The University of Chicago Legal Forum 2020 Symposium
PANEL A: GOVERNMENT AUTHORITY IN PUBLIC HEALTH EMERGENCIES
1. Lochner Under Lockdown
Eugene Kontorovich, Antonin Scalia Law School at George Mason University
In 1905, the Supreme Court rendered two landmark decisions on the scope of individual liberty. One of these forms the bedrock of all judicial examinations of public health measures ever since, and is a staple citation of COVID cases. The other has long ago been chucked in the dustbin of constitutional history, known now only as part of the “anti-canon.” Yet now, keeping pandemic restrictions in place for what may be an indefinite period requires putting together these two cases, Jacobson vs. Massachusetts and Lochner v. New York. To address the broad restrictions on liberty caused by current and foreseeable pandemic responses, Lochner must be brought out of lockdown.
The overarching story of substantive due process in the 20th Century was the rejection of economic rights as fundamental, followed by a recognition of unenumerated rights largely in the area of reproduction and sexuality. One explanation for this trajectory could simply a deeper social understanding of what is important in life. But another view would suggests the supplanting of economic rights was a kind of constitutional luxury – it was not generally thought that the freedom of contract would be suppressed or interfered with as thoroughgoingly, as say, the right to abortion.
The government response to the coronavirus pandemic has changed all that. In a matter of weeks, across the country, entire industries were shut down indefinitely, and often fatally. Government orders now directly prohibit contractual relations in entirely unprecedented and unimagined ways – by means of illustration, the unemployment rate after two months of lockdown orders exceeded that four years into the Great Depression.
The broad closures and lockdowns that mark COVID response around the world, and will likely characterized responses to future pandemics, are unprecedented. Unlike past pandemic public health measures that targeted primarily those who were sick or directly exposed. Yet current measures are essentially population-wide, representing a fundamental extension of governmental power. Yet perhaps the greatest impact of the public health measures on peoples’ lives – on their ability to work – has largely remained outside the realm of constitutional scrutiny.
Most constitutional challenges to the unprecedently broad new kind of pandemic measures have almost exclusively dealt with their impact on particular individual rights – communal prayer, gun purchases, and abortion services. Yet such challenges are merely nibbles around edges of the broad restriction on liberty imposed by lockdown-style pandemic response. Federal courts have been extremely reluctant to enjoined current closure measures, and even when they have done so, it is has been without great clarity about the nature of the rights involved.
A revival of Lochner would not in itself spell constitutional doom for closure orders. A wide variety of economic legislation of far more dubious necessity than the pandemic response were upheld in the Lochner era, and courts today have stressed that the pandemic is a compelling, rather than merely plausible, government interest. Again, Jacobson, which sustained mandatory vaccinations, was decided by the Lochner Court itself just two months earlier, and was framed against a backdrop of broad and unenumerated 14th Amendment liberty. Rather, this Essay urges that in a Lochnerless world, we lack the constitutional language to deal with the potential danger to liberty implicated by such impositions on peoples’ freedoms.
Lochner is heavily criticized as an attempt by the Court to second-guess legislative judgements about economic policy and redistribution. But this Essay will argue it is much better suited to scrutiny of traditional police power measures (health, morals, safety) that nonetheless have significant effects on freedom of contract. This is particularly true now that it appears that such pandemic responses are emergency measures that may be of indefinite duration, or regular recurrence.
2. The Validity of Tribal Checkpoints in South Dakota to Curb the Spread of COVID-19
Ann Tweedy, University of South Dakota Law School
This essay examines the question of whether, during a public health emergency, tribes located in a state that has adopted minimal protections to curb a pandemic may enact stronger protections for their own citizens and territories. May they do so, even when enforcement of the tribes’ protections causes inconvenience to those simply passing through the reservations and when the regulations affect non-member residents of the reservations? Based on Supreme Court case law, the answer is yes—tribes are within their rights in adopting and enforcing regulations designed to protect their citizens and other reservation residents from a public health emergency, even if they affect non-members.
