Harvard Journal on Legislation

JOL Online Article

by on

A Chapter 11 Makeover: Timely Revisions to the Bankruptcy Code to Assist Small Businesses Through Crises

A Chapter 11 Makeover: Timely Revisions to the Bankruptcy Code to Assist Small Businesses Through Crises

Matthew J. Razzano*

I. Introduction

Rarely does Congress act proactively. But with the passage of the Small Business Reorganization Act (SBRA)[1] in 2019, the legislature may have—unknowingly at the time—saved many small businesses from the devastating economic effects of the coronavirus. For years, critics have bemoaned the Bankruptcy Code’s (Code) rigid framework for reorganizing financially distressed companies—specifically its one-size-fits-all treatment of the corner store and the Fortune 500 conglomerate.[2] Yet the SBRA attempted to streamline the lengthy and costly reorganization process, creating a fast-track path for small businesses in Chapter 11.[3]

This Essay argues that while Congress may have gotten lucky in amending the Code prior to a flood of pandemic-induced small business bankruptcies, Congress can make additional changes to better accommodate these struggling entrepreneurs. Part II discusses historical issues with the Code’s treatment of small businesses and the stress placed upon these owners during the coronavirus pandemic. Part III introduces the provisions of the SBRA. And Part IV addresses additional changes needed to holistically improve the bankruptcy system for small business owners.

[Read more…] about A Chapter 11 Makeover: Timely Revisions to the Bankruptcy Code to Assist Small Businesses Through Crises

by on

Investigating the Attendant Circumstances of RICO from Its Early History and Drafting to Transnational Organized Crime and Extraterritorial Applications: A Perspective on U.S. Prosecutions, Ideology, and Globalization

By: Alina Veneziano*

Abstract

This Article traces the history of extraterritorial regulation, as applied to the Racketeer Influenced and Corrupt Organizations Act (“RICO”), through an examination of underlying domestic circumstances, such as criminal prosecutions, ideology, and globalization. Legal analyses have focused either on the problems of prosecutorial decision-making domestically or the history, shortcomings, and recommendations of RICO. This Article departs from the “either-or” approach and instead combines the two paths into a single analysis of these domestic effects on the extraterritorial regulation of RICO cases. In other words, its purpose is to analyze the phenomenon of extraterritoriality under the basic principles of criminal law, including the duties of prosecutors, the roles of courts, and the ideals that influence these respective parties. While most scholarship relating to extraterritorial applications tends to analyze such issues under international law principles, such as prescriptive jurisdiction or via international comity, sovereignty, or congressional intent, this Article strives to understand these issues on a national level.

While early judicial holdings have been mainly territorial, and courts have thus resisted utilizing extraterritorial regulation, a different situation is presented with organized crime. It is easily the case that organized crime schemes cross multiple borders, and, with the advent of technological advances and globalization, the methods of manipulation and evasion are multiplying faster than law enforcement can keep up. Congress remedied this situation by drafting RICO to target organized crime in a statute that provides for both criminal and civil suits. The problem is that the courts have interpreted this arguably clear statute in a manner that negates RICO’s original intent, force, and meaning. It is these holdings that set the stage for the next era in U.S. history in dealing with transnational organized crime and RICO. Such rationales are based on attendant circumstances such as the resources of prosecutors, ideology, and globalization.

But there is a problem within the U.S. democratic system: lack of resources, ideological inclinations, and the struggle to balance adherence to congressional intent with the consistent application of relief to injured parties. The realizations/recommendations identified by this Article are threefold: (1) to understand that is perfectly permissible for Congress to be concerned with transnational organized crime only as it applies to domestic conditions; (2) to identify a sufficient U.S. nexus requirement that is consistent in civil RICO applications and reduces the risk of foreign resentment; and (3) to implement training in local, state, and federal law enforcement regarding RICO’s intended coverage and geographic scope. While foreign nationals should demonstrate the domestic injury requirement, this same reasoning should not extend to U.S. nationals. Instead, U.S. claimants under a U.S. statute should be able to assert a civil RICO claim without the unprecedented domestic injury requirement in RJR Nabisco v. European Community.[1] The U.S. nexus requirement for U.S. nationals is found in their citizenship, which should be interpreted in a manner as to satisfy the domestic injury requirement when the private RICO claimant is a U.S. national. Such realizations reduce foreign infringement, case-by-case distinctions, and foreign-cubed transactions. Critically, such recommendations have the secondary effect of alleviating prosecutorial overload by shifting some cases to private claimants, reducing the cases that prosecutors bring that fall outside the types of cases envisioned by Congress, and providing more consistent application without the need for judicial or congressional involvement. By redefining the scope and reach of RICO, internal efficiencies are achieved and this, in turn, affects the U.S. enforcement mechanisms on the international field.

