The Jan. 18 Request for Information on Merger Enforcement (RFI)—issued jointly by the Federal Trade Commission (FTC) and the U.S. Justice Department (DOJ)—sets forth 91 sets of questions (subsumed under 15 headings) that provide ample opportunity for public comment on a large range of topics.

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In Fleites v. MindGeek—currently before the U.S. District Court for the District of Central California, Southern Division—plaintiffs seek to hold MindGeek subsidiary PornHub liable for alleged instances of human trafficking under the Racketeer Influenced and Corrupt Organizations (RICO) and the Trafficking Victims Protection Reauthorization Act (TVPRA). Writing for the International Center for Law & Economics (ICLE), we have filed a motion for leave to submit an amicus brief regarding whether it is valid to treat co-defendant Visa Inc. as a proper party under principles of collateral liability.

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The attached was submitted Jan. 17, 2022, by the International Center for Law & Economics (ICLE) to the U.S. District Court for the Central District of California, Southern Division, as a proposed amicus brief in case of Fleites v. MindGeek in support of co-defendant Visa Inc.’s motion to dismiss.

Introduction

Visa sits outside the boundaries of liability contemplated by statutes like RICO and TVPRA. At the very outer boundaries, liability for indirect actors under these statutes is analogous to the sorts of collateral liability sometimes found in other statutes and in common law tort.[1] But the nature of the relationship between Visa and the alleged direct actors in this case, dictated by the mechanics of payment networks, does not support the traditional economic and policy rationales for assigning collateral liability. This amicus brief elucidates the law and economics of collateral liability and applies it to the circumstances of Visa’s alleged participation in the alleged enterprises at issue. As discussed further below, the general principles of collateral liability counsel strongly against holding Visa liable for the harms suffered by Plaintiffs. To hold otherwise would be sure to generate a massive amount of social cost that would outweigh the potential deterrent or compensatory gains sought.

Read the full brief here.

[1] This amicus brief uses the term “collateral liability” to encompass a range of theories of civil liability aimed at secondary actors not directly responsible for causing harm. Thus, the term contemplates causes of action like premises liability for third-party injury, distributor liability for defamation, civil aiding and abetting liability for fraud, contributory and inducement liability for copyright infringement, and various theories of vicarious liability under the doctrine of respondeat superior. See generally Reiner Kraakman, Third-Party Liability, in 3 THE NEW PALGRAVE DICTIONARY OF ECONOMICS AND THE LAW 583 (Peter Newman ed., 1998).

In just over a century since its dawn, liberalism had reshaped much of the world along the lines of individualism, free markets, private property, contract, trade, and competition. A modest laissez-faire political philosophy that had begun to germinate in the minds of French Physiocrats in the early 18th century had, scarcely 150 years later, inspired the constitution of the world’s nascent leading power, the United States. But it wasn’t all plain sailing, as liberalism’s expansion eventually galvanized strong social, political, cultural, economic and even spiritual opposition, which coalesced around two main ideologies: socialism and fascism.

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It’s always fun to see what names politicians come up with for their legislative proposals. Take, for example, the American Innovation and Choice Online Act, which is co-sponsored by Sens. Amy Klobuchar (D-Minnesota) and Chuck Grassley (R-Iowa) and just cleared the Senate Judiciary Committee. Should it pass, it would promote neither innovation nor choice, but would in fact give the Federal Trade Commission and the Department of Justice a mandate to squash innovation.

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Background…

The U.S. Senate is considering legislation—S. 2710, the Open App Markets Act—that would, among other restrictions, bar app stores from requiring app developers to use the store’s own in-app payment system. The bill was introduced by Sen. Richard Blumenthal (D-Conn.), who has argued that it would “open the app economy to new competitors and give mobile users more control over their own devices.”