3. Ethical Issues in Pandemic Response: Examples from India
Anup Malani, University of Chicago Law School
Professor Malani will discuss the Indian response and use that as a prompt to raise ethical issues. It won’t be legal per se, as there are far fewer legal barriers in India than the US. Moreover, the legal issues there were are going to pretty in-the-weeds (e.g., why did the Indian Council of Medical Research have authority to regulate testing). But the ethical issues raised in this paper (a ppt presentation is attached) are salient in the US and have legal implications.
PANEL B: PANDEMICS AND ECONOMIC POLICY
1. Social Distancing for the Long Haul
Daniel Hemel, University of Chicago Law School
The intervention that has been most effective at stopping the spread of COVID-19 is the same intervention that proved most effective during the 1918 influenza pandemic: social distancing. The problem with social distancing is that it significantly constrains economic activity, social life, and childhood education. One of the primary challenges for policymakers in this pandemic and subsequent ones is how to incentivize individuals to continue to engage in social distancing over the course of many months until—and likely even after—a vaccine arrives.
This paper seeks to shed light on the policy challenge of maintaining social distancing over the long haul. It develops and calibrates a formal model of the social-distancing decision at the individual level, and it shows why distancing-related choices rationally depend upon expectations about pandemic length. One interesting implication is that a vaccine can save lives even before it arrives by changing behavior. The paper then considers how other interventions interact with distancing incentives. It illustrates the public-health significance of transfer programs such as unemployment insurance and a universal basic income. It ends by addressing the problem of childhood education. It suggests that bars, restaurants, and—most controversially—universities should close so that grade schools can remain open. Although the analysis is largely responsive to COVID-19, the paper emphasizes the commonality of policy challenges across pandemics, and it underscores why an important focus for future pandemic planning should be on how to get distancing incentives right.
2. Livelihood Insurance for the Next Pandemic
Michael Abramowicz, George Washington University
Had Nobel Laureate Robert Shiller’s proposal for livelihood insurance been implemented, economic adjustment to the coronavirus pandemic would have been much smoother. Individuals hit especially hard economically by the pandemic, such as restaurants and small business owners, would have received payments based on the collective circumstances of those similarly situated. Because no such market existed, the government acted instead as social insurer. Unable to measure loss accurately, the government distributed payments to all taxpayers, providing fiscal stimulus but without redistribution in favor especially of those most affected. This essay considers how the government might facilitate creation of robust markets in livelihood insurance. Such markets might smooth adjustment not only to pandemics, but also natural disasters, climate change, and unexpectedly weak economic performance in specific economic sectors, regions, or nations. Obstacles to creation of such insurance include limited ability of consumers to assess the benefits of such insurance, concern by consumers about relative economic success, and inability of businesses to obtain intellectual property protection. Short of creating a regime of mandatory insurance, which might easily be evaded, the government can facilitate such markets by collecting and distributing information, serving as a market maker, or subsidizing the early development of such insurance contracts.
3. Of Bankruptcies, Bailouts, and Subsidies: Law for Economic and Financial Distress in a Pandemic
Anthony Casey, University of Chicago Law School
This article explores the role of law and government action in responding to the economic and financial crisis that resulted from the Covid-19 pandemic. The available tools can broadly be placed into four categories: bankruptcy proceedings, bailouts, subsidies, and bail-ins. These tools are not interchangeable and not all are well suited for responding to a pandemic-related crisis. The appropriate choice and application of these tools depend in large part on the nature and source of the crisis to which they are targeted. In understanding that choice, we can take several lessons from the legal responses to this crisis as well as to the financial crisis of 2008. These lessons will be key to preparing the law for the economic and financial distress of the next crisis, be it a pandemic or some other shock.
The government has been active in providing bailouts and other subsidies in response to the pandemic crisis. But as the Covid-19 pandemic took hold in the spring of 2020, most commentators thought bankruptcy law and bankruptcy courts would also play a large role in dealing with the economic effects of the pandemic. Indeed, among those who study and practice bankruptcy law in the United States, a consensus emerged that an unprecedent wave of Chapter 11 bankruptcy cases was on its way. That wave has not yet materialized. The rate of bankruptcy filings for small businesses (and individuals) has actually fallen, and the rate of large corporate bankruptcies—while it has increased—has not reached anywhere near a level that would cripple bankruptcy courts as predicted. To be sure, we are still in the midst of the pandemic and a day of economic reckoning is on the horizon. But it is less clear today that this reckoning will take place in bankruptcy courtrooms. This distinguishes 2020 from 2008, which—despite massive government bailouts and subsidies—saw a steep increase in bankruptcy filings.