[Read more…] about Investigating the Attendant Circumstances of RICO from Its Early History and Drafting to Transnational Organized Crime and Extraterritorial Applications: A Perspective on U.S. Prosecutions, Ideology, and Globalization

by on

Chairpointment: Rethinking the Appointment of Independent Agency Chairpersons

Chairpointment: Rethinking the Appointment of Independent Agency Chairpersons

Samuel Rubinstein*

The modern independent agency chairperson possesses great executive and administrative power.  Among other things, she usually can appoint and supervise officials, preside at meetings, and distribute the work among her fellow commissioners or board members.  Given this increased power as the chairperson, she is still just one vote.  Despite this, as the “head” of the agency, she is the face of the agency when dealing with other governmental bodies and the public.  However, her appointment procedure is inconsistent—sometimes the President can choose an incumbent commissioner without Senate approval, sometimes the President needs to go back to the Senate for approval, and in rare instances, the board members get to choose the chair themselves—and entirely unstudied.

This Article examines “chairpointments” in the context of the powers of an independent agency chairperson.  In doing so, the Article determines whether chairpersons are principal or inferior officers and the consequences of either result.  Finally, the Article addresses how chairpointments should to be reorganized and harmonized. [Read more…] about Chairpointment: Rethinking the Appointment of Independent Agency Chairpersons

by on

WARNing: The “Liquidating Fiduciary” Exception Should Not Exist

WARNing: The “Liquidating Fiduciary” Exception Should Not Exist

Jonathan C. Gordon*

 

Abstract

The Worker Adjustment and Retraining Notification Act requires employers of a sufficient size to provide sixty days’ notice to employees affected by plant closings or mass layoffs. The Department of Labor, meanwhile, said that fiduciaries that are liquidating a business do not have to comply with that notice requirement. Courts have uniformly held that such a “liquidating fiduciary” exception exists. I disagree; there is no such exception.

Using traditional tools of statutory interpretation, I submit that Congress did not mean for such an exception to apply. Thus, Congress should clarify the WARN Act and make clear that there is no exception for “liquidating fiduciaries.” Until then, however, courts should stop applying the exception.

[Read more…] about WARNing: The “Liquidating Fiduciary” Exception Should Not Exist

by on

Combination Among the States: Why the National Popular Vote Interstate Compact is an Unconstitutional Attempt to Reform the Electoral College

Combination Among the States: Why the National Popular Vote Interstate Compact is an Unconstitutional Attempt to Reform the Electoral College

Patrick C. Valencia[*]

 

“In all, the invisible federalism that has gone largely unnoticed in present presidential election debates serves a valuable purpose. It accounts for nonvoters, it maximizes enfranchisement, and it discourages interstate meddling. Federalism is not simply an impediment to Electoral College reform—it is a foundational element of its defense, one that precludes reform.”[1]

 

Abstract

Since the 2000 election “misfire” produced a President who won the Electoral College but lost the national popular vote, the National Popular Vote Interstate Compact (“the Compact”) has garnered support across the nation. Under the terms of the Compact, the states would thereafter pledge their electoral votes to the winner of the national popular vote, regardless of the outcome of the election within their own state. The Compact, already successfully approved by eleven states and the District of Columbia, needs its signatories to possess at least 270 electoral votes before it takes full effect and converts the Electoral College into a de facto direct popular election of the President. The current compacting states possess 165 electoral votes, and therefore need only 105 more before the Compact takes effect, a total that can be reached with the consent of as few as four more states. This article argues that this possibility makes the Compact a constitutional crisis–in–­­waiting. Although this crisis is not yet upon us, it lurks in the shadows and must be addressed before it has the chance to alter a presidential election and take away any and all effective electoral power from as many as thirty–nine states.

This article explains that the Compact is unconstitutional because it promotes combination among the states and effectively creates a direct popular election. Because these results are precisely what the Framers deliberately sought to avoid when they carefully detailed the “finely wrought” electoral procedures in Article II, Section 1, the Compact makes an impermissible fundamental alteration to the Electoral College. This Note examines the historical evidence of the Federal Convention, ratification debates, and writings of the Founding era and, in doing so, concludes that the Framers specified these procedures to prevent combination among the states and allow each individual state to vote according to its distinct interests. The Compact would force a state’s electors to disregard their state’s unique interests and, instead, vote for whomever secures a plurality of the national popular vote, regardless of that candidate’s performance in that specific state. To prevent this crisis-in-waiting from occurring, this Note concludes that if states ever attempt to enforce the Compact, a court should apply the “finely wrought” standard from Chadha and City of New York and strike down the deal, thereby preventing supporters of the Compact from passing a de facto constitutional amendment that deprives the non–compacting states of their current political power in presidential elections.

