March|April 2004



PRIVATE MAKES PERFECT

Any country club member who's tried to hit the golf course without a shirt collar or co-op tenant who's tried to slip a dachshund past a doorman knows the power of privately made law. The rules are taken seriously, and there are weighty consequences for breaking them.

Membership in a country club or a co-op is, of course, voluntary, but that doesn't mean that only the Lacoste set are subject to private law. In a recent article, David Snyder charts the influence of "Private Lawmaking" in the commercial realm. Snyder notes that certain privately made rules exert very real legal control over broad areas of commerce. Stock exchanges, for example, govern the ways companies report their earnings and what information they must share with the public. Credit card companies' rules are not only privately made but also kept secret. Yet their rules control the way nearly all retail business gets done, determining when and where their cards can be used (until recently prohibiting remote transactions, raising a serious roadblock to online commerce) and assigning liability for fraud.

Because so many Americans either own stock or use a credit card, Snyder contends, these private laws cannot be treated like country club regulations; they have the uniformity and influence of law authored by a legislature or the courts. Private law has long been ignored by legal scholars, Snyder says, but it represents a successful method of governance, what he calls "molecular federalism." If political federalism promotes better lawmaking through competition between states, private law promotes better lawmaking through the even fiercer competition between companies. A credit card company with rules less favorable to retailers or cardholders will lose out to a company with better rules when consumers choose the better card.

Despite his cheerleading, Snyder is wary of letting the marketplace for law run rampant. "Hope must be tempered," he writes, "by knowledge of market failures and monopolies, markets for lemons and rules of oligarchs." There is still a place, he says, for public servants to compete. Ohio State Law Journal, Volume 64, Number 2

WHAT'S BAD FOR THE GOOSE

Joseph Ybarra went to the hospital in 1939 for an appendectomy, was put under anesthesia, and woke up short his appendix—and the use of his right arm. He knew that someone on his medical team was responsible for his injury, but since he was unconscious, he didn't know who was to blame—and none of them were talking. So he sued them all: the anesthesiologist, the surgeon, and the nurse. In what is now a textbook tort decision, the California Supreme Court found that he could extract damages from the group.

The concept of group punishment is one Americans tend to be suspicious of since it necessarily punishes the innocent along with the guilty. But in "Collective Sanctions," published in the Stanford Law Review, Daryl Levinson argues that meting out penalties to groups can be an efficient way to punish wrongdoing—and to encourage good behavior. If groups are sufficiently tight-knit, they will be willing to absorb punishments on behalf of their members and will likely engage in self-policing to prevent future wrongs. Groups can monitor their members in ways the state cannot and can impose inexpensive but effective penalties, like loss of esteem or ejection from the group when a member acts badly. In effect, group punishments foster private lawmaking, though of a sort further removed from actual statutes than the rules examined by David Snyder.

There is always the danger, of course, that the wrong groups (like racial or religious ones) will be targeted, but collective sanctions are frequently used to good effect. Waiters who pool tips are more likely to tend to their colleagues' ignored tables since they know that every bad tip hurts them all. Drill sergeants harness peer pressure by taking out the failings of the weakest private on the entire platoon, a technique that Levinson says boosts both performance and solidarity. Stanford Law Review, Volume 56, Number 2

THE TRUE NORTH STRONG AND FREE

The border between the United States and Canada is the longest undefended national boundary in the world, and the U.S. has long been a beneficiary of its porousness: Where would Waiting for Guffman or Best in Show have been without Canucks Eugene Levy and Catherine O'Hara? In the wake of the attacks of September 11, however, U.S. authorities began worrying that not all Canadian imports are so benign. It is now believed that terrorists have tried to exploit the two nations' openness in planning attacks. The thwarted plot to bomb Los Angeles International Airport in 2000 was orchestrated by a Montreal-based al Qaeda cell that attempted to smuggle a rental car full of explosives across the Canadian border.

"In Support of Canada's Anti-Terrorism Act," by David Jenkins, reads as it bills itself: The article is a rousing thumbs-up for our northern neighbor's legislative response to the attacks of September 11. Comparing Canada's 2001 Anti-Terrorism Act to Britain's Anti-terrorism, Crime and Security Act 2001 and the United States' Patriot Act, Jenkins contends that Canada has found a superior way to balance protection of civil liberties with the fight against terrorism. Canada's law embraces many United Nations protocols that protect individual rights, but it also cuts off sources of terrorist funding and permits preventive arrests of terrorism suspects.

Jenkins sees American and British law as too willing to trample individual rights and too passive in protecting its citizens. Yet Jenkins is inconsistent in his criticism, or perhaps just too bent on defending Canadian policy. He bristles at Britain's law, which criminalizes association with suspected terrorist groups even if no other crime has been committed. By contrast, he finds the Patriot Act lacking because, unlike Canada's law, it doesn't allow judges to compel incriminating testimony from terror suspects. Fifth Amendment supporters south of the border are surely glad the Patriot Act gave that idea the cold shoulder. Saskatchewan Law Review, Volume 66, Number 2