Examining the roles that bankruptcy law, bailouts, subsidies, and bail-ins can play in responding to a crisis reveals that the spring’s predictions about bankruptcy law’s role in responding to the pandemic lost sight of the familiar scope of corporate bankruptcy law and the distinction between financial and economic distress. For decades, virtually everyone has understood that Chapter 11 is a tool for dealing with financial distress. In contrast, it is not a tool for dealing with economic distress. The distinction is always important but for a pandemic it is essential. The core business challenge of the pandemic is economic: a severe reduction in demand for certain goods and services. Consumers are simply not paying to fly on planes, go to movie theaters or fitness centers, eat at a restaurant, or host large birthday parties at specialty-themed restaurants at the same level they were in 2019. There is little bankruptcy can do to address that challenge.
Likewise, other proposals have lost sight of the proper design and purpose of bailouts, subsidies, and bail-ins. What are the lessons to learn from all of this? The distress resulting from a crisis can be categorized across two dimensions, and that categorization will inform the proper response. First, distress can be financial or economic. Second, it can be systemic or specific (or one might say macro or micro). These dimensions prescribe the appropriate response. A bailout is a tool for systemic financial distress. Bankruptcy is a tool for specific financial distress. Bail-ins, general stimulus, and automatic subsidies are tools for systemic economic distress. And a targeted subsidy is a tool for specific economic distress. (This last category is a form of humanitarian relief or political favoritism rather than a crisis response.)
Understanding, how a specific instance of distress fits into this matrix provides guidance in preparing for the next crisis. To be sure, any given crisis will likely present with both economic and financial distress. But the balance will be different. The current pandemic is a rare and dramatic example of a crisis that primarily creates systemic economic distress and uncertainty, whereas 2008 is widely recognized as a primarily financial crisis. And yet the government action in 2020 has done little to address the systemic economic challenges posed by Covid-19. The economic fire is still burning and while the day of reckoning likely won’t be a wave of Chapter 11 cases, it will almost certainly be a blaze of economic hardship.
In responding to this crisis and in preparing for the next one, an understanding of the nature of crisis distress and the available tools to address that distress is essential. Because this crisis is not over, there is much to be learned and all lessons are tentative. Much thought should be put toward the substantive nature of relief and the proper forum and mechanisms for distributing it. Careful thought must also be given to the temporal nature of distress. That is, demand in some industries will be permanently altered by this crisis while in others it will not. But is difficult today to identify which effects are permanent and which are temporary. Perhaps when the next crisis arises, we will have learned lessons about how to make that distinction and about which tools we should mobilize in response to the distress that it presents.
4. Essential Businesses and Shareholder Value
Aneil Kovvali, University of Chicago Law School
The COVID-19 crisis has demonstrated that Americans rely on certain for-profit corporations to supply the essentials of everyday life. Even in a crisis situation in which the government had assumed an extraordinary role and extraordinary responsibilities, it was deemed necessary for workers handling “essential” tasks to risk infection to continue their work at private companies. Our society’s capacity to meet basic needs in a crisis thus seems entirely dependent on the capacity of private corporations, which in turn is determined by the decisions of the private actors in positions of authority at these companies.
At the same time, these actors have limited incentives to consider the full implications of their decisions. Under a conventional understanding of corporate law, corporate officers and directors have an obligation to maximize the value of the corporation for the benefit of its shareholders, without considering the interests of other stakeholders like employees or customers. As a result, corporate actors will consider issues like employee or customer welfare only to the extent that regulations or business dynamics make their welfare relevant to shareholder profits. In addition, corporate fiduciaries have broad discretion under the business judgment rule to make decisions and take risks on the corporation’s behalf. Because shareholders are normally able to diversify away risks at an individual company by holding a portfolio of stocks, the business judgment rule is normally consistent with the interests of shareholders.
