‘reasonable procedure’
is determined by the circumstances surrounding the operation of
credit bureau [sic] and may vary from credit bureau to credit
112
Stewart v. Credit Bureau, Inc., 734 F.2d 47, 51 (D.C. Cir. 1984).
FTC STAFF REPORT, supra note 61, at 3. Under the Consumer Financial
Protection Act of 2010, the FTC now shares its enforcement role with the newly created
Consumer Financial Protection Bureau (CFPB). Id. at 1. In August 2012, the FTC
brought its first enforcement action against a CRA for violations of the FCRA in
connection with employment background screening. Complaint for Civil Penalties,
Permanent Injunction, and Other Equitable Relief, United States v. HireRight Solutions,
Inc., 12-cv-01313 (D.D.C. Aug. 8, 2012), available at http://ftc.gov/os/caselist/1023130/
120808hirerightcmpt.pdf; see also Press Release, Fed. Trade Comm’n, Employment
Background Screening Company to Pay $2.6 Million Penalty for Multiple Violations of the
Fair Credit Reporting Act (Aug. 8, 2012), available at http://www.ftc.gov/
opa/2012/08/hireright.shtm; Editorial, Accuracy in Criminal Background Checks, N.Y.
TIMES, Aug. 10, 2012, at A18, available at http://www.nytimes.com/2012/08/10/
opinion/accuracy-in-criminal-background-checks.html?_r=1&hp. The case, brought against
CRA HireRight, addressed FCRA violations that may have come to the attention of the
FTC after a class action suit against the company settled last year. See id.; supra notes
55, 102-08. The complaint alleged that HireRight violated several provisions of the
FCRA, including §§ 1681e(b) and 1681k. See HireRight, 12-cv-01313, ¶¶ 21-38. A
settlement with HireRight, announced the same day the complaint was brought,
imposed a $2.6 million penalty on the company and permanently enjoined it from
further violations of the FCRA. Stipulated Final Judgment and Order for Civil
Penalties, Permanent Injunction, and Other Equitable Relief at 3-5, HireRight, 12-cv01313, available at http://ftc.gov/os/caselist/1023130/120808hirerightstip.pdf.
114
“[T]he Commission was specifically denied the power to issue substantive
rules and regulations under the Fair Credit Reporting Act and, therefore, may not
specify the precise procedures which credit bureaus must follow on an industry-wide
basis . . . .” Bryant, 487 F. Supp. at 1241-42 (quoting FED. TRADE COMM’N, UNOFFICIAL
STAFF INTERPRETATION NO. 162). Regardless, it is not clear how much weight would be
given to FTC interpretations of the FCRA. The issue of how much deference the courts
should give to FTC interpretations brings up administrative law issues that are outside
the scope of this note. For a discussion of those issues, see Amanda L. Fuchs,
Comment, The Absurdity of the FTC’s Interpretation of the Fair Credit Reporting Act’s
Application to Workplace Investigations: Why Courts Should Look Instead to the
Legislative History, 96 NW. U. L. REV. 339, 347-58 (2001). Unlike the FTC, the CFPB
was granted rule-making authority over the FCRA, but has yet to use this power in the
context of employment screening and criminal background checks. See NAT’L
CONSUMER LAW CTR., supra note 10, at 35.
113
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bureau.”115 Therefore, the FTC is relegated to “litigate the question
on a case by case basis.”116
Litigating reasonableness on such a case-by-case basis
often reduces the issue to a “battle of . . . witnesses,”117 even
where the underlying facts of the case are undisputed, causing
jury confusion and making the outcome of a case unpredictable.
To illustrate this point, consider the recent case of Adams v.
National Engineering Service Corp.118 Deborah Adams brought
an action against CRA National Engineering Services
Corporation (NESC) after she was denied employment based
on a consumer report “which inaccurately attributed to [her]
felony and misdemeanor convictions belonging to a person with
a different first name . . . [and which] emanated from Virginia,
a state to which . . . [she] had no connection.”119 The court
denied NESC’s motion for summary judgment, finding that the
CRA had clearly reported inaccurate information as “it [was]
uncontested that the convictions which NESC reported to
Guidant did not belong to Adams,”120 and that, as to the other
three elements of a § 1681e(b) claim, a reasonable jury could
find in Adams’s favor.121
At trial, the jury found for NESC, and Adams
subsequently moved for a new trial.122 The court denied her
motion because, although “the facts of this case were generally
115
Bryant, 487 F. Supp. at 1241 (quoting FED. TRADE COMM’N, UNOFFICIAL
STAFF INTERPRETATION NO. 162).
