Winkler on Corporations and Their Quest for Civil Rights

I haven't posted in a while, partially because work is busy, but also because I have been making more time for recreational reading (a hobby that can be difficult to pursue when one is an associate in the field of civil litigation).

But I've somehow managed to get some reading done recently, so partially to highlight some darn good books (and partially to dilute the frequency of posts fixating on ordinances banning "distracted walking"), here's the first of a couple posts on what I've been reading!

First up is We the Corporations: How American Businesses Won Their Civil Rights by Adam Winkler. I bought the book partially because I was a student at UCLA Law and had the opportunity to take one of Professor Winkler's classes, and partially because I read Winkler's previous book, Gunfight: The Battle Over the Right to Bear Arms in America a few years ago and thought it was excellent.

Winkler's We the Corporations, like Gunfight, showcases his remarkable ability to tell a story. Many cases that are explored in his book are covered in typical law school classes or casebooks on constitutional law. The cases, while significant, are often dry, dense, and confusing. Not here. In discussing significant cases or doctrine, Winkler develops the plot by delving into facts behind each case, the drama of the conflicting interests involved, and the pitfalls of the litigation preceding the various opinions. Winkler explores the characters involved by discussing the histories, backgrounds, quirks, and vices of the corporations, their officers, and the attorneys involved in the cases. All of this combines to create an engaging series of stories that paint a picture of the development of various rights, or sets of rights, that corporations have managed to secure. It is a vast undertaking that is nevertheless straightforward and clear enough to appeal to attorneys and non-attorneys alike. 

The books is nearly 500 pages (closer to 400 if you don't count the endnotes), but you can expect to breeze through it in far less time than you might think because the writing is so clear and engaging. And I hope that many choose to engage, as Winkler reveals that the common debate over whether "corporations are people," is far more nuanced than may be expected. For instance, Winkler points out that corporations have won some of their greatest victories when their personhood is ignored. Rather, it is when courts pierce the corporate "veil" and focus on the people behind the corporation, that corporations have made some of their most dramatic strides in their quest for civil rights. Winkler also draws attention to the recurring phenomenon of corporations' sheer ability to get what they want through the courts. Through hiring the best lawyers, choosing the best cases, and persisting as only tireless business entities can, corporations have often gained recognition of their rights earlier than the other disadvantaged groups who are typically central to the study and discussion of civil rights.

You can find reviews of We the Corporations here, here, here, and here.

Next up will be my thoughts on The Justice of Contradictions: Antonin Scalia and the Politics of Disruption by Richard Hasen. Spoiler alert: it's also pretty dang good.

P.S.: For those looking for recommendations for shorter things to read, check out this post at Josh Blackman's blog on Justice Brennan's correspondence with Barack Obama.

Wells Fargo Turns to Arbitration Clauses to Neutralize False Account Lawsuits

The New York Times reports that Wells Fargo has been using arbitration clauses in its contracts with customers to defeat claims that the bank set up false accounts for customers:

Ms. Zeleny, a lawyer who lives outside Salt Lake City and opened a Wells Fargo account when she started a new law practice, said it would be impossible for her to agree to arbitrate her dispute over an account that she had never signed up for in the first place.

The bank’s counterargument: The arbitration clauses included in the legitimate contracts customers signed to open bank accounts also cover disputes related to the false ones set up in their names.

Some judges have agreed with this argument, but some lawmakers and others consider it outrageous.

“Wells Fargo’s customers never intended to sign away their right to fight back against fraud and deceit,” said Senator Sherrod Brown, an Ohio Democrat, who introduced a bill last week that would prevent Wells from forcing arbitration in the sham account cases.

Yet even as the bank reels in the court of public opinion, Wells Fargo has been winning its legal battles to kill off lawsuits. Judges have ruled that Wells Fargo customers must go to arbitration over the fraudulent accounts.

In dismissing one large case seeking class-action status in California, a federal judge ruled last year that it was not “wholly groundless” that customers could be forced to arbitrate over accounts they had never agreed to. That case is now being settled, according to legal filings.

An earlier report, also in the New York Times, details Wells Fargo's efforts to compel arbitration in a Federal District Court in Utah:

Wells Fargo has asked a Federal District Court to order dozens of customers who are suing the bank over the opening of unauthorized accounts to resolve their disputes in private arbitrations instead of court, according to legal documents. 

