The Political Process of Preemption

Paul A. Diller*, The Political Process of Preemption, 54 U. Rich. L. Rev. 343 (2020).

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Preemption, particularly of the state-city variety, has become a hot topic. State legislatures in many states over the last decade have preempted a wide swath of areas in which cities and counties were previously free to govern. In addition to the sweeping nature and frequency of preemption, the increasingly aggressive methods of enforcing preemption have drawn notice. The threat of fiscal penalties, removal of local officials from office, and even criminal sanctions constitute what one scholar has dubbed the phenomenon of “hyper preemption.”

There are several reasons why this new landscape of preemption is of concern. Advocates of local control lament the loss of cities’ ability to use their local expertise to solve local problems. Relatedly, fans of local innovation fear that aggressive preemption limits the ability of cities to try out new policy proposals that might work their way up the state or federal ladder. The specter of personal penalties for city councilors who support preempted ordinances may dissuade citizens from running for local elected office, a crucial training ground for state and federal positions and an intrinsically important component of our democratic system. Even if not punitive, sweeping substantive preemption may weaken cities so much that voters and potential elected officials have less interest in participating in city governance. Finally, due to the political valence of much of the recent preemption—by more conservative state legislatures preempting the policy priorities of populous, politically liberal cities—political progressives see preemption as an attack on their values and priorities.

Because of the issue-based nature of preemption, it is tempting to approach the subject in a results-based manner. Political progressives, for instance, may oppose preemption of local firearm regulation, but cheer preemption of local ordinances that crack down on illegal immigration. Conversely, political conservatives bemoan preemption of local “right-to-work” ordinances, but support preemption of the minimum wage. Courts and legal scholars have struggled for years to offer a neutral way out of this morass.

For decades some scholars and courts have argued that a neutral way of determining the legitimacy of statewide preemption is by focusing on whether the particular issue in play is “local” or not. Many scholars and judges, however, have rightly criticized this approach as intellectually unsatisfying. Another view, recently offered in a brilliant essay by Nestor Davidson, is that courts might find their way out of the results-based morass by homing in on whether the preemptive legislation furthers the “general welfare” of the state. This approach is attractive, particularly with respect to deregulatory preemption. Employing it may still, however, require courts to make policy-based determinations regarding whether a state or local choice furthers the general welfare.

This Article suggests a different path out of the morass by inviting scrutiny of the political process of preemption. Focusing on state rather than federal preemption, this Article assumes—without endorsing—the primacy of the state over its political subdivisions, a view embraced by the Supreme Court in the seminal 1907 case of Hunter v. City of Pittsburgh and beyond. While making this assumption, this Article nonetheless critically examines it by digging deeper into the roots of state sovereignty and the state’s claim to dominion over its subentities.

At the time of the Founding, states were seen as sovereign due to their representation of “the people.” Building off of this conception of state sovereignty, the Court in Hunter recognized plenary state power over cities—or local “agencies”—as the Court referred to them. Fifty-seven years later, in Reynolds v. Sims, the Court recognized one-person, one-vote as a key component of representation, embracing the idea that the state legislature ought to be responsive to the policy preferences of a majority of the state’s voters. After Reynolds, the Court continued to reaffirm Hunter’s notion of state primacy without explicitly re-examining the premises of this assumption. After Reynolds, however, state primacy and the majoritarianism of state government had become fused, and rightly so. Only a democratically legitimate state government—that is, one which purported to represent credibly a majority of the state’s population—could justifiably exercise its plenary powers over the democratic subunits within it.

Working from these premises, this Article argues that when state preemption is the product of a credibly majoritarian lawmaking process, it might be considered less objectionable, regardless of its political valence. A key component of democratic illegitimacy, this Article will argue, is intentional political gerrymandering. Such gerrymandering distorts the legislature’s composition and leads to legislative products that do not accurately reflect the views of the median voter statewide. When produced by other processes, such as direct democracy, preemption may reflect the majority’s will in some crude sense, but may raise other normative concerns.