116
Id. at 1242 (quoting UNOFFICIAL STAFF INTERPRETATION NO. 162, supra
note 115). In the decade following the passage of the FCRA, even the consumer
reporting industry was unsure of their responsibilities under this provision. An
industry publication from 1977 stated:
[Y]ou have some flexibility and the law does not spell out what reasonable
procedures you must follow. Congress believed that you and the credit granter
and the consumer would best determine that, and if there was a conflict, the
courts could decide if the procedure was reasonable. This does not give you the
license to do anything you please but it recognizes that a procedure may differ
between credit bureaus, and both procedures may be perfectly acceptable.
RALPH C. CLONTZ, JR., FAIR CREDIT REPORTING MANUAL App. H-113 (rev. ed. 1977),
quoted in Bryant, 487 F. Supp. at 1242.
117
Adams v. Nat’l Eng’g Serv. Corp., No. 3:07cv1035, 2010 U.S. Dist. LEXIS
35489, at *6 (D. Conn. Apr. 12, 2010).
118
Adams v. Nat’l Eng’g Serv. Corp., 620 F. Supp. 2d 319 (D. Conn. 2009).
119
Id. at 333
120
Id. at 330.
121
Id. (explaining that “a reasonable jury could find that NESC failed to
follow reasonable procedures,” “that Adams was injured when [her potential employer]
revoked its contingent offer of employment,” and “that [it] would not have revoked its
contingent offer but for NESC’s inaccurate attribution of various felony and
misdemeanor convictions to Adams”).
122
Adams, 2010 U.S. Dist. LEXIS 35489, at *3.
2012]
GIVING MEANING TO THE FCRA
291
undisputed . . . , the crux of the jury’s role in this case was to
determine whether the undisputed actions of [the] defendants
constituted negligent and/or willful violations of the law.”123 The
court pointed out that “the distinction between a failure to
comply with the FCRA and a negligent or willful
failure . . . was crucial to the case and the presumptive basis
for the jury’s decision.”124 As the court stated, “The trial
constituted a battle of the parties’ expert witnesses who
attempted to define what the parties’ responsibilities were
under the law.”125 In the absence of guidance as to what
constitute reasonable procedures under the statute, litigation
under the FCRA remains unpredictable and difficult for
consumers to win.
C.
Proving Causation Can Be Very Problematic
Even if a plaintiff is able to prove to a jury that a CRA
was negligent or willful in failing to follow reasonable
procedures under § 1681e(b), she still has to prove the other
elements in a § 1681e(b) claim—notably that the CRA’s
negligence proximately caused her injury. To exemplify the
challenge that this requirement can present, consider the case
of Obabueki v. Choicepoint.126 Abel Obabueki had been arrested
for a misdemeanor, and two years after pleading “nolo
contendere,” his conviction had been “set aside and
dismissed.”127 When applying for a job at IBM, Obabueki did not
disclose the conviction on his application, believing that it had
been expunged from his record and that it could therefore be
omitted under the directions on the application.128 IBM
subsequently obtained a consumer report on Obabueki from
CRA Choicepoint, which “contained information about
[Obabueki’s] 1995 conviction but did not mention the 1997
dismissal order.”129 IBM questioned Obabueki about this
123
Id. at *5-6.
Id. at *7.
125
Id.
126
Obabueki v. Choicepoint, 236 F. Supp. 2d 278 (S.D.N.Y. 2002), aff’d sub
nom. Obabueki v. Int’l Bus. Mach. Corp., 319 F.3d 87 (2d Cir. 2003).
127
Id. at 280. Obabueki’s arrest had taken place in California, and the
“conviction was set aside and dismissed by an order pursuant to California Penal Code
§ 1204.3.” Id.
128
Id. at 280-81. The form directed that “‘arrests without convictions, [and]
convictions or incarcerations for which a record has been sealed or expunged’ need not
be included . . . .” Id. at 280 (alteration in original).
129
Id. at 281.
124
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incident, at which point he provided them with a copy of the
1997 dismissal order.130 Even after reviewing the dismissal
order, however, IBM determined that Obabueki had lied on his
application, and rescinded its offer of employment.131 After
Obabueki showed the 1997 dismissal order to Choicepoint,
Choicepoint sent a revised report to IBM which “stated that
[Obabueki’s] criminal record was ‘clear,’ and made no mention
of either the 1995 conviction or the 1997 dismissal order.”132
However, IBM did not reinstate its offer of employment.133
Obabueki brought an action against Choicepoint, and
the jury found that Choicepoint had “negligently fail[ed] to
maintain required procedures designed to ensure the
completeness and accuracy of its reports.”134 Choicepoint moved
for judgment as a matter of law, and the court granted its
motion,135 holding that “the evidence produced at trial . . . did
not provide a legally sufficient basis for the jury to find as a
factual matter that [Obabueki’s] injury was proximately caused
by Choicepoint’s negligence.”136 According to the court, “the
inaccuracy of the initial report lay in its failure to include the
1997 dismissal order, not in its failure to report that plaintiff
had no convictions whatsoever.”137 The court went on to say that
“although this inaccuracy may have been caused by
Choicepoint’s negligent failure to maintain procedures
designed to ensure the accuracy of its reports, the inaccuracy
was effectively neutralized . . . when plaintiff faxed a copy of
the 1997 dismissal order to . . . IBM.”138
130
Id.