The motion, filed in the United States District Court in Utah on Wednesday, is in response to the first-class action lawsuit filed against Wells since it agreed to pay $185 million in penalties and $5 million to customers for opening up to 2 million deposit and credit-card accounts in their names without their permission. 

. . .

Mandatory arbitration rules inserted into account-opening agreements prohibit customers from joining class actions or suing Wells Fargo. Instead, the agreements require individual, closed-door arbitration. 

Mandating arbitration when signing up for financial products has become standard practice after a Supreme Court decision in 2011 validated the practice. But customer advocates say it improperly denies customers the legal protections of court proceedings, such as the right to appeal, and helps to conceal corporate misconduct from the public and regulators because the related documents and hearings are not made public.

Folks in the media seem to have an unfortunate aversion to linking to actual documents, but I did some searching and you can find Wells Fargo's Motion to Compel Arbitration in the Utah case here. You're welcome, dear reader.

Wells Fargo's position in this motion is that the Plaintiffs admit that they set up at least one account with Wells Fargo voluntarily. In doing so, they voluntarily entered into agreements that their disputes with Wells Fargo would be settled through binding arbitration.

Here is one example of such a set of facts that Wells Fargo sets forth in its motion:

On July 9, 2010, Sbeen Ajmal, a California resident and at the time a Wells Fargo employee, opened a team member checking account (x5671) and a consumer savings account (x6215). Ajmal signed the Consumer Account Application for the two accounts as the primary joint owner on July 9, 2010; Mohammad Nazir was listed as a secondary joint owner. (Declaration of Karen Nelson (“Nelson Decl.”) ¶ 26, Ex. 3-A at 3.) In signing this application, Ajmal confirmed the following: “I have received a copy of the applicable account agreement and privacy brochure and agree to be bound by them… . I also agree to the terms of the dispute resolution program described in the account agreement.” (Id.; see also id. ¶ 26 & Ex. 1-G (March 2010 Consumer Account Agreement).) Ajmal further agreed that “disputes will be decided before one or more neutral persons in an arbitration proceeding and not by a jury trial or a trial before a judge.” (Id. ¶ 26, Ex. 3-A at 3.) Ajmal actively used her team member checking account (x5671), and had her paychecks directly deposited into the account. (Id. ¶ 27, Ex. 3-B.)

Another example references a customer who received a welcome letter stating that if his account remained open past a certain date, it would be governed by terms in the "Consumer Disclosure brochure." Among the terms in the brochure was an agreement that any "dispute" arising between the customer and Wells Fargo would be settled through arbitration. As for the definition of "dispute," the contract provided this definition:

[A]ny unresolved disagreement between you and the Bank that relates in any way to account[**] [emphasis added] or services described in this brochure [including] any claim that arises out of or is related to these accounts, services or related agreements. It includes claims based on broken promises or contracts, torts (injuries caused by negligent or intentional conduct), or other wrongful actions. It also includes statutory, common law and equitable claims. A dispute also includes any disagreement about the meaning of this Arbitration Agreement, and whether a disagreement is a ‘dispute’ subject to binding arbitration as provided for in this Arbitration Agreement.

[**NOTE: The quoted portion in the motion says "account," although it makes more sense if read as either "accounts" or "the account." Each alternative reading, however, significantly changes the potential scope of the arbitration agreement, as described in more detail below.]

Wells Fargo's argument is that the arbitration agreement in the accounts that the Plaintiffs admit to entering voluntarily apply to the dispute arising from Wells Fargo's alleged creation of additional accounts for those Plaintiffs without those Plaintiffs' permission. The Plaintiffs will likely argue that the scope of each arbitration agreement was limited to the account that was voluntarily created, and not to any accounts created without permission.

Wells Fargo's argument has merit because the arbitration provisions cited in its motion are generally quite broad. The bank can argue that once the customers created a contractual relationship with Wells Fargo, they agreed that future actions of Wells Fargo relating to the accounts or services fell under the arbitration provision in that contract. This argument is strongest under the terms of the contract described in the first quoted paragraph above.

But under the terms described in the second quoted paragraph above, Wells Fargo's argument might face more of an uphill battle. There, the "disputes" covered by the arbitration provision may be limited to the customer's account -- or to Wells Fargo accounts in general, depending on whether the term "account" is read as "the account," or "accounts." Based on the remainder of the quote and its context, it looks like the intended word was "accounts," which would strengthen Wells Fargo's position, but the quote as stated is ultimately unclear. If the Court reads the agreement giving rise to the account to extend only to Wells Fargo's actions in providing services under that particular account, the Plaintiffs will have a stronger argument, at least to the extent that the Consumer Disclosure brochure is the only applicable agreement.