  [Read more…] about Combination Among the States: Why the National Popular Vote Interstate Compact is an Unconstitutional Attempt to Reform the Electoral College

by on

Be Warned: A Proposal to Reform Food Product Disclosure Statements

Be Warned: A Proposal to Reform Food Product Disclosure Statements

By Gideon Zvi Palte, J.D. ’18[*]

I. Introduction

Dietary choices can have a significant effect on health.[1] Moderate reduction in salt consumption can reduce the risk of cardiovascular disease, stroke, and coronary heart attack.[2] High cholesterol has been identified as a major contributor to coronary heart disease, heart attacks, and strokes.[3] Reducing fat intake can contribute to weight loss.[4]

The societal prevalence of health conditions can have sizeable economic effects. The World Health Organization has identified a push to reduce salt intake as one of the most cost-effective population health measures that countries can implement.[5] Obesity costs the United States health care system $147 billion annually.[6]

The impact of dietary choices on health and the costs of chronic health conditions have led other countries to implement front-of-package food labeling requirements to warn consumers of high levels of specific nutrients in food products. Ecuador requires food products to display red, yellow, and green warning icons to indicate sugar, fat, and sodium contents.[7] Chile has implemented aggressive food labeling reforms to combat national obesity rates that are lower than such rates in the United States.[8]

The United States does not require comparable warnings of the risk of high contents of specific nutrients in food products. Although federal regulations identify fat, saturated fat, cholesterol, and sodium as nutrients that have the potential to increase the risk of a diet-related disease or health condition,[9] food products that contain these “health-risk nutrients”[10] in potentially dangerous quantities are not required to provide consistent or clear warning to consumers.

Food products are required to display disclosure statements to warn consumers of potentially dangerous health-risk nutrient contents only when those food products make a nutrient content claim[11] that characterizes the level of a nutrient in the food (e.g., “high in fiber”).[12] Because nutrient content claims are voluntarily included on food products,[13] food manufacturers can easily avoid the requirement to include a disclosure statement to warn of potentially dangerous health-risk nutrient contents by choosing not to display nutrient content claims on their packaging. Consumers therefore receive inconsistent notice of potentially dangerous health-risk nutrient contents in food products. Moreover, consumers do not receive clear notice of potentially dangerous health-risk nutrient contents because disclosure statements do not explicitly state that the food product poses a health risk due to its content of the health-risk nutrient.[14]

The shortcoming of the disclosure statement in providing consistent and clear notice of potentially dangerous health-risk nutrient contents in foods stems from its initial enactment alongside referral statements, which were intended to refer consumers to the Nutrition Facts label whenever a food product made a nutrient content claim.[15] The referral statement and disclosure statement requirements were enacted together as part of the Nutrition Labeling and Education Act of 1990 (“NLEA”),[16] which required standardized nutrition information on food product packaging for the first time.[17] Referral statements served to remind consumers to consult the newly required comprehensive nutrition information, instead of nutrient content claims that food manufacturers voluntarily included on food packaging, to learn about the nutrient contents of foods.[18] However, this requirement was abrogated with the passage of the Food and Drug Administration Modernization Act of 1997 (“FDAMA”),[19] leaving only disclosure statements, which are required to accompany nutrient content claims when food products contain health-risk nutrients at potentially dangerous levels.[20]

This Article proposes reforming disclosure statements to provide consistent and clear notice of potentially dangerous levels of health-risk nutrients in foods. The proposal would make disclosure statements (1) mandatory irrespective of the presence or absence of nutrient content claims and (2) explicit in indicating that the food products to which they apply contain health-risk nutrients in a quantity that poses a health risk.

The Article will first review the history of the legal requirement of disclosure statements in the United States and describe the current requirement and its shortcomings. Next, the Article will explore a private sector food labeling initiative in the United States and the regulatory approaches adopted by Chile and Ecuador to warn consumers of high contents of specific nutrients in foods. It will then discuss the importance of mandatory clear and accurate food labeling in addressing diet-related diseases and facilitating informed consumer decisions. Finally, the Article will propose a statutory reformation of disclosure statements in order to give consumers consistent and clear notice of contents of health-risk nutrients in food products that pose a health risk, followed by an analysis of the constitutional permissibility of the proposal.

[Read more…] about Be Warned: A Proposal to Reform Food Product Disclosure Statements