Of Elephants, Donkeys, and the U.S. Health Care Imbroglio

It is more than passingly ironic that the representative animals of American Republicans (the elephant) and Democrats (the donkey) are both the offspring of a 19th century cartoonist - Thomas Nash.  Were he alive today, Nash might have a great deal of fun depicting these two ungainly beasts attempting death defying arabesques, pivot turns and scissors leaps on the highly greased balance beam that is health care reform.  Both portly quadrupeds agree that Obamacare needs fixing.  But the nature of that fix remains the cause of a great deal of unhelpful snorting, grunting, and braying. 

Too bad they don’t realize that the key lies in appreciating a type of market failure known to economists and other pointy heads as “adverse selection”.  Prepare to be initiated. 

One of the overriding goals of Obamacare (and one ostensibly supported by both Republicans and Democrats) is to ensure that those with pre-existing medical conditions have access to affordable healthcare.  Under Obamacare, this is achieved by compelling insurers to lump those with pre-existing conditions into the same pool as those without – while charging everyone the same price.  This has resulted in what is effectively a government mandated market failure, whose outward manifestations are skyrocketing health care premiums and market withdrawals by multiple insurers. 

Obscene intentions and corrupting effects

[Cross-posted from the OUP Blog)   The 1868 decision in R. v Hicklin created a formula for evaluating obscene works that British and American courts would use for nearly a century. Chief Justice Alexander Cockburn, in a succinct phrase that numerous courts would quote, explained that “the test of obscenity is … whether the tendency of the matter charged as obscenity is to deprave and corrupt those whose minds are open to such immoral influences, and into whose hands a publication of this sort may fall.” Hicklin is often taken as inaugurating a new era in obscenity law, shifting attention away from the author’s intentions, and towards a vague and subjective evaluation of the work’s effects.

Google v. Equustek: Unnecessarily Hard Cases Make Unnecessarily Bad Law

Google "G" LogoWhen lawyers say that hard cases make bad law, they usually mean that extreme or unusual circumstances provide poor basis for making legal rule that would have to be applicable to a wider range of more common cases. Sometimes the phrase describes cases that involve a party whose hardship draws sympathy even if its legal case is weak. But sometime hard cases can make good law, when they present smart judges with difficult dilemmas and force them to think hard and deep on their ruling and its broader consequences. Yet courts don't always choose the cases that come before them and the possibility of a hard case making bad law is an occupational hazard of the legal system.

Presents, Emoluments, and Corruption

(Cross-posted from Balkinization)   The government’s motion to dismiss in CREW v. Trump features a two-prong argument on the central issue in the dispute, namely, the meaning of the term emolument in the provision stating that “no person holding any office of profit or trust under them, shall, without the consent of the Congress, accept of any present, emolument, office, or title, of any kind whatever, from any king, prince, or foreign state.” The DOJ’s argument presumably offers a template for the government’s position in the other emoluments cases. First, according to the DOJ, the term emolument was “widely understood at the framing of the Constitution to mean any compensation or privilege associated with an officesuch as tolls, rents, fees, and the like, attached to the performance of official duties.

Our Anxious Supreme Court

[cross posted from https://cfe.ryerson.ca/blog/2017/05/our-anxious-supreme-court]

One gets the sense that the Supreme Court of Canada does not have a good feel for free speech questions. It took some time, for instance, for a majority of the Court to acknowledge that legal constraints might ‘chill’ free speech. The Court confidently proclaimed, on more than one occasion, that civil and criminal legal prohibitions should not be expected to deter speakers. 

Only recently did the Court acknowledge this possibility and, accordingly, relaxed the law of libel so as to allow a new defence of responsible communication on matters of public interest. The Court did so only after other commonwealth Courts had taken a lead in relaxing the common law of libel. It was this reform that enabled the press to report freely on the misdeeds of the late Toronto Mayor, Rob Ford, without the worry of a lawsuit.