Before proceeding, it is useful to clarify what this Article means by preemption. This Article uses the word broadly to include any override of pre-existing local power or prerogative by statute or constitutional amendment. Such preemption may impose a new regulatory regime from above, displacing the locality’s previously governing regime, or it may impose a regulatory regime when none such existed previously at the local level. As used here, preemption may also simply deprive the locality of the authority to implement a regulatory regime or fiscal choice, such as its preferred level of taxation, without providing any new regime or supplementary revenue in its place. Almost all of the preemption discussed here is of the general type—i.e., not special legislation that formally applies only to one city or a handful of cities—but the framework of the analysis should apply similarly to special preemption.

Part I of this Article examines the roots of the state’s role as sovereign, and how the democratic legitimacy of the state legislature eventually became linked to a notion of majoritarianism, as epitomized by Reynolds. Part II discusses how and why gerrymandering and political geography may cause a legislature to stray from majoritarianism. Part II examines this phenomenon in the context of state-local relations, in particular. Part II includes vignettes of some key states where gerrymandering has arguably led to unrepresentative preemption in approximately the last decade. Part III looks at how the initiative process differs from the legislative process in the context of preemption. Nothing is more seemingly majoritarian than the voters enacting a policy preference by a majority vote. Nonetheless, direct democracy raises distinct problems of democratic legitimacy, which Part III assesses in the context of state-local relations. Finally, Part IV looks at some other factors in prominent preemption instances of late, including legislative “horse trading” and punitive enforcement mechanisms, and asks what these dynamics reveal about the legitimacy of state overrides.

* Professor of Law, Willamette University College of Law, Salem, Oregon. J.D., University of Michigan. B.S., B.A.S., University of Pennsylvania. The author thanks Jessica Bulman-Pozen, Nestor Davidson, Christopher Elmendorf, Richard Schragger, Ken Stahl, and many others for insightful comments on earlier drafts. The author also thanks Mary Rumsey, Research Librarian at Willamette, and Mick Harris, law student, for outstanding research assistance.

Ethical Blind Spots in Adoption Lawyering

Malinda L. Seymore*, Ethical Blind Spots in Adoption Lawyering, 54 U. Rich. L. Rev. 527 (2020).

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When Sherrie Smith approached her lawyer, Robert Stubblefield, desiring to place her then-unborn child for adoption, he agreed to help her find adoptive parents for the child. He found them in his own home—he and his wife, without telling the mother until after she signed an irrevocable consent, adopted the child. If Stubblefield had tried to buy her house under those circumstances, it would have been a clear violation of the Model Rules of Professional Conduct (the “Model Rules”)—when it comes to business transactions with clients, the Model Rules recognize that a lawyer’s legal training, together with the trusting relationship between the lawyer and potentially less powerful client, “create the possibility of overreaching.” A lawyer cannot enter into business transactions with a client unless the terms are fair and reasonable to the client and disclosed in a writing transmitting those terms in a manner that can be understood by the client.[3] The client must also be advised in writing that they should seek the advice of independent legal counsel and be given a reasonable opportunity to do so. Finally, the client must give informed consent in a writing signed by the client that outlines the transaction terms and the role of the lawyer in the transaction. Stubblefield took none of these steps necessary to protect a client from an overreaching attorney in a business transaction when adopting his client’s child without her knowledge. If he had been buying his client’s business or house rather than adopting her child, his course of conduct would have clearly run afoul of the Model Rules.

But perhaps it is wrong to compare an adoption process to a business transaction, though adoption is clearly a business in addition to a child welfare institution. Language of “gift” abounds in adoption; perhaps the transaction between Sherrie and Stubblefield was a gift. But lawyers are also prohibited from soliciting substantial gifts from clients, out of the same concerns for undue influence that arise in business transactions. Even without the special rules regarding gifts and business transactions, Stubblefield was operating in his own self-interest—his desire to adopt the child—rather than out of undivided loyalty to his client. That, too, is a violation of the general conflict of interest rules regulating attorney behavior.