The New York Times references some critics and lawmakers who are angry with Wells Fargo's strategy, but from a pragmatic point of view the bank would be foolish not to use these agreements. Arbitration agreements are supported by favorable Supreme Court case law, and because they can thwart Plaintiffs' litigation efforts early in the process. Whether anger by consumers and legislators over Wells Fargo's arbitration maneuvers is enough to prompt changes in the law governing arbitration clauses remains to be seen.

R. Francis Underwood Defeats Delaware Corporation's Non-Compete Agreement in Delaware Court of Chancery

So notes this alert from Wilson Sosini Goodrich & Rosati. From the beginning of the alert:

In non-competition agreement disputes involving California employees, it is common to encounter an agreement stating that the law of another state governs the non-compete. Since non-competes in California are generally unenforceable under California law, non-compete disputes involving California employees typically involve employees moving to California from another state, those working in California for a company with its principal operations in another state, or California-based employees that have signed a non-compete as part of an M&A transaction. Common to each of these situations (although not always the case) is the use of a non-compete agreement providing that its interpretation is governed by the law of a state other than California. 

In Ascension Insurance Holdings, LLC v. Underwood et al. (January 28, 2015), the Delaware Court of Chancery addressed whether a non-compete agreement entered into in connection with an acquisition, and governed by Delaware law, could be enforced against a California-based employee competing against his employer in California. The court, concluding that California law (and not Delaware law) must be applied despite a Delaware choice-of-law provision, refused to enforce the non-compete agreement, and denied the former employer's request for an injunction prohibiting the employee from competing.

The full text of the opinion can be found here. California's policy against non-compete agreements is notably strong, as I have written here. Since the employee, Underwood, negotiated and signed the contract in California and was expected to abide by the non-compete restriction within California, I think that the Delaware Court of Chancery made the right decision to refuse to recognize the choice of law provision in the contract.

While my interest in non-compete agreements and conflict of law issues drove me to post about this case, I also took note of the case due to the defendant's last name - Underwood. Readers of this blog should know that I am a fan of House of Cards and that I often look out for any intersections between the show and the world of law. The strategy of challenging a Delaware corporation's choice of law provision in a Delaware court seems bold. It struck me as something that Francis Underwood (the central character in House of Cards) would pursue were he to find himself in the defendant's circumstances.

While the defendant's full name as stated in the court's opinion -- "Roberts F. Underwood" -- initially dispelled my suspicion that the defendant was channeling the legendary politician, I decided to investigate further. Some Google searching led me to a Utah insurance agent registration profile for "Roberts Francis Underwood," who is employed at Alliant Insurance. Most notably, that page revealed that Underwood had previously been associated with Ascension Insurance before becoming associated with Alliant.

This suggests that the defendant's full name is, in fact, Roberts Francis Underwood. This may explain why the Delaware Court of Chancery may have felt pressured into bending to Underwood's will (although the strong legal arguments on Underwood's side probably deserve some of the credit).

India Bans Drones

India Today reports:

India is one the few places on the planet where civilian drones can be legally used. That said, with many commercial organisations planning to use drones, the Directorate General of Civil Aviation (DGCA) has announced that till proper rules and regulations are formulated use of drones in India is illegal . . . .

India Today and BGR are reporting that this ban extends to "civilian drones." But the ban is far broader, according to this public notice from the Director General of Civil Aviation (DGCA). The notice states:

DGCA is in the process of formulating the regulations (and globally harmonize those) for certification & operation for use of [unmanned aircraft systems, or] UAS in the Indian Civil Airspace. Till such regulations are issued, no non government agency, organization, or an individual will launch a UAS in Indian Civil Airspace for any purpose whatsoever.

This prohibition on drones is notably broad -- it restricts hobbyist drones, commercial drones, and government drones.

This spells problems for Amazon, which had been planning to use India's (formerly) permissive regulatory environment to test drone-based package delivery services. I have not seen any reactions by the company to this sudden, universal prohibition of drone use. But I suspect Amazon will be carrying out its drone testing somewhere else in light of this ban.