Rolling back investor protection in the Trump Era

Attempting to fulfill his election promises, President Trump has begun to reevaluate post financial crisis rules designed to protect investors. The broad-based Dodd-Frank Wall Street Reform and Consumer Protection Act will be the target of much of Trump’s reforms in this area, which if repealed would undoubtedly leave investors vulnerable.

The Dodd-Frank Act added lending restrictions aimed at: preventing the formation of risky mortgages, protecting consumers against predatory provisions and extending similar protections to common forms of consumer debt including credit cards. In addition, its bank investment provisions (the ‘Volcker Rule’) prevent banks from trading securities in their own account while also restricting their investment in hedge funds and private equity. The derivatives provisions create a framework for the regulation of over the counter swaps, restricted regulatory authority of swap agreements and incorporated anti-fraud measures.

But the President and his team cannot instantaneously unwind Dodd-Frank – it is, after all, enacted law which would require 60 votes to be repealed and Republicans in Congress would not yet provide the support needed given that only 52 votes appear to be available.

Is the World Better Prepared for the Next Financial Crisis?

Eight years have passed since the most recent global financial crisis although its long-term effects linger in the form of low growth rates, weak labour markets and high levels of public and private indebtedness in many countries.  History suggests that we will experience more crises which will increasingly exhibit international dimensions with the internationalization of financial markets. Thus, we must confront the central question of whether there is an optimal regulatory structure that countries should implement, given that members of the G-20 have individually committed to regulating systemic risk in their respective domestic economies.

Financial crises come in many shapes and sizes. In a recent widely acclaimed survey of eight centuries of financial crises around the globe, Reinhart and Rogoff (2009) helpfully categorize them as including sovereign defaults, banking crises, exchange rate crises and finally crises marked by bouts of very high inflation that constitute the de facto equivalent of outright default on public or private sector debt. These are not watertight categories, of course – what may begin as one type of crisis can quickly transform into a different class of crisis both within and across countries.

InterOil-Exxon precedent delivers a wake-up call on fairness opinions


Published in the Globe and Mail on November 29, 2016.

Rare is the precedent-setting securities case that emerges from the Yukon Court of Appeal. The recent attempted arrangement between InterOil Corp. and Exxon Mobile Corp., however, has given rise to such a case. The decision contains a welcome judicial pronouncement on fairness opinions in the context of corporate mergers.

InterOil was set to merge with another corporation before Exxon came forward with a “white knight” offer. InterOil’s financial adviser, Morgan Stanley, provided it with a fairness opinion stating that the merger (which was structured as an arrangement) was fair from a financial point of view.

While fairness opinions are common in merger transactions, their purpose may be legitimately questioned. Should they provide shareholders with information about their investment and the transaction under consideration? Or, in the words of the judge at first instance, are they simply “comfort letters” that provide boards with support for their decision to enter into the merger?

When is an Arrangement an "Arrangement"?


Recently, the Alberta Court of Queen’s Bench handed down a decision regarding the proposed merger of Alberta Oilsands Inc. (AOS) and Marquee Energy Ltd. (Marquee) via a plan of arrangement. [1] The well-reasoned decision rightly suggests that it is within the court’s discretion to decide whether all affected parties are being treated fairly and reasonably in a proposed arrangement. It is not up to the corporation seeking to be arranged to make this determination for the court.

AOS is an Alberta VSX listed public company which has no business operations, but close to $35 million of cash on its balance sheet.  The board of AOS has spent several years in a strategtic process to identify an acquisition that would be beneficial for the company.

The Dangers of Euthanasia on Demand: Op-ed Chicago Tribune on the Dutch "Completed Life" Assisted Dying Proposal

The following co-authored editorial first appeared in the Chicago Tribune on October 18, 2016. It is a commentary on the Dutch government's proposal to introduce a new law that would enable state organized life-ending interventions for people who feel they have a 'completed life' but do not suffer from any 'untreatable medical condition' that causes 'unbearable suffering' (which are the key criteria to obtain access under the Dutch Euthanasia law). A new special 'counsellor in dying' would assess whether the request to have one's life terminated would be 'genuine' and based on a reasonable assessment of 'completed life'. 

The dangers of euthanasia-on-demand