How did Stubblefield miss these red flags signaling unethical behavior? Perhaps it is simply that the Model Rules fail to give sufficient guidance in specific areas. Perhaps the answer lies in the field of behavioral ethics, in “all too human modes of thinking.” Behavioral legal ethics posits that psychological factors blind lawyers to their own unethical conduct. Psychological factors may also blind lawyers to the ethical missteps of others as well, which may explain why the Stubblefield court had a great deal of difficulty imposing discipline on Stubblefield for adopting his client’s child and settled for merely proscribing such conduct in the future.

For adoption lawyers, ethical blind spots may arise because of their views of the righteousness of adoption work:

It is also too easy for attorneys to become caught up in the view that family formation work always exemplifies goodness and morality, possibly causing them to disregard the interests of the other parent as the lawyer marches toward the goal of creating a new and legally recognized parent/child relationship.

Even without a personal desire to adopt the client’s child, the attorney’s view of the inherent rightness of adoption may lead to unconscious bias. Lawyers often view adoption as “happy law,” ignoring the fact that adoption always starts with loss.

This Article discusses ethical issues relevant to adoption attorneys, as well as the lessons from behavioral ethics that inform the ethical blind spots common in the practice. The Model Rules for attorneys address a number of areas relevant to the complexities of adoption practice. Rules relating to competency and confidentiality, conflicts of interest and dual representation, and the lawyer’s roles as counselor as well as advocate are particularly germane. Although much has been written about the dual representation issue in adoption, other issues of professional responsibility in adoption cases have not been as carefully explored. This Article seeks to remedy that. Since legal ethics can be both descriptive and normative, this Article addresses both what the ethical requirements of professional responsibility are and what they should be in adoption practice. In doing so, this Article considers whether a more child-centered approach to adoption practice comports with the Model Rules. In addition to rules of professional conduct, there are other legal constraints on a lawyer’s conduct:

[T]he rules adopted in every state to regulate the conduct of lawyers are just one set of guidelines for the practice of law. Discovery rules, malpractice claims, appellate review of lower court decisions, the inherent power of the courts to punish for contempt, and even the criminal law provide constraints on how lawyers should operate when representing clients.

In assessing ethical lawyering in adoption, this Article examines all of these legal sources of ethical standards, as well as disciplinary rulings. This Article seeks to sketch the contours of ethical lawyering in adoption in order to shine light on the ethical blind spots adoption attorneys should avoid. Finally, this Article examines solutions to ethical blind spots from behavioral ethics.

* Professor of Law, Texas A&M University School of Law. I gratefully acknowledge the financial and institutional support of Texas A&M, without which this Article would not have been possible. This Article expands on an essay to be published by Adoption Quarterly’s special issue on adoption ethics. As is the tradition among those who write about adoption, I wish to note my place in the adoption triad: I am an adoptive parent of two children via international adoption.

Pills, Public Nuisance, and Parens Patriae: Questioning the Propriety of the Posture of the Opioid Litigation

Michelle L. Richards, Pills, Public Nuisance, and Parens Patriae: Questioning the Propriety of the Posture of the Opioid Litigation, 54 U. Rich. L. Rev. 405 (2020).

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The opioid crisis has been in litigation for almost twenty years on various fronts, including criminal prosecutions of pharmaceutical executives, civil lawsuits by individuals against drug manufacturers and physicians, class actions by those affected by opioid abuse, and criminal actions filed by the Drug Enforcement Administration (“DEA”). In the early 2000s, opioid litigation began with individual plaintiffs filing suit against manufacturers and others for damages allegedly related to opioid use. The litigation has since expanded significantly in terms of the type of plaintiffs and defendants, the nature of the claims being asserted, and the damages attributable to the crisis.

The most current and active litigation is that which is pursued by state attorneys general in both federal and state courts to recover monies expended in their respective jurisdictions in response to the opioid epidemic. Additionally, and to a greater extent, individual municipalities, including cities and counties and even tribes like the Cherokee Nation, have filed similar independent actions against drug manufacturers, distributors, and pharmacies. In 2018, more than 400 of the cases filed in courts throughout the United States by individual states, local governments, individuals, and other nongovernmental entities against drug manufacturers, distributors, and pharmacies were consolidated and transferred for pre-trial coordination to the Northern District of Ohio by the Judicial Panel on Multidistrict Litigation under the multi-district litigation (“MDL”) process set forth in 28 U.S.C. § 1407. Since that time, an additional 1500 parties have been added to this consolidated litigation, and there are approximately 330 opioid-related cases pending in various state courts, including fifty-five lawsuits filed by state attorneys general. In fact, in April 2019, plaintiffs’ expert witnesses provided reports that estimated it will cost more than $480 billion to “fix” the crisis.