Drones raise safety and privacy concerns. To an extent, these concerns are warranted, and governments may be correct to impose regulations that address privacy and safety concerns. But effective regulations should allow for the continued use of this developing technology. India's sudden and complete ban on drones is far too broad, and will hinder the development of drone technology and the economic opportunities that this technology can (and was about to) create.

General Mills Reverses Changes to its Legal Terms, Removing Arbitration Provision

The New York Times reports:

General Mills, one of the country’s largest food companies, on Saturday night announced in a stunning about-face that it was withdrawing its controversial plans to make consumers give up their right to sue it. 

In an email sent after 10 p.m. on Saturday, the company said that due to concerns that its plans to require consumers to agree to informal negotiation or arbitration had raised among the public, it was taking down the new terms it had posted on its website. 

“Because our terms and intentions were widely misunderstood, causing concerns among our consumers, we’ve decided to change them back to what they were,” Mike Siemienas, a company spokesman, wrote in the email. “As a result, the recently updated legal terms are being removed from our websites, and we are announcing today that we have reverted back to our prior legal terms, which contain no mention of arbitration.”

How did General Mills think their terms had been mischaracterized? In its blog, the company elaborates on its legal terms revisions. General Mills' post includes this remark:

We’ll just add that we never imagined this reaction. Similar terms are common in all sorts of consumer contracts, and arbitration clauses don’t cause anyone to waive a valid legal claim. They only specify a cost-effective means of resolving such matters. At no time was anyone ever precluded from suing us by purchasing one of our products at a store or liking one of our Facebook pages. That was either a mischaracterization – or just very misunderstood.

I mentioned in this previous post that I thought there was some misinterpretation about what the legal terms said -- some people had been reporting that purchasing General Mills products would result in a forfeiture of the right to sue, but the legal terms only appeared to apply to those customers who received coupons or "joined" the company's "online community" -- not all customers.

But the terms of the legal agreement said that the agreement applied to customers who "joined" General Mills' websites "as a member" and those customers who "joined" the company's "online community." This was the provision that led many to report that the legal terms applied to users who "liked" the company on Facebook, or followed the company on Twitter. And I think this interpretation of the terms follows from the former language in the agreement. So while General Mills is correct to say that the agreement did not preclude customers from suing as a result of a simple purchase, I don't think they are right to say that the agreement did not preclude lawsuits by consumers who liked the company on Facebook.

While I thought that General Mills' legal agreement contained some questionable provisions, and while General Mills' reversal of these changes is probably a good business move, this reversal means that the interesting legal questions I discussed in my previous post will not be explored by the courts.

UPDATE

Dave Hoffman at Concurring Opinions discusses the General Mills legal agreement and its revision here.

In Its New Statement of Legal Terms, General Mills Greatly Restricts Consumers' Rights to Sue

The New York Times reports:

General Mills, the maker of cereals like Cheerios and Chex as well as brands like Bisquick and Betty Crocker, has quietly added language to its website to alert consumers that they give up their right to sue the company if they download coupons, “join” it in online communities like Facebook, enter a company-sponsored sweepstakes or contest or interact with it in a variety of other ways.

Instead, anyone who has received anything that could be construed as a benefit and who then has a dispute with the company over its products will have to use informal negotiation via email or go through arbitration to seek relief, according to the new terms posted on its site. 

In language added on Tuesday after The New York Times contacted it about the changes, General Mills seemed to go even further, suggesting that buying its products would bind consumers to those terms.

General Mills' online agreement certainly seems to go as broad as it told the Times. At the top of its webpage, it states, "Please note we also have new Legal Terms which require all disputes related to the purchase or use of any General Mills product or service to be resolved through binding arbitration." Looking to the legal agreement suggests that the terms apply to a broad range of activities, although they may not apply to all consumers who purchase General Mills products. Here are the portions of the agreement that give me this impression:

1. Your agreement to these legal terms 

These terms are a binding legal agreement (“Agreement”) between you and General Mills. In exchange for the benefits, discounts, content, features, services, or other offerings that you receive or have access to by using our websites, joining our sites as a member, joining our online community, subscribing to our email newsletters, downloading or printing a digital coupon, entering a sweepstakes or contest, redeeming a promotional offer, or otherwise participating in any other General Mills offering, you are agreeing to these terms.