These principles lead to odd results in a pandemic. External sources of liability like tort are unlikely to cause a business to internalize the full costs of its decisions in a pandemic, meaning that a corporation can cause harm without having to pay out damages or denting shareholder profits. These harms are amplified at essential businesses, which are likely to keep operating and thus keep causing harm even in the midst of a pandemic. And disruptions to the operations of an essential business are likely to cause downstream impacts on the operations of other businesses — the importance of their goods and services to other businesses and to consumers is part of what makes an essential business essential. Diversified investors will experience many of these losses indirectly, both in their capacity as human beings living in an ailing society and in their capacity as investors in other companies. Indeed, they will be unable to diversify away the risks associated with such losses, as they will strike all areas of the economy. But they will not experience the losses directly in their capacity as shareholders. As a result, corporations running essential businesses are likely to underinvest in protective measures, and to seek to eke out additional profits even at the expense of redundancy or resilience.
There are some conventional responses to these issues, but they are likely to prove inadequate. First, the government can use emergency powers like those accorded by the Defense Production Act to force essential businesses to carry out necessary tasks. But this is a power to reshape incentives ex post, in the midst of a crisis, and it would do little to improve important decisions ex ante, when many critical decisions are made. When corporate actors decide whether to preserve redundancy and resiliency (for example, by operating two small factories instead of streamlining operations at one large factory) or what precautions to take (for example, by laying out a factory in a way that permits distancing instead of making it impossible), they are making decisions that critically affect performance in a crisis. The prospect that the government may use emergency powers ex post is unlikely to shape those decisions positively, and may even create perverse incentives as essential businesses anticipate that the government will use its powers to facilitate continued operations even if the business is not set up to run safely.
Second, the government might seek to impose regulations ex ante that require businesses to adopt appropriate measures. For example, the government might designate certain businesses as essential and require them to take specific steps, such as maintaining backup facilities or securing their supply chain. The government could also adopt various worker and customer safety regulations. There is an obvious and important role for such regulations, which will undoubtedly be explored in other forum contributions. But such measures are likely to be incomplete. Corporate directors and officers have more information about their operations than the government, and have a better sense of what is required to ensure reliability. Businesses seeking to maximize shareholder value would also do their best to undermine and evade regulations, lobbying officials for weaker regulations and moving to jurisdictions that impose less stringent requirements.
This suggests that some modifications to corporate doctrine may be in order. In the wake of a financial contagion a decade ago, some commentators suggested modifying fiduciary duties and the business judgment rule at systemically important financial institutions. The analysis above would support a similar set of modifications at firms that are important to weathering a true contagion. One approach would be to impose liability upon (1) directors and officers (2) at corporations running large essential businesses that (3) as a result of a failure to act appropriately prior to a crisis, are (4) unable to operate safely at appropriate levels during a crisis. If each of the four elements were satisfied, the directors and officers would be liable up to an amount not to exceed a set number of years of compensation prior to the crisis.
Each element would require explanation and justification. First, directors and officers have responsibility for monitoring and running the corporation, and are a natural target for the reform. In addition, imposing liability upon them would be unlikely to exacerbate any financial or economic crisis accompanying a pandemic; smaller damages would be sufficient to provide deterrence, and the remedy would not drain the coffers of the corporation itself. Second, the motivating problems described here are at their worst at large essential businesses, which have the greatest ability to cause disruptions to the overall system. Though measures might be adopted to regulate other legal entities running essential businesses, corporations have a unique ability to raise capital and distribute risk, making them a natural focus for efforts to encourage preventative investments. Third, focusing on decisions prior to a crisis would avoid interfering with government efforts to keep operations going during a crisis. Increased liability for decisions made during a pandemic might discourage businesses from cooperating with government efforts to sustain or ramp up activity. The approach would also encourage corporations to seek clarity from regulators on appropriate measures, causing them to put their political capital to work in prompting necessary action instead of stalling it. Fourth, making a failure to maintain safe operation during a crisis the trigger for liability maintains an appropriate focus on what society needs from essential businesses and the people who lead them. Limiting liability to a set number of years of compensation would avoid chilling valuable behavior by corporate actors.
This is a relatively modest proposal, tinkering at the margins of corporate law instead of fundamentally reorienting it. But it is consistent with a rethinking of the relationship between business and government. In the wake of COVID-19, we are — or at least ought to be — entering a period of robust government action in which the state assumes greater responsibility for ensuring the safe and resilient production and delivery of goods and services to its citizens. Such a shift in the government’s approach naturally calls for a rethinking of corporate social responsibility. If corporations are set up to work with the social consensus, they can create enormous value, and can justify the trust placed in them by society. If they are set up to fight and undermine the social consensus, they will radically reduce the effectiveness of government regulation and damage their own standing.