Id.
132
Id. Later, when ruling on Choicepoint’s motion for judgment as a matter of
law, the court held that Obabueki had no right to a “clean” report. Id. at 283 (accepting
Choicepoint’s assertion that “the initial report would have been correct if it had listed
the 1997 dismissal order along with the 1995 conviction”).
133
Id. at 282.
134
Id. at 280.
135
Id.
136
Id. at 284.
137
Id.
138
Id. The court further stated:
131
[A]fter evaluating both the initial Choicepoint report and the 1997 order, IBM
concluded that [Obabueki] had lied on the [form]. The fact that this conclusion
was based on IBM’s possibly erroneous interpretation of the legal effect of the
1997 order is of no consequence to the issue of whether Choicepoint caused
[Obabueki’s] injury. While Choicepoint may have provided IBM with incomplete
information regarding [Obabueki], the uncontested evidence offered at trial
showed that IBM based its decision on information that was complete and
accurate. Thus, Choicepoint’s negligence—which may have caused the
2012]
GIVING MEANING TO THE FCRA
293
In the court’s eyes, Obabueki lost the job offer because,
basing its decision on a full and complete record, IBM decided
that Obabueki had lied. And, as the court pointed out, “the
FCRA is not a strict liability statute; Choicepoint’s violation of
the statute does not relieve plaintiff of his burden to establish
that those violations were the proximate cause of plaintiff’s
injury.”139 The fact that Choicepoint later determined that
Obabueki’s record had been expunged, and left it off the report,
was of no consequence to the court.140 IBM was free to make
whatever assumptions it wanted about whether his record was
expunged, even if those assumptions were erroneous.
IV.
HEIGHTENED STANDARDS UNDER § 1681K? DEBUNKING
THE MYTH
The preceding part of this note dealt with problems
associated with litigating a claim under § 1681e(b), which is
applicable to CRAs in all cases. Recognizing the importance of
employment decisions and the decisive effect that a
misreported criminal offense can have on such decisions,
§ 1681k of the FCRA “deals specifically with consumer reports
in the employment context and ‘creates heightened standards
for procedures used to collect information for employment
purposes.’”141 Under this portion of the FCRA,
[w]hen a consumer reporting agency furnishes a report that contains
matters of public record likely to have an adverse effect upon the
consumer’s ability to obtain employment, it is obligated to do one of
two things: (1) notify the consumer contemporaneously with the
transmission of the report to the user or (2) “maintain strict
procedures” designed to ensure the information is “complete and up
to date.”142
Focusing first on the second prong of this test, the
standard for CRA compliance in the employment context differs
in two ways from the general requirement found in § 1681e(b):
(1) the CRA must maintain strict, rather than reasonable,
procedures, and (2) these procedures must be meant to ensure
production of the initial report—cannot be said to have been the proximate cause
of IBM’s decision.
Id. at 285.
139
Id.
Id. at 285 n.4.
141
Smith v. HireRight Solutions, Inc., 711 F. Supp. 2d 426, 438 (E.D. Pa.
2010) (quoting Dalton v. Capital Assoc. Indus., 257 F.3d 409, 417 (4th Cir. 2001)).
142
Id. (emphasis added) (quoting Dalton, 257 F.3d at 417).
140
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that information is complete and up to date, and not just to
ensure maximum possible accuracy.
However, these changes may be misleading because, in
practice, they do not result in any heightened standards at all.
Section 1681k does not alter the fact that the FCRA is not a
strict liability statute, and the important “distinction between
a failure to comply with the FCRA and a negligent or willful
failure”143 remains. Therefore, to succeed on a § 1681k claim at
trial, a plaintiff still must prove the same general elements as
in a § 1681e(b) claim, except that “strict procedures” and
“complete and up to date” replace “reasonable procedures” and
“maximum possible accuracy.” Although the standard for
accuracy presents unique problems in this context,144 courts
tend to encounter many of the same problems with the “strict
procedure” standard as they did when defining “reasonable
procedures.”145 Courts often conflate the two, using reasonable
procedures as a way to qualify strict procedures.146 When a
plaintiff loses on reasonable procedures, he will likely lose on
strict procedures as well.147 And, since a plaintiff must also
prove that the CRA’s negligence proximately caused his injury,
many of the problems that were present in § 1681e(b) persist in
§ 1681k(a)(1), making it hard to see how this provision imposes
“heightened” requirements at all.