Of course, your decision to do any of these things (i.e., to use or join our site or online community, to subscribe to our emails, to download or print a digital coupon, to enter a sweepstakes or contest, to take advantage of a promotional offer, or otherwise participate in any other General Mills offering) is entirely voluntary. But if you choose to do any of these things, then you agree to be bound by this Agreement.

. . . 

3. Dispute resolution; binding arbitration 

. . . 

ANY DISPUTE OR CLAIM MADE BY YOU AGAINST GENERAL MILLS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR YOUR PURCHASE OR USE OF ANY GENERAL MILLS SERVICE OR PRODUCT (INCLUDING GENERAL MILLS PRODUCTS PURCHASED AT ONLINE OR PHYSICAL STORES FOR PERSONAL OR HOUSEHOLD USE) REGARDLESS OF WHETHER SUCH DISPUTE OR CLAIM IS BASED IN CONTRACT, TORT, STATUTE, FRAUD, MISREPRESENTATION, OR ANY OTHER LEGAL THEORY (TOGETHER, A “DISPUTE”) WILL BE RESOLVED BY INFORMAL NEGOTIATIONS OR THROUGH BINDING ARBITRATION, AS DESCRIBED BELOW.

Later portions of the arbitration waiver indicate that consumers who go to arbitration cannot consolidate their classes with other consumers, meaning that consumers who agree to the contract waive any class action rights.

This is a pretty notable development in General Mills limitation of its own liability, and I don't think that this contract will stand up in all the situations the contract claims to cover. Also, I don't think that General Mills has accurately stated what its contract actually says in its discussion with the New York Times.

Smolen et al. on Cyber Insurance

Miriam Smolen, Adrian Azer, and Katrina Johnson have a helpful article at the National Law Review where they discuss the differences between insurance policies that cover commercial general liability and policies that specifically cover risks of cyber-attack or sabotage. They write:

Most companies typically have traditional insurance policies that may cover cyber risks, including commercial general liability (CGL) coverage. CGL policies generally cover the company against liability for claims alleging “bodily injury” and/or “property damage” and also against liability for claims alleging “personal injury” and/or “advertising liability.” Insurers typically argue that “cyber” risks are not intended to be covered under CGL policies, but insureds have had some success in pursuing coverage for cyber risks. Insurers have begun to constrict CGL policy language in an effort to preclude coverage for losses arising from data breaches. In order to specifically cover the risks associated with cyber breaches, and to protect the company’s balance sheet, companies are looking toward cybersecurity insurance.

Smolen et al. go on to describe the types of coverage that cybersecurity policies typically provide. Policies may cover first party costs of investigating breaches and repairing systems, and there are also third-party policies that can protect companies from the costs of lawsuits due to any breaches that intrude on the private information of third-parties who deal with the insured.

Smolen et al. conclude by urging companies to purchase cyber insurance policies in light of insurance companies' narrowing of their commercial general liability policies. In light of today's increasing number and severity of cyber attacks, and the increasing amount of corporate and customer information that is stored in clouds and computers, companies would do well to heed this advice.

UK Court: Greek Yogurt Needs to be From Greece

The BBC reports:

Chobani, a US-based yoghurt manufacturer, cannot label its UK products Greek as they're made in the US, according to a UK court ruling. 

A three-person panel upheld a lower court's ruling that the "Greek yogurt" label misled customers. 

Chobani's yoghurt is strained a number of times to give it a thicker texture, which the firm has said is typical of a style found in Greece.

Dairyreporter.com has additional coverage of the case, including several quotes from the ruling itself.

I have not heard of any similar lawsuits in the United States, although Alison Keeley's post at American University's Intellectual property brief clued me in on this firm's attempt to possibly put together some sort of lawsuit based on the "Greek" label. There has been at least one lawsuit against Chobani after Keeley's post, but that suit seemed more focused on Chobani's claim to use all-natural ingredients and whether Chobani's labeling adequately reflected the yogurt's ingredients.

Would this type of lawsuit succeed in the United States? My understanding, at least based on what I know about the Lanham Act, is that plaintiffs would need to prove that using the term "Greek" in labeling yogurt would tend to mislead customers into thinking that the yogurt is actually from Greek, rather than simply being "Greek-style" yogurt. (See 15 U.S.C. 1125(a)(1)(A), and for a good primer on the Lanham Act, see here).