A Q + A with Chief Judge Rebecca R. Pallmeyer
THE FEDERAL COURTS RESPONSE TO COVID-19
Moderated by Jonathan Masur, The University of Chicago Law School
The pandemic we face today poses unique challenges for courts. If a disaster of the future poses similar challenges, we may be better equipped to face them based on the COVID-19 experience. Our response has been halting but effective as we learn to issue rulings without benefit of direct oral advocacy and to conduct hearings effectively by videoconference. Changes underway before 2020 have been accelerated. Our newer practices have advantages in ease and safety for litigants, but generate risk that parties will become less engaged and that we will not be effective in creating an atmosphere of confidence and dignity. The practice of pretrial discovery has changed rapidly, and questions of jurisdiction and venue should become less salient. The decline in the number of jury trials implicates constitutional rights and undermines an important avenue for public education. As a result, courts will need to find new ways to enhance public understanding of and confidence in the legal process. Public health concerns dictate greater flexibility in the location and times when work is performed, but will also require the courts to make allowances for sudden changes in the lives and capability of litigants and staff. New lawyers will be more able to make their way in the online world, but legal institutions will need to make particular efforts to assist them to become connected and socialized in the practice of law.
PANEL C: REACTIONS AND ADAPTATIONS TO PANDEMICS IN THE LAW:
PAST, PRESENT AND FUTURE
1. Scrambling the New Sanitarian Synthesis: Civil Liberties and Public Health in the Age of COVID-19
John Fabian Witt, Yale Law School
The late decades of the 20th century witnessed a new sanitarianism in the law of public health and epidemics. The traditional models of public health imagined that public health and civil liberties were in tension with one another. Jacobson v. Massachusetts and the upholding of state power over individuals stood as the paradigmatic triumph of the field against potentially subversive rights claims. But beginning in the 1980s, progressive public health law leaders asserted that a better model synthesized civil liberties and public health. HIV / AIDS seemed to teach that eliciting the participation of and protecting vulnerable and sick populations was crucial to managing epidemics. Protecting people’s rights would enable the protection of public health; restricting those rights would only drive the sick and the vulnerable underground and make epidemic management more difficult. But the COVID-19 epidemic is scrambling the new sanitarian synthesis in multiple ways, raising real prospects that we stand on the verge of a new paradigm in civil liberties and public health.
2. The Need for Tort Law Privileges of Self- Defense and Necessity in Intellectual Property Law
Liza Vertinsky, Emory University School of Law
Yaniv Heled, George State University College of Law
Ana Santos-Rutschman, Saint Louis University School of Law
The COVID-19 pandemic has laid bare inherent tensions between the protection of intellectual property (IP) and the health of individuals touched by life-threatening medical conditions. Examples from around the world have made front page news: hospitals desperate for ventilator parts while 3D-printing instructions for such parts remain unshared for fear of liability; potentially lifesaving medicines whose manufacture and distribution on sufficient scale is limited by the threat of patent infringement; proprietary clinical data essential for making life-or-death decisions withheld from doctors and patients; the list continues. The threat of liability for IP infringement also dampens the ability to innovate under conditions of emergency, further contrasting the protection of IP with the protection of human lives. A number of policy responses for the current pandemic have been advanced, including the application of government rights under the Defense Production Act to IP contexts, compulsory licensing, legislation that would allow for emergency overrides to IP protections, and efforts to encourage companies to make their IP freely available voluntarily through the Open COVID Pledge. But fears of disrupting IP protections have curtailed the use of these measures, leaving the tensions between protection and life-saving access largely unaddressed.
Instead of looking to legislative proposals, a stretch of emergency powers, or vague private commitments, we suggest that the law already provides a mechanism for addressing this tension, in the form of the age old common tort law doctrines of self-defense and necessity (a.k.a. lesser-harm or lesser-evil defense). Under these doctrines, a person is accorded the privilege of trespassing onto another’s land or chattel, using or converting the property, and/or even employing deadly force if that person reasonably believes such conduct to be necessary for the purpose of protecting herself or a third party or avoiding imminent harm to the public. While the common law privilege may be full or partial, it is well settled that it can apply to interference with another’s property interests and even their interest in their own person. If another person’s real property, chattels, and even person are subject to such privileged interferences, it seems logical that one’s IP should also be subordinate to these privileges.