Turning to the first prong of the test laid out above,
§ 1681k(a)(1) explicitly offers CRAs a way to “opt-out” of the socalled “heightened” procedures by providing notice to the
consumer at the same time as providing a report to an
employer.148 If the agency contemporaneously provides notice,
its responsibilities revert back to those under the regular
§ 1681e(b) requirements.149 Since the notice provides no benefit
to the consumer,150 § 1681k, as written and as applied, fails to
create a meaningful form of heightened protection in the
employment context.
143
Adams v. Nat’l Eng’g Serv. Corp., No. 3:07cv1035, 2010 U.S. Dist. LEXIS
35489, at *7 (D. Conn. Apr. 12, 2010).
144
See infra Part IV.A.
145
See infra Part IV.B.
146
See infra note 157 and accompanying text.
147
See infra notes 158-61 and accompanying text.
148
See 15 U.S.C. § 1681k(a) (2006).
149
See infra note 167.
150
See infra notes 168-73 and accompanying text.
2012]
A.
GIVING MEANING TO THE FCRA
295
The Accuracy Requirement Is Ineffective
As for the threshold question of accuracy in the context
of employment, it would seem that § 1681k(a)(2) eliminates the
effect of the circuit split as to the definition of accuracy under
§ 1681e(b).151 Because § 1681k(a)(2) requires that reports be
complete and up to date, a CRA that reported a criminal record
but left out a subsequent expungement would be foreclosed
from using the technical accuracy approach as a defense. The
language of the statute, however, does not address the fact that
many court records are inaccurate, and that CRAs may be
reporting inaccurate information from them.
According to the statute, reports of public records are
“considered up to date if the current public record status of the
item at the time of the report is reported.”152 In Henson v. CSC
Credit Services,153 the court held that court records are “a
presumptively reliable source.”154 Therefore, the court held that
“as a matter of law, a credit reporting agency is not liable
under the FCRA for reporting inaccurate information obtained
from a court’s Judgment Docket, absent prior notice from the
consumer that the information may be inaccurate.”155 The court
felt that to hold otherwise “would be unduly burdensome and
inefficient” for CRAs.156 Therefore, although agencies are
subject to heightened standards in the sense that they must
ensure that the report reflects the current public records, those
standards do not actually produce reports with greater
accuracy overall.
B.
“Strict Procedures” Is Not Defined by the Statute
Additionally, in § 1681k, the statute changes the
standard from one requiring reasonable procedures to one
requiring strict procedures. While the reasonableness of
procedures follows the standard torts definition, “strict
procedures” is harder to define, and just like with
reasonableness, the statute offers no guidance. Because the
FCRA does not provide a definition, the courts are left to decide
151
See Smith v. HireRight Solutions, Inc., 711 F. Supp. 2d 426, 433 n.5 (E.D.
Pa. 2010); see also supra Part III.A.
152
15 U.S.C. § 1681k(a)(2).
153
29 F.3d 280 (7th Cir. 1994).
154
Id. at 285.
155
Id.
156
Id. at 285-86.
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what Congress intended. The result is that courts punt the
question to the jury with very little guidance, using “reasonable
procedures” as a qualifier, thereby conflating the two
standards. In Smith, the court simply stated that “[w]ithout an
extensive analysis of what constitutes ‘strict’ as opposed to
‘reasonable’ procedures, it stands to reason that ‘strict’ is
necessarily a more stringent standard.”157
At the summary judgment stage, when a plaintiff brings
claims under both § 1681e(b) and § 1681k, courts will usually
just evaluate the two claims together.158 After finding that a
report was inaccurate under § 1681e(b), there will almost
always be a question of fact as to the reasonableness of the
procedures,159 and courts will, therefore, assume that one exists
as to the “strictness” of the procedures, as well.160 Ultimately,
this comes down to the same “battle of the witnesses” that was
present in § 1681e(b),161 and the result is often the same in both
cases: if consumers fail to show that the CRA used reasonable
procedures, they will lose on a claim of strict procedures, as
well. In this way, the strict procedures required by the statute
remain unclear and undefined, and the supposed heightened
requirement that it imposes remains largely unenforced.
C.
Making Matters Worse—Offering CRAs a Way Out
To top off the frustrations consumers face in § 1681e(b)
and § 1681k(a)(2), the notice provision of § 1681k(a)(1)
explicitly offers CRAs a way to “opt-out” of the provisions of
§ 1681k(a)(2), allowing CRAs to exclusively follow § 1681e(b)
157
Smith v. HireRight Solutions, Inc., 711 F. Supp. 2d 426, 439 (E.D. Pa. 2010).
See, e.g., Williams v. LexisNexis Risk Mgmt., No. 3:06cv241, 2007 U.S.
Dist. LEXIS 62193, at *18-19 (E.D. Va. Aug. 23, 2007) (explaining that because the
Obabueki court was analyzing the adequacy of procedures under the FCRA, the court
analyzed the § 1681k claims under § 1681e(b)).
159
See supra notes 84-85 and accompanying text.
160
See, e.g., Adams v. Nat’l Eng’g Serv. Corp., 620 F. Supp. 2d 319, 332 (D.