But…

The app store market is competitive and mobile users already have a choice of relatively open and relatively closed platforms. More open platforms, like the Google Play store, offer users the benefits of greater customization and a broader range of apps and payment options. More closed platforms, such as Apple’s App Store, foreclose some of these options, but instead promise users greater privacy and security and a more curated experience that can ensure better device operation. 

Moreover…

Requiring closed platforms to allow the use of alternative payment options would see large developers and rival payment processors get the benefit of the app store’s investments without paying for them. The Open App Markets Act would substitute regulatory fiat for consumer choice, sacrificing the benefits currently enjoyed by many consumers.

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The attached was originally published by the Institute of Economic Affairs.

Summary

• The draft Online Safety Bill presents a significant threat to freedom of speech, privacy, and innovation. “Safety” has been prioritized over freedom. The bill’s proponents wrongly assume it is possible to remove “bad” content without negatively impacting on the “good” and that platforms, not users, are responsible for “harms.”
• The bill’s inclusion of “legal but harmful” speech–along with defining unlawful speech as any content that the platform merely has “reasonable grounds to believe” is unlawful–risks state-mandated automated censorship of lawful online speech. The duties to “have regard” to freedom of expression and privacy are far weaker than the “safety” duties.
• The bill threatens innovation and competition within the U.K. economy by imposing byzantine duties that will inevitably be harder and more costly for start-ups and smaller companies to comply with, while discouraging companies from operating in the United Kingdom, limiting access to online services.
• The bill provides extraordinary discretion to the Secretary of State and Ofcom to design “codes of conduct” that will define “legal but harmful” content. They will also have the power to impose additional requirements such as age verification and undermine end-to-end encryption. The regulator will also have significant leeway about what types of content and which platforms to target.
• If the Government is unwilling to fundamentally rewrite the bill, there is a clear need for serious, independent scrutiny mechanisms to prevent regulatory and ministerial overreach.
• An Independent Reviewer of Online Safety Legislation, modelled partly on the Independent Reviewer of Terrorism Legislation, could provide some accountability.
• The Independent Reviewer would need to be properly resourced and empowered to scrutinize the activities of the Secretary of State and Ofcom and communicate findings to policymakers and the general public.
• An Independent Reviewer, properly empowered and resourced, could stand up for freedom of expression, privacy and innovation while being a bulwark against future authoritarian demands.

Read the full paper here.

Abstract

Despite recent signs of improvement, since 2010, law schools have faced declining enrollment and entering classes with lower predictors of success. At least partly as a result, the rates at which law school graduates pass the bar exam have declined and remain at historic lows. Yet, during this time, many schools have improved their graduates’ chances of success on the bar exam, and some schools have dramatically outperformed their predicted bar exam passage rates. Our study examines which schools do so and why.

We began our research by accounting for law schools’ incoming class credentials to predict an expected bar exam passage rate for each ABA-accredited law school. We then examined each law school’s aggregated performance on the bar exam tests for which its graduates sat based on relative and absolute performance, weighing the difficulty of each state’s bar exam. Through this analysis, we identified law schools that have consistently higher and lower first-time bar exam passage rates over a period of six years: 2014-2019. In addition to identifying overperforming law schools on the bar exam, our methodology is a novel contribution not only to the legal education literature but also to the quantitative methodological literature, given its unique tailoring of the classic value-added modeling design to the realities of the bar exam.

In the second phase of our research, we surveyed administrators at these overperforming and underperforming law schools, as well as law schools in the middle of the distribution, to qualitatively assesses how these law schools approach bar support and bar success of their students. Collectively, this research provides significant insight into how law schools are responding to recent negative trends in bar passage rates, validates successful approaches to mitigate this trend, and recommends a suite of options available to law schools seeking to improve their bar passage rate.

President Joe Biden’s July 2021 executive order offered a sneak preview of his administration’s priorities for the freight-rail sector, particularly where it calls on the Surface Transportation Board (STB) to “strengthen regulations pertaining to reciprocal switching agreements.”

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