Whether the "Greek" label misleads customers into thinking the yogurt is actually from Greece would be a question of fact that plaintiffs would need to prove. Personally, I always take "Greek yogurt" to mean the Greek-style of strained yogurt rather than yogurt that is actually from Greece. But maybe plaintiffs could show that many consumers do indeed think that the yogurt is from Greece.

New Canadian Regulations Threaten Importation and Sale of Irn Bru and Bovril

The BBC reports:

The owner of a British food shop in Canada says he has been ordered to stop selling Marmite, Ovaltine and Irn Bru because they contain illegal additives.

Other affected products include Lucozade, Penguin Bars and Bovril.

. . .

The Canadian Food Inspection Agency (CFIA) is reportedly cracking down on the sale of such goods and increasing its inspections of suppliers.

Irn Bru contains at least one additive - Ponceau 4R - which has been linked to hyperactivity and does not appear on the approved food list in Canada.

The other products are banned because they are "enriched with vitamins and mineral" while some canned foods and soup contained too much animal product.

Sounds like these are troubling times for those with British and Scottish culinary inclinations. But the CFIA is now conducting evaluations of the banned products to determine if they are safe.

While Irn Bru, rather than Bovril, seems to be the star of this story, I cannot post about a story like this without an honorary citation to Watteau v. Fenwick, 1 QB 346 (1892), where a pub manager, Humble (who was the agent of the pub's owner, Fenwick), bought Bovril and cigars even though he had not been given the authority to make these purchases. The seller thought that Humble owned the bar and did not realize that he was anybody's agent. In the absence of Humble's actual authority or apparent authority (as the seller did not realize that there was any principal involved), the court held that Fenwick was still liable for the purchases, concluding that in cases like this, the principal is liable for all acts which are within the authority usually confided to an agent of that character.

I have not traveled extensively, so I did not know what Bovril was until last year, when Stephen Bainbridge gave an extensive and opinionated description of the product when he taught Watteau in his Business Associations class. For any reader who is still unfamiliar with this product, Wikipedia seems to give a thorough and accurate account.

Google's Purchase of Nest and the Rise of "Smart" Devices

The BBC and New York Times report that Google plans to purchase Nest Labs for $3.2 billion. The BBC describes Nest's primary product as "a thermostat capable of learning user behaviour and working out whether a building is occupied or not, using temperature, humidity, activity and light sensors."

The New York Times elaborates:

Rather than thermostats, Nest’s key technologies were described by [Chief Executive, Tony] Fadell in an interview last November as “communications, algorithms, sensors and user experience, running over a network to the cloud.” 

That is, Nest is interested in how people behave inside their houses; the thermostat was just the first step to understanding that. Its sensors gave information about interactions; after that, algorithms on everything from user preferences to battery power were deployed to give people a sense of control they had not had before. As Mr. Fadell put it at the time, “we’re focused on experience.”

When I heard about Google's plan to purchase Nest, I was reminded of Peter Bright's op-ed at Ars Technica a few days ago. That op-ed began:

If you believe what the likes of LG and Samsung have been promoting this week at CES, everything will soon be smart. We'll be able to send messages to our washing machines, run apps on our fridges, and have TVs as powerful as computers.

Bloomberg Businessweek covers some of the notable devices on display at the Consumer Electronics Show (CES) here. Technology companies seem to be moving in a direction where every device is a "smart" device that can connect to the internet. But Bright goes on to argue that these developments spell trouble for users' privacy.

The result is a whole lot of exposure to security problems. Even if we assume that these devices ship with no known flaws—a questionable assumption in and of itself if SOHO routers are anything to judge by—a few months or years down the line, that will no longer be the case. Flaws and insecurities will be uncovered, and the software components of these smart devices will need to be updated to address those problems. They'll need these updates for the lifetime of the device, too. Old software is routinely vulnerable to newly discovered flaws, so there's no point in any reasonable timeframe at which it's OK to stop updating the software.

. . .

Herein lies the problem, because if there's one thing that companies like Samsung have demonstrated in the past, it's a total unwillingness to provide a lifetime of software fixes and updates. Even smartphones, which are generally assumed to have a two-year lifecycle (with replacements driven by cheap or "free" contract-subsidized pricing), rarely receive updates for the full two years (Apple's iPhone being the one notable exception).