Conn. 2009) (Because it had “already found that there exist[ed] a factual dispute over
whether NESC followed reasonable procedures, the court necessarily [held] that there
exist[ed] a genuine issue of material fact as to whether it followed strict procedures.”);
Poore v. Sterling Testing Sys., Inc., 410 F. Supp. 2d 557, 572 (E.D. Ky. 2006) (“Just as
there is an issue of fact as to whether such reliance and procedures were ‘reasonable’
under § 1681e(b), there is an issue of fact as to whether these actions constitute ‘strict’
procedures under § 1681k.”); Obabueki v. Int’l Bus. Mach. Corp., 145 F. Supp. 2d 371,
399 (S.D.N.Y. 2001) (The court approvingly cited Equifax v. Federal Trade
Commission, 678 F.2d 1047, 1049 & n.4 (11th Cir. 1982), for its recognizing that the
distinction between reasonable procedures and strict procedures “is clearly not without
significance,” yet holding that “the disposition of plaintiff’s respective claims under
these sections are parallel in this case.”).
161
See supra note 125 and accompanying text.
158
2012]
GIVING MEANING TO THE FCRA
297
without providing anything to consumers in return. Therefore,
rather than imposing heightened standards, this notice
requirement actually harms consumers without helping to ease
their burden in litigation. Given that Congress intended to
create heightened standards in the employment context
through § 1681k, the inclusion of § 1681k(a)(1) is an enigma.
Section 1681k applies when a CRA uses public records
to create a consumer report for employment purposes and the
information contained therein is likely to have an adverse
effect.162 The provision mandates that the CRA do one of two
things: either follow strict procedures to ensure a complete and
up-to-date report under § 1681k(a)(2), or,
at the time such public record information is reported to the user of
such consumer report, notify the consumer of the fact that public
record information is being reported by the consumer reporting
agency, together with the name and address of the person to whom
such information is being reported.163
Central to understanding this provision is recognizing
the problem the statute creates by permitting the CRA to
follow either subsection (a)(1) or (a)(2). Because of that choice,
stating a valid cause of action for violation of § 1681k “requires
Plaintiff to plead facts to establish both that: (1) Defendant
failed to timely notify Plaintiff of the report; and (2) Defendant
failed to ‘maintain strict procedures designed to insure’ that
the potentially adverse report is ‘complete and up to date.’”164
Therefore, failing to comply with the notice provision does not
create strict liability for the CRA; if a CRA fails to send timely
notice to the consumer, the consumer still must prove that it
negligently or willfully violated § 1681k(a)(2).165 Yet a CRA can
evade the supposedly heightened requirements under
§ 1681k(a)(2) by providing contemporaneous notice to both the
consumer and the employer.166 Much like the threshold question
of accuracy in § 1681e(b) claims, if the CRA provides this notice
to the consumer, then that ends the § 1681k inquiry; the CRA
does not have to prove that it followed strict procedures.
162
15 U.S.C. § 1681k(a) (2006).
Id. § 1681k(a)(1).
164
Smith v. HireRight Solutions, Inc., 711 F. Supp. 2d 426, 439 (E.D. Pa.
2010) (quoting 15 U.S.C. § 1681k(a)).
165
See, e.g., Adams v. Nat’l Eng’g Serv. Corp., No. 3:07cv1035, 2010 U.S. Dist.
LEXIS 35489, at *7 (D. Conn. Apr. 12, 2010) (stating that “Even if [the CRA’s] notice to
plaintiff was ‘clearly inadequate,’ as the Court found on summary judgment, it does not
necessarily follow that [the CRA] was negligent under the law.”).
166
Smith, 711 F. Supp. 2d at 438.
163
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Instead, its responsibility reverts back to the general
compliance requirements of § 1681e(b).167
What makes this so troubling is that the
contemporaneous notice requirement does not provide any
meaningful additional protection to the consumer to warrant
exemption from the heightened standards of § 1681k(a)(2).168
Contemporaneous notice does not give the consumer an
opportunity to dispute the contents of the report before the
potential employer receives it.169 Therefore, “By delaying its
meaningful accuracy test, the Act allows agencies and
furnishers a free pass that can be painfully costly to the
defamed consumer.”170 Thus, the smart CRA would always send
notice, and thereby avoid having to litigate whether it followed
strict procedures or not.