One clear conclusion that can be drawn from even a cursory review of the nature of the litigation that has arisen over the last twenty years is that nearly every facet of the community, from individuals and families to government entities and corporations, has been affected by the opioid crisis. Another point that cannot be denied is that the prescription drug industry, including manufacturers, distributors, and pharmacies, played a significantly culpable role in allowing the crisis to develop into its current magnitude. However, what is also clear is that many, many others played supporting roles in this regard, including, but not limited to, individuals, friends; families; governments, both federal and state; licensing boards; and physicians.

So, how can litigation possibly sort through this massive morass of players, and will it really result in any sort of meritorious resolution? Some believe that the “how” is a recipe that combines, in part, parens patriae standing and common law public nuisance claims. However, based on a historical review of the mass tort cases that have used both parens patriae standing and public nuisance claims, it is unlikely that the opioid litigation will really benefit anyone or anything other than the lawyers who represent parties on both sides of the proverbial “v.” Most concerning is that opioid courts have been more interested in orchestrating a mass settlement than evaluating the propriety of the posture of the litigation itself. For example, on September 11, 2019, Judge Dan Polster, the judge assigned to handle the massive opioid MDL, certified a “first-of-its-kind” negotiating class to promote global settlements between local municipalities, including cities and counties, and the numerous defendants in the MDL, which include drug manufacturers, distributors, and sellers.

This is not the first time that litigation has played a role in attempting to resolve a public health crisis. When the doctrine of parens patriae and public nuisance claims are invoked by the states and utilized in mass tort litigation, the matters typically resolve quickly, suggesting perhaps that these two doctrines are beneficial to both sides in matters of complex tort liability. For example, the litigation against the tobacco industry in the 1990s has been referred to as “the most salient example of a high-profile litigation effort that after settlement yielded vast sums.” However, post-Big Tobacco, many strongly believe that the tobacco litigation actually did not do much to change the behavior of the general public and the tobacco industry itself. And, perhaps most importantly, there is significant doubt as to whether that litigation actually improved the public health of the country. Regardless, since the litigation against Big Tobacco, the combination of parens patriae standing and public nuisance claims has been used more frequently to address other public health concerns including guns, lead paint exposure, and, currently, opioids.

Although many comparisons have been made between the Big Tobacco and opioid litigation to both justify and predict the ultimate outcome of the opioid litigation, there are significant differences between the two that should provide some impetus for courts to consider whether the continued use of parens patriae standing and public nuisance claims is justified in these types of matters. In fact, as compared to most other mass tort cases that have utilized a combination of parens patriae standing and public nuisance claims since Big Tobacco, the fact that the product involved in the opioid litigation is a legitimate and beneficial prescription drug should signal to the courts that the propriety of the procedural posture of the case deserves some consideration. Further, there are complex causation issues in opioid cases that did not exist in the Big Tobacco litigation. Finally, it is important to acknowledge that there continue to be serious concerns post-tobacco litigation that the settlement reached under the Master Settlement Agreement (“MSA”) did not achieve the goals of tort litigation because the settlement monies were rarely, if ever, used to assist those who were most affected by tobacco use; instead, lawyers took a large chunk of the pot, and states often spent the money for other needs.