The trend towards "smart homes" at CES, and Google's purchase of Nest, indicates that internet connections will likely permeate people's lives beyond their computers, smartphones, and (in some cases) televisions. Nest's technology gathers information about building interiors and users' behaviors in an effort to provide more effective heating and cooling of buildings, among other services. While it is currently unclear how much, if any, of Nest's information will be shared with Google, it would not be surprising if this information ends up being shared. In the very least, Nest will likely take advantage of Google's cloud computing technology in bolstering its own products' capabilities.

Combining Nest's information-gathering technology with Google's cloud computing technology would mean that even more personal information will be uploaded to the internet (beyond the content users enter into browsers, emails, and other online services). As Bright points out, this information will probably be poorly-secured, and will therefore be an easy target for theft.

Beyond concerns about theft of personal information, the Google-Nest deal signals a trend that may have interesting Fourth Amendment implications. In Kyllo v. United States, the Supreme Court held that when police used a thermal imaging device on a house to spot heat radiating from marijuana grow-lights, this was a search under the Fourth Amendment. The technology the police used was not in general public use, and it revealed intimate details about the interior of the home. The Court held that when "the Government uses a device that is not in general public use, to explore details of the home that would previously have been unknowable without physical intrusion, the surveillance is a 'search' and is presumptively unreasonable without a warrant."

Will the logic of Kyllo apply in a world of Nest thermostats and smart appliances? In this world, people will constantly be uploading details of their home life to the cloud so that their appliances and homes work at maximum effectiveness. In the near future, it may be much harder to label as "intimate" the myriad details of the home that are shared with Google and other technology companies.

UCLA Law is Runner-Up in Top Business Law Faculties Poll

Brian Leiter has the results of his poll listing the top ten business law faculties here.  UCLA Law is the first runner-up.

I have had the opportunity to take several courses in business law while I have been at UCLA (I am currently taking Federal Income Tax with Professor Jason Oh, and I took Business Associations with Professor Stephen Bainbridge last year as well as a Business Torts course with Harry Mittleman).  I found these courses engaging and informative.  Since I have little educational or experiential background in business preceding these courses, I give a lot of credit to my professors for making these subjects accessible, interesting, and even entertaining (with particular credit to Professor Bainbridge on this final point).

As a final note, hopefully Professor Bainbridge will find this poll more useful than Leiter's listing of the top faculties in constitutional law and theory.  Bainbridge did not seem to care for that earlier poll.

Strange Empirical Claims About Mass Shootings and Stock Prices

I have a few "alerts" set up on Google Scholar, with one of them set to notify me whenever something containing the phrase "Second Amendment" is published.  The system has a few kinks to work out (my "Second Amendment" alert emailed me the link to this robotics article this evening...) but the system is an interesting way to stumble across things I might otherwise miss.

This evening's alert clued me in on an article by Benjamin W. Cross and Stephen W. Pruitt entitled Dark Knights Rising: The Aurora Theater and Newtown School Massacres and Shareholder Wealth.  The Article appears in Volume 41 of the Journal of Criminal Justice.  Here is the abstract:

Purpose 

This study analyzes the stock price impact of the Aurora theater and Newtown (Sandy Hook) school massacres on both domestic (US) and foreign theater operators and US gun manufacturers in an effort to document the economic effects of these tragedies. 

Methods 

The well-established “event study” methodology from the fields of economics and finance is employed to assess the impact of the shootings on the affected companies after controlling for risk and overall market movements. 

Results 

The Aurora theater shooting resulted in striking declines for Cinemark (the targeted theater) as well as major US competitors, but had no impact on overseas theater chains. Smith & Wesson (maker of the gun used in Aurora) showed no response, whereas Ruger (a competitor) exhibited large gains. Both Smith & Wesson and Ruger plunged after the Newtown shooting, although neither made the weapons used in the shooting. 

Conclusions 

Contrary to prior research on workplace homicides, the results show that random mass shootings have profound effects on targeted companies. In addition, the results suggest the presence of a very strong “contagion effect” (where negative events affecting one company impact others in the same industry). The negative responses of both publicly-traded US firearms manufacturers to the Newtown shooting suggests a “sea-change” in the debate over gun ownership in the US.

Normally I would write off an article like this as involving subject matter that is typically outside of my area of expertise -- but the abstract's last claim about a "sea-change" in the gun ownership debate caught my eye.  I decided to read through the article to see what the authors had found.

As it turns out, the article is blatantly flawed and highly misleading.