The problems that arise when an employer is the first to
receive the report demonstrate how this notice mechanism fails
to provide any benefit to the consumer. As discussed earlier,
the FCRA places a notice requirement on employers who wish
to “tak[e] any adverse action based in whole or in part” on
information contained in consumer reports—the employer must
“provide . . . the consumer . . . with a copy of the report” before
taking such adverse action.171 In theory, “The purpose of the
notification requirement is to allow individuals to contact the
consumer reporting agency and correct any inaccuracies
contained in a report, such as incorrect information regarding
an individual’s arrest or conviction.”172 In light of the way the
statute is worded, however, this requirement fails to provide
the consumer any meaningful chance of disputing the record in
time to remain a realistic candidate for the position.173
167
See EEOC, Statement of Maneesha Mithal, Meeting of Oct. 20, 2010,
available at http://www.eeoc.gov/eeoc/meetings/10-20-10/mithal.cfm#fn12 (“Regardless
of whether a CRA chooses to provide the notice or adopt strict procedures, section
1681e(b) of the FCRA still requires CRAs to have reasonable procedures to assure
maximum possible accuracy.”).
168
It is a well-documented problem with the FCRA that it does not provide
any form of relief until it is too late. See, e.g., ATTORNEY GENERAL’S REPORT, supra note
39, at 100-01; Elizabeth D. De Armond, Frothy Chaos: Modern Data Warehousing and
Old-Fashioned Defamation, 41 VAL. U. L. REV. 1061, 1107 (2007).
169
See De Armond, supra note 168, at 1107.
170
Id.
171
15 U.S.C. § 1681b(b)(3)(A) (2006).
172
Lujan, supra note 6, at 59; see also SEARCH, supra note 2, at 60
(“‘[P]readverse action’ notice is intended to give the consumer the opportunity to review
the report for accuracy and completeness before the employer makes a final decision.”).
173
This appears to be a fundamental flaw in the statute from its very
inception, related to the remedial nature of the statute. In explaining the requirement
that an employer provide notice to an employee before taking adverse action—a
2012]
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299
In Johnson v. ADP,174 plaintiff Eric Johnson ran into this
very problem. Johnson was denied employment by defendant
staffing agency RHI based on an erroneous criminal record in a
consumer report compiled by defendant CRA ADP.175 Initially,
RHI provided Johnson with a copy of the report and informed
him that his employment application was being placed on
hold.176 Fourteen days later, RHI informed Johnson that he was
no longer being considered as a candidate.177 Johnson sued RHI
claiming that it violated the FCRA by disqualifying him so soon
after sending the statutorily required notice, effectively
denying him an opportunity to dispute the contents of the
report.178 The FCRA allows CRAs thirty days to investigate
disputes by consumers.179 Johnson argued that since ADP had
thirty days to review his report, RHI should have to wait at
least thirty days before taking adverse action against him.180
requirement that was added by the House conferees prior to the FCRA’s enactment—
then House Representative Sullivan explained,
The House conferees succeeded in assuring immediate notification to any
individual, who is rejected for . . . employment because of information in a credit
report, of the name and address of the agency which made the report on him.
Thus, his right to access to his file is made more meaningful—he will
automatically be told where to look for information which may be causing him
needless harm. The Senate bill would have required the consumer who had been
rejected for . . . employment because of adverse information in a credit file to
request, in writing, the name and address of the credit reporting bureau in order
to check further into the information which may have caused his rejection.
116 CONG. REC. 36571 (1970) (statement of Rep. Sullivan), quoted in Drury v. TNT
Holland Motor Express, 885 F. Supp. 161, 165 (W.D. Mich. 1994). This focus on
allowing consumers to fix their report ex post exemplifies how the consumer cannot
realistically expect to keep the job offer. And, given the aforementioned inadequacies,
the FCRA’s protections seem almost meaningless—if a consumer loses one job, then he
might have a chance for another, but he will almost never know that he does not have a
clean report until he loses that first job. See De Armond, supra note 168, at 1106. This
ex-post approach to correcting inaccuracies presents another problem: since “[t]he
process of evaluating and choosing employees is a subjective, hidden process with no
oversight[,] . . . the notice requirement is in reality no more than a request that
employers act in good faith.” Ruth Desmond, Comment, Consumer Credit Reports and
Privacy in the Employment Context: The Fair Credit Reporting Act and the Equal
Employment for All Act, 44 U.S.F. L. REV. 907, 919 (2010). Additionally, “there is the
risk that the employer will still be influenced by the record in his employment decision
and find another ostensible reason not to hire the individual, even if a mistake in the
record is corrected before the adverse action is taken.” ATTORNEY GENERAL’S REPORT,
supra note 39, at 101.
174
768 F. Supp. 2d 979 (D. Minn. 2011).
175
Id. at 981. “[T]he criminal records incorrectly list[ed] his race as ‘black.’”
Id. at 984.
176
Id. at 981.
177
Id.
178
Id. at 981, 983.
179
15 U.S.C. § 1681m (2006).
180
Johnson, 768 F. Supp. 2d at 983.