So far, some of the settlements reached in the opioid cases urgently point toward a need for judicial oversight over the manner in which standing is asserted and claims are pled. For example, in one of the opioid litigation cases that has already resolved, a significant portion of the money “recovered” by the governmental entities has not been allocated to opioid-related expenses.[14] In another case, Oklahoma’s Attorney General reached a $270 million settlement with one of the opioid manufacturers, in which the monies would be used to fund addiction research and treatment in Oklahoma and to pay legal fees to the private counsel retained by the state.[15] However, because a large portion of the damages claimed in the litigation were Medicaid payments made to Oklahoma citizens for healthcare costs allegedly attributable to opioid use, the federal government has now demanded that Oklahoma reimburse it for a portion of the federal contribution toward those Medicaid payments, which amounted to sixty-two percent of the costs of Oklahoma’s $5 billion Medicaid program in 2019.[16] As the terms of the settlement only provided for the costs of addiction research and legal fees, it is unclear as to how Oklahoma will address that reimbursement demand. Finally, there is some indication that these settlements are actually creating tax incentives for the opioid defendants as a portion of the settlement may be classified as “restitution,” for which a deduction is provided in tax law for “damage or harm which was or may be caused by the violation of any law or the potential violation of any law.”[17]

In light of the differences between the opioid and Big Tobacco litigation and the post hoc view of the resolution of the Big Tobacco and other mass tort litigation, this Article cautions against the use of parens patriae standing and public nuisance claims to achieve a mass settlement without first examining whether the use of those tools will truly lead to a resolution that fulfills the goals of tort litigation—namely, to define acceptable conduct in society, to direct compensation to victims of prohibited conduct, and to deter others from acting in a similar fashion.

Part I of this Article provides an overview of the parens patriae doctrine and the expansive role it has played in mass tort litigation. Part II discusses public nuisance claims and how they have evolved into an attractive tool for attorneys seeking reimbursement for expenditures made in relation to respective underlying tort claims. Part III examines, more specifically, the Big Tobacco litigation and evaluates resulting consequences. Part IV of this Article introduces the history of the opioid crisis and the litigation that has flowed from it. Finally, Part V compares the use of parens patriae and public nuisance claims in the opioid litigation to the Big Tobacco litigation and encourages the courts to consider the propriety of the use of those tools in the opioid crisis.

* Assistant Professor of Law, University of Detroit Mercy School of Law, J.D., 1994, University of Detroit Mercy School of Law; B.A., 1991, Michigan State University.  The author gratefully acknowledges the support of Detroit Mercy Law colleagues Professor Julia Belian, mentor Professor Howard Abrams, and research assistant Aaron Pattison (2020). Many thanks also to Allison Bohan and the staff at University of Richmond Law Review.

The Corporate Chameleon

Megan Wishchmeier Shaner, The Corporate Chameleon, 54 U. Rich. L. Rev. 527 (2020).

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Since the adoption of the first American general incorporation statutes in the late nineteenth century, corporate law has contemplated three distinct actors involved in the corporation—directors, stockholders, and officers. Today, officers are widely considered among the most central, if not the central, figures in corporate governance. Yet they are the least theorized participants. While corporate statutes and case law make clear the identities of directors and stockholders, officers are left relatively undefined. Over 120 years after the creation of modern corporation law, “Who is an ‘officer’ of a corporation?” remains an open question. The definitional uncertainty surrounding “officer” is problematic at the individual, institutional, judicial, and legislative levels. Categorization as a corporate officer carries with it distinct legal duties, rights, and liabilities. Currently, individuals, boards, and their counsel are left to speculate as to “officer” status. Lacking in established definitional boundaries, parties opportunistically define “officer” to fit their particular argument, causing judicial analysis and rulemaking as it pertains to corporate officers to become inconsistent and unpredictable.

Historically, corporate codes identified a handful of officers that every corporation should, and in some cases, must have. Over the years, the adoption of statutory reforms largely stripped out all references to any particular office or title. Corporate statutes contemplate a distinct “officer” category, but refrain from articulating that role with any specificity, leaving it up to corporations to do so in their governing documents.Corporations have, however, refrained, through private ordering in their bylaws or otherwise, from clarifying the term “officer.” In fact, corporations have done the opposite; through exercising the freedom of contract provided under the enabling regime of modern corporate law, corporations have muddied the definitional waters, fashioning officer titles in myriad ways and giving titles to countless people, many of whom lack traditional officer responsibilities and authority. Over the years corporate law has developed in such a way that identifying the officers of a corporation, as that role is contemplated in corporate jurisprudence, is arguably a more challenging task than it has ever been.