As a relatively recent body of law, IP continuously evolves, absorbing and emulating doctrines and legal constructs from other areas of law, including the law of torts, in which most types of IP claims are rooted and from which they derive their structure and rationale. Courts deciding IP matters have allowed litigants to make arguments rooted in other areas of law, developing the common law of IP, and they may do so by allowing defendants to raise self-defense and necessity arguments to protect themselves from IP claims. Although IP law already includes a variety of well-established mechanisms for limiting the enforceability of IP rights, the COVID-19 pandemic has provided us with stark examples of how these existing mechanisms are inadequate to protect from liability in situations involving public health emergencies. Indeed, the need for better emergency defenses in IP law has never been more apparent. Bringing self-defense and necessity to IP law would therefore create an essential safety valve that can be used by multiple players in the healthcare and health technology space during public health crises and other kinds of dire need.
In this Article, we demonstrate the need for the self-defense and necessity doctrines in IP law; explain how such claims may allow defendants to avoid liability in circumstances in which infringement is necessary to prevent adverse public health outcomes; and argue the adoption of these doctrines is needed to increase preparedness ahead of future—indeed expected—outbreaks of infectious diseases. We conclude that the time is ripe for doctors, hospitals, independent compounders, medical products manufacturers, engineers and, ultimately, litigants and the courts to consider self-defense and necessity as an old-new tool for resolving IP disputes. Doing so would not only be ethically sound but would also help to resolve many of the public health critiques that have been plaguing IP law by attenuating ingrained misalignments between IP frameworks and the furtherance of public health goals.
3. Post-Pandemic Wills
Bridget Crawford, Elisabeth Haub School of Law at Pace University
Kelly Purser, Australian Centre for Health Law Research, Faculty of Law, Queensland University of Technology
Tina Cockburn, Australian Centre for Health Law Research, Faculty of Law, Queensland University of Technology
The global pandemic caused by COVID-19 has brought new focus to human mortality. The virus concomitantly has reminded many people that they need to have a will or otherwise make plans for the transmission of their property at death. Yet stay-at-home orders and social distancing recommendations make it difficult or impossible to comply with the traditional rules for executing wills. Across most common law jurisdictions, the traditional requirements include two witnesses in the presence of the testator. Because of the practical difficulties of safely executing documents with assembled witnesses during the pandemic, however, many jurisdictions have implemented emergency measures that permit the remote witnessing of wills and other estate planning documents via audio-visual platforms like Zoom, Skype or FaceTime.
This Essay employs a dual Australia-United States perspective to investigate the purposes of traditional wills formalities and to suggest their continued vitality in the context of remotely witnessed or electronic wills. Although emergency measures adopted in both countries have made it easier to execute wills during the pandemic, these provisions will sunset in the near future. Increasing access to legal services generally and will-making specifically might argue in favor of making permanent the new rules adopted for will executions during the pandemic. Before embracing such a change, though, there needs to be more research.
This Essay suggests the importance of an empirical study into whether and how access to will-making has increased during the pandemic. Are the people who are availing themselves of new technologies for will execution during the pandemic those who would have made a will anyway? Is will-making behavior encouraged by the relaxing of traditional legal requirements for executing a will, or are testators driven by the practical (and real) fear of possible death during the pandemic? To what extent do the remote witnessing rules adequately provide for satisfactory testamentary capacity assessments (where necessary), and safeguard against undue influence and fraud, particularly in the case of vulnerable older persons and those who are socially isolated? Are wills executed during the pandemic under relaxed witnessing rules more likely than traditionally-executed wills to be subject to probate contests? The emergency measures adopted during the pandemic for will executions should not automatically become the new normal. Framing the discussion in both Australian and U.S. perspectives highlights important questions about the purposes that traditional wills formalities are designed to serve and the continued need for formal safeguards that will increase the likelihood that an individual’s wishes will be respected after death.