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The court disagreed. Looking to the language of the
FCRA, the court stated that there is no statutorily
“mandate[d] . . . waiting period between the notice and the
adverse action.”181 Still, the court recognized that “Congress’s use
of the word ‘before’ shows that there must be some time between
notice and action.”182 However, in what is now a familiar
problem, the court was left looking at a statute that provided a
dearth of guidance into exactly how much time “before” would
satisfy the statutory requirement. Ultimately, the court felt that
the two weeks that RHI waited between notice and taking
adverse action satisfied the requirement of the statute.183
The holding in Johnson shows how consumers are hurt
when their employer receives a copy of their consumer report
before they have a chance to review it. In fact, just one week
after RHI denied Johnson employment, ADP concluded that his
criminal record had been inaccurate.184 This conclusion was
reached within the thirty-day window provided to CRAs, but it
was still too late—RHI had already made its decision. And yet
RHI had acted, according to the court, completely within its
mandated requirements. Further, the court stated in its
holding that “[n]othing in the FCRA requires an employer to
consider any correction that a reporting agency might make.”185
Therefore, similar to the problems already shown, once the
damage had been done by the inaccurate report, nothing could
be done to fix it. But, if the FCRA is a “remedial statute[],”186 as
the Johnson court called it, then the statute should actually
provide some meaningful remedial relief for injured consumers.
Further, if providing a private right of action under the FCRA
was intended to be a “part of its enforcement mechanism,”187
then bringing a private action should induce CRAs to employ
better practices, something which clearly has not happened.
V.
THE SOLUTION: AMENDING § 1681K
In light of Congress’s intention for § 1681k to impose
heightened responsibilities on CRAs, the standards in
§ 1681k(a)(2) must be enhanced by giving meaning to the
181
182
183
184
185
186
187
Id.
Id.
Id. at 984.
Id. at 981.
Id. at 984.
Id. at 983.
Cahlin v. Gen. Motors Acceptance Corp., 936 F.2d 1151, 1156 (11th Cir. 1991).
2012]
GIVING MEANING TO THE FCRA
301
requirement of strict procedures and by providing for greater
accuracy in background checks. Further, the statute should not
provide CRAs an opportunity to “opt-out” of § 1681k(a)(2) through
use of the notice provision of § 1681k(a)(1). Modifying this notice
requirement and incorporating it into § 1681k(a)(2) may provide a
solution to many of the problems outlined in this note.
The fact that Congress thought to include a notice
provision in § 1681k shows that the lawmakers at least
recognized that the consumer is in the best position to identify
and fix a mistake in his consumer report. Courts also recognize
that “[t]he consumer is in a better position than the credit
reporting agency to detect errors appearing in court documents
dealing with the consumer’s own prior litigation history.”188
However, although the right intention exists, the methodology
is flawed in at least two important ways. First, notifying a
consumer that a report of his criminal history is being prepared
will not necessarily move that consumer to request a copy of
the report. As happens in many cases, information in a
criminal history report may be completely erroneous, and the
consumer may not realize that he has any reason to suspect
errors.189 The consumer may also be motivated by the fear that
if he delays production of the report to the employer, he will be
viewed as having something to hide. Second, and most
important, for such a method to have any meaningful effect on
employment decisions, the consumer must have the ability to
inspect and correct the report before a potential employer has
the opportunity to see it. Providing notice of the report to the
consumer at the same time the report is supplied to the
employer fails to provide that protection.
Therefore, the first step to amending § 1681k is to require
the CRA to provide the consumer with a copy of the report before
providing it to the employer.190 A simple way to enforce this would
188
Henson v. CSC Credit Servs., 29 F.3d 280, 286 (7th Cir. 1994).
ATTORNEY GENERAL’S REPORT, supra note 39, at 100.
190
Noting the problems inherent in the failure of the FCRA to provide a
consumer with the opportunity to review his criminal record ahead of a prospective
employer is not a novel observation. See, e.g., De Armond, supra note 168, at 1107. It
has also been suggested that as a means of consumer protection, “Congress may want
to consider imposing the requirement of giving consumers the pre-reporting
opportunity to see the information in all reports of criminal records by consumer
reporting agencies.” ATTORNEY GENERAL’S REPORT, supra note 39, at 134. More
recently, one student writer, aiming to bolster the efficacy of Ohio’s record-sealing
statute, proposed that Ohio adopt a credit reporting law that would give consumers
access to their criminal record reports prior to their being provided to prospective
employers. Jagunic, supra note 2, at 185 (proposing that Ohio “enact credit reporting
legislation that allows a consumer to dispute inaccurate and out-of-date information
189
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be to impose strict liability on CRAs who fail to do so. Congress,
however, clearly did not intend for the FCRA to create strict
liability. Instead, the amended § 1681k(a)(1) should be combined
with § 1681k(a)(2), and prior notice to the consumer should be
considered a “strict procedure” for ensuring that the report is
complete and up to date. In this way, the “strict procedures”
required in § 1681k would have a definition more rigorous than,
and separate from, the “reasonable procedures” required in
§ 1681e(b), thereby ameliorating many of the problems found in
litigation under § 1681k.