In addition to state corporate codes, federal securities law, jurisdictional statutes, and bankruptcy law all make reference to the corporate “officer.” Each defining “officer” in slightly different terms, courts disagree over the proper interpretation of “officer” and the proper identification of persons occupying this role.[7] A contributing factor to the inconsistent interpretations is the lack of a “north star” definition in state corporate law for courts to look to for guidance. The resulting definitional fluidity within and across disciplines means that individuals can move in and out of “officer” status in a chameleon-like fashion depending on the context and jurisdiction in which they operate.

To be sure, this chameleon-like result is not exclusive to the term “officer.” There are many words in the English language that take on new or specialized meanings depending on the area of law or jurisdiction in which one is operating. Moreover, legal definitions can expand, contract, or be transformed into new definitions depending on the context in which a word or phrase is being used. The variable nature of words in the law becomes problematic, however, when there is a lack of established consensus and clarity in defining a term. Linguistic precision is vital to the development, practice, and application of the law, but to achieve this, there needs to be clear delineation of a term’s legal meaning(s). This is necessary for individuals to understand their legal responsibilities and authority, and for lawyers and judges to communicate efficiently and effectively. If left unresolved, definitions will be determined ex post, allowing parties to opportunistically define terms to fit their particular argument or position.

While limited in scope, “officer” scholarship to date has focused on identifying the authority, responsibility, and liability of these individuals. Research in this area (including that written by this author) avoids the messy step of having to delineate with precision “officer” status in a corporation. However, before officer jurisprudence is further developed by the courts or scholars, the threshold question of “To whom does the doctrine apply?” needs to be answered. Corporate governance specifies different consequences that attach to the different categories of corporate actors. It is both normatively and practically problematic to decide consequences without reference to a clearly defined category.

Defining “officer” has become particularly pressing in light of the private ordering movement in corporate law. With increasing frequency, parties are structuring key aspects of corporate governance through private contracting methods. Observing that the ambiguity surrounding officers in corporate law makes it a ripe topic for private ordering, the American Bar Association (“ABA”) has created a Task Force on Officer Liability charged with developing ways of addressing uncertainties in officer doctrine and developing model provisions suitable for use in employment agreements and governing documents. Integral to these efforts will be establishing a clear consensus on the legal default definition of “officer.” As individual corporations and their stockholders begin to attempt to structure the governance of their entity through provisions in the governing documents or contract, clarity as to whom the law views as an “officer” is critical.

This Article seeks to address what is currently missing from corporate law—a clear way of determining “officer” status as that distinct legal role is contemplated in corporate jurisprudence. Part I discusses the three primary actors involved in the internal governance of the corporation—directors, stockholders, and officers—and how the law defines each one. While corporate law clearly contemplates officers as a distinct role, a quick comparison of the three reveals a failure to identify with any precision the bounds of “officer” status. Part II looks to other areas of the law for guidance in defining and identifying the officers of the corporation. While the policy considerations underlying the definitions of “officer” in each of these other areas of the law may be similar or different to those animating “officer” for purposes of state corporate law, the articulation and identification of individuals occupying the officer role are nevertheless instructive. Finally, Part III applies the lessons learned from the struggles courts in securities law and bankruptcy law have had in identifying officers and proposes a test for determining “officer” status. Adopting a prototype-centered approach, the proposal rejects a fixed definition in lieu of a multi-factor approach that embodies the traditional and legal officer roles espoused by courts and scholars. The result stabilizes the meaning of “officer” as a category of corporate actor and provides predictability and certainty to corporations, officers, directors, stockholders, third parties, and their counsel going forward.

* Associate Dean for Research & Scholarship; Professor of Law, The University of Oklahoma College of Law. For helpful comments and discussions, I would like to thank Afra Afsharipour, Brad Bernthal, Wendy Netter Epstein, Charlie Korsmo, Christopher Odinet, and Christina Sautter. I would also like to thank the participants in the National Business Law Scholars Conference, the Law and Society Annual Meeting, and BYU Law School’s Winter Deals Conference whose thoughtful comments and questions contributed to the completion of this Article.