The D.C. Circuit Court of Appeals suggested that CRAs
could provide reports to satisfy the reasonable procedure
requirement of § 1681e(b) in Koropoulos v. Credit Bureau.191
There, in the context of a credit report that was incomplete, yet
not erroneous or misleading, the court stated that “the
likelihood that consumers will be harmed by incomplete reports
that are neither misleading nor erroneous is less, and in many
cases it may well be a ‘reasonable procedure’ to let the potential
creditor supplement the missing information himself.”192 For
reasons already discussed,193 leaving the responsibility of fixing
a consumer report in the hands of the employer would not work
because the consumer is already harmed if the employer views
an erroneous report. But, using the framework suggested by
the Koropoulos court, CRAs could satisfy “strict procedures” by
providing a report to the consumer before showing it to the
employer. The analogy works as follows: if allowing a potential
creditor to supplement missing information in a credit report
could be considered a reasonable procedure for assuring
maximum possible accuracy under § 1681e(b), then perhaps
before it is provided to a prospective employer”). And, earlier this year, a report by the
NCLC stated that CRAs should “send the consumer a notice that they intend to report
the negative information before they send the information to the prospective employer,
so that incomplete information can be addressed prior to dissemination,” thereby “ensuring
that records are complete and up-to-date, and no sealed or expunged information is
provided.” NAT’L CONSUMER LAW CTR., supra note 10, at 34.
191
734 F.2d 37 (D.C. Cir. 1984).
192
Id. at 45. The court reasoned that:
Imprecise or incomplete reports that are not misleading, although undesirable,
are not as noxious as erroneous and misleading ones. The potential creditor is
not misled; he is merely missing information which might be relevant to his
decision whether to grant credit. Unlike the case of erroneous or misleading
reports, the potential creditor can often correct inaccuracies himself by asking
the credit applicants or the source to supply the missing information.
Id.
193
See supra notes 168-73 and accompanying text.
2012]
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providing a copy of a criminal report to the consumer to verify
its accuracy could be considered a strict procedure for ensuring
the report is complete and up to date under § 1681k.
This approach would benefit both the consumer and the
CRA. Consumers would have the chance to review their
purported criminal records before they are given to potential
employers. CRAs would have a clear example of a compliance
mechanism that satisfies the strict procedure requirement.
Employers would most likely oppose this proposition,
claiming that they will be forced to delay hiring schedules and
bear added costs. In Johnson, however, the court rejected a
similar argument by the CRA that a waiting period between
providing consumers with their reports and taking adverse
action “would create untenable constraints on employers” by
pausing their hiring process pending resolution of any
dispute.194 The court held that the language of the FCRA
required some waiting period and that the CRA’s position
would “lead to absurd results.”195 Given that the FCRA was
enacted to ensure accuracy in the credit reporting industry, it
would seem that a short delay in the process would not be
beyond the reach of the statute. Most disputes could be cleared
up rather quickly, and, at that point, the employer could make
a well-informed decision based on accurate data. Additionally,
since the report would have already been created, the cost of
sending a copy to the consumer first would be minimal.
CONCLUSION
Criminal background checks can provide important
information to potential employers about their prospective
employees. At the same time, these consumers must be
protected by ensuring that what their potential employers find
out about them is accurate and up to date. The FCRA aims to
regulate the production of consumer reports and places
requirements on the CRAs that compile information pertaining
to criminal records. When a consumer is injured because of a
flawed report, however, the FCRA provides little meaningful
relief. Having lost an opportunity for employment, the injured
consumer must then engage in protracted litigation with a low
chance for success. Additionally, § 1681k of the FCRA—which
194
Johnson v. ADP Screening & Selection Servs., 768 F. Supp. 2d 979, 983-84
(D. Minn. 2011).
195
Id.
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purportedly places heightened standards on CRAs in the context
of employment—actually only harms consumers, while helping
the CRAs. Because the requirements under that section are
inadequately defined, the standard of care required is much the
same as the general standard of care required under other
sections of the FCRA. Additionally, CRAs can “opt-out” of the socalled “heightened” requirements, without giving the consumer
anything in return. Amending the FCRA by combining the two
choices in § 1681k can provide a solution to these problems. It
would give some guidance to courts and juries on the required
heightened standard of care in the employment context, and it
would eliminate the ability of CRAs to “opt-out” from
compliance. Most importantly, it would give the consumer a
meaningful chance of avoiding injury in the first place.
Noam Weiss†
†
J.D. Candidate, Brooklyn Law School, 2013; B.A., Sociology, University of
Maryland, 2009. I would like to thank the Brooklyn Law Review staff for their hard
work in the editing process. I would also like to thank Professors Anita Bernstein and
Marilyn Walter for their helpful comments on earlier drafts of this note. Finally, I
would like to thank my family, especially my parents, for their continued and
unwavering love and support.